PART 970.DOE MANAGEMENT AND OPERATING CONTRACTS
Sec.
970.0000 Scope of part.
970.0001 [Reserved]
Subpart 970.03 [Reserved]
Subpart 970.04.Administrative Matters
970.0404 Safeguarding classified information.
970.0404-1 Definitions.
970.0404-2 General.
970.0404-3 Responsibilities of contracting officers.
970.0404-4 Contract clauses.
970.0406 [Reserved]
970.0407-1 Alternate retention schedules.
970.0407-2 Access to and ownership of records.
970.0407-3 Contract clause.
970.0470 Department of Energy directives.
970.0470-1 General.
970.0470-2 Contract clause.
Subpart 970.08.Required Sources of Supplies and Services
970.0801 Excess personal property.
Subpart 970.09.Contractor Qualifications
970.0901 Management controls.
970.0902 Determination of responsibility
970.0905 Organizational conflicts of interest.
Subpart 970.10.Specifications, Standards and Other Statement of Work Descriptions
970.1001 Performance-based contracting.
970.1002 Additional considerations.
Subpart 970.15.Contracting by Negotiation
970.15404-4 Fees for management and operating contracts.
970.15404-4-1 Fee policy.
970.15404-4-2 Special considerations: laboratory management and operation.
970.15404-4-3 Types of contracts and fee arrangements.
970.15404-4-4 General considerations and techniques for determining fixed fees.
970.15404-4-5 Calculating fixed fee.
970.15404-4-6 Fee base.
970.15404-4-7 Special equipment purchases.
970.15404-4-8 Special considerations-cost-plus-award-fee.
970.1504-4-9 Special consideration: fee limitations.
970.15404-4-10 Documentation
970.15404-4-11 Solicitation provision and contract clauses.
970.15405 Price negotiation.
970.15406-2 Cost or pricing data.
970.15407-2 Make-or-buy plans.
970.15407-2-1 Policy.
970.15407-2-2 Requirements.
970.15407-2-3 Contract clause.
Subpart 970.17 Special Contracting Methods
970.1702-1 Term of contract and option to extend.
970.1702-2 Solicitation provision and contract clause
970.19.Small, Small Disadvantaged and Women- Owned Small Business Concerns
970.1901 General.
Subpart 970.20 [Reserved]
Subpart 970.22 Application of Labor Policies
970.2201 Basic labor policies.
970.2206 Walsh-Healey Public Contracts Act.
970.2208 Equal employment opportunity.
970.2210 Service Contract Act.
970.2270 Unemployment compensation.
970.2271 Workers' compensation insurance.
970.2272 Conduct of employees and consultants of DOE management and operating contractors.
970.2273 Administrative controls and criteria for application of the Davis-Bacon Act in operational or maintenance activities.
970.2274 Whistleblower protection of contractor employees.
970.2274-1 General.
970.2274-2 Clause.
970.2275 Overtime management.
970.2275-1 General.
970.2275-2 Contract clause.
Subpart 970.23.Environmental, Conservation, and Occupational Safety Programs
970.2303 Hazardous materials identification and material safety.
970.2303-1 General.
970.2303-2 Clauses.
970.2304 Use of Recovered/Recycled Materials.
970.2304-1 General.
970.2304-2 Contract clause.
970.2305 Workplace substance abuse programs management and operating contracts.
970.2305-1 General.
970.2305-2 Applicability.
970.2305-3 Definitions.
970.2305-4 Solicitation provision and contract clause.
970.2305-5 Suspension of payments, termination of contract, and debarment and suspension actions.
Subpart 970.25 Foreign Acquisition
970.2501 Severance payments for foreign nationals
Subpart 970.26.Other Socioeconomic Programs
970.2601 Implementation of Section 3021 of the Energy Policy Act of 1992.
970.2602-1 Implementation of Section 3161 of the National Defense Authorization Act for Fiscal Year 1993.
970.2602-2 Contract clauses
Subpart 970.27.Patents, Data, and Copyrights
970.2701 General.
970.2702 Patent Rights.
970.2703 Technology transfer.
970.2704 Patent clauses.
970.2705 Rights in Technical Data-General.
970.2706 Rights in Technical Data- Procedures.
970.2707 Rights in Data Clauses
Subpart 970.28.Bonds and Insurance
970.2830 Contract clause.
970.2870 Indemnification.
Subpart 970.29.Taxes
970.2901 Exemptions from Federal excise taxes.
970.2902 State and local taxes.
970.2903 Contract clauses.
Subpart 970.30.Cost Accounting Standards
970.3001 General.
970.3001-1 Applicability.
970.3001-2 Limitations.
Subpart 970.31.Contract Cost Principles and Procedures
970.3100 Scope and applicability of subpart.
970.3100-1 Definitions.
970.3100-2 Responsibilities.
970.3100-3 Deviation.
970.3101 General policy.
970.3101-1 Actual cost basis.
970.3101-2 Direct and indirect costs.
970.3101-3 General basis for reimbursement of costs.
970.3101-4 Cost determination based on audit.
970.3101-5 Contractor's system of accounting.
970.3101-6 Advance understandings on particular cost items.
970.3101-7 Cost submission, certification, penalties, and waivers.
970.3102 Application of cost principles.
970.3102-1 General and administrative expenses.
970.3102-2 Compensation for personal services.
970.3102-3 Cost of money.
970.3102-4 Depreciation.
970.3102-5 Employee morale, health, welfare, food service, and dormitory costs.
970.3102-6 Facilities (plant and equipment).
970.3102-7 Political activity costs.
970.3102-8 Membership in trade, business and professional organizations.
970.3102-9 Outside technical and professional consultants.
970.3102-10 Overtime, shift, and holiday premiums.
970.3102-11 Page charges in scientific journals.
970.3102-12 Plant reconversion costs.
970.3102-13 Precontract costs.
970.3102-14 Preparatory and make-ready costs.
970.3102-15 Procurement: Subcontracts, contractor-affiliated sources, and leases.
970.3102-16 Relocation costs.
970.3102-17 Travel costs.
970.3102-18 Special funds in the construction industry.
970.3102-19 Public relations and advertising.
970.3102-20 Cost prohibitions related to legal and other proceedings.
970.3102-21 Fines and penalties.
970.3103 Contract clauses.
Subpart 970.32.Contract Financing
970.3201 General.
970.3202 Advance payments.
970.3270 Clauses.
970.3271 Special bank account agreement.
970.3272 Reduction or suspension of advance, partial, or progress payments.
Subpart 970.36 Construction and A-E Contracts
970.3601 Special construction clause for operating contracts.
Subpart 970.41 Acquisition of Utility Services
970.4100 General.
Subpart 970.45. Government Property
970.4501 Contract clause.
Subpart 970.49.Termination of Contracts
970.4901 General.
970.4902 Termination clause.
Subpart 970.51.Use of Government Sources by Contractors
970.5101 Use of Government supply sources.
970.5102 Use of interagency motor pool vehicles and related services.
Subpart 970.52.Contract Clauses for Management and Operating Contracts
970.5201 General policy.
970.5202 Deviations.
970.5203 Modifications and notes to FAR clauses.
970.5203-1 Covenant against contingent fees.
970.5203-2 [Reserved]
970.5203-3 Buy American Act.
970.5204 Clauses to be used in addition to or in place of the contract clauses set forth in FAR Part 52 and DEAR Part 952.
970.5204-1 Security.
970.5204-2 Integration of environment, safety, and health into work planning and execution.
970.5204-3 Buy American Act.construction materials.
970.5204-4 New Mexico Gross Receipts and Compensating Tax.
970.5204-5 Disclosure of information.
970.5204-6 Nuclear hazards indemnity.
970.5204-7 [Reserved]
970.5204-8 Indemnity assurance to architect-engineer or supplier prior to operation of a nuclear facility.
970.5204-9 Accounts. records, and inspection.
970.5204-10 Foreign ownership, control, or influence over contractors (FOCI).
970.5204-11 Changes.
970.5204-12 Contractor's organization.
970.5204-13 Allowable costs and fixed-fee (Management and Operating contracts).
970.5204-14 Allowable costs and fixed-fee (support contracts).
970.5204-15 Obligation of funds.
970.5204-16 Payments and advances.
970.5204-17 Political activity cost prohibition.
970.5204-18 [Reserved]
970.5204-19 Printing clause for management and operating contracts.
970.5204-20 Management controls.
970.5204-21 Property.
970.5204-22 Contractor purchasing system.
970.5204-23 Taxes.
970.5204-24 [Reserved]
970.5204-25 Workmanship and materials.
970.5204-26 [Reserved]
970.5204-27 Consultant or other comparable employment services of contractor employees.
970.5204-28 Assignment.
970.5204-29 Permits or licenses.
970.5204-31 Insurance, litigation and claims.
970.5204-32 [Reserved]
970.5204-33 Priorities and allocations.
970.5204-35 Controls in the national interest (unclassified contracts with educational institutions).
970.5204-36 Preventing conflicts of interest in university research.
970.5204-37 Statement of work (management and operating contracts).
970.5204-38 Special clause for procurement of construction.
970.5204-39 Acquisition and Use of Environmentally Preferable Products and Services.
970.5204-40 Technology transfer mission
970.5204-41 [Reserved]
970.5204-42 Key personnel.
970.5204-43 Other Government contractors.
970.5204-44 Flowdown of contract requirements to subcontracts.
970.5204-45 Termination.
970.5204-48 [Reserved]
970.5204-50 [Reserved]
970.5204-51 [Reserved]
970.5204-52 Foreign travel.
970.5204-53 Contractor employee travel discounts.
970.5204-54 Total available fee: base fee amount and performance fee amount.
970.5204-55 [Reserved]
970.5204-56 [Reserved]
970.5204-57 Agreement regarding workplace substance abuse programs at DOE facilities
970.5204-58 Workplace substance abuse programs at DOE sites.
970.5204-59 Whistleblower protection for contractor employees.
970.5204-60 Facilities management.
970.5204-61 Cost prohibitions related to legal and other proceedings.
970.5204-62 [Reserved]
970.5204-63 Collective bargaining agreements - management and operating contracts.
970.5204-71 Patent Rights-Nonprofit Management and Operating Contractors
970.5204-72 Patent Rights-Profit-Making Management and Operating Contractors.
970.5204-73 Notice regarding options.
970.5204-74 Option to extend the term of the contract.
970.5204-75 Preexisting conditions.
970.5204-76 Make-or-buy plan.
970.5204-77 Workforce restructuring under Section 3161 of the National Defense Authorization Act for Fiscal Year 1993.
970.5204-78 Laws, regulations, and DOE directives.
970.5204-79 Access to and ownership of records.
970.5204-80 Overtime management.
970.5204-81 Diversity plan.
970.5204-82 Rights in data--facilities.
970.5204-83 Rights in Data-Technology Transfer
970.5204-84 Waiver of limitations on severance payments to foreign nationals
970.5204-85 Reduction or suspension of advance, partial, or progress payments upon finding of substantial evidence of
fraud.
970.5204-86 Conditional payment of fee, profit, or incentives.
970.5204-87 Cost reduction.
970.5204-88 Limitation on fee.
970.5204-89 Requirement for Guarantee of Performance
Subpart 970.70.Use of DOE Facilities for Work for Others
970.7000 Mission-oriented solicitation.
Subpart 970.71.Management and Operating Contractor Purchasing
970.7101 General.
970.7102 DOE responsibility.
970.7103 Contractor Purchasing System.
970.7104 [Reserved]
970.7105 Purchasing from contractor-affiliated sources.
970.7108 Review and approval.
970.7109 Advance notification.
970.7110 Nuclear material transfers.
Subpart 970.72.Facilities Management.
970.7201 Policy.
Subpart 970.73.Technology Transfer.
970.7310 General.
970.7320 Policy.
970.7330 Contract Clause.
Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C. 2201), sec. 644 of the Department of Energy
Organization Act, Public Law 95-91 (42 U.S.C. 7254).
Source: 49 FR 12063, Mar. 28, 1984; 60 FR 18032, Apr. 10, 1995; 62 FR 2310, Jan. 16, 1997; Interim rule 61 FR 32584,
Jun. 24, 1996; final rule 62 FR 34872, Jun. 27, 1997; 62 FR 34842, Jun. 27, 1997; 62 FR 51800, Oct. 3, 1997; 62 FR
63423, Nov. 28, 1997; 63 FR 5272, Feb. 2, 1998; 63 FR 10499, Mar. 4, 1998]
____________________________________
970.0000 Scope of part.
This part provides Departmental requirements and provisions regarding award and administration of management and
operating contracts as defined at FAR Subpart 17.6 and Subpart 917.6 of this chapter. Use of a management and operating
contract must be authorized by the Secretary, Deputy Secretary or Under Secretary. For administrative convenience, the
subparts of this part are arranged in the same numeric sequence as the parts of the FAR. Thus, for example, requirements
regarding small business are found at 970.19 and guidance regarding contract clauses is found at 970.52. To the extent
possible the same subpart section and subsection titles of the FAR are applied in this Part 970. There are some differences
for convenience. When there is no specific guidance of a FAR part/section or applicability of a FAR part/section to DOE
management and operating contracts a subpart or section will not be included.
970.0001 [Reserved]
[Interim rule 61 FR 32584, Jun. 24, 1996;
final rule 62 FR 34872, Jun. 27, 1997]
Subpart 970.03 [Reserved]
Subpart 970.04.Administrative Matters
970.0404 Safeguarding classified information.
970.0404-1 Definitions.
Classified Information means any information or material that is owned by or produced for, or is under the control of the
United States Government, and determined pursuant to provisions of Executive Order 12356, April 2, 1982 (47 FR 14874,
April 6, 1982), or prior orders, or as authorized under the Atomic Energy Act of 1954, as amended, to require protection
against unauthorized disclosure, and is so designated.
Counterintelligence means information gathered and activities conducted to protect against espionage, other intelligence
activities, sabotage, or assassinations conducted for or on behalf of foreign powers, organizations or persons, or
international terrorist activities, but not including personnel, physical, document or communication security programs.
Restricted Data means data which is defined, in section 11, of the Atomic Energy Act of 1954, as amended, as "all data
concerning: (1) Design, manufacture, or utilization of atomic weapons; (2) the production of special nuclear material; or (3)
the use of special
nuclear material in the production of energy, but shall not include data declassified or removed from the Restricted Data
category pursuant to section 142."
[49 FR 12063, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984; 62 FR 51800, Oct. 3, 1997]
970.0404-2 General.
(a) The basis of DOE's security requirements is the Atomic Energy Act of 1954, as amended.
(b) DOE regulations concerning national security information are codified at 10 CFR Part 1045 and Part 710. Supplemental
security material is found in the DOE Directives system. Foreign ownership, control, or influence over contractors as it
relates to security is discussed at 904.70 also applies to management and operating contracts. Regulations pertaining to the
protection of restricted data is found under 10 CFR Part 1016.
(c) Statutory requirements to be observed in connection with the release of Restricted Data to foreign governments are
contained in the Atomic Energy Act of 1954, Sections 141 and 144.
(d) Section 148 of the Atomic Energy Act (42 U.S.C. 2168) prohibits the unauthorized dissemination of unclassified nuclear
information with respect to the atomic energy defense programs pertaining to:
(1) The design of production facilities or utilization facilities;
(2) Security measures (including security plans, procedures, and equipment) for the physical protection of: (i) production or
utilization facilities, (ii) nuclear material contained in such facilities, or (iii) nuclear materials in transit; or
(3) The design, manufacture, or utilization of any atomic weapon or component if the design, manufacture, or utilization of
such weapon or component was contained in any information declassified or removed from the Restricted Data category
pursuant to section 142 of the Atomic Energy Act.
(e) Executive Order 12333, United States Intelligence Activities, provides for the organization and control of United States
foreign intelligence and counterintelligence activities. In accordance with this Executive Order, DOE has established a
counterintelligence program which is described in DOE Order 5670.3 (as amended). All DOE elements, including
management and operating contractors and other contractors managing DOE-owned facilities which require access
authorizations, should undertake the necessary precautions to ensure that DOE and covered contractor personnel, programs
and resources are properly protected from foreign intelligence threats and activities.
[49 FR 12063, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984; 62 FR 51800, Oct. 3, 1997]
970.0404-3 Responsibilities of contracting officers.
(a) If access to Restricted Data may be required during the solicitation process for a management and operating contract,
security clearances shall be obtained in accordance with applicable DOE Directives in the safeguards and security series.
(b) Management and operating contracts which may require the processing or storage of Restricted Data or Special Nuclear
Material require application of the applicable DOE Directives in the safeguards and security series.
[62 FR 2310, Jan. 16, 1997]
970.0404-4 Contract clauses.
(a) The security clauses to be used in DOE management and operating contracts are found at 970.5204. They are:
(1) Security and Classification/Declassification, 970.5204-1(a). These clauses are required in all contracts which involve
access to classified information, nuclear material, or access authorizations.
(2) Counterintelligence, 970.5204-1(b). This clause is required in all management and operating contracts and other
contracts for the management of DOE-owned facilities which include the security and classification/declassification clauses.
(4) Foreign ownership, control, or influence, 970.5204-10. The clause is required in all management and operating contracts.
(b) The clause at 970.5204-5, Disclosure of Information may be used in place of the clauses entitled "Security" and
"Classification" in contracts for work that are not likely to produce classified information or restricted data.
(c) Include the clause at 952.204-73 in a solicitation for a management and operating contract.
(d) See 904.71 for guidance concerning the prohibition on award of a DOE contract under a national security program to a
company owned by an entity controlled by a foreign government when access to proscribed information is required to
perform the contract.
[49 FR 12063, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984, as amended at 52 FR 38426, Oct. 16, 1987, 58 FR 59862, 59 FR
6221, Feb. 10, 1994; 62 FR 51800, Oct. 3, 1997]
970.0406 [Reserved]
[52 FR 28717, Aug. 3, 1987; 62 FR 2310, Jan. 16, 1997]
970.0407-1 Alternate retention schedules.
Records produced under the Department's contracts involving management and operation responsibilities relative to
DOE-owned or - leased facilities are to be retained and disposed of in accordance with the requirements of DOE Order
1324.5B, Records Management Program and DOE Records Schedules, (see current version) rather than those set forth at
FAR subpart 4.7, Contractor Records Retention.
[62 FR 34842, Jun. 27, 1997]
970.0407-2 Access to and ownership of records.
Contracting officers may agree to contractor ownership of the categories of records designated in the instruction in
paragraph (b) of 48 CFR (DEAR) 970.5204-79, Access to and Ownership of Records, provided the Government's rights to
inspect, copy, and audit these records are not limited. These rights must be retained by the Government in order to carry out
the Department's legal responsibilities under the Atomic Energy Act and other statutes in overseeing its contractors,
including compliance with the Department's health and safety and reporting requirements, and to protect the public interest.
[62 FR 34842, Jun. 27, 1997]
970.0407-3 Contract clause.
The contracting officer shall insert the clause at 48 CFR (DEAR) 970.5204-79, Access to and Ownership of Records, in
management and operating contracts.
[62 FR 34842, Jun. 27, 1997]
970.0470 Department of Energy directives.
970.0470-1 General.
(a) The Department of Energy Directives System is a system of instructions, including orders, notices, manuals, guides, and
standards, for Departmental elements. In certain circumstances, requirements contained in these directives may apply to a
contractor through operation of a contract clause. Program and requirements personnel are responsible for identifying
requirements in the Directives System applicable to a contract, and developing a list of applicable requirements and
providing it to the contracting officer for inclusion in the contract.
(b) Where directives requirements are established using either the Standards/Requirements Identification Process or the
Work Smart Standards Process, the applicable process should also be used to establish the environment, safety, and health
portion of the list identified in paragraph (a) of this section.
[62 FR 34842, Jun. 27, 1997]
970.0470-2 Contract clause.
The contracting officer shall insert the clause at DEAR 970.5204- 78, Laws, regulations, and DOE Directives, in
management and operating contracts.
[62 FR 34842, Jun. 27, 1997]
Subpart 970.08.Required Sources of Supplies and Services
970.0801 Excess personal property.
The provisions of FAR Subpart 8.1, FPMR 41 CFR 101-43, and DOE-PMR 41 CFR 109-43 apply.
Subpart 970.09.Contractor Qualifications
970.0901 Management controls.
(a) As a management and operating contractor, the contractor shall develop and maintain systems of management and
quality control to discourage waste, abuse, and fraud; and to ensure components, products, and services provided DOE
meet's the specifications.
(b) As a part of the required overall management structure, the contractor must maintain management control systems which:
(1) Are documented and satisfactory to DOE;
(2) Ensure that all levels of management are accountable for effective management systems and internal controls within their
areas of assigned responsibility;
(3) Cover both programmatic and administrative functions;
(4) Provide reasonable assurance that Government resources are safeguarded against theft, fraud, waste, and unauthorized use;
(5) Promote efficient and effective operations;
(6) Ensure that all obligations and costs incurred are in compliance with the contract's terms and conditions and intended purposes;
(7) Properly record, manage, and report all revenues, expenditures, transactions and assets;
(8) Maintain financial, statistical and other reports necessary to maintain accurate, reliable, and timely accountability and
management controls;
(9) Are periodically reviewed to ensure they are adequate to provide reasonable assurance that the objectives of the system
are being accomplished and that these controls are working effectively;
(10) Are in accordance with the Comptroller General's standards for internal controls, as set forth in the General Accounting
Office Policy and Procedures Manual For Guidance To Federal Agencies, chapter 3 of title 2 (Oct 1984), as amended.
(c) As a management and operating contractor, the contractor shall also develop and maintain a baseline program of quality
assurance that will implement documented performance and quality standards, and management controls and assessment
techniques to ensure components, services, and products meet DOE's, design agency and other governing and applicable specifications.
[56 FR 65448, Dec. 17, 1991]
970.0902 Determination of responsibility.
(a) In the award of a management and operating contract, the contracting officer shall determine that the prospective contractor is a responsible contractor and is capable of providing all necessary financial, personnel, and other resources in performance of the contract. (b) DOE contracts with entities that have been created solely for the purpose of performing a specific management and operating contract. Such a newly created entity generally will have very limited financial and other resources. In such instances, when making the determination of responsibility required under this section, the contracting officer may evaluate the financial resources of other entities only to the extent that those entities are legally bound, jointly and severally if more than one, by means of a performance guarantee or other equivalent enforceable commitment to supply the necessary resources to the prospective contractor and to assume all contractual obligations of the prospective contractor. A performance guarantee should be the means used unless an equivalent degree of commitment can be obtained by an alternative means. (c) The guaranteeing corporate entity(ies) must be found to have sufficient resources in order to satisfy its guarantee. (d) Contracting officers shall insert the provision at 970.5204-89 in solicitations where the awardee is required to be organized solely for performance of the requirement.
[64 FR 16649, April 6, 1999]
970.0905 Organizational conflicts of interest.
Management and operating contracts shall contain an organizational conflict of interest clause substantially similar to the
clause at 48 CFR 952.209-72 and appropriate to the statement of work of the individual contract. In addition, the
contracting officer shall assure that the clause contains appropriate restraints on intra-corporate relations between the
contractor's organization and personnel operating the Department's facility and its parent corporate body and affiliates,
including personnel access to the facility, technical transfer of information from the facility, and the availability from the
facility of other advantages flowing from performance of the contract. The Contracting Officer is responsible for ensuring
that M&O contractors adopt policies and procedures in the award of subcontracts that will meet the Department's need to
safeguard against a biased work product and an unfair competitive advantage. To this end, the organizational conflicts of
interest clause in the management and operating contract shall include Alternate I.
[49 FR 12063, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984, as amended at 53 FR 24231, June 27, 1988; 62 FR 40748, Jul.
30, 1997]
Subpart 970.10.Specifications, Standards and Other Statement of Work Descriptions
970.1001 Performance-based contracting.
(a) It is the policy of the Department of Energy to use, to the maximum extent practicable, performance-based contracting methods in its management and operating contracts. Office of Federal Procurement Policy Letter 91-2 provides guidance concerning the development and use of performance-based contracting concepts and methodologies that may be generally applied to management and operating contracts. Performance- based contracts: describe performance requirements in terms of results rather than methods of accomplishing the work; use measurable (i.e., terms of quality,
timeliness, quantity) performance standards and objectives and quality assurance surveillance plans; provide performance
incentives (positive or negative) where appropriate; and specify procedures for award or incentive fee reduction when work
activities are not performed or do not meet contract requirements.
(b) The use of performance-based statements of work, where feasible, is the preferred method for establishing work
requirements. Such statements of work and other documents used to establish work requirements (such as work
authorization directives) should describe performance requirements and expectations in terms of outcome, results, or final
work products, as opposed to methods, processes, or design.
(c) Contract performance requirements and expectations should be consistent with the Department's strategic planning goals
and objectives, as made applicable to the site or facility through Departmental programmatic and financial planning
processes. Measurable performance criteria, objective measures, and where appropriate, performance incentives, shall be
structured to correspond to the performance requirements established in the statement of work and other documents used to
establish work requirements.
(d) Quality assurance surveillance plans shall be developed to facilitate the assessment of contractor performance and ensure
the appropriateness of any award or incentive fee payment. Such plans shall be tailored to the contract performance
objectives, criteria, and measures, and shall, to the maximum extent practicable, focus on the level of performance required
by the performance objectives rather than the methodology used by the contractor to achieve that level of performance.
[62 FR 34842, Jun. 27, 1997]
970.1002 Additional considerations.
(a) While it is not feasible to set forth standard language which would apply to every contract situation, language must be
designed for inclusion in a management and operating contract to describe clearly the work being undertaken; the controls,
as appropriate, to be exercised by DOE over the performance of that work; and the relationship contemplated between the parties.
(b) The language shall also include the following with respect to subcontracting performance of the work described pursuant
to (a) of this section: "The contractor shall, when directed by DOE and may, but only when authorized by DOE, enter into
subcontracts for the performance of any part of the work under this clause".
(c) In management and operating contracts when the contractor is expected to perform no Davis-Bacon work with his own
forces, the special clause in 970.5204-38 shall be included in the language.
(d) The provisions required above shall be set forth in a Statement of work clause to be included in the contract.
[62 FR 34842, Jun. 27, 1997]
Subpart 970.15.Contracting by Negotiation
970.15404-4 Fees for management and operating contracts. This subsection sets forth the Department's policies on fees for management and operating contracts and may be applied to other contracts as determined by the Procurement Executive, or designee. 970.15404-4-1 Fee policy. (a) DOE management and operating contractors may be paid a fee in accordance with the requirements of this subsection. (b) There are three basic principles underlying the Department's fee policy: (1) The amount of available fee should reflect the financial risk assumed by the contractor. (2) It is the policy of the Department, when work elements cannot be fixed price, incentive fees (including award fees) tied to objective measures should be used to the maximum extent appropriate. (3) When work elements cannot be fixed price and award fees are employed, they should be tied to either objective or subjective measures. Each measure should, to the maximum extent appropriate, be directly tied to a specific portion of the fee pool. (c) Fee objectives and amounts are to be determined for each contract. Standard fees or across-the-board fee agreements will not be used or made. Due to the nature of funding management and operating contracts, it is anticipated that fee shall be established in accordance with the annual funding cycle; however, with the prior approval of the Procurement Executive, or designee, a longer period may be used where necessary to incentivize performance objectives that span funding cycles or to optimize cost reduction efforts. (d) Annual fee amounts shall be established in accordance with this subsection. Annual amounts shall not exceed maximum amounts derived from the appropriate fee schedule (and Classification Factor, if applicable) unless approved in advance by the Procurement Executive, or designee. In no event shall any fee exceed statutory limits imposed by 41 U.S.C. 254(b). (e)(1) Contracting Officers shall include negative fee incentives in contracts when appropriate. A negative fee incentive is one in which the contractor will not be paid the full target fee amount when the actual performance level falls below the target level established in the contract. (2) Negative fee incentives may only be used when: (i) A target level of performance can be established, which the contractor can reasonably be expected to reach; (ii) The value of the negative incentive is commensurate with the lower level of performance and any additional administrative costs; (iii) Factors likely to prevent attainment of the target level of performance are clearly within the control of the contractor; and (iv) The contract indicates clearly a level below which performance is not acceptable. (f) Prior to the issuance of a competitive solicitation or the initiation of negotiations for an extension of an existing contract, the HCA shall coordinate the maximum available fee, as allowed by 48 CFR 970.15404-4, and the fee amount targeted for negotiation, if less, with the Procurement Executive, or designee. Solicitations shall identify maximum available fee under the contract and may invite offerors to propose fee less than the maximum available. (g) When a contract subject to this subsection requires a contractor to use its own facilities or equipment, or other resources to make its own cost investment for contract performance, (e.g., when there is no letter-of-credit financing) consideration may be given, subject to approval by the Procurement Executive, or designee, to increasing the total available fee amount above that otherwise provided by this subsection. (h) Multiple fee arrangements should be used in accordance with 48 CFR 970.15404-4-3. 970.15404-4-2 Special considerations: laboratory management and operation. (a) For the management and operation of a laboratory, the contracting officer shall consider whether any fee is appropriate. Considerations should include: (1) The nature and extent of financial or other liability or risk assumed or to be assumed under the contract; (2) The proportion of retained earnings (as established under generally accepted accounting methods) that are utilized to fund the performance of work related to the DOE contracted effort; (3) Facilities capital or capital equipment acquisition plans; (4) Other funding needs, to include contingency funding, working capital funding, and provision for funding unreimbursed costs deemed ordinary and necessary; (5) The utility of fee as a performance incentive; and (6) The need for fee to attract qualified contractors, organizations, and institutions. (b) In the event fee is considered appropriate, the contracting officer shall determine the amount of fee in accordance with this subsection. (1) Costs incurred in the operation of a laboratory that are allowable and allocable under the cost principles (i.e., commercial using FAR 31.2, nonprofit using OMB Circular A-122, or university- affiliated using OMB Circular A-21), regulations, or statutes applicable to the operating contractor should be classified as direct or indirect (overhead or G&A) charges to the contract and not included as proposed fee. Exceptions must be approved by the Procurement Executive, or designee. (2) Except as specified in 48 CFR 970.15404-4-2(c)(3), the maximum total amount of fee shall be calculated in accordance with 48 CFR 970.15404-4-4 or 48 CFR 970.15404-4-8, as appropriate. The total amount of fee under any laboratory management and operating contract or other designated contract shall not exceed, and may be significantly less than, the result of that calculation. In determining the total amount of fee, the contracting officer shall consider the evaluation of the factors in paragraph (a) of this subsection as well as any benefits the laboratory operator will receive due to its tax status. (c) In the event fee is considered appropriate, the contracting officer shall establish the type of fee arrangement in accordance with this subsection. (1) The amount of fee may be established as total available fee with a base fee portion and a performance fee portion. Base fee, if any, shall be an amount in recognition of the risk of financial liability assumed by the contractor and shall not exceed the cost risk associated with those liabilities or the amount calculated in accordance with 48 CFR 970.15404-4-4, whichever is less. The total available fee, excepting any base fee, shall normally be associated with performance at or above the target level of performance as defined by the contract. If performance in either of the two general work categories appropriate for laboratories (science/technology and support) is rated at less than the target level of performance, the total amount of the available fee shall be subject to downward adjustment. Such downward adjustment shall be subject to the terms of 48 CFR 970.5204-86, ``Conditional Payment of Fee, Profit, or Incentives,'' clause, if contained in the contract. (2) The amount of fee may be established as a fixed fee in recognition of the risk of financial liability to be assumed by the contractor, with such fixed fee amount not exceeding the cost risk associated with the liabilities assumed or the amount of fee calculated in accordance with 48 CFR 970.15404-4-4, whichever is less. (3) If the fixed fee or total available fee exceeds 75% of the fee that would be calculated per 48 CFR 970.15404-4-4 or 48 CFR 970.15404- 4-8; or if a fee arrangement other than one of those set forth in paragraphs (c) (1) or (2) of this subsection is considered appropriate, the approval of the Procurement Executive, or designee, shall be obtained prior to its use. (4) Fee, if any, as well as the type of fee arrangement, will normally be established for the life of the contract. It will be established at time of award, as part of the extend/compete decision, at the time of option exercise, or at such other time as the parties can mutually reach agreement, e.g., negotiations. Such agreement shall require the approval of the Procurement Executive, or designee. (5) Fee established for longer than one year shall be subject to adjustment in the event of a significant change (greater than +/-10% or a lessor amount if appropriate) to the budget or work scope. (6) Retained earnings (reserves) shall be identified and a plan for their use and disposition developed. (7) The use of retained earnings as a result of performance of laboratory management and operation may be restricted if the operator is an educational institution. 970.15404-4-3 Types of contracts and fee arrangements. (a) Contract types and fee arrangements suitable for management and operating contracts may include cost, cost-plus-fixed-fee, cost-plus- award-fee, cost-plus-incentive-fee, fixed-price incentive, firm-fixed- price or any combination thereof. See FAR 16.1. In accordance with 48 CFR 970.15404-4-1(b)(1), the fee arrangement chosen for each work element should reflect the financial risk for project failure that contractors are willing to accept. Contracting officials shall structure each contract and the elements of the work in such a manner that the risk is manageable and, therefore, assumable by the contractor. (b) Consistent with the concept of a performance-based management contract, those contract types which incentivize performance and cost control are preferred over a cost-plus-fixed-fee arrangement. Accordingly, a cost-plus-fixed-fee contract in instances other than those set forth in 48 CFR 970.15404-4-2(c)(2) may only be used when approved in advance by the Procurement Executive, or designee. (c) A cost-plus-award-fee contract is generally the appropriate contract type for a management and operating contract. (1) Where work cannot be adequately defined to the point that a fixed price contract is acceptable, the attainment of acquisition objectives generally will be enhanced by using a cost-plus-award-fee contract or other incentive fee arrangement to effectively motivate the contractor to superior performance and to provide the Department with flexibility to evaluate actual performance and the conditions under which it was achieved. (2) The construct of fee for a cost-plus-award-fee management and operating contract is that total available fee will equal a base fee amount and a performance fee amount. The total available fee amount including the performance fee amount the contractor may earn, in whole or in part during performance, shall be established annually (or as otherwise agreed to by the parties and approved by the Procurement Executive, or designee), in an amount sufficient to motivate performance excellence. (3) However, consistent with concepts of performance-based contracting, it is Departmental policy to place fee at risk based on performance. Accordingly, a base fee amount will be available only when approved in advance by the Procurement Executive, or designee, except as permitted in 48 CFR 970.15404-4-2(c)(1). Any base fee amount shall be fixed, expressed as a percent of the total available fee at inception of the contract, and shall not exceed that percent during the life of the contract. (4) The performance fee amount may consist of an objective fee component and a subjective fee component. Objective performance measures, when appropriately applied, provide greater incentives for superior performance than do subjective performance measures and should be used to the maximum extent appropriate. Subjective measures should be used when it is not feasible to devise effective predetermined objective measures applicable to cost, technical performance, or schedule for particular work elements. (d) Consistent with performance-based contracting concepts, performance objectives and measures related to performance fee should be as clearly defined as possible and, where feasible, expressed in terms of desired performance results or outcomes. Specific measures for determining performance achievement should be used. The contract should identify the amount and allocation of fee to each performance result or outcome. (e) Because the nature and complexity of the work performed under a management and operating contract may be varied, opportunities may exist to utilize multiple contract types and fee arrangements. Consistent with paragraph (a) of this subsection and FAR 16.1, the contracting officer should apply that contract type or fee arrangement most appropriate to the work component. However, multiple contract types or fee arrangements: (1) Must conform to the requirements of DEAR Part 915 and FAR Parts 15 and 16, and (2) Where appropriate to the type, must be supported by (i) Negotiated costs subject to the requirements of the Truth in Negotiations Act, (ii) A pre-negotiation memorandum, and (iii) A plan describing how each contract type or fee arrangement will be administered. (f) Cost reduction incentives are addressed in 48 CFR 970.5204-87, ``Cost Reduction.'' This clause provides for incentives for quantifiable cost reductions associated with contractor proposed changes to a design, process, or method that has an established cost, technical, and schedule baseline, is defined, and is subject to a formal control procedure. The clause is to be included in management and operating contracts as appropriate. Proposed changes must be: initiated by the contractor, innovative, applied to a specific project or program, and not otherwise included in an incentive under the contract. Such cost reduction incentives do not constitute fee and are not subject to statutory or regulatory fee limitations; however, they are subject to all appropriate requirements set forth in this regulation. (g) Operations and field offices shall take the lead in developing and implementing the most appropriate pricing arrangement or cost reduction incentive for the requirements. Pricing arrangements which provide incentives for performance and cost control are preferred over those that do not. The operations and field offices are to ensure that the necessary resources and infrastructure exist within both the contractor's and government's organizations to prepare, evaluate, and administer the pricing arrangement or cost reduction incentive prior to its implementation. 970.15404-4-4 General considerations and techniques for determining fixed fees. (a) The Department's fee policy recognizes that fee is remuneration to contractors for the entrepreneurial function of organizing and managing resources, the use of their resources (including capital resources), and, as appropriate, their assumption of the risk that some incurred costs (operating and capital) may not be reimbursed. (b) Use of a purely cost-based structured approach for determining fee objectives and amounts for DOE management and operating contracts is inappropriate considering the limited level of contractor cost, capital goods, and operating capital outlays for performance of such contracts. Instead of being solely cost-based, the desirable approach calls for a structure that allows evaluation of the following eight significant factors, as outlined in order of importance, and the assignment of appropriate fee values (subject to the limitations on fixed fee in 48 CFR 970.15404-4-5): (1) The presence or absence of financial risk, including the type and terms of the contract; (2) The relative difficulty of work, including specific performance objectives, environment, safety and health concerns, and the technical and administrative knowledge, and skill necessary for work accomplishment and experience; (3) Management risk relating to performance, including: (i) Composite risk and complexity of principal work tasks required to do the job; (ii) Labor intensity of the job; (iii) Special control problems; and (iv) Advance planning, forecasting and other such requirements; (4) Degree and amount of contract work required to be performed by and with the contractor's own resources, as compared to the nature and degree of subcontracting and the relative complexity of subcontracted efforts, subcontractor management and integration; (5) Size and operation (number of locations, plants, differing operations, etc.); (6) Influence of alternative investment opportunities available to the contractor (i.e., the extent to which undertaking a task for the Government displaces a contractor's opportunity to make a profit with the same staff and equipment in some other field of activity); (7) Benefits which may accrue to the contractor from gaining experience and knowledge of how to do something, from establishing or enhancing a reputation, or from having the opportunity to hold or expand a staff whose loyalties are primarily to the contractor; and (8) Other special considerations, including support of Government programs such as those relating to small and minority business subcontracting, energy conservation, etc. (c) The total fee objective for a particular annual fixed fee negotiation is established by evaluating the above factors, assigning fee values to them, and totaling the resulting amounts (subject to limitations on total fixed fee in 48 CFR 970.15404-4-5). 970.15404-4-5 Calculating fixed fee. (a) In recognition of the complexities of the fee determination process, and to assist in promoting a reasonable degree of consistency and uniformity in its application, the following fee schedules set forth the maximum amounts of fee that contracting activities are allowed to award for a particular fixed fee transaction calculated annually. (b) Fee schedules representing the maximum allowable annual fixed fee available under management and operating contracts have been established for the following management and operating contract efforts: (1) Production; (2) Research and Development; and (3) Environmental Management. (c) The schedules are: Production Efforts ------------------------------------------------------------------------ Fee Incr. Fee base (dollars) Fee (per (per (dollars) cent) cent) ------------------------------------------------------------------------ Up to $1 Million......................... ........... ....... 7.66 1,000,000................................ 76,580 7.66 6.78 3,000,000................................ 212,236 7.07 6.07 5,000,000................................ 333,670 6.67 4.90 10,000,000............................... 578,726 5.79 4.24 15,000,000............................... 790,962 5.27 3.71 25,000,000............................... 1,161,828 4.65 3.35 40,000,000............................... 1,663,974 4.16 2.92 60,000,000............................... 2,247,076 3.75 2.57 80,000,000............................... 2,761,256 3.45 2.34 100,000,000.............................. 3,229,488 3.23 1.45 150,000,000.............................. 3,952,622 2.64 1.12 200,000,000.............................. 4,510,562 2.26 0.61 300,000,000.............................. 5,117,732 1.71 0.53 400,000,000.............................. 5,647,228 1.41 0.45 500,000,000.............................. 6,097,956 1.22 ....... Over $500 Million........................ 6,097,956 ....... 0.45 ------------------------------------------------------------------------ Research and Development Efforts ------------------------------------------------------------------------ Fee Incr. Fee base (dollars) Fee (per (per (dollars) cent) cent) ------------------------------------------------------------------------ Up to $1 Million......................... ........... ....... 8.42 1,000,000................................ 84,238 8.42 7.00 3,000,000................................ 224,270 7.48 6.84 5,000,000................................ 361,020 7.22 6.21 10,000,000............................... 671,716 6.72 5.71 15,000,000............................... 957,250 6.38 4.85 25,000,000............................... 1,441,892 5.77 4.22 40,000,000............................... 2,075,318 5.19 3.69 60,000,000............................... 2,813,768 4.69 3.27 80,000,000............................... 3,467,980 4.33 2.69 100,000,000.............................. 4,006,228 4.01 1.69 150,000,000.............................. 4,850,796 3.23 1.14 200,000,000.............................. 5,420,770 2.71 0.66 300,000,000.............................. 6,083,734 2.03 0.58 400,000,000.............................. 6,667,930 1.67 0.50 500,000,000.............................. 7,172,264 1.43 ....... Over $500 Million........................ 7,172,264 ....... 0.50 ------------------------------------------------------------------------ Environmental Management Efforts ------------------------------------------------------------------------ Fee Incr. Fee base (dollars) Fee (per (per (dollars) cent) cent) ------------------------------------------------------------------------ Up to $1 Million......................... ........... ....... 7.33 1,000,000................................ 73,298 7.33 6.49 3,000,000................................ 203,120 6.77 5.95 5,000,000................................ 322,118 6.44 5.40 10,000,000............................... 592,348 5.92 4.83 15,000,000............................... 833,654 5.56 4.03 25,000,000............................... 1,236,340 4.95 3.44 40,000,000............................... 1,752,960 4.38 3.29 60,000,000............................... 2,411,890 4.02 3.10 80,000,000............................... 3,032,844 3.79 2.49 100,000,000.............................. 3,530,679 3.53 1.90 150,000,000.............................. 4,479,366 2.99 1.48 200,000,000.............................. 5,219,924 2.61 1.12 300,000,000.............................. 6,337,250 2.11 0.88 400,000,000.............................. 7,219,046 1.80 0.75 500,000,000.............................. 7,972,396 1.59 0.58 750,000,000.............................. 9,423,463 1.26 0.55 1,000,000,000............................ 10,786,788 1.08 ....... Over 1.0 Billion......................... 10,786,788 ....... 0.55 ------------------------------------------------------------------------ 970.15404-4-6 Fee base. (a) The fee base is an estimate of necessary allowable costs, with some exclusions. It is used in the fee schedules to determine the maximum annual fee for a fixed fee contract. That portion of the fee base that represents the cost of the Production, Research and Development, or Environmental Management work to be performed, shall be exclusive of the cost of source and special nuclear materials; estimated costs of land, buildings and facilities whether to be leased, purchased or constructed; depreciation of Government facilities; and any estimate of effort for which a separate fee is to be negotiated. (b) Such portion of the fee base, in addition to the adjustments in paragraph (a) of this subsection, shall exclude: (1) Any part of the estimated cost of capital equipment (other than special equipment) which the contractor procures by subcontract or other similar costs which is of such magnitude or nature as to distort the technical and management effort actually required of the contractor; (2) At least 20% of the estimated cost or price of subcontracts and other major contractor procurements; (3) Up to 100% of the estimated cost or price of subcontracts and other major contractor procurements if they are of a magnitude or nature as to distort the technical and management effort actually required of the contractor; (4) Special equipment as defined in 48 CFR 970.15404-4-7; (5) Estimated cost of Government-furnished property, services and equipment; (6) All estimates of costs not directly incurred by or reimbursed to the operating contractor; (7) Estimates of home office or corporate general and administrative expenses that shall be reimbursed through the contract; (8) Estimates of any independent research and development cost or bid and proposal expenses that may be approved under the contract; (9) Any cost of work funded with uncosted balances previously included in a fee base of this or any other contract performed by the contractor; (10) Cost of rework attributable to the contractor; and (11) State taxes. (c) In calculating the annual fee amounts associated with the Production, Research and Development, or Environmental Management work to be performed, the fee base is to be allocated to the category reflecting the work to be performed and the appropriate fee schedule utilized. (d) The portion of the fee base associated with the Production, Research and Development, or Environmental Management work to be performed and the associated schedules in this part are not intended to reflect the portion of the fee base or related compensation for unusual architect-engineer, construction services, or special equipment provided by the management and operating contractor. Architect-engineer and construction services are normally covered by special agreements based on the policies applying to architect-engineer or construction contracts. Fees paid for such services shall be calculated using the provisions of 48 CFR 915.404-4 relating to architect-engineer or construction fees and shall be in addition to the operating fees calculated for the Production, Research and Development, or Environmental Management work to be performed. Special equipment purchases shall be addressed in accordance with the provisions of 48 CFR 970.15404-4-7 relating to special equipment. (e) No schedule set forth in 48 CFR 915.404-4-71-5 or 48 CFR 970.15404-4-5 shall be used more than once in the determination of the fee amount for an annual period, unless prior approval of the Procurement Executive, or designee, is obtained. 970.15404-4-7 Special equipment purchases. (a) Special equipment is sometimes procured in conjunction with management and operating contracts. When a contractor procures special equipment, the DOE negotiating official shall determine separate fees for the equipment which shall not exceed the maximum fee allowable as established using the schedule in 48 CFR 915.404-4-71-5(h). (b) In determining appropriate fees, factors such as complexity of equipment, ratio of procurement transactions to volume of equipment to be purchased and completeness of services should be considered. Where possible, the reasonableness of the fees should be checked by their relationship to actual costs of comparable procurement services. (c) For purposes of this subsection, special equipment is equipment for which the purchase price is of such a magnitude compared to the cost of installation as to distort the amount of technical direction and management effort required of the contractor. Special equipment is of a nature that requires less management attention. When a contractor procures special equipment, the DOE negotiating official shall determine separate fees for the equipment using the schedule in 48 CFR 915.404-4-71-5(h). The determination of specific items of equipment in this category requires application of judgment and careful study of the circumstances involved in each project. This category of equipment would generally include: (1) Major items of prefabricated process or research equipment; and (2) Major items of preassembled equipment such as packaged boilers, generators, machine tools, and large electrical equipment. In some cases, it would also include special apparatus or devices such as reactor vessels and reactor charging machines. 970.15404-4-8 Special considerations: cost-plus-award-fee. (a) When a management and operating contract is to be awarded on a cost-plus-award-fee basis, several special considerations are appropriate. (b) All annual performance incentives identified under these contracts are funded from the annual total available fee, which consists of a base fee amount (which may be zero) and a performance fee amount (which typically will consist of an incentive fee component for objective performance requirements, an award fee component for subjective performance requirements, or both). (c) The annual total available fee for the contract shall equal the product of the fee(s) that would have been calculated for an annual fixed fee contract and the classification factor(s) most appropriate for the facility/task. If more than one fee schedule is applicable to the contract, the annual total available fee shall be the sum of the available fees derived proportionately from each fee schedule; consideration of significant factors applicable to each fee schedule; and application of a Classification Factor(s) most appropriate for the work. (d) Classification Factors applied to each Facility/Task Category are: ------------------------------------------------------------------------ Classification Facility/task category factor ------------------------------------------------------------------------ A....................................................... 3.0 B....................................................... 2.5 C....................................................... 2.0 D....................................................... 1.25 ------------------------------------------------------------------------ (e) The contracting officer shall select the Facility/Task Category after considering the following: (1) Facility/Task Category A. The main focus of effort performed is related to: (i) The manufacture, assembly, retrieval, disassembly, or disposal of nuclear weapons with explosive potential; (ii) The physical cleanup, processing, handling, or storage of nuclear radioactive or toxic chemicals with consideration given to the degree the nature of the work advances state of the art technologies in cleanup, processing or storage operations and/or the inherent difficulty or risk of the work is significantly demanding when compared to similar industrial/DOE settings (i.e., nuclear energy processing, industrial environmental cleanup); (iii) Construction of facilities such as nuclear reactors, atomic particle accelerators, or complex laboratories or industrial units especially designed for handling radioactive materials; (iv) Research and development directly supporting paragraphs (e)(1)(i), (ii), or (iii) of this subsection and not conducted in a laboratory, or (v) As designated by the Procurement Executive, or designee. (Classification factor 3.0) (2) Facility/Task Category B. The main focus of effort performed is related to: (i) The safeguarding and maintenance of nuclear weapons or nuclear material; (ii) The manufacture or assembly of nuclear components; (iii) The physical cleanup, processing, handling, or storage of nuclear radioactive or toxic chemicals, or other substances which pose a significant threat to the environment or the health and safety of workers or the public, if the nature of the work uses state of the art technologies or applications in such operations and/or the inherent difficulty or risk of the work is more demanding than that found in similar industrial/DOE settings (i.e., nuclear energy, chemical or petroleum processing, industrial environmental cleanup); (iv) The detailed planning necessary for the assembly/disassembly of nuclear weapons/components; (v) Construction of facilities involving operations requiring a high degree of design layout or process control; (vi) Research and development directly supporting paragraphs (e)(2)(i), (ii), (iii), (iv) or (v) of this subsection and not conducted in a laboratory; or (vii) As designated by the Procurement Executive, or designee. (Classification factor 2.5) (3) Facility/Task Category C. The main focus of effort performed is related to: (i) The physical cleanup, processing, or storage of nuclear radioactive or toxic chemicals if the nature of the work uses routine technologies in cleanup, processing or storage operations and/or the inherent difficulty or risk of the work is similar to that found in similar industrial/DOE settings (i.e., nuclear energy, chemical processing, industrial environmental cleanup); (ii) Plant and facility maintenance; (iii) Plant and facility security (other than the safeguarding of nuclear weapons and material); (iv) Construction of facilities involving operations requiring normal processes and operations; general or administrative service buildings; or routine infrastructure requirements; (v) Research and development directly supporting paragraphs (e)(3)(i), (ii), (iii) or (iv) of this subsection and not conducted in a laboratory; or (vi) As designated by the Procurement Executive, or designee. (Classification factor 2.0) (4) Facility/Task Category D. The main focus of the effort performed is research and development conducted at a laboratory. (Classification factor 1.25) (f) Where the Procurement Executive, or designee, has approved a base fee, the Classification Factors shall be reduced, as approved by the Procurement Executive, or designee. (g) Any risks which are indemnified by the Government (for example, by the Price-Anderson Act) will not be considered as risk to the contractor. (h) All management and operating contracts awarded on a cost-plus- award-fee basis shall set forth in the contract, or the Performance Evaluation and Measurement Plan(s) required by the contract clause at 48 CFR 970.5204-54, a site specific method of rating the contractor's performance of the contract requirements and a method of fee determination tied to the method of rating. (i) Prior approval of the Procurement Executive, or designee, is required for an annual total available fee amount exceeding the guidelines in paragraph (c) of this subsection. (j) DOE Operations/Field Office Managers must ensure that all important areas of contract performance are specified in the contract or Performance Evaluation and Measurement Plan(s), even if such areas are not assigned specific weights or percentages of available fee. 970.15404-4-9 Special considerations: fee limitations. In situations where the objective performance incentives are of unusual difficulty or where the successful completion of the performance incentives would provide extraordinary value to the Government, fees in excess of those allowed under 48 CFR 970.15404-4-4 and 48 CFR 970.15404-4-8 may be allowed with the approval of the Procurement Executive, or designee. Requests to allow fees in excess of those provided under other provisions of this fee policy must be accompanied by a written justification with detailed supporting rationale as to how the specific circumstances satisfy the two criteria listed in this Subsection. 970.15404-4-10 Documentation. The contracting officer shall tailor the documentation of the determination of fee prenegotiation objective based on FAR 15.406-1, Prenegotiation objectives, and the determination of the negotiated fee in accordance with FAR 15.406-3, Documenting the negotiation. The contracting officer shall include as part of the documentation: the rationale for the allocation of cost and the assignment of Facility/ Task Categories; a discussion of the calculations described in 48 CFR 970.15404-4-4; and discussion of any other relevant provision of this Subsection. 970.15404-4-11 Solicitation provision and contract clauses. (a) The contracting officer shall insert the clause at 48 CFR 970.5204-54, ``Total Available Fee: Base Fee Amount and Performance Fee Amount,'' in management and operating contracts, and other contracts determined by the Procurement Executive, or designee, that include cost-plus-award-fee arrangements. (b) The contracting officer shall insert the clause at 48 CFR 970.5204-86, ``Conditional Payment of Fee, Profit, or Incentives,'' in management and operating contracts, and other contracts determined by the Procurement Executive, or designee. Further, due to the various types of fee and incentive arrangements which may be included in a contract and the need to ensure the overall balanced performance of the contract, Alternate I shall be included in such contracts awarded on a cost-plus-award-fee, multiple fee, or incentive fee basis. (c) The contracting officer shall insert the clause at 48 CFR 970.5204-87, ``Cost Reduction,'' in management and operating contracts, and other contracts determined by the Procurement Executive, or designee, if cost savings programs are contemplated. (d) The Contracting Officer shall insert the provision at 48 CFR 970.5204-88, ``Limitation on Fee,'' in solicitations for management and operating contracts, and other contracts determined by the Procurement Executive, or designee. [64 FR 12219, March 11, 1999] 970.15407-2 Make-or-buy plans. 970.15407-2-1 Policy. (a) Contracting officers shall require management and operating contractors to develop and implement make-or-buy plans that establish a preference for providing supplies or services (including construction and construction management) on a least-cost basis, subject to program specific make-or-buy criteria. The emphasis of this make-or-buy structure is to eliminate bias for in-house performance where an activity may be performed at less cost or otherwise more efficiently through subcontracting. (b) A work activity, supply or service is provided at ``least cost'' when, after consideration of a variety of appropriate programmatic, business, and financial factors, it is concluded that performance by either ``in-house'' resources or by contracting out is likely to provide the property or service at the lowest overall cost. Programmatic factors include, but are not limited to, program specific make-or-buy criteria established by the Department of Energy, the impact of a ``make'' or a ``buy'' decision on mission accomplishment, and anticipated changes to the mission of the facility or site. Business factors pertain to such elements as market conditions, past experience in obtaining similar supplies or services, and overall operational efficiencies that might be available through either in- house performance or contracting out. Among the financial factors that may be considered to determine a least-cost alternative in a make-or- buy analysis are both recurring and one-time costs attributable to either retaining or contracting out a particular item, financial risk, and the anticipated contract price. (c) In developing and implementing its make-or-buy plan, a contractor shall be required to assess subcontracting opportunities and implement subcontracting decisions in accordance with the following: (1) The contractor shall conduct internal productivity improvement and cost-reduction programs so that in-house performance options can be made more efficient and cost-effective. (2) The contractor shall consider subcontracting opportunities with the maximum practicable regard for open communications with potentially affected employees and their representatives. Similarly, a contractor will communicate its plans, activities, cost-benefit analyses, and decisions with those stakeholders likely to be affected by such decisions, including representatives of the community and local businesses. 970.15407-2-2 Requirements. (a) Development of program-specific make-or-buy criteria. DOE program offices responsible for the work conducted at the facility or site shall develop program specific make-or-buy criteria. Program specific make-or-buy criteria are those factors that reflect specific mission or program objectives (including operational efficiency, contractor diversity, environment, safety and health, work force displacement and restructuring, and collective bargaining agreements) and that, upon their application to a specific work effort, would override a decision based on a purely economic rationale. These criteria are to be used to assess each work effort identified in a facility's or site's make-or-buy plan to determine the appropriateness of a contractor's make-or-buy decisions. Program specific make-or-buy criteria shall be provided to the contractor for use in developing a make-or-buy plan for the facility, site, or specific program, as appropriate. (b) Make-or-buy plan property and services. Supplies or services estimated to cost less than one (1) percent of the estimated total operating cost for a year or $1 million for the same year, whichever is less, need not be included in the contractor's make-or-buy plan. However, adjustments may be made to these thresholds where programmatic or cost considerations would indicate that a particular supply or service should be included in the make-or-buy plan. (c) Competitive solicitation requirements. (1) To the extent practicable, a competitive solicitation for the management and operation of a Department of Energy facility or site should: (i) Identify those programs, projects, work areas, functions or services that the Department intends for the successful offeror to include in any make-or-buy plan; and (ii) Require the submission of a preliminary make-or-buy plan for the period of performance of the contract from each offeror as part of its proposal submitted in response to the competitive solicitation. (2) If the requirement for each offeror to submit a preliminary make-or-buy plan as part of its proposal is impractical or otherwise incompatible with the acquisition strategy, consideration should be given to structuring the evaluation criteria for the competitive solicitation in such a manner as to permit the evaluation of an offeror's approach to conducting its make-or-buy program within the context of the contractual requirements. (3) The successful offeror's preliminary make-or-buy plan shall be submitted for final approval within 180 days after contract award, consistent with the requirements of 48 CFR 970.5204-76(c), Make-or-buy Plan. (d) Evaluation of the contractor's make-or-buy plan. In evaluating the contractor's make-or-buy plan, the contracting officer shall consider the following factors: (1) The program specific make-or-buy criteria (such as operational efficiency, contractor diversity, environment, safety and health, work force displacement and restructuring, and collective bargaining agreements) with particular attention to the effect of a ``buy'' decision on the contractor's ability to maintain core competencies needed to accomplish mission-related program and projects; (2) The impact of a ``make'' or ``buy'' decision on contract cost, schedule, and performance and financial risk; (3) The potential impact of a ``make'' or ``buy'' decision on known future mission or program activities at the facility or site; (4) Past experience at the facility or site regarding ``make-or- buy'' decisions for the same, or similar, supplies or services; (5) Consistency with the contractor's approved subcontracting plan, as required by the clause entitled ``Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan'' (FAR 52.219-9), of the contract and implementation of Section 3021 of the Energy Policy Act of 1992. (6) Local market conditions, including contractor work force displacement and the availability of firms that can meet the work requirements with regard to quality, quantity, cost, and timeliness; (7) Where the construction of new or additional facilities is required, that the cost of such facilities is in the Government's best interest when compared to subcontracting or privatization alternatives; and (8) Whether all relevant requirements and costs of performing the work by the contractor and through subcontracting are considered and any different requirements for the same work are reconciled. (e) Approval. The contracting officer shall approve all plans and revisions thereto. Once approved, a make-or-buy plan shall remain effective for the term of the contract (up to a period of five years), unless circumstances warrant a change. (f) Administration. The contractor's performance against the approved make-or-buy plan shall be monitored to ensure that: (1) The contractor is complying with the plan; (2) Items identified for deferral decisions are addressed in a timely manner; and (3) The contractor periodically updates the make-or-buy plan based on changed circumstances or significant new work. 970.15407-2-3 Contract clause. The contracting officer shall insert the clause at 48 CFR (DEAR) 970.5204-76, Make-or-Buy Plan, in management and operating contracts.
[62 FR 34842, Jun. 27, 1997]
Subpart 970.17. Special Contracting Methods
970.1702-1 Term of contract and option to extend.
(a) Contract term. Effective work performance under a management and operating
contract is facilitated by the use of a relatively long contract term of up to ten
(10) years. Accordingly, management and operating contracts shall provide for a
basic contract term not to exceed five (5) years and may include an option(s) to
extend the term for additional periods; provided, that no one option period
exceeds five (5) years in duration and the total term of the contract, including
any options exercised, does not exceed ten (10) years. The specific term of the
base period and of any options periods shall be determined at the time of the
authorization to compete or extend the contract. The term "option" as used herein
means a unilateral right in the contract by which the Government can extend the
term of the contract. Accordingly, except as may be provided for through the
inclusion of an option(s) in the contract to extend the term, any extension to
continue the contract with the incumbent contractor beyond its term shall only
occur when such extension can be justified under one of the statutory authorities
identified in FAR 6.302 and when authorized by the Head of the Agency.
(b) Exercise of option. As part of the review required by FAR 17.605(b), the
contracting officer shall assess whether competing the contract will produce a
more advantageous offer than exercising the option. The incumbent contractor's
past performance under the contract, the extent to which performance-based
management contract provisions are present, or can be negotiated into, the
contract, and the impact of a change in a contractor on the Department's discharge
of its programs are considerations that shall be addressed in the contracting
officer's decision that the exercise of the option is in the Government's best
interest. The contracting officer's decision shall be approved by the Procurement
Executive and the cognizant Assistant Secretary(s).
970.1702-2 Solicitation provision and contract clause.
(a) The contracting officer shall insert a provision substantially the same as the
provision at 48 CFR (DEAR) 970.5204-73, Notice Regarding Options, in solicitations
when the inclusion of an option to extend the term of the contract has been authorized.
(b) The contracting officer shall insert the clause at 48 CFR (DEAR) 970.5204-74,
Option to extend the term of the contract, when the inclusion of an option to
extend the term of the contract has been authorized.
[Interim rule 61 FR 32584, Jun. 24, 1996;
final rule 62 FR 34872, Jun. 27, 1997]
Subpart 970.19.Small, Small Disadvantaged and Women-Owned Small Business Concerns
[61 FR 21975, May 13, 1996]
970.1901 General.
(a) The clause at FAR 52.219-9 shall be included in management and operating contracts.
(b) Management and operating contracts shall include a subcontracting plan which
is effective for the term of the contract. Goals for the contract shall be
negotiated annually when revised funding levels are determined. The plan should
include provisions for revising the goals or any other sections of the plan. Such
revisions shall be in writing, approved by the contracting officer, and shall be
specifically made a material part of the contract.
[49 FR 12063, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984, as amended at 52 FR 38426,
Oct. 16, 1987; 53 FR 24231, June 27, 1988]
Subpart 970.20 [Reserved]
Subpart 970.22.Application of Labor Policies
970.2201 Basic labor policies.
(a) Contracting officers shall in appropriate circumstances, follow the guidance
in FAR Subpart 22.1 except as provided below in award and administration of
management and operating contracts.
(b) The extent of Government ownership of the nation's energy plant and materials,
and the overriding concerns of national defense and security, impose special
conditions on personnel and labor relations in the energy program, namely,
continuity of vital operations at DOE installations must be assured; DOE must
retain absolute authority on all questions of security; DOE reviews labor expenses
under management and operating contracts as a part of its responsibility for
assuring judicious expenditure of public funds. It is the intent of DOE, that
personnel and labor policies throughout the energy program should reflect the best
experience of American industry in aiming to achieve the type of stable
labor-management relations essential to the proper development of the energy
program. The following enunciates the principles upon which the DOE policy is based:
(1) Employment standards. (i) Management and operating contractors are expected to
bring experienced, proven personnel from their private operations to staff key
positions on the contract work and to recruit other well-qualified personnel as
needed. Such personnel should be employed and treated during employment without
discrimination by reason of race, color, religion, sex, or national origin.
Contractors shall be required to take affirmative action to achieve these objectives.
(ii) The job qualifications and suitability of prospective employees should be
established by the contractor prior to employment by careful personnel
investigations. Such personnel investigations should include, as appropriate: a
credit check; verification of high school degree/diploma or degree/diploma granted
by an institution of higher learning within the last 5 years; contacts with listed
personal references; contacts with listed employers for the past 3 years
(excluding employment of less than 60 days duration, part-time employments, and
craft/union employments); and local law enforcement checks when such checks are
not prohibited by State or local law, statute, or regulation, and when the
individual had resided in the jurisdiction where the contractor is located. When a
DOE access authorization (security clearance) will be required, the aforementioned
preemployment checks must be conducted and the applicant's job qualifications and
suitability must be established before a request is made to the DOE to process the
applicant for access authorization. Evidence must be furnished to the DOE with the
applicant's security forms that specifies: the date each check was conducted, the
entity contacted that provided information concerning the applicant, a synopsis of
the information provided as a result of each contact, and a statement that all
information available has been reviewed and favorably adjudicated in accordance
with the contractor's personnel policies. When an applicant is being hired
specifically for a position which requires a DOE access authorization, the
applicant shall not be placed in that position prior to the access authorization
being granted by the DOE unless an exception has been obtained from the Head of
the Contracting Activity or designee. If an applicant is placed in that position
prior to access authorization being granted by the DOE, the applicant may not be
afforded access to classified matter or special nuclear materials (in categories
requiring access authorization) until the DOE notifies the employer that access
authorization has been granted. Management and operating contractors and other
contractors operating DOE facilities may, at their discretion, include this
language in solicitations and subcontracts (appropriately modified to identify the
parties) wherein
subcontract employees will be required to hold DOE access authorization in order
to perform on-site duties, such as protective force operations.
(iii) The contractor is responsible for maintaining satisfactory standards for
employee qualifications, performance, conduct, and business ethics under its own
personnel policies.
(2) Security. On all matters of security at its installations, DOE retains
absolute authority and neither the security rules nor their administration are
matters for collective bargaining between management and labor. Insofar as DOE
security regulations affect the collective bargaining process, the security
policies and regulations will be made known to both parties. To the fullest extent
feasible, DOE will consult with representatives of management and labor in
formulating security rules and regulations that affect the collective bargaining
process.
(3) Wages, salaries, and employee benefits. (i) Wages, salaries, and employee
benefits shall be administered in a manner designated to adapt normal industry or
university practices and conditions to the contract work and to provide for
appropriate review by DOE. Area practices, valid patterns, and well-established
commercial or academic practices of the contractors, as appropriate, form the
criteria for the establishment and adjustment of compensation schedules.
(ii) The aspects of wages, hours, and working conditions which are the substance of collective bargaining in normal organized industries will be left to the orderly processes of negotiation and agreement between DOE contractor managements and employee
representatives with maximum possible freedom from Government interference.
(4) Employee relations. The handling of employee relations on contract work,
including such matters as the conduct and discipline of the work force and the
handling of employee grievances, is part of the normal management responsibility
of the contractor.
(5) Collective bargaining. (i) DOE review of collective bargaining practices will
be premised on the view that management's trusteeship for the operation of the
Government facilities includes the duty to adopt practices which are fundamental
to the friendly adjustment of disputes, and which experience has shown promote
orderly collective bargaining relationships. Practices inconsistent with this view
may be objected to, if not found to be otherwise clearly warranted.
(ii) Consistent with the policy of assuring continuity of operation of vital
facilities, all collective bargaining agreements at DOE-owned facilities should
provide that grievances and disputes involving the interpretation or application
of the agreement will be settled without resorting to strike, lockout, or other
interruption of normal operations. For this purpose, each collective bargaining
agreement entered into during the period of performance of this contract should
provide an effective grievance procedure with arbitration as its final step,
unless the parties mutually agree upon some other method of assuring continuity of
operation for the term of the collective bargaining agreement. The contracting
officer shall insert the clauses at FAR 52.222-1, Notice to the government of
labor disputes, and 970.5204-63, Collective bargaining agreements.management and
operating contracts, in all management and operating contracts, and subcontracts
thereunder, which require continuity of operation at a DOE-owned facility.
(iii) DOE expects its management and operating contractors and the unions
representing contractor employees to cooperate fully with the Federal Mediation
and Conciliation Service.
(6) Personnel training. DOE encourages and supports personnel training programs
aimed at improving work efficiency or developing needed skills which are not
otherwise obtainable.
(7) Working conditions. Accident, fire, health, and occupational hazards
associated with DOE activities will be held to a practical minimum level and
controlled in the interest of maintenance of health and prevention of accidents.
To this end, contractors shall be required to maintain comprehensive continuous
preventive and protective programs appropriate to the
particular activities throughout all operations subject to DOE control.
Appropriate financial protection in case of occupational disability must be
provided employees on DOE projects.
(c) Title to payroll and associated records under certain contracts for the
management and operation of DOE facilities, and for necessary miscellaneous
construction incidental to the function of these facilities, shall vest in the
Government. Such records are to be disposed of in accordance with DOE directions.
For such contracts, the Solicitor of Labor has granted a tolerance from the
Department of Labor Regulations to omit from the prescribed labor clauses the
requirement for the retention of payrolls and associated records for a period of
three years after completion of the contract. Under this tolerance, the records
retention requirements for all labor clauses in the contract and the Fair Labor
Standards Act is satisfied by disposal of such records in accordance with DOE
directives.
[62 FR 51800, Oct. 3, 1997]
970.2206 Walsh-Healey Public Contracts Act.
Because DOE has safety and health standards compatible with those of 41 CFR Part
50-204, the Department of Labor has agreed to accept DOE's program for inspection
and evaluation of compliance, in lieu of establishing its own program of
inspection and evaluation to the extent the Walsh-Healey safety and health
standards are applicable to operations conducted for DOE at Government-owned
and/or controlled sites and facilities.
[49 FR 12063, Mar. 28, 1984, as amended at 53 FR 24231, June 27, 1988]
970.2208 Equal employment opportunity.
The equal employment opportunity provisions of FAR Subpart 22.8 and Subpart 922.8
of this chapter, including E.O. 11246 and 41 CFR Part 60, are applicable to DOE
management and operating contracts.
[49 FR 12063, Mar. 28, 1984, as amended at 53 FR 24231, June 27, 1988]
970.2210 Service Contract Act.
The Service Contract Act of 1965 is not applicable to contracts for the management
and operation of DOE facilities.
[49 FR 12063, Mar. 28, 1984, as amended at 53 FR 24231, June 27, 1988]
970.2270 Unemployment compensation.
(a) Each state has its own unemployment compensation system to provide payments to
workers who become unemployed involuntarily and through no fault of their own.
Funds are provided for unemployment compensation benefits through a payroll tax on
employers. Most DOE contractors are subject to the unemployment compensation tax
laws of the states in which they are located. It is the policy to assure, both in
the negotiation and administration of cost-reimbursement type contracts, that
economical and practical arrangements are made and practiced with respect to
unemployment compensation.
(b) Contract exempt from state laws. (1) Some contractors are exempt from state
unemployment compensation laws, usually on grounds that they are nonprofit
organizations or subdivisions of State governments. Most states, however, permit
such employers to elect unemployment compensation coverage on a voluntary basis.
Under such circumstances, all existing or prospective cost-reimbursement
contractors shall be encouraged to provide unemployment compensation coverage or
equivalent substitutes.
(2) It is also DOE policy that, prior to the award or extension of a management
and operating contract, exempt contractors or prospective contractors shall be
required to submit to the contracting officer a statement that they will either
elect coverage or provide equivalent substitutes for unemployment compensation, or
in the alternative, submit evidence that it is impractical to do so. If any exempt
contractor or prospective contractor submits that it is impractical to elect
coverage or to provide an equivalent substitute, appropriate Office of Contractor
Human Resource Management, within the Headquarters procurement organization staff
shall review that position prior to recommending an award or extension of the
contract. If there are substantial reasons for not electing coverage or for not
providing equivalent substitutes, a contract may be awarded or extended.
Headquarters' staff review and recommendation shall be based on such factors as:
(i) The specific provisions of the unemployment compensation law of the State;
(ii) The extent to which the establishment of special conditions on DOE work may
have an adverse effect on the contractor's general policies and operating costs in
its private operations;
(iii) The numerical relationship between the contractor's private work force and
its employees performing only work for DOE;
(iv) The contractor's record with respect to work force stability and the general
outlook with respect to future work force stability;
(v) In a replacement contractor situation, whether or not the prior contractor had
coverage or suitable substitutes; and
(vi) The particular labor relations implications involved.
970.2271 Workers' compensation insurance.
(a) Policies and requirements. (1) Workers' compensation insurance protects
employers against liability imposed by workers' compensation laws for injury or
death to employees arising out of, or in the
course of, their employment. This type of insurance is
required by state laws unless employers have acceptable programs of self-insurance.
(2) Special requirements. Certain workers' compensation laws contain provisions
which result in limiting the protection afforded persons subject to such laws. The
policy with respect to these limitations as they affect persons employed by,
management and operating contractors is set forth below:
(i) Elective provisions. Some worker's compensation laws permit an employer to
elect not to be subject to its provisions. It is DOE policy to require these
contractors to be subject to workers' compensation laws in jurisdictions
permitting election.
(ii) Statutory immunity. Under the provisions of some workers' compensation laws,
certain types of employers; e.g., nonprofit educational institutions, are relieved
from liability. If a contractor has a statutory option to accept liability, it is
DOE policy to require the contractor to do so.
(iii) Limited medical benefits. Some workers' compensation laws limit the
liability of the employer for medical care to a maximum dollar amount or to a
specified period of time. In such cases, a contractor's workers' compensation
insurance policy should contain a standard extrastatutory medical coverage endorsement.
(iv) Limits on occupational disease coverage; and employers' liability. Some workers' compensation laws do not provide coverage for all occupational diseases. In such situations, a contractor's workers' compensation
insurance policy should contain voluntary coverage for all occupational diseases.
(3) Contractor "employees' benefit plan".self-insurers. The policies and
requirements set forth in paragraph (2) apply where management and operating
contractors purchase workers' compensation insurance. With respect to self-insured
contractors, the objectives specified in paragraph (a)(2) also shall be met
through primary or excess workers' compensation and employers' liability insurance
policy(ies) or an approved combination thereof. "Employees' benefit plans" which
were established in prior years may be continued to contrast termination at
existing benefit levels.
(b) Assignment of responsibilities. (1) Office of Contractor Human Resource
Management, within the Headquarters procurement organization, and other officials
and the Heads of Contracting Activities, consistent with their delegations of
responsibility, shall assure management and operating contracts are consistent
with the policies and requirements of paragraph (a), above.
(2) In discharging assigned responsibility, the Heads of Contracting Activities shall:
(i) Periodically review workers' compensation insurance programs of management and
operating contractors in the light of applicable workers' compensation statutes to
assure conformance with the requirements of paragraph (a), above;
(ii) Evaluate the adequacy of coverage of "self-insured" workers' compensation programs;
(iii) Provide arrangements for the administration of any existing "employees'
benefit plans until such plans" are terminated; and
(iv) Submit to the Office of Contractor Human Resource Management, within the
Headquarters procurement organization, all proposals for the modification of
existing "employees' benefit plans."
(3) The Office of Contractor Human Resource Management, within the Headquarters
procurement organization, is responsible for approving management and operating
contractor "employees' benefit plans."
970.2272 Conduct of employees and consultants of DOE management and operating contractors.
(a) Scope of subsection. This subsection establishes the policies for maintaining
satisfactory standards of conduct on the part of employees and consultants
employed on DOE contract work by its management and operating contractors.
[59 FR 24357, May 11, 1994]
(b) Applicability. (1) These policies are applicable to DOE management and
operating contractors to the extent that their contracts with DOE contain
provisions making this subsection applicable; or instructions have been issued
under appropriate provisions of their contracts with DOE directing compliance with
this subpart.
(2) The contract clause contained in 970.5204-12 requiring the contractor to
establish such procedures as are necessary to effectively implement the provisions
of this subsection, subject to the approval of the contracting officer, shall be
included in all new DOE management and operating contracts.
(3) The contract clause contained in 970.5204-27(a) concerning necessary approvals
to be obtained by contractor employees before performing consultant or similar
services for another DOE contractor shall be included in:
(i) All new DOE management and operating contracts except those identified in
paragraph (b)(4) of this section; and
(ii) Major modifications (involving change in scope or other significant
substantive changes) or extensions of existing contracts within the foregoing category.
(4) The contract clause contained in 970.5204-27(b) concerning necessary approvals
to be obtained by contractor employees before performing consultant or similar
services for another DOE contractor, or in the energy field for another
organization, shall be included in:
(i) All new DOE management and operating contracts for research or operations of
DOE program work where a substantial portion of the land or buildings used for
such research or in such operations is owned or controlled by the Government; and
(ii) Major modifications (involving change in scope or other significant
substantive changes) or extensions of existing contracts within the foregoing category.
(5) Exceptions to the requirements of paragraphs (b)(2), (3), and (4) will be
permitted only with the approval of the Procurement Executive.
(c) Gratuities. A management and operating contractor or its employees or consultants shall not,
under circumstances which might reasonably be interpreted as an attempt to
influence the recipients in the conduct of their duties, accept any gratuity or
special favor from individuals or organizations with whom the contractor is doing
business, or proposing to do business, in accomplishing the work under the
contract. Reference should be made to the provisions of 41 U.S.C. 51-54.
(d) Use of privileged information. Employees and consultants of a management and
operating contractor shall not use for personal gain or make other improper use of
privileged information which is acquired in connection with their employment on
contract work. In this connection, the term "Privileged information" includes but
is not limited to, unpublished information relating to technological and
scientific developments; medical, personnel, or security records of individuals;
anticipated materials' requirements or pricing action; possible new sites for DOE
program operations; and knowledge of selections of contractors or subcontractors
in advance of official announcement.
(e) Outside employment of contractor employees. Employees of a management and
operating contractor are entitled to the same rights and privileges with respect
to outside employment as other citizens. Therefore, there is no general
prohibition against employees having outside employment. However, no employee of a
contractor performing work on a full-time basis under a DOE management and
operating contract may engage in employment outside official hours of duty or
while on leave if such employment will:
(1) In any manner interfere with the proper and effective performance of the
duties of the position;
(2) Appear to create a conflict-of-interest situation, or
(3) Appear to subject DOE or the contractor to public criticism or embarrassment.
(f) Information statement concerning consultant or other employment service. If a
consultant or other outside employment service of the employee involves the use of
information in the area of the employee's contract employment, the contractor will
be responsible for requiring that the employee file with the contractor, an
information statement containing such information concerning the outside
employment as the contractor may prescribe. As a minimum, the information
statement shall include a description of any patent agreements that may be
involved and the following acknowledgement:
I acknowledge that I have read and am familiar with the published policy of the
DOE contained in:
(a) Subpart 970.2272 "Conduct of employees and consultants of DOE management and
operating contractors;" and
(b) DOE publication entitled, "Reporting Results of Scientific and Technical Work
Funded by DOE," which states in part that significant new results produced in
DOE-funded scientific and technical work agree not to withhold or delay reporting
information acquired through my employment with ... in favor of ... with whom I
have made or am contemplating making a consulting agreement. I have also read and
am familiar with the requirements of my employer's contract with DOE relating to
patents. To the best of my knowledge or belief, the activities to be performed
under this consulting agreement will not conflict with the policy set forth in
970.5204-27, the patent provisions of my employer's contract with DOE, or with the
responsibility of my employer to report fully and promptly to DOE all significant
research and development information. If in the course of my activities under this
consulting agreement, it appears that such a conflict may arise, I will promptly
notify and consult with my primary employer ... concerning such possible conflict.
(g) Incompatibility between regular duties and private interests. Employees and
consultants of a management and operating contractor shall not be permitted to
make or influence any decisions on behalf of the contractor which directly or
indirectly affect the interest of the Government, if the employee's or
consultant's personal concern in the matter may be incompatible with the interest
of the Government. For example: (1) An employee or consultant of a contractor will
not negotiate, or influence the award of, a subcontract with a company in which
the individual has an employment relationship or significant financial interest;
and (2) an employee or consultant of a contractor will not be assigned the
preparation of an evaluation for DOE or for any DOE contractor of some technical
aspect of the work of another organization with which the individual has an
employment relationship, or significant financial interest, or which is a
competitor of an organization (other than the contractor who is the individual's
regular employer) in which the individual has an employment relationship or
significant financial interest. The contractor shall be responsible for informing
employees and consultants that they are expected to disclose any incompatibilities
between duties performed for the contractor and their private interests and to
refer undecided questions to the contractor.
[49 FR 12063, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984]
970.2273 Administrative controls and criteria for application of the Davis-Bacon
Act in operational or maintenance activities.
(a) Particular work items falling within one or more of the following criteria
normally will be classified as noncovered by the Davis-Bacon Act.
(1) Individual work items estimated to cost $2,000 or less. The total dollar
amount of the operating contract is not a factor to be considered and bears no
relation to individual work items classified as construction, alteration and/or
repair, including painting and decorating. However, no item of work, the cost of
which is estimated to be in excess of $2,000, shall be artificially divided into
portions less than $2,000 for the purpose of avoiding the application of the Act.
(2) Work and services that are a part of operational and maintenance activities or
which, being very closely and directly involved therewith, are more in the nature
of operational activities than construction, alteration, and/or repair work. This
includes work and services which would involve a material risk to continuity of
operations, to life or property, or to DOE operating requirements, if performed by
persons other than the operating contractor's regular production and maintenance
forces. However, any decision that contracts or work items are noncovered for
these reasons must be made by the Head of the Contracting Activity and the
authority to make such a decision cannot be redelegated.
(3) Assembly, modification, setup, installation, replacement, removal,
rearrangement, connection, testing, adjustment, and calibration of machinery and
equipment. It should be noted, however, that these activities are covered if they
are part of or would be a logical part of the construction of a facility, or if
construction type work, other than "incidental" is involved.
(4) Experimental development of equipment, processes, or devices including
assembly, fitting, installation, testing, reworking, and disassembly. This refers
to equipment, processes and devices which are assembled for the purpose of
conducting a test or experiment. The design may be only conceptual in character,
and professional personnel responsible for the experiment participate in the
assembly. Specifically excluded from the category of experimental development are
buildings and building utility services.as distinguished from temporary
connections thereto. Also specifically excluded from this category is equipment to
be used for continuous testing, e.g., a machine to be continuously used for
testing the tensile strength of structural members.
(5) Experimental work in connection with peaceful uses of nuclear energy. This
refers to equipment, processes and devices which are assembled and/or set in place
and interconnected for the purpose of conducting a test or experiment. The nature
of the test or experiment is such that professional personnel responsible for the
test or experiment and/or data to be derived therefrom necessarily must
participate in the assembly and interconnections. Specifically excluded from
experimental work are buildings, building utility services, structural changes,
drilling, tunneling, excavation, and back-filling work which can be performed
according to customary drawings and specifications, and utility services of
modifications to utility services.as distinguished from temporary connections
thereto. Work in this category may be performed in mines or in other locations
specifically constructed for tests or experiments.
(6) Emergency work to combat the effects of fire, flood, earthquake, equipment
failure, accident or other casualties, and to restart the operational activity
following the casualty. Work which is not directly related to restarting the
activity or which involves rebuilding or replacement of structure or structural
components or equipment is excluded from this category.
(7) Decontamination including washing, scrubbing, and scraping to remove
contamination; removal of contaminated soil or other material; and painting or
other resurfacing, provided that such painting or resurfacing is an integral part
of the decontamination activity and performed by the employees of the contractors
performing the decontamination.
(8) Burial of contaminated soil waste or contained liquid; however, initial
preparatory work readying the burial ground for use (for example, any grading or
excavating that is a part of initial site preparation, fencing, drilling wells for
continued monitoring of contamination, construction of guard or other office
space) is covered. Likewise, work subsequent to burial which involves the
placement of concrete or other like activity is covered.
(b) The classification of a contract as a contract for operational or maintenance
activities does not necessarily mean that all work and activities at the contract
location are classifiable as outside Davis-Bacon Act coverage, since it may be
necessary to separate out work which should be classified as covered. Therefore,
the Heads of Contracting Activities shall establish and maintain controls for the
careful scrutiny of proposed work assignments under such a contract to assure that:
(1) Contractors whose contracts do not contemplate the performance of covered work
with the contractor's own forces are neither asked nor authorized to perform work
within the scope of the Davis-Bacon Act. If the actual work assignments do involve
covered work, the contract should be modified to include applicable provisions of
the Davis-Bacon Act.
(2) Where covered work is performed by a contractor whose contract contains
provisions required by the Davis-Bacon Act, such work is performed as required by
law and the contract. After such contractor has been informed, as provided in
paragraph (b)(3) of this section, that certain work is covered work, the Head of
the Contracting Activity's responsibility to assure
compliance is the same as it would be if the work were being performed under a
separate construction contract.
(3) Controls provided for above include consideration by the Head of the
Contracting Activity and the contractor, before work is begun or contracted out,
of the relation of the Davis-Bacon Act to (i) the annual programming of work, (ii)
the contractor's work orders, and (iii) work contracted out in excess of $2,000.
The Head of the Contracting Activity may, if he concludes that it is consistent
with DOE's responsibilities as described in this section, prescribe from time to
time classes of work as to which applicability or nonapplicability of the
Davis-Bacon Act is clear, for which he will require no further DOE determination
on coverage in advance of the work. For all work, controls to be established by
the Head of the Contracting Activity should provide for notification to the
contractor before work is begun as to whether such work is covered.
The Head of the Contracting Activity is responsible for submitting to the Wage and
Hours Division, Employment Standards Administration, Department of Labor,
Washington, D.C. 20210, all DOE requests for project area or installation wage
determinations, or individual determinations, or extensions or modification
thereto. Requests for such determinations shall be made on Standard Form 308, at
least 30 calendar days before they are required for use in advertising for bids or
requests for proposals.
(c) Experimental installations. Within DOE programs, a variety of experiments are
conducted involving materials, fuels, coolants, processes equipment. Certain types
of situations where tests and experiments have sometimes presented coverage
questions are described below.
(1) Set-ups of device and/or processes. The proving out of investigative findings
and theories of a scientific and technical nature may require the set-up of
various devices and/or processes at an early, pre-prototype stage of development.
These may range from laboratory bench size to much larger set-ups. As a rule,
these set-ups are made within established facilities (normally laboratories);
required utility connections are made to services provided as a part of the basic
facilities; and the activity as a whole falls within the functional purpose of the
facility. Such set-ups are generally not covered. However, the erection of
structures which are public works is covered if construction type work, other than
an incidental amount is involved. Preparatory work for the set-up requiring
structural changes or modifications of basic utility services.as distinguished
from connections thereto.is
covered. Following are illustrations of noncovered set-ups of devices and/or processes:
(i) Assembly of piping and equipment within existing "hot cell" facilities for
proving out a conceptual design of a chemical processing unit;
(ii) Assembly of equipment, including adaptation and modification thereof, in
existing "hot cell" facilities to prove out a conceptual design for remotely
controlled machining equipment;
(iii) Assembly of the first graphite pile in a stadium at Stagg Field in Chicago;
(iv) Assembly of materials and equipment for particular aspects of the direct
current thermonuclear experiments to explore feasibility and to study other
ramifications of the concept of high energy injection and to collect data thereon.
(2) Loops. Many experiments are carried on in equipment assemblies called loops in
which liquids or gases are circulated under monitored and controlled conditions.
For purposes of determining Davis-Bacon coverage, loops may be classed as loop
facilities or as loop set-ups. Both of these classes of loops can include
in-reactor loops and out-of-reactor loops. In differentiating between clearly
identified loop set-ups and loop facilities, an area exists in which there have
been some questions of coverage, such as certain loops at the Material Test
Reactor and at Engineering Test Reactor and the Idaho National Engineering
Laboratory site. Upon clarification of this area, further illustrations will be
added. In the meantime, the differentiation between loop set-ups and loop
facilities must be made on a case-by-case basis, taking into account the total
criteria set forth in this subpart.
(i) Loop set-ups. The assembly, erection, modification, and disassembly of a loop set-up is noncovered. A noncontroversial example of a loop set-up is one which is assembled in a laboratory, e.g., Oak Ridge National Laboratory, Argonne National Laboratory, or Lawrence Livermore National Laboratory, for a particular test and thereafter disassembled. However, preparatory work for a loop set-up requiring structural changes or modifications of basic utility services.as distinguished from connections thereto.is covered, as are material and equipment that are installed for a loop set-up which
is a permanent part of the facility or which is use for a succession of
experimental programs.
(ii) Loop facilities. A loop facility differs from a loop set-up in that it is of
a more permanent character. It is usually, but not always, of greater size. It
normally involves the building or modification of a structure. Sometimes it is
installed as a part of construction of the facility. It may be designed for use in
a succession of experimental programs over a longer period of time. Examples of
loop facilities are the in-reactor "K" loops at Hanford and the large Aircraft
Nuclear Propulsion loop at the Idaho National Engineering Laboratory site. The
on-site assembly and erection of such loop facilities are covered. However, once a
loop facility is completed and becomes operational, the criteria set forth above
for operational and maintenance activities apply.
(3) Reactor component experiments. Other experiments are carried on by insertion
of experimental components within reactor systems without the use of a loop
assembly. An example of reactor facilities erected for such experimental purposes
are the special power excursion test reactors (SPETRs) at the National Reactor
Test Site which are designed for studying reactor behavior and performance
characteristics of certain reactor components. Such a facility may consist of a
reactor vessel, pressurizing tank, coolant loops, pumps, heat exchangers, and
other auxiliary equipment as needed. The facility also may include sufficient
shielding to permit work on the reactor to proceed following a short period of
power interruption, and buildings as needed to house the reactor and its auxiliary
equipment. The erection and on-site assembly of such a reactor facility is
covered, but the components whose characteristics are under study are excluded
from coverage. To illustrate, one of the SPETRs planned for studies of nuclear
reactor safety is designed to accommodate various internal fuel and control
assemblies. The internal structure of the pressure vessel is designed so that
cores of different shapes and sizes may be placed in the vessel for investigation,
or the entire internal structure may be easily removed and replaced by a structure
which will accept a different core design. Similarly, the control rod assembly is
arranged to provide for flexibility in the removal of instrument leads and
experimental assemblies from within the core.
(4) Tests or experiments in peaceful uses of nuclear energy. These tests or
experiments are varied in nature and some are only in a planning stage. They
consist of one or more nuclear or nonnuclear detonations for the purposes of
acquiring data. The data can include seismic effects, radiation effects, amount of
heat generated, amount of material moved and so forth. Some of these tests are
conducted in existing mines, while others are conducted in facilities specifically
constructed for the tests or experiments. In general, all work which can be
performed in accordance with customary drawings and specifications, as well as
other work in connection with preparation of facilities is treated as covered
work. Such work includes tunneling, drilling, excavation and back-filling,
erection of buildings or other structures, and installation of utilities. The
installation of the nonnuclear material or nuclear device to be detonated, and the
instrumentation and connection between such material or device and the
instrumentation are treated as noncovered work.
(5) Tests or experiments in military uses of nuclear energy. As in 970.2273(c)(4),
these tests or experiments can be varied in nature. However, under this category
it is intended to include only detonation of nonnuclear material or nuclear
devices. The material or devices can be detonated either underground, at ground
level, or above the ground. These tests or experiments have been conducted in, on,
or in connection with facilities specifically constructed for such tests or
experiments. As in tests or experiments in peaceful uses of nuclear energy, all
work which can be performed in accord with customary drawings and specifications,
as well as other work in connection with preparation of facilities are treated as
covered work. Such work includes building towers or similar structures, tunneling,
drilling, excavation and backfilling, erection of buildings or other structures,
and installation of utilities. The installation of the nonnuclear material or
nuclear devices and instrumentation are treated as noncovered work.
(d) Construction site contiguous to an established manufacturing facility. As
DOE-owned property sometimes embraces several thousand acres of real estate, a
number of separate facilities may be located in areas contiguous to each other on
the same property. These facilities may be built over a period of years, and
established manufacturing activities may be regularly carried on at one site at
the same time that construction of another facility is underway at another site.
On occasion, the regular manufacturing activities of the operating contractor at
the first site may include the manufacture, assembly, and reconditioning of
components and equipment which in other industries would normally be done in
established commercial plants. While the manufacture of components and equipment
in the manufacturing plant is noncovered, the installation of any such
manufactured items on a construction job is covered.
[49 FR 12063, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984; 62 FR 2310, Jan. 16, 1997]
970.2274 Whistleblower protection for contractor employees.
970.2274-1 General.
(a) This section implements the DOE Contractor Employee Protection Program as set forth at 10 CFR part 708. Part 708 establishes criteria and procedures for the investigation, hearing, and review of allegations from DOE contractor employees of employer reprisal resulting from employee disclosure of information to DOE, to members of Congress, or to the contractor; employee participation in proceedings before Congress or pursuant to this rule; or employee refusal to engage in illegal or dangerous activities when such disclosure, participation, or refusal pertains to employer practices which the employee believes to be unsafe; to violate laws, rules, or regulations; or to involve fraud, mismanagement, waste, or abuse.
(b) Contractors found to have retaliated against an employee in reprisal for such disclosure, participation or refusal are required to provide relief in accordance with decisions issued under 10 CFR part 708.
(c) Part 708 is applicable to employees of contractors, and subcontractors, performing work on behalf of DOE directly related to DOE-owned or -leased facilities.
(d) Part 708 provides for the purposes of the Contract Disputes Act (41 U.S.C.
605 & 606) a final decision issued pursuant to 10 CFR 708 shall not be considered
a claim by the Government against a contractor or a decision by the contracting
officer subject to appeal. However, a contractors disagreement and refusal to
comply, with a final decision could result in a contracting officer's decision to
disallow certain costs or to terminate the contract for default. In such case, the
contractor could file a claim under the Disputes clause of the contract regarding
the cost disallowance or contract termination.
[64 FR 12861, March 15, 1999]
970.2274-2 Clause.
The contracting officer shall insert the clause at 970.5204-59, Whistleblower
Protection for Contractor Employees, in management and operating contracts.
[57 FR 57638, Dec. 4, 1992 as corrected]
970.2275 Overtime management.
970.2275-1 General.
Contracting officers shall ensure that management and operating contractors manage
overtime cost effectively and use overtime only when necessary to ensure
performance of work under the contract.
[62 FR 34842, Jun. 27, 1997]
970.2275-2 Contract clause.
The contracting officer shall insert the clause at 48 CFR (DEAR) 970.5204-80,
Overtime Management, in management and operating contracts.
[62 FR 34842, Jun. 27, 1997]
Subpart 970.23.Environmental, Conservation, and Occupational Safety Programs
970.2303 Hazardous materials identification and material safety.
970.2303-1 General.
(a) The Department of Energy regulates the nuclear safety of its major facilities
under its own statutory authority derived from the Atomic Energy Act and other
legislation. The Department also regulates, under certain specific conditions, the
use by its contractors of radioactive materials and ionizing radiation producing machines.
(b) The inclusion of environmental, safety and health clauses in DOE contracts
shall be made by the contracting officer in consultation with appropriate
environmental, safety and health program management personnel.
970.2303-2 Clauses.
(a) When work under management and operating contracts and subcontracts thereunder is to be performed at a facility where DOE will exercise its statutory authority to enforce occupational safety and
health standards applicable to the working conditions of the contractor and
subcontractor employees at such facility, the clause at 970.5204-2 shall be used
in such contract or subcontract and made applicable to the work if conditions
(a)(1) through (3), are satisfied:
(1) DOE work is segregated from the contractor's or subcontractor's other work;
(2) The operation is of sufficient size to support its own safety and health
services; and
(3) The facility is government-owned, or leased by or for the account of the government.
(b) The clause set forth in 952.223-72 shall be included in those contracts or
subcontracts for, and be made applicable to, work to be performed at a facility
where DOE does not elect to assert its statutory authority to enforce occupational
safety and health standards applicable to the working conditions of contractor and
subcontractor employees, but does need to enforce radiological safety and health
standards pursuant to provisions of the contract or subcontract rather than by
reliance upon Nuclear Regulatory Commission licensing requirements (including
agreements with states under section 274 of the Atomic Energy Act).
[49 FR 12063, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984; 62 FR 34842, Jun. 27, 1997]
970.2304 Use of Recovered/Recycled Materials.
970.2304-1 General.
The policy for the acquisition and use of environmentally preferable products and
services is described at 48 CFR (DEAR) subpart 923.4.
[60 FR 47492, Sept. 13, 1995]
970.2304-2 Contract clause.
The contracting officer shall insert the clause at 48 CFR (DEAR) 970.5204-39,
Acquisition and Use of Environmentally Preferable Products and Services, in
management and operating contracts.
[60 FR 47492, Sept. 13, 1995]
970.2305 Workplace Substance Abuse
Programs.Management and Operating Contracts.
970.2305-1 General.
(a) The Department of Energy (DOE), as part of its overall responsibilities to
protect the environment, maintain public health and safety, and safeguard the
national security, has established policies, criteria, and procedures for
management and operating contractors to develop and implement programs that help
maintain a workplace free from the use of illegal drugs.
(b) Regulations concerning DOE's management and operating contractor workplace
substance abuse programs are promulgated at 10 CFR part 707, Workplace Substance
Abuse Programs at DOE Sites.
[57 FR 32676, July 22, 1992]
970.2305-2 Applicability.
(a) All management and operating contracts awarded under the authority of the
Atomic Energy Act of 1954, as amended, are required to implement the policies,
criteria, and procedures of 10 CFR part 707, Workplace Substance Abuse Programs at
DOE Sites.
(b) Except as otherwise provided for in this subpart, management and operating
contracts subject to the requirements of 10 CFR part 707 and this subpart shall
not be subject to FAR 23.5, Drug Free Workplace.
[57 FR 32676, July 22, 1992]
970.2305-3 Definitions.
Terms and words relating to DOE's Workplace Substance Abuse Programs, as used in
this section, have the same meanings assigned to such terms and words in 10 CFR
part 707.
[57 FR 32676, July 22, 1992]
970.2305-4 Solicitation provision and contract clause.
(a) The contracting officer shall insert the provision at 48 CFR 970.5204-57,
Agreement Regarding Workplace Substance Abuse Programs at DOE Sites, in
solicitations for the management and operation of DOE-owned or -controlled sites
operated under the authority of the Atomic Energy Act of 1954, as amended.
(b) the contracting officer shall insert the clause at 970.5204-58, Workplace
Substance Abuse Programs at DOE Sites, in contracts for the management and
operation of DOE-owned or -controlled sites operated under the authority of the
Atomic Energy Act of 1954, as amended.
[57 FR 32676, July 22, 1992; 62 FR 42072, Aug. 5, 1997]
970.2305-5 Suspension of payments, termination of contract, and debarment and
suspension actions.
(a) The contracting officer shall comply with the procedures of FAR 23.506
regarding the suspension of contract payments, the termination of the contract for
default, and the debarment and suspension of a contractor relative to failure to
comply with 970.5204- 58, Workplace Substance Abuse Programs at DOE Sites.
(b) For purposes of 10 CFR part 707, the specific causes for suspension of
contract payments, termination of the contract for default, and debarment and
suspension of the contractor are:
(1) The contractor fails to either comply with the requirements of 10 CFR part 707
or perform in a manner consistent with its approved program;
(2) The contractor has failed to comply with the terms of the provision at 48 CFR 970.5204-57;
(3) Such a number of contractor employees having been convicted of violations of
criminal drug statutes for violations occurring on the DOE-owned or -controlled
site, as to indicate that the contractor has failed to make a good faith effort to
provide a drug free workplace; or,
(4) The offeror has submitted a false certification in response to the provision
at 970.5204-57, Certification Regarding Workplace Substance Abuse Programs at DOE Sites.
[57 FR 32677, July 22, 1992; 62 FR 42072, Aug. 5, 1997]
Subpart 970.25 Foreign Acquisition
970.2501 Severance payments for foreign nationals.
(a) The Head of the Contracting Activity may waive the application of the
provisions of 48 CFR 970.3102-2(i)(2)(iv) and (v) in accordance with 41 U.S.C.
256(e)(2) if:
(1) The application of the provisions would adversely affect the continuation of a
program, project, or activity that provides significant support services for
Department of Energy employees posted outside the United States;
(2) The contractor has taken, or plans to take, appropriate actions within its
control to minimize the amount and number of incidents of payment of severance pay
to employees under the contract who are foreign nationals; and
(3) The payment of severance pay under the contract is necessary to comply with a
law that is generally applicable to a significant number of businesses in the
country in which the foreign national receiving the payment performed services or
is necessary to comply with a collective bargaining agreement.
(b) Solicitation provision and contract clause. The solicitation provision at
970.5204-84, Waiver of Limitations on Severance Payments to Foreign Nationals,
shall be included in solicitations and resulting contracts involving support
services for Department of Energy operations outside of the United States expected
to exceed $500,000, when, prior to the solicitation, the limitations on severance
to foreign nationals has been waived. Use the Alternate 1 contract clause in
solicitations and resulting contracts, when the Head of the Contracting Activity
may waive the limitations on severance to foreign nationals after contract award.
[63 FR 5272, Feb. 2, 1998]
Subpart 970.26.Other Socioeconomic Programs
970.2601 Implementation of Section 3021 of the Energy Policy Act of 1992.
(a) The goal requirements of Section 3021 of the Energy Policy Act of 1992, and
the attendant reporting requirements shall be included in the subcontracting plan
for the management and operating contract and shall apply to the annual dollar
obligations specifically provided to the Management and Operating contractor for
competitively awarded subcontracts that fulfill Energy Policy Act requirements.
See 970.7104-12(f).
(b) Department of Energy policy recognizes that full utilization of the talents
and capabilities of a diverse work force is critical to the achievement of its
mission. The principal goals of this policy are to foster and enhance partnerships
with small, small disadvantaged, women- owned small businesses, and educational
institutions; to match capabilities with existing opportunities; to track small,
small disadvantaged, women-owned small business, and educational activity; and to
develop innovative strategies to increase opportunities.
[60 FR 22302, May 5, 1995; 62 FR 34842, Jun. 27, 1997]
970.2602-1 Implementation of Section 3161 of the National Defense Authorization
Act for Fiscal Year 1993.
(a) Consistent with the objectives of Section 3161 of the National Defense
Authorization Act for Fiscal Year 1993, 42 U.S.C. 7474h, in instances where the
Department of Energy has determined that a change in work force at a DOE Defense
Nuclear Facility is necessary, DOE contractors and subcontractors at DOE Defense
Nuclear Facilities shall accomplish work force restructuring or displacement so as
to mitigate social and economic impacts and in a manner consistent with any DOE
work force restructuring plan in effect for the facility or site. In all cases,
mitigation shall include the requirement for hiring preferences for employees
whose positions have been terminated (except for termination for cause) as a
result of changes to the work force at the facility due to restructuring
accomplished under the requirements of Section 3161. Where applicable, contractors
may take additional actions to mitigate consistent with the Department's Workforce
Restructuring Plan for the facility or site.
(b) The requirements set forth in 48 CFR (DEAR) 926.71, Implementation of Section
3161 of the National Defense Authorization Act for Fiscal Year 1993, for
contractors and subcontractors to provide a hiring preference for employees under
Department of Energy contracts whose employment in positions at a Department of
Energy Defense Nuclear Facility is terminated (except for a termination for cause)
applies to management and operating contracts.
[62 FR 34842, Jun. 27, 1997]
970.2602-2 Contract clauses.
(a) The contracting officer shall insert the clause at 48 CFR (DEAR) 970.5204-77,
Workforce Restructuring Under Section 3161 of the National Defense Authorization
Act for Fiscal Year 1993, in contracts for the management and operation of
Department of Energy Defense Nuclear Facilities and, as appropriate, in other
contracts that include site management responsibilities at a Department of Energy
Defense Nuclear Facility.
(b) The Contracting Officer shall insert the clause at 48 CFR (DEAR) 970.5204-81
Diversity Plan in management and operating contracts.
[62 FR 34842, Jun. 27, 1997; 62 FR 63423, Nov. 28, 1997]
Subpart 970.27.Patents, Data, and Copyrights
970.2701 General.
This subpart applies to negotiation of patent rights and rights in technical data
provisions for the Department of Energy contracts for the management and operation
of its research and development and production facilities.
970.2702 Patent Rights.
(a) Whenever a contract has as a purpose, the design, construction, or operation
of a Government-owned research, development, demonstration or production facility,
it is necessary that the Government be accorded certain rights with respect to
further use of the facility by or on behalf of the Government upon termination of
the contract, including the right to make, use, transfer, or otherwise dispose of
all articles, materials, products, or processes embodying inventions or
discoveries used or embodied in the facility regardless of whether or not
conceived or first actually reduced to practice under or in the course of such a
contract. Thus, both versions of the patent rights clause for management and
operating contracts contain a facilities license.
(b) In the case of contractors operating and managing DOE research and development
or production facilities, that are not the beneficiaries of Pub. L. 96- 517, the
Department is statutorily obligated to take title to inventions conceived or first
actually reduced to practice in the performance of the contracts. Here, as in all
other circumstances in which the Department takes title to inventions by statute,
the contractors may request a waiver at the time of contracting for a class of
inventions or during contract performance for identified inventions. DOE includes
the considerations at 42 U.S.C. 5908 in its determination as to whether to approve
the request.
(c) While no contractor that manages and operates a DOE research and development or production facility is a small business, several have historically been nonprofit organizations. As such, they are the beneficiaries of the Bayh-Dole Act (35 U.S.C. 200 et seq., as amended) and, therefore, receive the right to retain title to inventions conceived or first actually reduced to practice in the performance of their contracts with the Department, except in areas of technology covered by Exceptional Circumstances Determinations made by DOE or of nuclear weapons and naval nuclear propulsion. In these latter two areas, the contractor may request that the Department waive its title and, therefore, subject to the exceptions
identified below, may be granted title to inventions conceived or first actually
reduced to practice in the performance of its contract with the Department.
(d) DOE has exercised statutory authority granted under 35 U.S.C. 202(a)(ii) and
202(a)(iv). In accordance with 35 U.S.C. 202(a)(ii), DOE has issued several
Exceptional Circumstances Determinations pursuant to which DOE nonprofit
management and operating contractors have no right to elect title to inventions
conceived or first actually reduced to practice in the course of or under their
contracts within covered areas of technology. However, those contractors may be
given some lesser property right in an invention within limits set by DOE in a
particular Exceptional Circumstances Determination so that the contractor can
effectively assist with a mission of DOE, such as technology transfer. As new
technologies evolve, DOE may issue additional Exceptional Circumstances
Determinations, as appropriate.
(e) In accordance with 35 U.S.C. 202(a)(iv), the Department of Energy has exempted
its weapons related and naval nuclear propulsion programs from the broad Bayh-Dole
right of its nonprofit management and operating contractors to elect title to
inventions conceived or first actually reduced to practice in the course of or
under their contracts. The effect of this exemption is that, if the contractors
want to acquire title, they must request title to covered inventions. DOE may then
grant the request subject to a case-by- case determination that the contractor has
met all procedural requirements unilaterally set by DOE to insure that all
national security concerns of DOE
relating to the contractor's use of an invention in either of these two areas for
commercialization have been met.
970.2703 Technology Transfer
The National Competitiveness Technology Transfer Act of 1989 (NCTTA) (Pub. L.
101-189) established technology transfer as a mission for Government- owned,
contractor-operated laboratories, including weapons production facilities, and
authorizes those laboratories to negotiate and award cooperative research and
development agreements with public and private entities for purposes of conducting
research and development and transferring technology to the private sector. In
implementing the NCTTA, DOE has negotiated technology transfer clauses with the
contractors managing and operating its laboratories. Those technology transfer
clauses must be read in concert with the patent rights clause required by this
subpart. Thus, each management and operating contractor holds title to subject
inventions for the benefit of the laboratory or facility being managed and
operated by that contractor.
970.2704 Patent Clauses
(a) Contracting officers shall insert the clause at 970.5204-71 in all management
and operating contracts with nonprofit organizations.
(b) Contracting officers shall insert the clause at 970.5204-72 in all management
and operating contracts with profit-making entities.
970.2705 Rights in data.general
(a) Rights in data relating to the performance of the contract and to all
facilities are significant in assuring continuity of the management and operation
of DOE facilities. It is crucial in assuring DOE's continuing ability to perform
its statutory missions that DOE obtain rights to all data produced or specifically
used by its management and operating contractors and appropriate subcontractors.
In order to obtain the necessary rights in technical data, DOE contracting
officers shall assure that management and operating contracts contain either the
Rights in Data clause at 48 CFR 970.5204-82 or the clause at 48 CFR 970.5204-83.
Selection of the appropriate clause is dependent upon whether technology transfer
is a mission of the management and operating contract pursuant to the National
Competitiveness Technology Transfer Act of 1989 (Pub. L. 101-189, as amended). If
technology transfer is not a mission of the management and operating contractor,
the clause at 48 CFR 970.5204-82 will be used. In those instances in
which technology transfer is a mission, the clause at 48 CFR 970.5204-83 will be
used.
(b) Employees of the management and operating contractor may not be used to assist
in the preparation of a proposal or bid for the performance of services, which are
similar or related to those being performed under the contract, by the contractor
or its parent or affiliate organization for commercial customers unless the
employee has been separated from work under the DOE contract for such period as
the Head of the Contracting Activity or designee shall have directed.
[63 FR 10499, Mar. 4, 1998]
970.2706 Rights in technical data.procedures
(a) The clauses at 48 CFR 970.5204-82 and 48 CFR 970.5204-83 both provide
generally for Government ownership and for unlimited rights in the Government
for all data first produced in the performance of the contract and unlimited
rights in data specifically used in the performance of the contract. Both clauses
provide that, subject to patent, security, and other provisions of the contract,
the contractor may use contract data for its private purposes. The contractor,
under
either clause, must treat any data furnished by DOE or acquired from other
Government agencies or private entities in the performance of their contracts in
accordance with any restrictive legends contained therein.
(b) Since both clauses secure access to and, if requested, delivery of technical
data used in the performance of the contract, there is generally no need to use
the Additional Technical Data Requirements clause at FAR 52.227-16 in the
management and operating contract.
(c)(1) Paragraph (d) of the clause at 48 CFR 970.5204-82 and paragraph (f) of the
clause at 48 CFR 970.5204-83 provide for the inclusion in subcontracts of the
Rights in Technical Data--General clause at FAR 52.227-14, with Alternate V, and
modified in accordance with DEAR 927.409. Those clauses also provide for the
inclusion in appropriate subcontracts Alternates II, III, and IV to the clause at
FAR 52.227-14 with DOE's prior approval and the inclusion of the Additional
Technical Data Requirements clause at FAR 52.227-16 in all subcontracts for
research, development, or demonstration and all other subcontracts having special
requirements for the production or delivery of data. In subcontracts, including
subcontracts for related support services, involving the design or operation of
any plants
or facilities or specially designed equipment for such plants or facilities that
are managed or operated by the contractor under its contract with DOE, the
management and operating contractor shall use the Rights in Data--Facilities
clause at 48 CFR 970.5204-82.
(2) Where, however, a subcontract is to be awarded by the management and operating
contractor in connection with a program, as discussed at 927.404-70, which
provides statutory authority to protect from public disclosure, data first
produced under contracts awarded pursuant to the program, contracting officers
shall ensure that the M&O; contractor includes in that subcontract the rights in
data clause provided by DOE Patent Counsel, consistent with any accompanying
guidance.
(3) Management and operating contractors and higher-tier subcontractors shall not
use their power to award subcontracts as economic leverage to acquire rights in a
subcontractor's limited rights data or restricted computer software for their
private use, nor may they acquire rights in a subcontractor's limited rights data
or restricted computer software except through the use of Alternate II or III to
the clause at FAR 52.227-14, respectively, without the prior approval of DOE
Patent Counsel.
(d)(1) Paragraphs (e) and (f) of the clause at 48 CFR 970.5204-82 and paragraphs
(g) and (h) of the clause at 48 CFR 970.5204-83 provide for the contractor's
granting a nonexclusive license in any limited rights data and restricted computer
software specifically used in performance of the contract.
(2) In certain instances the objectives of DOE would be frustrated if the
Government did not obtain, at the time of contracting, limited license rights on
behalf of responsible third parties and the Government in and to limited rights
data or restricted computer software or both necessary for the practice of subject
inventions or data first produced or delivered in the performance of the contract.
This situation may arise in the performance of management and operating contracts
and contracts for the management or operation of a DOE facility or site.
Contracting officers should consult with program officials and Patent Counsel. No
such rights should be obtained from a small business or non-profit organization,
unless similar rights in background inventions of the small business or non-profit
organization have been authorized in accordance with 35 U.S.C. 202(f). Where such
a background license is in DOE's interest, a provision that provides substantially
as Alternate VI at 48 CFR 952.227-14 should be added to the appropriate clause, 48
CFR 970.5204-82 or 48 CFR 970.5204-83.
(e) The Rights in Data-Technology Transfer clause at 48 CFR 970.5204-83 differs
from the clause at 48 CFR 970.5204-82 in the context of its more detailed
treatment of copyright. In management and operating contracts that have technology
transfer as a mission, the right to assert copyright in data first produced under
the contract will be a valuable right, and commercialization of such data,
including computer software, will assist the M&O; contractor in advancing the
technology transfer mission of the contract. The clause at 48 CFR 970.5204-83
provides for DOE approval of DOE's taking a limited copyright license for a period
of five years, and, in certain rare cases, specified longer periods in order to
contribute to commercialization of the data.
(f) Contracting officers should consult with Patent Counsel to assure that
requirements regarding royalties and conflicts of interest associated with
asserting copyright in data first produced under the contract are appropriately
addressed in the Technology Transfer
Mission clause of the management and operating contract. Where it is not otherwise
clear which DOE program funded the development of a computer software package,
such as where the development was funded out of a contractor's overhead account,
the DOE program which was the primary source of funding for the entire contract is
deemed to have administrative responsibility. This issue may arise, among others,
in the decision whether to grant the contractor permission to assert copyright.
See paragraph (e) of the Rights in Data-Technology Transfer clause at 970.5204-83.
(g) In management and operating contracts involving access to DOE-owned Category
C-24 restricted data, as set forth in 10 CFR part 725, DOE has reserved the right
to receive reasonable compensation for the use of its inventions and discoveries,
including its related restricted data and technology. Alternate I to each clause
shall be used where access to Category C-24 restricted data is contemplated in the
performance of a contract.
[60 FR 11812, Mar. 2, 1995; 63 FR 10499, Mar. 4, 1998]
970.2707 Rights in data clauses.
(a) Contracting officers shall insert the clause at 48 CFR 970.5204-82, Rights in
Data-Facilities, in management and operating contracts which do not contain the
clause at 48 CFR 970.5204-40, Technology Transfer Mission.
(b) Contracting officers shall insert the clause at 970.5204-83, Rights in
Data-Technology Transfer, in management and operating contracts which contain the
clause at 970.5204-40, Technology Transfer Mission.
(c) In accordance with 48 CFR 970.2706(g), in contracts where access to Category
C-24 restricted data, as set forth in 10 CFR part 725, is to be provided to
contractors, Contracting Officers shall incorporate Alternate I of the appropriate
rights in data clause prescribed in paragraph (a) or (b) of this section.
[63 FR 10499, Mar. 4, 1998]
Subpart 970.28.Bonds and Insurance
970.2830 Contract clause.
The contracting officer shall insert the clause at 48 CFR (DEAR) 970.5204-31,
Insurance.Litigation and Claims, in management and operating contracts. Paragraphs
(h)(3) and (j)(2) apply to a nonprofit contractor only to the extent specifically
provided in the individual contract.
[62 FR 34842, Jun. 27, 1997]
970.2870 Indemnification.
(a) Section 170d. of the Atomic Energy Act of 1954, as amended, requires DOE to
enter into agreements of indemnity with contractors whose work involves the risk
of public liability for the occurrence of a nuclear incident or precautionary
evacuation.
(b) Details of such indemnification are discussed in more detail at 950.70.
(c) The clause at 970.5204-6 shall be included in all management and operating
contracts involving the risk of public liability for the occurrence of a nuclear
incident or precautionary evacuation arising out of or in connection with the
contract work, including such events caused by a product delivered to a DOE-owned,
facility for use by DOE or its contractors. The clause at 970.5204-6 also shall be
included in any management and operating contract for the design of a DOE
facility, the construction or operation of which may involve the risk of public
liability for a nuclear incident or a precautionary evacuation.
(d) However, the clause at 952.250-70 shall not be included in contracts in which
the contractor is subject to Nuclear Regulatory Commission (NRC) financial
protection requirements under section 170b. of the Act or NRC agreements of
indemnification under section 170 c. or k. of the Act for activities to be
performed under the contract.
(e) DOE contractors with whom statutory nuclear hazards indemnity agreements under
the authority of section 170d. of the Atomic Energy Act of 1954, as amended, are
executed will not normally be required or permitted to furnish financial
protection by purchase of insurance to cover public liability for nuclear
incidents. However, if authorized by the DOE headquarters office having
responsibility for contractor casualty insurance programs, DOE contractors may be
(1) permitted to furnish financial protection to themselves or (2) permitted to
continue to carry such insurance at cost to the Government if they currently
maintain insurance for such liability.
[56 FR 57830, Nov. 14, 1991]
Subpar t 970.29.Taxes
970.2901 Exemptions from Federal excise taxes.
(a) The exemption respecting taxes on communication services or facilities has
been held to extend to such services when furnished to DOE management and
operating contractors who pay for such services or facilities from advances made
to them by DOE under their contracts.
(b) Where it is considered that a request for an additional exemption in the
performance of a management and operating contract would be justified, a
recommendation that such a request be made should be forwarded to the Chief
Financial Officer, Headquarters.
(c) Where tax exemption certificates are required in connection with the foregoing
taxes, the Head of the Contracting Activity will supply standard Government forms
(SF 1094, U.S. Tax Exemption Certificate) on request.
970.2902 State and local taxes.
It is DOE policy to secure those immunities or exemptions from state and local
taxes to which it is entitled under the Federal Constitution or state laws. In
carrying out this policy, the Heads of Contracting Activities shall:
(a) Take all necessary steps to preclude payment of any taxes for which any of the
foregoing immunities or exemptions are available. Advice of Counsel should be
sought as to the availability of such immunities or exemptions;
(b) Acquire directly and furnish to contractors as Government furnished property,
equipment, material, or services when, in the opinion of the Head of the
Contracting Activity:
(1) Such direct acquisition will result in substantial savings to the Government,
taking into consideration any additional administrative costs;
(2) Such direct acquisition will not have a substantial adverse effect on the
relationship between DOE and its contractor; and
(3) Such direct acquisition will not have a substantial adverse effect on the DOE
program or schedules.
970.2903 Contract clauses.
Contracting officers shall include the clause Taxes, at 970.5204-23, in management
and operating contracts.
[49 FR 12063, Mar. 28, 1984, as amended at 53 FR 24231, June 27, 1988; 62 FR 2310,
Jan. 16, 1997]
Subpart 970.30.Cost Accounting Standards
970.3001 General.
970.3001-1 Applicability.
The provisions of (FAR) 48 CFR part 30 and (FAR Appendix B) 48 CFR 9904.414 shall
be followed for management and operating contracts.
[FR 60 30005, Jun. 7, 1995]
970.3001-2 Limitations.
Cost of money as an element of the cost of facilities capital (CAS 414) and as an
element of the cost of capital assets under construction (CAS 417) is not
recognized as an allowable cost under contracts subject to 48 CFR part 970 (See 970.3102-3).
[FR 60 30005, Jun. 7, 1995]
Subpart 970.31.Contract Cost Principles and Procedures
970.3100 Scope and applicability of subpart.
The cost principles, procedures and general policy for the determination of
reimbursable costs applicable to the administration of management and operating
contracts are set for in this subpart. The terms "reimbursement" and
"reimbursable" are used interchangeably in relation to "allowable costs" as a
matter of editorial convenience. No "reimbursement" is actually involved in those
situations where the cost-type contractor makes payments for "allowable cost" from
Government funds advanced to him by the DOE.
970.3100-1 Definitions.
Off-site work is contract required work (under a contract covered by FAR Subpart
17.6) performed in contractor-owned facilities, such as a central or branch office.
On-site work (under a contract covered by FAR Subpart 17.6) is work performed at
the Government-site.
Direct costs of a management and operating contract are defined as follows:
(a) With respect to on-site work, "direct costs" technically include all performance costs; that is, such costs are identified specifically for, or account of, the contract. However, in some circumstances it may be desirable or necessary because of the requirements of
the contract to distinguish between direct and indirect types of costs. "Direct
costs," when the foregoing circumstances apply, are those which are identified as
having been incurred specifically for, or on account of a designated cost
objective, such as a particular product (or groups of similar products), work
order, job, project, program or contract. Materials, labors or expenses which
relate specifically and solely to the manufacture of a particular product or to
the performance of a distinct job or work are broad examples of direct costs.
Direct costs are not limited to items incorporated in an end product.
(b) With respect to "off-site" work, "direct costs" are as defined in FAR 31.202
and discussed in other sections of this subpart. "Indirect costs" of a management
and operating contract are defined as follows:
(a) With respect to "on-site" work, when it is desirable or necessary to
distinguish them from direct costs, "indirect costs" are those items of material,
labor, and expenses not directly identified with a single final cost accumulation
point, but identified with applicability to two or more objectives or with at
least one intermediate cost objective.
(b) With respect to "off-site" work, "indirect cost" are as defined in FAR 31.203
and discussed in other sections of this subpart.
970.3100-2 Responsibilities.
(a) The Procurement Executive is responsible for developing and revising the
policy and procedures for the determination of allowable costs reimbursable under
a management and operating contract, and for seeing that they are properly
coordinated with other Headquarters' offices having joint interests.
(b) The Head of the Contracting Activity is responsible for following the policy,
principles and standards set forth herein in establishing the compensation
provisions of contracts and subcontracts and for submission of deviations for
Headquarters consideration.
970.3100-3 Deviation.
Deviations from the policy and principles set forth in this subpart shall not be
made unless such action is authorized by the Procurement Executive, on the basis
of a written justification stating clearly the special circumstances involved.
Where appropriate, any approved deviation shall be reflected in the compensation
provisions of the contract.
970.3101 General policy.
The cost policies of the DOE regarding management and operating contracting are as
discussed in this section:
970.3101-1 Actual cost basis.
(a) DOE shall reimburse its contractors for costs incurred in the performance of a
management and operating contract in accordance with its terms and the provisions
of this subpart. Such costs are those allowable costs provided for in the contract
to the extent that they are necessary or incident, and either directly
attributable or equitably allocable to the work under the contract. This broad
expression of the DOE's cost-reimbursement policy is further developed and
elaborated upon throughout this subpart.
(b) DOE uses retrospective or after-the-fact determination, usually called the
actual cost basis, to establish the amount reimbursable. This general policy
precludes the use of predetermined fixed percentage rates except for provisional payments.
(c) When a fixed compensation for any otherwise allowable cost is separately
negotiated, the items of such costs covered by the fixed amount shall be
identified with maximum clarity and set forth in an appropriate appendix to the
contract as an amount otherwise excludable from other reimbursable costs (this is
done in order to distinguish between those allowable costs subject to
reimbursement and those costs which are covered by the negotiated fixed amount).
970.3101-2 Direct and indirect costs.
(a) Direct costs identified specifically with a management and operating contract
are direct cost of performing that contract and are to be charged directly
thereto. All costs specifically identified with other final cost objectives of the
management and operating contractor are direct cost of those cost objectives and
are not to be charged to the contract directly or indirectly. For reasons of
practicality, any direct cost of minor dollar amount may be treated as an indirect
cost if the accounting treatment.
(1) Is consistently applied; and
(2) Produces substantially the same results as treating the cost as a direct cost.
(b) Indirect cost are not subject to treatment as a direct cost and thus directly chargeable to a contract. After direct costs have been determined and charged directly to the contract or other work, indirect costs are those remaining to be allocated from an appropriate indirect
cost accumulation account. The following principles and procedures shall apply to
indirect costs to the extent that they are incurred under management and operating
contracts.
(1) Indirect costs to the extent required to be or otherwise incurred in the
accounting system of the operating contractor shall be accumulated by logical cost
groupings with due consideration of the reasons for incurring such costs. Each
grouping should be determined so as to permit distribution of the grouping on the
basis of the benefits accruing to the cost objectives to which it is to be
allocated. Generally, overhead and general and administrative (G&A) expenses are
separately grouped. Similarly, the particular case may require subdivision of
these groupings; e.g., building occupancy costs might be separable from those of
personnel administration within a specific overhead group such as manufacturing
overhead. This necessitates selecting a distribution base common to all cost
objectives to which the grouping is to be allocated. The base should be selected
so as to permit allocation of the grouping on the basis of the benefits accruing
to the cost objectives. The number and composition of cost groupings should be
governed by practical considerations and should not unduly complicate the allocation.
(2) Once an appropriate base for distributing indirect costs has been accepted, it
shall not be fragmented by removing individual elements. For example, when a cost
input base is used for the distribution of G&A costs, all items that would
properly be part of the costs input base, whether allowable or unallowable, shall
be included in the base and bear their pro rata share or G&A costs.
(3) The method of allocating indirect costs shall be in accordance with generally
accepted accounting principles which are consistently applied.
(4) A base period for allocating indirect costs is the cost accounting period
during which such costs are incurred and accumulated for distribution to work
performed in that period.
970.3101-3 General basis for reimbursement of costs.
(a) The total reimbursable cost of a DOE management and operating contract is the
sum of the allowable direct costs necessary or incident to the performance of the
contract, plus any properly allocable portion of allowable indirect costs,
(including corporate or home office G&A expense, or branch office indirect
expenses), if any, less applicable income and other credits. In determining
allowability and reimbursability of costs, the following shall be considered:
(1) Allowability and reasonableness in accordance with FAR 31.201- 2(d) and
31.201-3;
(2) Allocability of a cost to management and operating contract. A cost is
allocable if it is assignable or chargeable for work and performance of the
contract in accordance with the relative benefits received or other equitable relationship;
(3) Application of generally accepted accounting principles and practices
appropriate to identifying and measuring costs of performing the contract in
accordance with this subpart;
(4) All exclusions of and limitations of types and amounts of items of cost set
forth in the contract;
(5) Approvals by the contracting officer required under the contract terms; and
(6) Cost accounting standards if applicable.
(b) A contracting officer shall not resolve any questioned costs until the
contracting officer has obtained:
(1) Adequate documentation with respect to such costs; and
(2) The opinion of the Department of Energy's auditor on the allowability of such costs.
(c) The contracting officer shall ensure that the documentation supporting the
final settlement addresses the amount of the questioned costs and the subsequent
disposition of such questioned costs.
(d) The contracting officer shall ensure, to the maximum extent practicable, that
the Department of Energy's auditor is afforded an opportunity to attend any
negotiation or meeting with the contractor regarding a determination of allowability.
[62 FR 34842, Jun. 27, 1997; 63 FR 5272, Feb. 2, 1998]
970.3101-4 Cost determination based on audit.
The amount reimbursable under management and operating contracts shall be determined in accordance with the principles set forth in this subpart and in accordance with the terms of the respective contract on the basis of audit. In the event that the contractual terms differ, or are inconsistent with (see 970.3100-3 for approval of deviations) the principles stated herein, the
contractual terms control. It is expected however, contractual terms to be based
on the principles therein. The audit may be performed directly by DOE (or by the
cognizant Federal agency pursuant to arrangements made by the DOE).
[49 FR 12063, Mar. 28, 1984, as amended at 53 FR 24231, June 27, 1988]
970.3101-5 Contractor's system of accounting.
(a) Careful DOE study of a management and operating contractor's usual accounting
procedures shall be made prior to arriving at an understanding with the contractor
as to the accounting system to be employed by the contractor during the period of
contract performance.
(b) A contractor's customary accounting practices are usually accepted for
management and operating contracts if they conform to generally accepted
accounting principles, produce equitable results, are consistently applied, are
not in conflict with the provisions of this subpart, are conducive to accurate
costing of the contract work, and produce reports required by the DOE.
970.3101-6 Advance understandings on particular cost items.
(a) It is important that agreement between DOE and its management and operating
contractors be reached in advance of the incurrence of costs in categories where
reasonableness as to amounts or allocability to the management and operating
contract are difficult to determine in order to avoid possible subsequent
disallowance or dispute. Any such agreement should be incorporated in the
contract. But the absence of such agreement on any element of cost will not, in
itself, serve to make the element either allowable or unallowable. Examples of
costs on which advance agreements may be particularly important are:
(1) Deferred maintenance costs;
(2) Precontract costs;
(3) Professional or technical consulting services;
(4) Reconversion costs;
(5) Research and development costs;
(6) Royalties;
(7) Selling and distribution costs;
(8) Unemployment insurance experience ratings;
(9) Employee compensation, including amounts of money or percentage of payment
authorized to be expended annually for groups of employees for all types of wage
and salary increases, travel, relocation expenses and other personnel costs.
(10) Lobbying costs;
(11) Public relations and advertising; and
(12) Travel and relocation costs as related to special or mass personnel movements
and as related to travel via contractor-owned leased, or chartered aircraft.
(b) DOE generally utilizes two basic methods of achieving and recording
understandings with contractors as to the allowability of employee compensation,
travel, relocation, and other personnel costs: (1) Negotiation of a personnel
appendix to the contract, which sets forth the policies, programs, and schedules
which are accepted as the basis for determining the allowability of costs; or (2)
reviewing and reaching agreements on established policies, programs, and schedules
(and any changes thereto during the contract term) applicable to contractor's
private operations which are acceptable for contract work and which will be
consistently followed throughout the contractor's organization. A personnel
appendix to the contract setting forth advance understandings covering
compensation for personal services shall be utilized in management and operating
contracts (as defined in FAR 17.601) when one or more of the following
circumstances exist: when policies, programs, and schedules are established
specifically for contract work; when the contractor's work is predominantly or
exclusively made up of negotiated Government contract work; when contract work is
so different from the organization's private work that existing established
policies, programs, and schedules cannot reasonably be extended to and
consistently applied on contract work; or, when established policies, programs,
and schedules proposed for contract work are not sufficiently definitive to permit
a clear advance mutual understanding of allowable costs and to provide a basis for
audit. The Head of the Contracting Activity is authorized to select the
alternative method of achieving and recording advance understanding that they find
most appropriate, after considering the facts of the particular contract
situation. As used in this paragraph:
(c) With regard to the costs at (a)(9) of this section:
(1) Compensation for personal services includes wages and salaries, bonuses and incentives, premium payments, pay for time not worked, and supplementary compensation and benefits, such as pension and
retirement, group insurance, severance pay plans, and other forms of compensation
covered by 970.3102-2.
(2) Employee travel costs include transportation expenses incurred while on
official business, within the U.S. or outside the U.S. as necessary. Travel of
executive officers is covered in 970.3102-17. Contractor travel policies must be
acceptable to the Department, and result in reasonable cost necessary for contract
performance. To avoid disputes and to clearly state the treatment that applies to
travel cost, advance understandings should be reached with the management and
operating contractor. They should be sufficiently definitive to evidence the
contractor's responsibility to minimize costs consistent with contract
performance. The allowability to certain travel costs, such as air travel, are
specifically limited by Department policy. For example, the added cost of first
class air travel is prohibited as a reimbursable cost, except under stringent
conditions, which must be justified in writing. Contractually enforceable
understandings concerning the allowability and reimbursement of other potentially
significant travel costs (such as the use of Government-furnished automobiles or
Government-contract provided rental automobiles) should be reached with the
contractor. A reasonable basis for such understandings is the Federal travel
policy applicable to Government and directly paid contractor employees.
(3) Other personnel costs include:
(i) Morale, health, welfare, food service and dormitory costs covered in
970.3102-5;
(ii) Training and education costs covered in 970.5204- 13 and 970.5204-14;
(iii) Relocation costs for relocating employees as discussed in 970.3102-16; and
special or mass personnel movement covered in 970.3102-2(i).
[49 FR 12063, Mar. 28, 1984, as amended at 52 FR 1607, Jan. 14, 1987]
970.3101-7 Cost submission, certification, penalties, and waivers.
(a) The contracting officer shall require that management and operating
contractors provide a submission for settlement of costs incurred during the
period stipulated on the submission and a certification that the costs included in
the submission are allowable. The contracting officer shall assess a penalty if
unallowable costs are included in the submission. Unallowable costs are either
expressly unallowable or determined unallowable.
(1) An expressly unallowable cost is a particular item or type of cost which,
under the express provisions of an applicable law, regulation, or this contract,
is specifically named and stated to be unallowable.
(2) A cost determined unallowable is one which, for that contractor
(i) Was subject to a contracting officer's final decision and not appealed;
(ii) The Department's Board of Contract Appeals or a court has previously ruled as
unallowable; or
(iii) Was mutually agreed to be unallowable.
(b) If, during the review of the submission, the contracting officer determines
that the submission contains an expressly unallowable cost or a cost determined to
be unallowable prior to the submission, the contracting officer shall assess a penalty.
(c) If the contracting officer determines that a cost submitted by the contractor
in its submission for settlement is
(1) Expressly unallowable, then the contracting officer shall assess a penalty in
an amount equal to the disallowed cost allocated to this contract plus interest on
the paid portion of the disallowed cost. Interest shall be computed from the date
of overpayment to the date of repayment using the interest rate specified by the
Secretary of the Treasury pursuant to 50 U.S.C. 1215.
(2) Determined unallowable, then the contracting officer shall assess a penalty in
an amount equal to two times the amount of the disallowed cost allocated to this contract.
(d) The contracting officer may waive the penalty provisions when
(1) The contractor withdraws the submission before the formal initiation of an
audit of the submission and submits a revised submission;
(2) The amount of the unallowable costs allocated to covered contracts is $10,000
or less; or
(3) The contractor demonstrates to the contracting officer's satisfaction that:
(i) It has established appropriate policies, personnel training, and an internal control and review system that provides assurances that unallowable costs subject to
penalties are precluded from the contractor's submission for settlement of costs; and
(ii) The unallowable costs subject to the penalty were inadvertently incorporated
into the submission.
(e) The Head of the Contracting Activity may waive the certification when--
(1) It is determined that it would be in the best interest to waive such
certification; and
(2) The Head of the contracting Activity states in writing the reasons for that
determination and makes such determination available to the public.
[63 FR 5272, Feb. 2, 1998]
970.3102 Application of cost principles.
(a) The incurred costs of performing management and operating contracts shall be
reimbursed to the extent they are reasonable, allocable, and determined to be
allowable under the provisions of this subpart and the terms of the contract.
(b) This section does not cover every element of cost. Failure to include any item
of cost does not imply that it is either allowable or unallowable. The
determination of allowability shall be based on the principles and standards in
this subpart and the treatment of similar or related items. When more than one
paragraph in this section is relevant to a contractor cost, the cost shall be
apportioned among the applicable subsections, and the determination of
allowability of each portion shall be based on the guidance contained in the
applicable subsection. As an example, the cost of meals while in a travel status
would normally be allowable if reasonable. However, the cost of alcoholic
beverages associated with a meal would be unallowable. In no case shall costs made
specifically unallowable under one cost principle be made allowable under another
cost principle.
[63 FR 5272, Feb. 2, 1998]
970.3102-1 General and administrative expenses.
(a) For on-site work, the DOE considers that its fee allowance for management and
operating contracts provides for the recognition of appropriate compensation for
home or corporate office general and administrative expenses incurred in the
general management of the contractor's business as a whole.
(b) The above policy is intended to preclude the payment of general and
administrative expenses merely because they are incurred or accounted for at or by
a contractor's home or corporate office and not the operating site. The DOE
recognizes some benefit of such cost to the DOE program. The basis of recognition
through fee allowance is associated with the difficulty of determining and
assessing the dollar value of such expenses that might be applicable to or have
benefit to a management and operating contract. Conventional allocation
techniques; i.e., total operating costs, labor dollars or hours, etc., are
generally not considered appropriate because they normally distribute such
expenses over a base representative of contractor investment (in terms of its own
resources, including labor, material, overhead, etc.). Contractor investments and
home office contributions are minimal under DOE's operating and management
contracts in as much as they are totally financed and supported by DOE advance
payments under the letter-of-credit method and by DOE's provision of
government-owned and project-exclusive facilities, property, and other needed
resources.
(c) Notwithstanding the concept in (a) above, it is recognized that from time to
time the fee amounts established for a management and operating contract, to meet
the purpose cited in 970.15404-4-1 and consideration of the factors in
970.15404-4-4, may be considered insufficient to adequately recognize a
contractor's general and administrative expenses incurred in general management
and administration of the contractor's business as a whole and which appear to
have a directly benefiting relationship to the DOE program. Such recognitions may
be the basis of requesting fee amounts in excess of the limitations set forth in
970.15404-4-5 or alternatively, in any particular case, the contractor may be
compensated on the basis of cost in accordance with 970.3101-1 if the Head of the
Contracting Activity or other approving contract official authorizes or approves
the procedure and a fair and reasonable amount can be agreed upon. Such amount
shall normally be in addition to the applicable fee amounts.
(d) The DOE allows company general and administrative expenses under off-site architect-engineer, supply and research contracts with commercial contractors performing the work in their own facilities. Contractor's general and administrative expenses, may, however, be included for reimbursement under such DOE off-site architect-engineer, supply and research contracts, only to the extent that they are established, after careful examination, to be allowable in nature an properly allocable to the work. Work performed in a contractor's own facilities under a management and operating or construction contract may likewise be allowed to bear
the properly allocable portion of allowable company general and administrative
expense.
[63 FR 56849, Oct. 23, 1998]
970.3102-2 Compensation for personal services.
(a) General. Compensation for personal services includes all remuneration paid
currently or accrued, in whatever form and whether paid immediately or deferred,
for services rendered by employees to the contractor during the period of contract
performance (except as otherwise provided for severance pay costs in paragraph
(b)(4)(i) of this section and for pension cost in paragraph (b)(1) of this
section). It includes, but is not limited to, salaries; wages; directors' and
executive committee members' fees; bonuses (including stock bonuses); incentive
awards; employee stock options, stock appreciation rights, and stock ownership
plans; employee insurance; fringe benefits; contributions to pension, annuity, and
management employee incentive compensation plans; and allowances for off-site pay,
incentive pay, location allowances, hardship pay, severance pay, and cost of
living differential.
(b) Allowability. Reimbursable costs for compensation for personal services are to
be set forth in a personnel appendix in the contract as discussed at 970.3101-6.
This personnel appendix shall be negotiated using the principles and policies of
this 970.3102-2, and other pertinent parts of the DEAR. However, costs that are
unallowable pursuant to other paragraphs of 970.3102 or contract terms shall not
be allowable under this 970.3102-2 on the basis they constitute compensation for
personnel services. Costs of compensation for personal services are reimbursable
to the extent that:
(1) The compensation is for personal services work performed by the employee in
the current year and must not represent a retroactive adjustment of prior year's
salaries or wages (but see 970.3102-2 (i), (j), (l), (m), and (n));
(2) The compensation in total is reasonable for the work performed; however,
specific restrictions on individual compensation elements must be observed where
they are prescribed;
(3) The compensation is based upon and conforms to the terms and conditions of the
contractor's established compensation plan or practice followed so consistently as
to imply, in effect, an agreement to make the payment;
(4) Any approvals prescribed by this 970.3102-2 are obtained. No assumption of
allowability will exist where the contractor introduces major revisions of
existing compensation plans or new plans and the contractor.
(i) Has not notified the cognizant contracting officer of the changes either
before their implementation, or within a reasonable period after their
implementation, and
(ii) Has not provided the Government, either before implementation or within a
reasonable period after it, an opportunity to review the allowability of the changes.
(5) Costs that are unallowable under the contract terms or other paragraphs of
this 970.3102 shall not be
allowable under this 970.3102-2 solely on the basis that they constitute
compensation for personal services.
(c) Reasonableness. Subject to 970.3102-2(d) of this section compensation for
personal services will be considered reasonable if the total compensation conforms
generally to compensation paid by other firms of the same size, in the same
industry, or in the same geographic area for similar services or work performed.
This does not preclude the Government from challenging the reasonableness of an
individual element of compensation where costs are excessive in comparison with
compensation paid by other firms of the same size, same industry, or in the same
geographic area for similar services. In administering this principle, it is
recognized that not every compensation case need be subjected in detail to the
above tests. The tests need be applied only when a general review reveals amounts
or types of compensation that appear unreasonable or unjustified. In questionable
cases, the contractor has responsibility to support the reasonableness of
compensation in relation to the effort performed. Compensation costs under certain
conditions give rise to the need for special consideration. Among such conditions
are the following:
(1) Compensation to (i) owners of closely held corporations, partners, sole proprietors, or members of their immediate families, or (ii) persons who are contractually committed to acquire a substantial financial interest in the contractor's enterprise. Determination should be made that salaries are reasonable for the personal services rendered rather than being a distribution of profits. Compensation in lieu of salary for services rendered by partners and sole proprietors will be allowed to the extent that it is reasonable and does not constitute a distribution of profits. For closely held corporations, compensation costs covered by this subparagraph shall not be recognized in amounts exceeding those costs that are
deductible as compensation under the Internal Revenue Code and its regulations.
(2) Any change in a contractor's compensation policy that results in a substantial
increase in the contractor's level of compensation, particularly when it was
concurrent with an increase in the ratio of Government contracts to other
business, or any change in the treatment of allowability of specific types of
compensation due to changes in the treatment of allowability of specific types of
compensation due to changes in Government policy. No presumption of reasonableness
will exist where major revisions of existing compensation plans or new plans are
introduced by the contractor; and the contractor.
(i) Has not notified the cognizant contracting officer of the change either before
their implementation or within a reasonable period after their implementation; and
(ii) Has not provided the Government, either before implementation or within a
reasonable period after it, an opportunity to review the reasonableness of the changes.
(3) The contractor's business is such that its compensation levels are not subject
to the restraints that normally occur in the conduct of competitive business.
(4) The contractor incurs costs for compensation in excess of the amounts which
are deductible under the Internal Revenue Code and its regulations.
(d) DOE review and approval of compensation paid individual employees. In
determining the reasonableness of compensation, the compensation of each
individual contractor employee normally need not be subjected to review and
approval. Generally, the compensation paid individual employees should be left to
the judgment of contractors subject to the limitations of DOE-approved
compensation policies, programs, classification systems, and schedules, and
amounts of money authorized for wage and salary increases for groups of employees.
However, all compensation due an individual of $80,000 or more shall require the
contracting officer's or designee's review and approval. In addition, it will
often be necessary that employee compensation be subjected to review and approval
on an individual basis at a level below $80,000, when the contracting officer
finds it appropriate for the particular situation. The contract shall specifically
provide for the approval by the contracting officer of the cost of compensating an
individual contractor employee above the level determined by the contracting
officer, if a total of 50 percent or more of such compensation is reimbursed under
DOE cost-type contracts. For purposes of determining the level for individual
review and approval, total compensation as used in this paragraph includes only
the employee's salary and bonus or incentive compensation. As in the case of other
personnel and compensation costs, it is intended that contracting officer review
and approval of individual compensation normally will be prior to incurrence of costs.
(e) Labor-management agreements. Notwithstanding any other DOE requirements, costs
of compensation are not allowable to the extent that they result from provisions
of labor-management agreements that, as applied to work in performing Government
contracts, are determined to be unreasonable because they are either unwarranted
by the character and circumstances of the work or discriminatory against the
Government. The application of the provisions of a labor-management agreement
designed to apply to a given set of circumstances and conditions of employment
(e.g., work involving extremely hazardous activities or work not requiring
recurrent use of overtime) is unwarranted when applied to a Government contract
involving significantly different circumstances and conditions of employment
(e.g., work involving less hazardous activities or work continually requiring use
of overtime). It is discriminatory against the Government if it results in
employee compensation (in whatever form or name) in excess of that being paid for
similar non-Government work under comparable circumstances. Disallowance of costs
will not be made under this paragraph (e) unless.
(1) The contractor has been permitted an opportunity to justify the costs; and
(2) Due consideration has been given to whether unusual conditions pertain to
Government contract work, imposing burdens, hardships, or hazards on the
contractor's employees, for which compensation that might otherwise appear
unreasonable is required to attract and hold necessary personnel.
(f) Salaries and wages. Salaries and wages for current services include gross
compensation paid to employees in the form of cash, stock (see paragraph (h)(2) of
this section regarding valuation), products, or services, and are allowable.
(g) Domestic and foreign differential pay. (1) When personal services are performed in a foreign country, compensation may also include a differential that may properly consider all expenses associated with foreign employment such as housing, cost of living adjustments, transportation, bonuses, additional
Federal, state, local or foreign income taxes resulting from foreign assignment,
and other related expenses.
(h) Bonuses and incentive compensation. Incentive compensation and cash bonuses
based on production, cost reduction or efficient performance, suggestion awards,
and safety awards are to be treated as allowable, to the extent that the
contractor's overall compensation plan is determined to be reasonable and such
costs are paid or accrued, pursuant to an agreement entered into in good faith
between the contractor and the employees before the services were rendered, or
pursuant to an established plan followed by the contractor so consistently as to
imply, in effect, an agreement to make such payment (see 970.3101-6). In
determining reasonableness, it will be necessary to take into account, not only
bonuses and incentive compensation payments charged directly to the contract, but
also payments charged indirectly to the contract through overhead. Bonuses,
awards, and incentive compensation, when any of them are deferred, are to be
treated as allowable to the extent provided in paragraph (m) of this section.
(1) Bonuses and incentive compensation paid to employees other than those whose
pay is directly reimbursed will not be made allowable in on-site construction and
management and operating contracts, where home office general and administrative
expense is unallowable.
(2) When the costs of bonuses and incentive compensation are paid in the stock of
the contractor or of an affiliate, the following additional restrictions apply:
(i) Valuation placed on the stock shall be the fair market value on the
measurement date (i.e., the first date the number of shares awarded is known)
determined upon the most objective basis available; and
(ii) Accruals for the cost of stock before issuing the stock to the employees
shall be subject to adjustment according to the possibilities that the employees
will not receive the stock and that their interest in the accruals will be forfeited.
(3) When the bonus and incentive compensation payments are deferred, the costs are
subject to the requirements of paragraph (h)(1) of this section and of paragraph
(m) of this section.
(i) Severance pay. (1) Severance pay, also commonly referred to as dismissal
wages, is a payment in addition to regular salaries and wages by contractors to
workers whose employment is being involuntarily terminated. Payments for early
retirement incentive plans are covered in paragraph (l)(6) of this section.
(2) Severance pay to be allowable must meet the general allowability criteria in
paragraph (i)(2)(i) of this section, and, depending upon whether the severance is
normal or abnormal, criteria in paragraph (i)(2)(ii) of this section for normal
severance pay or paragraph (i)(2)(iii) of this section for abnormal severance pay
also apply. In addition, paragraphs (i)(2)(iv) and (v) of this section apply if
the severance cost is for foreign nationals employed outside the United States.
(i) Severance pay is allowable only to the extent that, in each case, it is
required by (A) law, (B) employer-employee agreement, (C) established policy that
constitutes, in effect, an implied agreement on the
contractor's part, or (D) circumstances of the particular employment. Payments
made in the event of employment with a replacement contractor where continuity of
employment with credit for prior length of service is preserved under
substantially equal conditions of employment, or continued employment by the
contractor at another facility, subsidiary, affiliate, or parent company of the
contractor are not severance pay and are unallowable.
(ii) Actual normal turnover severance payments shall be allocated to all work
performed in the contractor's plant, or where the contractor provides for accrual
of pay for normal severances, that method will be acceptable if the amount of the
accrual is reasonable in light of payments actually made for normal severances
over a representative past period and if amounts accrued are allocated to all work
performed at the facility.
(iii) Abnormal or mass severance pay is of such a conjectural nature that
measurement of costs by means of an accrual will not achieve equity to both
parties. Thus, accruals for this purpose are not allowable. However, the
Government recognizes its obligation to participate, to the extent of its fair
share, in any specific payment. Thus, allowability will be considered on a
case-by-case basis.
(iv) Notwithstanding the provision of paragraph (c) of this section, which
references geographic area, under 41 U.S.C. 256(e)(1)(M), the costs of severance
payments to foreign nationals employed under a service contract performed outside
the United States are unallowable to the extent that such payments exceed amounts
typically paid to employees providing similar services in the same industry in the
United States.
(v) Further, under 41 U.S.C. 256(e)(1)(N), the costs of severance payments
referred to in paragraph (i)(2)(iv) of this section are unallowable if the
termination of employment is the result of the closing of, or curtailment of,
activities at a United States facility in that country at the request of the
government of that country.
(vi) The Head of the Contracting Activity may waive the application of the
provisions of paragraphs (i)(2)(iv) and (v) of this section under the conditions
specified in subpart 970.25.
(3) Subject to paragraph (a) of this section, the following standards apply in
determining allowability of costs for severance pay plans of management and
operating contractors:
(i) Payments should be made only upon involuntary termination by reduction in
force (RIF) of an employee which results in a permanent separation from the
employment of the contractor. However, payments may also be made upon voluntary
separation of an employee within a RIF grouping, but not otherwise scheduled for
termination, which thereby eliminates the need for terminating another employee involuntarily.
(ii) Payments should be not provided for in the event of temporary layoffs;
employment or offer of employment with a replacement contractor (employer) where
continuity of employment with credit for prior length of service is preserved
under substantially equal conditions of employment; early or normal retirement; or
continued employment by the contractor at another facility, subsidiary, affiliate,
or parent company of the contractor. Contractor employees should not have the
option of refusing employment to receive severance pay.
(j) Backpay.(1) Backpay resulting from violations of Federal labor laws or the
Civil Rights Act of 1964. Backpay may result from a negotiated settlement, order,
or court decree that resolves a violation of Federal labor laws or the Civil
Rights Act of 1964. Such backpay falls into two categories: one requiring the
contractor to pay employees additional compensation for work performed for which
they were underpaid, and the other resulting from other violations, such as when
the employee was improperly discharged, discriminated against, or other
circumstances for which the backpay was not additional compensation for work
performed. Backpay resulting from underpaid work is compensation for the work
performed and is allowable. All other backpay resulting from willful violation of
Federal labor laws or the Civil Rights Act of 1964 is unallowable.
(2) Other backpay. Backpay may also result from payments to union employees (union
and non-union) for the difference in their past and current wage rates for working
without a contract or labor agreement during labor management negotiations. Such
backpay is allowable. Backpay to nonunion employee based upon results of union
agreement negotiations is allowable only if (i) a formal agreement or
understanding exists between management and the employees concerning these
payments, or (ii) an established policy or practice exists and is followed by the
contractor so consistently as to imply, in effect, an agreement to make such payment.
(k) Stock options, stock appreciation rights, and phantom stock plans. (1) The
cost of stock options awarded to employees to purchase stock of the contractor or
of an affiliate will be treated as deferred compensation and must comply with the
requirements of paragraph (m) of this section and with the allowability criteria
contained in paragraph (k)(2) of this section. The allowable cost of stock
appreciation rights, whether offered separately or combined with stock options,
will be determined in the same manner as stock options.
(2) The allowable costs of stock options and stock appreciation rights will be
limited to the difference between the option price or stock-appreciation-right
price and the market price of the stock on the measurement date (i.e., the first
date on which both the number of shares and the option or stock-appreciation-right
price are known). Accordingly, when the option or stock-appreciation-right price
is equal to or greater than the market price on the measurement date, then no
costs are allowed for contract costing purposes.
(3) In phantom-stock-type plans, contractors assign or attribute contingent shares
of stock to employees as if the employees own the stock, even though the employees
neither purchase the stock nor receive title to it. Under these plans, an
employee's account may be increased by the equivalent of dividends issued and any
appreciation in the market price of the stock over the price of the stock on the
measurement date (i.e., the first date the number of shares awarded is known).
Such increases in employee accounts for dividend equivalents and market price
appreciation are unallowable.
(l) Pension costs. (1) A pension plan is a deferred compensation plan that is established and maintained by one or more employers to provide systematically for paying benefits to plan participants after their retirement, provided that the benefits are paid for life or are payable for life at the option of the employee.
Additional benefits such as permanent and total disability and death payments and
survivorship payments to beneficiaries of deceased employees may be treated as
pension costs, provided the benefits are an integral part of the pension plan and
meet all the criteria pertaining to pension costs.
(2) Pension plans are normally segregated into two types of plans: defined benefit
or defined contribution pension plans. Except as provided by other DOE directives,
the cost of all defined benefit pension plans shall be measured, allocated, and
accounted for in compliance with the provisions of CAS 412, Composition and
Measurement of Pension Costs, and CAS 413, Adjustment and Allocation of Pension
Cost. The costs of all defined contribution pension plans shall be measured,
allocated, and accounted for in accordance with the provisions of CAS 412. Pension
costs are allowable subject to directives issued by the Office of Contractor Human
Resource Management, within the Headquarters procurement organization, the
referenced standards and the cost limitations and exclusions set forth below in
this paragraph and in paragraphs (l)(3), (4), (5), (6), and (7) below.
(i) To be allowable in the current year, pension costs must be funded by the time
set for filing the Federal income tax return or any extension thereof. Pension
costs assigned to the current year, but not funded by the tax return time, shall
not be allowable in any subsequent year.
(ii) Pension payments must be reasonable in amount and be paid pursuant to (A) an
agreement entered into in good faith between the contractor and employees before
the work or services are performed and (B) the terms and conditions of the
established plan. The cost of changes in pension plans which are discriminatory to
the Government or are not intended to be applied consistently for all employees
under similar circumstances in the future are not allowable.
(iii) Except as provided for early retirement benefits in paragraph (l)(6) below,
one-time-only pension supplements not available to all participants of the basic
plan are not allowable as pension costs unless the supplemental benefits represent
a separate pension plan and the benefits are payable for life at the option of the
employee.
(iv) Increases in payments to previously retired plan participants covering
cost-of-living adjustments are allowable if paid in accordance with a policy or
practice consistently followed.
(3) Defined benefit pension plans. This paragraph covers pension plans in which
the benefits to be paid or the basis for determining such benefits are established
in advance and the contributions are intended to provide the stated benefits. The
cost limitations and exclusions pertaining to defined benefit plans are as follows:
(i) Normal costs of pension plans not funded in the year incurred, and all other
components of pension costs (see CAS 412.40(a)(1)) assignable to the current
accounting period but not funded during it, shall not be allowable in subsequent
years (except that a payment made to a fund by the time set for filing the Federal
income tax return or any extension thereof is considered to have been made during
such taxable year). However, any part of a pension cost that is computed for a
cost accounting period that is deferred pursuant to a waiver granted under the
provisions of the Employee's Retirement Income Security Act of 1974 (ERISA) (see
CAS 412.50(c)(3)), will be allowable in those future accounting periods in which
the funding does occur. The allowability of these deferred contributions will be
limited to the amounts that would have been allowed had the funding occurred in
the year the costs would have been assigned except for the waiver.
(ii) Any amount paid or funded before the time it becomes assignable and allowable
shall be applied to future years, in order of time, as if actually paid and
deductible in those years. The interest earned on such premature funding, based on
the valuation rate of return, may be excluded from future years' computations of
pension costs in accordance with CAS 412.50(a)(7).
(iii) Increased pension costs caused by delay in funding beyond 30 days after each
quarter of the year to which they are assignable are unallowable. If a composite
rate is used for allocating pension costs between the segments of a company and
if, because of differences in the timing of the funding by the segments, an
inequity exists, allowable pension costs for each segment will be limited to that
particular segment's calculation of pension costs as provided for in CAS
413.50(c)(5). Determination of unallowable costs shall be made in accordance with
the actuarial method used in calculating pension costs.
(iv) Allowability of the cost of indemnifying the Pension Benefit Guaranty Corporation (PBGC) under ERISA section 4062 or 4064 arising from terminating an employee deferred compensation plan will be considered on a case-by-case basis; provided that if insurance was required by the PBGC under ERISA section 4023, it was so obtained and the indemnification payment is not recoverable under the insurance. Consideration under the foregoing
circumstances will be primarily for the purpose of appraising the extent to which
the indemnification payment is allocable to Government work. If a beneficial or
other equitable relationship exists, the Government will participate in the
indemnification payment to the extent of its fair share.
(4) Defined contribution pension plans. This paragraph covers those pension plans
in which the contributions to be made are established in advance and the level of
benefits is determined by the contributions made. It also covers profit sharing,
savings plans, and other such plans provided the plans fall within the definition
of a pension plan in paragraph (l)(1) of this section.
(i) The pension cost assignable to a cost accounting period is the net
contribution required to be made for that period after taking into account
dividends and other credits, where applicable. However, any portion of pension
cost computed for a cost accounting period that is deferred pursuant to a waiver
granted under the provisions of ERISA (see CAS 412.50(c)(3)) will be allowable in
those future accounting periods when the funding does occur. The allowability of
these deferred contributions will be limited to the amounts that would have been
allowed had the funding been made in the year the costs would have been assigned
except for the waiver.
(ii) Any amount paid or funded to the trust before the time it becomes assignable
and allowable shall be applied to future years, in order of time, as if actually
paid and deductible in such years.
(iii) The provisions of paragraph (l)(3)(vi) of this section concerning payments
to PBGC apply to defined contribution plans.
(5) Pension plans using pay-as-you-go methods. A pension plan using pay-as-you-go
methods is a plan in which the contractor recognizes pension cost only when
benefits are paid to retired employees or their beneficiaries. Regardless of
whether the payment of pension benefits contribution can or cannot be compelled,
allowable costs for these types of plans shall not exceed an amount computed as follows:
(i) Compute, by using an actuarial cost method, the plan's actuarial liability for
benefits earned by plan participants. This entire liability is always unfunded for
a pay-as-you-go plan.
(ii) Compute a level amount which, including an interest equivalent, would
amortize the unfunded actuarial liability over a period of no less than 10 or more
than 40 years from the inception of the liability.
(iii) Compute, by using an actuarial cost method, a normal cost for the period.
(iv) The sum of paragraphs (l)(5) (i), (ii), and (iii) of this section represents
the amount of pension costs assignable to the current period. This amount,
however, is limited to the amount paid in the year.
(v) For purposes of determining contract cost where a pay-as-you-go plan is
initiated as either a supplemental plan or an additional but separate plan to a
basic funded plan, the plans will be treated as one plan; e.g., the actuarial cost
method, past service amortization period, etc., of the basic plan will be used on
the supplemental or additional pay-as-you-go plan in determining the proper costs
assignable to the current period. Any costs in excess of those determined by using
the actuarial cost method and assumptions of the basic plan are unallowable.
However, where assumption for salary progressions, mortality rates of the
participants, and so forth are significantly different, the assumptions used for
the basic and supplemental plan may be different.
(vi) The requirements of paragraphs (l)(3) (i) through (iv) of this section are
also applicable to pay-as-you-go plans.
(6) Early retirement incentive plans. An early retirement incentive plan is a plan
under which employees receive a bonus or incentive, over and above the requirement
of the basic pension plan, to retire early. These plans normally are not
applicable to all participants of the basic plan and do not represent life income
settlements, and as such would not qualify as pension costs. However, for contract
costing purposes, early retirement incentive payments are allowable subject to
pension criteria contained in paragraphs (l)(3)(i) through (iv) provided.
(i) The costs are accounted for and allocated in accordance with the contractor's
system of accounting for pension costs (see paragraph (l)(5)(v) of this section
for supplemental pension benefits);
(ii) The payments are made in accordance with the terms and conditions of the
contractor's plan;
(iii) The plan is applied only to active employees. The cost of extending the plan
to employees who retired or were terminated before the adoption of the plan is
unallowable; and
(iv) The total of the incentive payments to any employee may not exceed the amount
of the employee's annual salary for the previous fiscal year before the employee's
retirement.
(7) Employee stock ownership plans (ESOP). (i) An ESOP is an individual stock
bonus plan designed specifically to invest in the stock of the employer
corporation. The contractor's contributions to an Employee Stock Ownership Trust
(ESOT) may be in the form of cash, stock, or property. Costs of ESOP's are
allowable subject to the following conditions:
(A) Contributions by the contractor in any one year may not exceed 15 percent (25
percent when a money purchase plan is included) of salaries and wages of employees
participating in the plan in any particular year.
(B) The contribution rate (ratio of contribution to salaries and wages of
participating employees) may not exceed the last approved contribution rate except
when approved by the contracting officer based upon justification provided by the
contractor. When no contribution was made in the previous year for an existing
ESOP, or when a new ESOP is first established, and the contractor proposes to make
a contribution in the current year, the contribution rate shall be subject to the
contracting officer's approval.
(C) When a plan or agreement exists wherein the liability for the contribution can
be compelled for a specific year, the expense associated with that liability is
assignable only to that period. Any portion of the contribution not funded by the
time set for filing of the Federal income tax return for that year or any
extension thereof shall not be allowable in subsequent years.
(D) When a plan or agreement exists wherein the liability for the contribution
cannot be compelled, the amount contributed for any year is assignable to that
year provided the amount is funded by the time set for filing of the Federal
income tax return for that year.
(E) When the contribution is in the form of stock, the value of the stock
contribution shall be limited to the fair market value of the stock on the date
that title is effectively transferred to the trust. Cash contributions shall be
allowable only when the contractor furnishes evidence satisfactory to the
contracting officer demonstrating that stock purchases by the ESOT are or will be
at a fair market price; e.g., makes arrangements with the trust permitting the
contracting officer to examine purchases of stock by the trust to determine that
prices paid are at fair market value. When excessive prices are paid, the amount
of the excess will be credited to the same indirect cost pools that were charged
for the ESOP contributions in the year in which the stock purchase occurs.
However, when the trust purchases the stock with borrowed funds which will be
repaid over a period of years by cash contributions from the contractor to the
trust, the excess price over fair market value shall be credited to the indirect
cost pools pro rata over the period of years during which the contractor
contributes the cash used by the trust to repay the loan. When the fair market
value of unissued stock or stock of a closely held corporation is not readily
determinable, the valuation will be made on a case-by-case basis taking into
consideration the guidelines for valuation used by the IRS.
(ii) Amounts contributed to an ESOP arising from either (A) an additional
investment tax credit (see 1975 Tax Reduction Act); or (B) a payroll-based tax
credit (see Economic Recovery Tax Act of 1981) are unallowable.
(iii) The requirements of paragraphs (l)(3)(ii) of this section are applicable to
Employee Stock Ownership Plans.
(m) Deferred compensation. (1) Deferred compensation is an award given by an
employer to compensate an employee in a future cost accounting period or periods
for services rendered in one or more cost accounting periods before the date of
receipt of compensation by the employee. Deferred compensation does not include
the amount of year-end accruals for salaries, wages, or bonuses that are paid
within a reasonable period of time after the end of a cost accounting period.
Subject to 970.3102-2(a), deferred awards are allowable when they are based on
current or future services. Awards made in periods subsequent to the period when
the work being remunerated was performed are not allowable.
(2) The costs of deferred awards shall be measured, allocated, and accounted for
in compliance with the provisions of CAS 415, Accounting for the Cost of Deferred Compensation.
(3) Deferred compensation payments to employees under awards made before the
effective date of CAS 415 are allowable to the extent they would have been
allowable under prior acquisition regulations.
(n) Fringe benefits. Fringe benefits are allowances and services provided by the
contractor to its employees, as compensation, in addition to regular wages and
salaries. Subject to the determination that total compensation is reasonable in
accordance with this 970.3102-2, costs of fringe benefits such as pay for
vacations, holidays, sick leave, military leave, employee insurance, pension,
retirement plans, and supplemental unemployment benefit plans are to be treated as
allowable, provided such fringe benefits meet the following conditions;
(1) The benefits contribute to the performance of contract work and are
appropriate for reimbursement from public funds;
(2) Such benefit plans as exist in the contractor's private operations that are
inconsistent with DOE published requirements are appropriately modified or disallowed;
(3) Employee benefit plans especially established to meet the particular needs of
the contract are in conformity with published DOE policy and standards;
(4) Appropriate controls under the contract are established to assure that
employees on contract work are treated no more or no less favorably than employees
in the contractor's private operation, except to the extent that paragraphs (n)(2)
and (3) of this section apply;
(5) To the fullest extent possible, definite limitations or terminal points are
established for each of the various benefit plans, so that DOE's full liability
with respect thereto is established under the contract; and
(6) DOE has access to all information necessary to complete understanding of the
means of computing or determining the cost of the benefits afforded contract
employees and their dependents under the benefit plans.
(o) Training and education expenses. See 970.5204- 13 and 970.5204-14.
(p) Special compensation. The following costs are unallowable:
(1) Special compensation to employees pursuant to agreements which permit payments
in excess of the contractor's normal severance pay practices, if their employment
terminates following a change in the management control over, or ownership of, the
contractor or a substantial portion of its assets.
(2) Special compensation to employees pursuant to agreements which permit payments
resulting from a change, whether actual or prospective, in the management control
over, or ownership of, the contractor or a portion of its assets which is
contingent upon the employee remaining with the contractor for a stated period of time.
(q) Limitation on allowability of compensation for certain contractor personnel.
(1) Costs incurred for compensation of a senior executive in excess of the
benchmark compensation amount determined applicable for the contractor fiscal year
by the Administrator, Office of Federal Procurement Policy, are unallowable.
Allowable costs of executive compensation shall be determined pursuant to Federal
Acquisition Regulation 31.205-6(p).
[49 FR 12063, Mar. 28, 1984, as amended at 49 FR 26744, June 29, 1984; 49 FR
32953, Oct. 2, 1984; 55 FR 5462, Feb. 15, 1990; 56 FR 41965, Aug. 26, 1991; 63 FR
5272, Feb. 2, 1998; 63 FR 25779, May 11, 1998]
970.3102-3 Cost of money.
Cost of money as an element of the (a) cost of facilities capital (CAS 414) and
(b) cost of capital assets under construction (CAS 417) is not an allowable cost
under DOE management and operating contracts. Under the provisions of CAS 414 and
CAS 417, cost of money is an imputed cost applicable to contractor owned and
financed tangible capital assets employed in contract performance or being
constructed, fabricated, or developed for ultimate employment in contract
performance. Cost of money is not applicable to DOE management and operating
contracts since the Government provides for assets used, or under construction for
use in performance of its contracts (such as through Government furnished or
contractor-acquired Government property contract provisions and/or through
granting cash advances, including letters-of-credit.)
970.3102-4 Depreciation.
(a) Depreciation is allowable subject to the following:
(1) The charge represents normal depreciation on a contractor's plant and
equipment used in performance of management and operating work.
(2) The charge to current operations is a distribution of the cost of acquisition
of a tangible capital asset,
less estimated residual value, over the estimated useful life of the asset, in a
systematic and logical manner.
(3) Any generally accepted accounting method consistently applied to assets
concerned having the approval of the Internal Revenue Service for Federal income
tax purposes, if subject to the Internal Revenue Code of 1954, as amended, may be
used including:
(i) The straight-line method;
(ii) The declining balance method, using a rate not exceeding twice the rate which
would have been used had the annual allowance been computed under the method
described in paragraph (a)(3)(i) of this section;
(iii) The sum-of-the-years digits method;
(iv) Any other consistent method productive of an annual allowance which, when
added to all allowances for the period commencing with the use of the property and
including the current year, does not, during the first two-thirds of the useful
life of the property, exceed the total of such allowances which would have been
used, had such allowances been computed under the method described in paragraph
(a)(3)(ii) of this section.
(4) If a nonprofit or tax-exempt organization, the method shall be such that it
could have had the approval of the Internal Revenue Service, had the organization
been subject to the Internal Revenue Code of 1954, as amended.
(5) The contractor must use the same approved method of depreciation for costing
its contract work as for costing its other work at the same facility.
(6) The method of depreciation shall produce equitable and reasonable results.
(b) Depreciation of the following is unallowable:
(1) Idle or excess facilities (machinery and equipment), other than reasonable
standby facilities;
(2) Assets fully amortized or depreciated on the contractor's books;
(3) Unrealized appreciation of values of assets; and
(4) Accelerated amortization under Certificates of Necessity or other system in
excess of normal depreciation, as computed under paragraph (a) of this section.
(c) In entering into contracts involving the use of "special facilities" under
section 161 of the Atomic Energy Act of 1954, as amended (section 7 of Pub. L.
85-681 approved Aug. 19, 1958), the percentage of the total cost of such special
facilities devoted to contract performance and chargeable to the DOE should no
exceed the ratio between the period of contract deliveries and the anticipated
useful life of such facilities.
970.3102-5 Employee morale, health, welfare, food service, and dormitory costs.
(a) Employee morale, health, and welfare activities are those services or benefits
provided by the contractor to its employees to improve working conditions,
employer-employee relations, employee morale, and employee performance. These
activities include such items as house or employee publications, health or
first-aid clinics, wellness/fitness centers, employee counseling services, awards
for performance or awards made in recognition of employee achievements pursuant to
an established contractor plan or policy, and, for the purpose of this section,
food service and dormitory costs. However, these activities do not include, and
should be differentiated from compensation for personal services as defined in
970.3102-2. Food and dormitory services include operating or furnishing facilities
for cafeterias, dining rooms, canteens, lunch wagons, vending machines, living
accommodations, or similar types of services for the contractor's employees at or
near the contractor's facilities or site of the contract work.
(b) Costs of recreation, registration fees of employees participating in
competitive fitness promotions, team activities, and sporting events are
unallowable, except for the costs of employees' participation in company sponsored
intramural sports teams or employee' organizations designed to improve company
loyalty, team work, or physical fitness.
(c) Except as limited by paragraph (d) of this section, the aggregate of costs
incurred on account of all activities mentioned in paragraph (a) of this section,
less income generated by all such activities, is allowable to the extent that the
net aggregate cost of all such activities, as well as the net cost of each
individual activity, is reasonable and allocable to the contract work.
Additionally, advance understandings with respect to the costs mentioned in
paragraph (a) of this section are to be reached prior to the incurrence of these
costs as required in 48 CFR 970.3101-6.
(d) Losses from the operation of food or dormitory services may be included as
costs incurred under paragraph (c) of this section only if the contractor's
objective is to operate such services at least on a break-even basis. Losses
sustained because food services or lodging accommodations are furnished without
charge or at prices or rates which obviously would not be conducive to operation
on a break-even basis are not allowable, except in those instances where the
contractor can demonstrate that unusual circumstances exist, such that, even with
efficient management, operation of the services on a break-even basis would
require charging inordinately high prices, or prices or rates higher than those
charged by commercial establishments offering the same services in the same
geographical areas. Typical examples of such unusual circumstances are:
(1) Where the contractor must provide food or dormitory services at remote
locations where adequate commercial facilities are not reasonably available, or
(2) Where it is necessary to operate a facility at a lower volume than the
facility could economically support. Cost of food and dormitory services shall
include an allocable share of indirect expenses pertaining to these activities.
(e) In those situations where the contractor has an arrangement authorizing an
employee association to provide or operate a service such as vending machines in
the contractor's plant, and retain the profits derived therefrom, such profits
shall be treated in the same manner as if the contractor were providing the
service, except as provided in paragraph (f) of this section.
(f) Contributions by the contractor to an employee organization, including funds
set over from vending machines receipts or similar sources, may be included as
cost incurred under paragraph (c) of this section, only to the extent that the
contractor demonstrates that an equivalent amount of the costs incurred by the
employee organization would be allowable, if incurred by the contractor directly.
[63 FR 5272, Feb. 2, 1998]
970.3102-6 Facilities (plant and equipment).
(a) Use of Government-owned facilities. If the Government furnishes to the
contractor, or the contractor acquires at Government expense, Government-owned
equipment with which to do all or a significant amount of the work under the DOE
contract, on which equipment the Government is bearing the expenses of
depreciation, maintenance, insurance, and taxes, appropriate procedures must be
established to avoid apportioning to DOE work performed with DOE-owned equipment,
a share of the expenses of depreciation, maintenance, insurance and taxes on the
contractor's equipment not used to perform such work. If the Government-owned
equipment is placed in a segregated area, that area should be accounted for as a
separate department. If the Government-owned equipment is not placed at the
separate area, other steps must be taken to avoid what would amount to a double
equipment burden on work performed with the Government-owned facilities. Such work
shall be so accounted for as to be relieved of charges for expenses related to
contractor's equipment not used in its performance.
(b) Contractor's costs covering plant and equipment. Charges relating to
contractor-owned plant and equipment shall be restricted to the applicable costs,
such as depreciation, maintenance, insurance, and taxes, and shall not be on a
rental basis. (Compensation in excess of costs is covered by the fixed fee.)
Rentals of plant or equipment owned by third parties are normally allowable, if
the rates are reasonable in the light of the type, value, condition of the
property involved, and option and other provisions of the lease agreement.
However, where the plant and equipment used by the contractor is rented by the
contractor under a sale and lease-back agreement, only the normal costs (such as
depreciation, maintenance, insurance, and taxes) that would have been incurred if
the contractor had retained title to the facilities, should be allowed. Allowances
for plant and equipment rented under agreements that are not arms-length
transactions should be similarly restrictive.
970.3102-7 Political activity costs
The following costs are unallowable, except for costs associated with providing
information pursuant to 970.5204-17, unless approved by the contracting officer:
Contractor costs incurred to influence either directly or indirectly.
(a) Legislative action on any matter pending before Congress, a State legislature,
or a legislative body of a political subdivision of a State; or
(b) Federal, State, or executive body of a political subdivision of a State action
on regulatory and contract matters.
[53 FR 21648, June 9, 1988; 63 FR 5272, Feb. 2, 1998]
970.3102-8 Membership in trade, business and professional organizations.
(a) The costs of memberships in trade, business and technical organizations are
unallowable, except as approved by the contracting officer.
(b) In considering approval of membership dues, the contracting officer shall:
(1) Ensure that dues payments to an organization are clearly justified and provide
necessary and specific agency benefit;
(2) Do not constitute payments for, or in support of partisan and political
activity; and,
(3) Are solely for purposes of enhancing trade, business, or technical knowledge
necessary for, and related to, performance of DOE contracts.
970.3102-9 Outside technical and professional consultants.
Technical and professional consultants, as used here, refer to private individuals
acting in their own behalf, who make their services available on a fee or per diem
basis. It does not refer to employees of firms acting in the firm's behalf whose
services may be made available by the firm on, for example, a fixed rate basis.
Consultant arrangements may permit bringing to contract work, the services of
outstanding specialists who would not be available on a full-time basis, or whose
employment on a full-time basis would not be economically feasible. Costs of such
outside consultant services are normally allowable (however, see 970.5204-13 and
970.5204-14 regarding compensation of an individual who is employed by another
contractor and concurrently performing work on a full-time annual basis under a
DOE cost-type contract), provided that the services are essential to, and will
make a material contribution to, the performance of contract work; the services
may be performed more economically or more successfully by a consultant than by
the contractor's regular personnel; the fee or per diem charged is reasonable;
and, when approved by the contracting officer. If the cost of such services is
charged directly to the DOE contract, the cost of like items properly chargeable
only to other work of the contractor must be eliminated from indirect costs
allocable to the DOE contract (see 970.3101-2).
[49 FR 12063, Mar. 28, 1984; 49 FR 38953, Oct. 2, 1984]
970.3102-10 Overtime, shift, and holiday premiums.
(a) Overtime, shift, and holiday premiums are allowable only to the extent
provided in the contract or approved by the contracting officer. The amount of
such premiums charged to a management and operating contract shall be equitable in
relation to the amount of such costs charged to other work currently performed in
the contractor's plant and the factors which necessitate incurrence of the costs.
When the necessity for overtime, shift, and holiday work arises from inadequacy of
the contractor's plant or department to perform its total workload on a purely
straight-time basis, inclusions in overhead for apportionment to all work of the
plant or department, as the case may be, appears appropriate. When particular
work, DOE or other, is being specially expedited to a point that its fair share of
the contractor's purely straight-time efforts on a single-shift basis will not get
the particular job completed within the time desired, direct charging of the
related premiums appears appropriate.
(b) When premiums for overtime, shift, and holiday work are charged direct to the
work concerned, if the operating overhead of the plant or related department is
distributed on the basis of direct labor (cost or hours), the premiums should be
excluded from the direct labor base for purposes of overhead distribution. That
is, the direct labor base should be, as appropriate, direct labor straight-time
cost or direct labor hours actually worked. While the premiums for authorized
overtime, shift, and holiday work are acceptable as reimbursable costs, it is
generally recognized that direct labor hours worked on an overtime, shift, or
holiday basis should participate in indirect costs to the same extent as hours
worked on a straight-time basis.
970.3102-11 Page charges in scientific journals.
It is a policy of the DOE to permit DOE contractors to budget for and pay page
charges for scientific journal publication, as a necessary part of research costs,
in all cases where:
(a) The research papers report work supported by the Government.
(b) The charges are levied impartially on all research papers published by the
journal, whether by non-Government or by Government authors.
(c) Payment of such charges is in no sense a condition for acceptance of
manuscripts by the journal.
(d) The journals involved are not operated for profit.
(e) The author does not receive an emolument from the journal for the research paper.
970.3102-12 Plant reconversion costs.
Plant reconversion costs are those incurred in the restoration of the contractor's
facilities to approximately the same condition existing immediately prior to the
commencement of the contract work, fair wear and tear excepted.
970.3102-13 Precontract costs.
Precontract costs are those incurred prior to the effective date of the contract
directly pursuant to the negotiation and in anticipation of the award of the
contract, where such incurrence is necessary to comply with the proposed contract
delivery schedule. Such costs are allowable to the extent that they would have
been allowable if incurred after effective the date of the contract. They do not
include costs of preparing bids or of participation in the negotiation. The
allowability of precontract costs is dependent upon appropriate coverage in the
contract.
970.3102-14 Preparatory and make-ready costs.
Since indirect costs are usually apportioned to individual jobs wholly or
substantially on the basis of the direct labor applied to the particular job, a
contract will absorb no overhead by apportionment prior to the inception of the
actual performance of direct work on the contract. The effort of the contractor's
overhead organization in preparing for one job and in getting it underway, will
thus be absorbed by jobs previously commenced and still being performed; later,
the job, which in its initial stages of preparation and make-ready was relieved of
expenses that were actually applicable to it, will partially absorb,
through their apportionment as overhead, similar costs equally applicable in fact
to other, subsequently undertaken jobs. This procedure is in accordance with
generally accepted accounting practices and normally is reasonably equitable in
its results. The initial advantages and subsequent disadvantages to the individual
contract that result from consistent application of the procedure tend to offset
each other and balance out. It is quite appropriate, however, to employ the direct
charge method in connection with overhead costs in preparing for actual
performance by segregating such preparatory and make-ready costs and identifying
them specifically with the contract to which the effort actually pertains.
However, if preparatory and make ready costs are charged direct to a DOE contract,
care must be taken, as performance of the DOE contract work proceeds toward
completion, to segregate subsequent indirect expenses similarly applicable to the
preparation for, and commencement of, other jobs and to account for them as direct
charges to those other jobs.
970.3102-15 Procurement: Subcontracts, contractor-affiliated sources, and leases.
(a) Subcontracts. Award and management policies for subcontracts placed under
operating contracts when necessary to the performance of the required services and
work efforts of the management and operating contractor are set forth in 970.71.
The cost of performing such subcontracts shall be allowable under the DOE contract
when (1) the award/approval is otherwise in accord with the contract terms and
conditions and the provisions of 970.71 and (2) the reimbursement of subcontractor
costs of the management and operating contractor is in accordance with the
provisions of the DOE cost principles set forth in FAR 31, as appropriate to the
type of subcontractor being selected; i.e., commercial, educational, state/local
government, or nonprofit organization.
(b) Procurement or transfer from contractor-affiliated sources (See 970.7105).
Allowance for all equipment, materials, supplies, and services which are sold or
transferred between any division, subsidiary, or affiliate of a management and
operating contractor under a common control shall be on the basis of cost incurred
in accordance with the terms of the contract; except, when it is the established
practice of the transferring organization to price inter-organization transfers of
equipment, materials, supplies, and services at other than cost for commercial
work of the contractor or any division, subsidiary, or affiliate of the contractor
under a common control, allowance may be at a price when:
(1) It is based on an "established catalog or market price of commercial items
sold in substantial quantities to the general public" in accordance with 48 CFR
(FAR) Subpart 15.4 or
(2) It is the result of "adequate price competition" in accordance with 48 CFR
(FAR) Subpart 15.4 and is the price at which an award was made to the affiliated
organization, after obtaining quotations of an equal basis from such organization
and one or more outside sources which normally produce the item or its equivalent
in significant quantity, provided that in either case:
(i) The price is not in excess of the transferor's current sales price to its most
favored customer (including any division, subsidiary, or affiliate of the
contractor under a common control) for a like quantity under comparable
conditions, and
(ii) The price is not determined to be unreasonable by the contracting officer,
provided, however, that if the price is determined unreasonable, such
determination must be supported by an enumeration of facts on which it is based
and approved at a level above the contracting officer. The price determined in
accordance with paragraph (a) of this section should be adjusted, when
appropriate, to reflect the quantities being procured and may be adjusted upward
or downward to reflect the actual cost of any modifications necessary because of
contract requirements.
(c) Leases. Contractor lease payments will be considered an allowable cost when a
leasing arrangement is not prohibited by the contract terms (e.g., see
970.5204-22). If a lease for property, plant or equipment (land and/or depreciable
assets) is required to be classified as a capital lease under generally accepted
accounting principles (GAAP), imputed interest costs determined in accordance with
GAAP for any such contractor lease shall be an allowable contract charge if the
following are met:
(1) The specific decision to enter into a capital leasing arrangement is
authorized by DOE in accordance with applicable DOE procedures, prior to execution
of the lease,
(2) The lease is accounted for in accordance with GAAP, and
(3) The imputed interest costs are separately accounted for in special DOE
accounts established for the recordation of such costs.
[49 FR 12063, Mar. 28, 1984, as amended at 53 FR 24231, June 27, 1988; 55 FR
41540, Oct. 12, 1990; 63 FR 56849, Oct. 23, 1998]
970.3102-16 Relocation costs.
(a) Relocation costs are costs incident to the permanent change of duty assignment
(for an indefinite period or for a stated period of not less than 12 months) of an
existing employee or upon recruitment of a new employee. The following types of
costs are allowable as noted, subject to provisions of paragraphs (b), (c), and
(d) of this section.
(1) Costs of travel of the employee and members of his/her immediate family and
transportation of household and personal effects to the new location.
(2) Costs of finding a new home, such as advance trips by employees and spouses to
locate living quarters, and temporary lodging during the transition periods, not
exceeding separate cumulative totals of 60 days for employees and 45 days for
spouses and dependents, including advance trip time.
(3) Closing costs (i.e., brokerage fees, legal fees, appraisal fees, points,
finance charges, etc.) incident to the disposition of actual residence owned by
the employee when notified of transfer; Provided that closing costs when added to
the continuing costs described in (a)(6) of this section shall not exceed 14% of
the sales price of the property sold.
(4) Other necessary and reasonable miscellaneous expenses incident to relocation,
such as disconnection and connecting household appliances; automobile
registration; drivers license and use taxes; cutting and fitting rugs, draperies,
and curtains; forfeited utility fees and deposits; and purchase of insurance
against damage to or loss of personal property while in transit.
(5) Costs incident to the acquisition of a home in a new location, except that
these costs will not be allowable for existing employees or newly recruited
employees who prior to the relocation were not homeowners and the total costs
shall not exceed 5% of the purchase price of the new home.
(6) Continuing costs of ownership of the vacant former actual residence being
sold, such as maintenance of building and grounds (exclusive of fixing up
expenses), utilities, taxes, property insurance, mortgage interest, etc., after
settlement date or lease date of new permanent residence; provided that when added
to the closing costs described in (a)(3) of this section, the costs shall not
exceed 14% of the sales price of the property sold.
(7) Mortgage interest differential payments, except that these costs are not
allowable for existing or newly recruited employees who prior to the relocation
were not homeowners, and the total payments are limited to an amount determined as
follows:
(i) Difference between the mortgage interest rates of the old and new residence
times the current balance of the old mortgage times 3 years; and
(ii) When mortgage differential payments are made on a lump sum basis and the
employee leaves or is transferred again in less than 3 years, the amount
initially recognized shall be proportionately adjusted to reflect payments only
for the actual time of the relocation.
(8) Rental differential payments covering situations where relocated employees
retain ownership of a vacated home in the old location and rent at the new
location. The rented quarters at the new location must be comparable to those
vacated, and the allowable differential payment may not exceed the actual rental
costs for the new home, less the fair market rent for the vacated home times 3 years.
(9) Cost of canceling an unexpired lease.
(b) The costs described in (a) of this section must also meet the following
criteria to be considered allowable.
(1) The move is for the benefit of the Government.
(2) Reimbursement must be in accordance with an established policy or practice and
program that is consistently followed and is designed to motivate employees to
relocate promptly and economically.
(3) Amounts to be reimbursed do not exceed the employee's actual expenses, except
that for miscellaneous costs of the type discussed in (a)(4) of this section, a
flat amount, not to exceed $1,000, may be paid in lieu of actual costs.
(c) The following types of costs are not allowable:
(1) Loss on sale of a home.
(2) Continuing mortgage principle payments on residence being sold.
(3) Cost incident to the acquisition of a home in a new location as follows:
(i) Real estate brokers fees and commissions;
(ii) Costs of litigation;
(iii) Real and personal property insurance against damage or loss of property;
(iv) Mortgage life insurance;
(v) Owner's title policy insurance when such insurance was not previously carried
by the employees on the old residence (however, costs of a mortgage title policy
is allowable) and;
(vi) Property taxes and operating or maintenance costs.
(4) Payments for employee's income taxes or FICA (social security taxes) incident
to reimbursed relocation costs.
(5) Costs incident to furnishing equity or nonequity loans to employees or making
arrangements with lenders for employees to obtain lower-than-market rate mortgage loans.
(d) If relocation costs for an employee have been allowed and the employee resigns
within 12 months for reasons within the employee's control, it is expected the
contractor shall refund or credit the relocation costs to the Government.
(e) Contractor payments to an independent relocation assistance firm handling
acquisitions and sales of houses of transferred employees are allowable in amounts
which otherwise represent payment for itemized cost which are allowable in
accordance with the provisions of this section.
[49 FR 12063, Mar. 28, 1984, as amended at 54 FR 27649, June 30, 1989]
970.3102-17 Travel costs.
(a)(1) Commercial air travel. It is the policy of the DOE to require management
and operating contractors to use the lowest commercial airfare accommodations for
all necessary travel under the contract, except when such accommodations are not
reasonably available. Airfare costs in excess of the lesser of the lowest
available commercial discount airfare, Government contract airfare, or customary
standard (coach or equivalent) airfare, shall be disallowed except where the use
of such accommodations would: Require circuitous routing; require travel during
unreasonable hours; excessively prolong travel; result in increased cost that
would offset transportation savings; would offer accommodations not reasonably
adequate for the physical or medical needs of the traveler; or are not reasonably
available to meet necessary mission requirements. The contractor shall be required
to establish appropriate airfare travel policies and procedures requiring the use
of the lowest available commercial airfare consistent with the foregoing and
prudent travel management. Where a contractor can reasonably demonstrate to the
contracting officer, or designee, the nonavailability of discount airfare or
Government contract airfare for a particular trip or, on an overall basis, that it
is the contractor's practice to make routine use of such airfare, specific
contractor determinations of nonavailability should generally not be questioned,
unless a pattern of avoidance is detected. However, in order for airfare costs in
excess of the customary standard commercial airfare to be allowable; e.g., use of
first-class airfare, the contractor must be able to justify and document on a
case-by-case basis the applicable condition(s) set forth above.
(2) Air travel by other than commercial carrier. "Cost of travel by
contractor-owned, -leased, or -chartered aircraft," as used in this paragraph,
includes the cost of lease, charter, operation (including personnel costs),
maintenance, depreciation, insurance and other related costs. Costs of travel via
contractor-owned, -leased, and -chartered aircraft shall not exceed the cost of
commercial air travel accommodations, unless the management and operating
contractor can demonstrate that costs in excess of such amounts are necessary for
contract performance and that the increase in cost, if any, in comparison with
alternative means of transportation is commensurate with the advantage gained.
(b) Government-owned, commercial rental, and company-furnished vehicles.
Commercial rental automobile costs in excess of the cost of a Government-furnished
automobile or, when a Government-furnished automobile is not available, the cost
of a Government-contract rental automobile available under a GSA Federal Supply
Schedule contract, is unallowable unless:
(1) A Government-furnished or a Government contract rental automobile is not
reasonably available to the traveler, or
(2) The traveler's use and the cost of a commercial rental automobile are
justified and authorized as more advantageous to the Government.
(3) The costs of contractor-owned or -leased vehicles include the costs of lease, operation, maintenance, depreciation, insurance, and other similar costs. These
costs are unallowable except as approved by the contracting officer. That portion
of the cost of company-furnished automobiles that relates to personal use by
employees, including transportation to and from work is unallowable.
(c) Lodging, meals and incidental expenses. (1) Costs for lodging, meals, and
incidental expenses incurred by management and operating contractor personnel
traveling on official business in the performance of contract work are allowable
costs but subject to the limitations set forth in this subsection. Payments for
lodging, meals, and incidental expenses may be based on per diem, actual expenses,
or a combination thereof, provided the method used results in a reasonable cost to
DOE.
(2) Except as provided in paragraph (c)(3) of this section, management and
operating contractor payments for lodging, meals, and incidental expenses (as
defined in the regulations cited in paragraphs (c)(2) (i) through (iii) of this
section) shall be considered to be reasonable and allowable cost only to the
extent that they do not exceed, on a daily basis, the maximum per diem rates in
effect at the time of travel as set forth in the:
(i) Federal Travel Regulation prescribed by the General Services Administration,
for travel in the conterminous 48 United States.
(ii) Joint Travel Regulations, Volume 2, DOD Civilian Personnel, Appendix A.
prescribed by the Department of Defense, for travel in Alaska, Hawaii, the
Commonwealth of Puerto Rico, and territories and possessions of the United States;
or
(iii) Standardized Regulations (Government Civilians, Foreign Areas), section 925,
"Maximum Travel Per Diem Allowances for Foreign Areas," prescribed by the
Department of State, for travel in areas not covered in paragraphs (c)(2) (i) and
(ii) of this section.
(3) In special or unusual situations, management and operating contractor
personnel may be paid for actual expenses in excess of the above-referenced
maximum per diem rates provided such payments do not exceed the higher amounts
authorized for Federal civilians employees as permitted in the regulations
referenced in paragraph (c)(2) (i), (ii) or (iii) of this section and all of the
following conditions are met:
(i) One of the conditions warranting approval of the actual expense method, as set
forth in the regulations referenced in paragraph (c)(2)(i), (ii) or (iii) of this
section exist.
(ii) A written justification for payment of the higher amounts is approved by an
officer or appropriate official of the management and operating contractor's organization.
(iii) Documentation exists to support the payment of actual expenses incurred and
each employee expenditure in excess of $25.00 is supported by a receipt. The
approved justification required by paragraph (c)(3)(ii) and, if applicable, DOE
advance approvals required under paragraph (c)(5) of this section must also be retained.
(4) Paragraphs (c)(2) and (c)(3) of this section do not incorporate the
regulations cited in paragraphs (c)(2) (i), (ii) and (iii) of this section in
their entirety. Only the coverage in the referenced regulations dealing with
special or unusual situations, the maximum per diem rates and the definitions of
lodging, meals and incidental expenses are to be applied to management and
operating contractors.
(5) An advance agreement with respect to compliance with paragraphs (c)(2) and
(c)(3) of this section will be established in the personnel appendix of the
contract. The management and operating contractor shall also be required to obtain
advance approval from DOE, if it becomes necessary for the contractor to exercise
the authority to make payments based in the higher actual expense method
repetitively or on a continuing basis in a particular area. It is not intended
that individual contractor authorizations to pay actual expenses in excess of
applicable maximum per diem rates be approved in advance by DOE. Such before the
fact, case-by-case approvals should only be invoked when the management and
operating contractor does not have acceptable travel cost policies, procedures or
practices in effect.
(6)(i) The maximum per diem rates referenced in paragraph (c)(2) of this section
generally would not constitute a reasonable daily charge:
(A) When no lodging costs are incurred; and/or
(B) On partial travel days (e.g., same day of departure and return).
(ii) Appropriate downward adjustments from the maximum perdiem rates would
normally be required under these circumstances. While these adjustments need not
be calculated pursuant to the Federal Travel Regulation, Joint Travel Regulations,
or Standardized Regulations, they must result in a reasonable charge.
[49 FR 12063, Mar. 28, 1984 and 51 FR 43926, Dec. 5, 1986, as amended at 52 FR
1608, Jan. 14, 1987; 60 FR 30006, Jun. 7, 1995; 63 FR 5272, Feb. 2, 1998]
970.3102-18 Special funds in the construction industry.
Costs of special "funds," financed by employer contributions, in the construction
industry for such purposes as methods and materials research, public and industry
relations, market development, disaster relief, etc., are unallowable, except as
specifically authorized by the contracting officer and provided for in the
contract.
970.3102-19 Public relations and advertising.
(a) "Public relations" means all functions and activities dedicated to:
(1) Maintaining, protection, and enhancing the image of a concern or its products;
or
(2) Maintaining or promoting reciprocal understanding and favorable relations with
the public at large, or any segment of the public. The term "public relations"
includes activities associated with areas such as advertising, customer relations,
community service, etc.
(b) "Advertising" means the use of media to promote the sale of products or
services and to accomplish the activities referred to in paragraph (d) of this
section regardless of the medium employed, when the advertiser has control over
the form and content of what will appear, the media in which it will appear, and
when it will appear. Advertising media include but are not limited to conventions,
exhibits, free goods, samples, magazines, trade papers, direct mail, dealer cards,
window displays, outdoor advertising, radio, and television.
(c) Public relations and advertising costs include the costs of media time and
space, purchased services performed by outside organizations, as well as the
applicable portion of salaries, travel, and fringe benefits of employees engaged
in the functions and activities identified in paragraphs (a) and (b) of this
section.
(d) The only advertising costs that are allowable are those specifically required
by contract, approved in
advance by the contracting officer, or that arise from requirements of the
contract and that are exclusively for:
(1) Recruiting personnel required for contract performance;
(2) Acquiring scarce items for contract performance;
(3) Disposing of scrap or surplus materials acquired for contract performance;
(4) The transfer of federally owned or originated technology to State and local
governments and to the private sector; or
(5) Obtaining supplies and services including contract-required equipment, leases,
banking services, etc.
Costs of this nature are allowable to the extent that they are determined by the
contracting officer to be reasonable, necessary, and incident to contract
performance.
(e) Allowable public relations costs include the following:
(1) Costs specifically required by contract, or approved in advance by the
contracting officer.
(2) Costs of.
(i) Responding to inquiries on company policies and activities.
(ii) Communicating with the public, press, stockholders creditors, local
communities, and customers, including responses to inquiries from and initiation
of press releases and other communications with the news media.
(iii) Conducting general liaison with news media and government public relations
officers, to the extent that such activities are limited to communication and
liaison necessary to keep the public informed matters of public concern such as
notice of contract awards, plant closures or openings, employee layoffs or
rehires, financial information environmental impact of plant operations, etc.
(3) Costs of participation in community service activities (e.g., blood bank
drives, charity drives, savings bond drives, disaster assistance, outreach
programs, etc.), exclusive of contractor cash contributions and donations which
are unallowable. The contractor's cost of services or contractor-owned property
provided to support community service activities (e.g., the contractor's cost of
making payroll deductions for employee contributions to a charity, cost of
employee services provided to community organizations, or other similar, nominal
in-kind participation) is allowable.
(4) Costs of plant tours, visitors centers, and open houses (but see paragraph
(f)(5) of this section).
(f) Unallowable public relations and advertising costs include the following
activities except when the principal purpose of the activity or event is to
disseminate technical information or stimulate production in accordance with
contract requirements:
(1) All advertising costs other than those specified in paragraph (d) of this
section.
(2) Costs of air shows and other special events, such as conventions and trade
shows including:
(i) Costs of displays, demonstrations and exhibits;
(ii) Costs of meeting rooms, hospitality suites, and other special facilities used
in conjunction with shows and other special events; and
(iii) Salaries and wages of employees engaged in setting up and displaying
exhibits, making demonstrations, and providing briefings.
(3) Costs of sponsoring meetings, symposia, seminars, and other special events.
(4) Costs of ceremonies such as corporate celebrations and new product
announcements.
(5) Costs of promotional material, motion pictures, videotapes, brochures,
handouts, magazines, and other media that are designed to benefit the contractor's
organization by calling favorable public attention to contractor activities.
(g) Unallowable public relations and advertising costs include the following:
(1) Costs of souvenirs, models, imprinted clothing, buttons, and other mementos
provided to customers or the public.
(2) Cost of memberships in civic and community organizations.
(3) All advertising and public relations costs, other than as specified in
paragraphs (d), (e) and (f) of this section, whose primary purpose is to benefit
the contractor's organization by promoting the sale of products or services by
stimulating interest in a product or product line or by disseminating messages
calling favorable attention to the contractor for purposes of enhancing the
company image to sell the company's products or services unless such sales
activities are required under the management and operating contract to support the
DOE mission. Nothing in this paragraph (g)(3) modifies the express unallowability
of costs listed in paragraphs (f), (g)(1) and (g)(2) of this section. The purpose
of this paragraph is to provide criteria for determining whether advertising and
public relations costs not specifically identified should be unallowable.
[52 FR 1608, Jan. 14, 1987]
970.3102-20 Cost prohibitions related to legal and other proceedings.
(a) Contractor costs incurred in connection with a criminal, civil or
administrative proceeding involving contractor violation of, or failure to comply
with, a Federal, State, local or foreign statute or regulation are subject to the
allowable costs limitations established in section 8 of The Major Fraud Act of
1988, Pub. L. 100-700 (see 41 U.S.C. 256).
(b) Implementation of the Major Fraud Act's contract cost limitations is specified
in the applicable cost principles clauses at 970.5204-13(e)(33) or 970.5204-
14(e)(31). Definitive cost principle criteria for determining the allowability of
an M&O contractor's costs incurred in connection with a criminal, civil or
administrative proceeding are set forth in the contract clause at 970.5204-61. Any
change made to the cost principle criteria specified therein constitutes a
deviation requiring Procurement Executive approval pursuant to 970.3100-3.
[52 FR 1609, Jan. 14, 1987 and 58 FR 61625, Nov. 22, 1993]
970.3102-21 Fines and penalties.
It is Department of Energy policy not to reimburse management and operating
contractors for fines and penalties except as provided in 48 CFR (DEAR)
970.5204-13(e)(12), Allowable Costs and Fixed Fee (Management and Operating
Contracts), 48 CFR (DEAR) 970.5204-14(e)(10), Allowable Costs and Fixed Fee
(Support Contracts), and 48 CFR (DEAR) 970.5204-75, Preexisting Conditions.
[62 FR 34842, Jun. 27, 1997]
970.3103 Contract clauses.
(a) The appropriate cost principles clause at 970.5204- 13 or 970.5204-14 shall be
included in a management and operating contract.
(b) The political activity cost prohibition clause at 48 CFR 970.5204-17 shall be
included in all M&O contracts.
(c) The clause setting forth cost prohibitions related to legal and other
proceedings at 970.5204-61 shall be included in all M&O contracts.
(d) The clause at 970.5204-75, Preexisting Conditions, shall be included in
management and operating contracts. Alternate I of the clause shall be inserted in
management and operating contracts with incumbent contractors. Alternate II shall
be inserted in contracts with contractors not previously working at that
particular site or facility.
[49 FR 12090, Mar. 28, 1984. Correctly designated at 52 FR 1610, Jan. 14, 1987,
and amended at 53 FR 21648, June 9, 1988; 62 FR 34842, Jun. 27, 1997; 63 FR 5272,
Feb. 2, 1998]
Subpart 970.32.Contract Financing
970.3201 General.
It is the policy of the DOE to finance management and operating contracts through
advance payments and use of Special Bank Accounts. Appropriate procedures for
properly managing and controlling funds for obligation and expenditure under a
management and operating contract are maintained by the Chief Financial Officer, Headquarters.
970.3202 Advance payments.
(a) The Head of the Contracting Activity, shall authorize advance payments without
interest; and approve the findings, determinations and the contract terms and
conditions concerning advance payments in accordance with the procedures set forth
in FAR Subpart 32.4, Advance Payments, as amended by Subpart 932.4.
(b) Advance payments shall be made under a letter-of-credit arrangement for
deposit in a special bank account.
(c) Prior to providing any advance payments, the contracting officer shall enter
into an agreement with the contractor and a financial institution, regarding a
special bank account where the advanced funds are to be deposited by the
Government. Such agreement shall (1) provide that DOE shall retain title to the
unexpended balance of funds in the special bank account including revenues if any,
deposited by the contractor; and that such title shall be superior to any claim or
lien of the bank of deposit and (2) incorporate as necessary or appropriate,
additional financial provisions required by Treasury or Departmental financial regulations.
(d) Deviations from these specified requirements cited in paragraph (c) above
shall be considered a deviation requiring approval of the Head of the Contracting Activity.
(e) Letter-of-Credit arrangements shall be prepared in accordance with FAR 32.406,
Letters of Credit, and shall be coordinated between the procurement and finance organizations.
970.3270 Clauses.
The clauses at 970.5204-16 shall be included in management and operating contracts
when advances of funds are to be placed in a special bank account. They may be
appropriately modified to incorporate any additional provisions that may be
required by governing financial regulations of the Treasury Department or the Department.
970.3271 Special bank account agreement.
NOTE: The following agreement shall be used with special bank accounts in
accordance with 970.3202(c).
Agreement entered into this .. day of ..., 19 ., between the United States of
America (hereinafter called the Government) represented herein by the Department
of Energy (hereinafter called the "DOE"), and .... (hereinafter called the
"Contractor," a corporation under the laws of the State of ...., and ....,
(hereinafter called the "Bank,") a banking corporation under the laws of ....,
located at .....
RECITALS
(a) On the date of ..., 19 ., DOE and the Contractor entered into Contract(s) No.
...., or a supplemental agreement thereto, providing for the making of advances of
Government funds to the contractor a copy of such advance provisions has been
furnished to the Bank.
(b) DOE requires that amounts advanced to the Contractor under said contract or
supplemental agreement be deposited in a Special Bank Account or accounts with a
bank designated by the Treasury Department as depositary and financial agent of
the Government (Section 10 of the Act of June 11, 1942, 56 Stat. 356; 12 U.S.C.
265), separate from any of the Contractor's general or other funds; and, the Bank
being such a bank, the parties are agreeable to so depositing said amounts with
the Bank.
(c) This Special Bank Account shall be designated ".... (Name of Contractor), ...
(Contract Number), Department of Energy Special Bank Account."
COVENANTS
In consideration of the foregoing, and for other good and valuable considerations,
it is agreed that,
(1) The Government shall have title to the credit balance in said account to
secure the return of all advances made to the contractor, which title shall be
superior to any lien or claim of the Bank or others with respect to such account.
(2) The Bank will be bound by the provisions of said contract or contracts relating to the deposit and withdrawal of funds in the above Special Bank Account, but shall not be responsible for the application of funds properly withdrawn from said account. After
receipt by the Bank of written directions from the contracting officer, or from
the duly authorized representative of the contracting officer, the Bank shall act
thereon and shall be under no liability to any party hereto for any action taken
in accordance with the said written directions.
(3) The Government, or its authorized representatives, shall have access to the
books and records maintained by the Bank with respect to such Special Bank Account
at all reasonable times and for all reasonable purposes, including, without
limitation, the inspection or copying of such books and records and any and all
memoranda, checks, correspondence, or documents pertaining thereto. Except as
agreed upon by the Government and the Bank, all books and records pertaining to
the Special Bank Account in the possession of the Bank relating to the Special
Bank Account agreement shall be preserved by the Bank for a period of three (3)
years after final payment under the contract to which the Special Bank Account
agreement pertains or otherwise disposed of in such manners as may be agreed upon
by the Government and the Bank.
(4) In the event of the services of any writ of attachment, levy of execution, or
commencement of garnishment proceedings with respect to the Special Bank Account,
the Bank will promptly notify the Head of the Contracting Activity, DOE.
In witness whereof the parties hereto have caused this Agreement to be executed,
as of the day and year first above written.
(Signatures and Official Titles)____________________________
____________________________________________________
970.3272 Reduction or suspension of advance, partial, or progress payments.
(a) The procedures prescribed at FAR 32.006 shall be followed.
(b) The agency head has delegated their responsibilities under this section to the
Senior Procurement Executive.
(c) The remedy coordination official is responsible for receiving, assessing, and
making recommendations to the Senior Procurement Executive.
(d) The contracting officer shall insert the clause at 48 CFR 970.5204-85,
Reduction or suspension of contract payments, in management and operating contracts.
[63 FR 5272, Feb. 2, 1998]
Subpart 970.36.Construction and A-E Contracts
970.3601 Special construction clause for operating contracts.
The clause in 970.5204-38 shall be used in management and operating contracts when
the contractor will not perform covered work with its own forces but may procure
construction by subcontract.
[49 FR 12063, Mar. 28, 1984. Redesignated at 53 FR 24231, June 27, 1988]
Subpart 970.41.Acquisition of Utility Services
970.4100 General.
(a) Utility services defined at FAR 41.101 for the furnishing of electricity, gas
(natural or manufactured), steam, water, and/or sewerage to facilities owned or
leased by DOE shall be acquired directly by DOE and not by a contractor using a
subcontractor arrangement, except as provided in (b) below.
(b) Where it is determined to be in the best interest of the Government, a
Contracting Activity may authorize a management and operating contractor for a
facility to acquire such utility service for the facility, after requesting and
receiving concurrence to make such an authorization from the Director, Public
Utilities Branch, Headquarters. Any request for such concurrence should be
included in the Utility Service Requirements and Options Studies required by DOE
directives in subseries 4540 (Public Services). Alternatively, it may be made in a
separate document submitted to the Director of that office early in the
acquisition cycle. Any request shall set forth why it is in the best interest of
the DOE to acquire utility service(s) by subcontract, i.e., what the benefits are,
such as economic advantage.
(c) The requirements of FAR part 41, this section, and DOE directives in subseries
4540 shall be applied to a subcontract level acquisition for furnishing utility
services to a facility owned or leased by DOE.
[56 FR 41965, Aug. 26, 1991; 62 FR 2310, Jan. 16, 1997]
Subpart 970.45.Government Property
970.4501 Contract clause.
The contracting officer shall insert the clause at 970.5204-21, Property, in
management and operating contracts. Paragraph (f)(1)(iii) applies to a non-profit
contractor only to the extent specifically provided in the individual contract.
[62 FR 34842, Jun. 27, 1997]
Subpart 970.49.Termination of Contracts
970.4901 General.
All management and operating contracts, regardless of whether they are for production, research and
development, or services, shall contain appropriate termination provisions.
[49 FR 12063, Mar. 28, 1984, as amended at 53 FR 24231, June 27, 1988]
970.4902 Termination clause.
The clause at 970.5204-45 shall be inserted into management and operating contracts.
Subpart 970.51.Use of Government Sources by Contractors
970.5101 Use of Government supply sources.
(a) Management and operating contractors should meet their acquisition
requirements from Government sources of supply, when these sources are made
available to them and if it is economically advantageous or otherwise in the best
interest of the Government.
(b) Contracting officers may authorize management and operating contractors and
their subcontractors with cost-reimbursement type subcontracts, where all
higher-tier subcontracts are cost-reimbursement types, to acquire materials and
services directly from such Government sources of supply in accordance with the
requirements of this subpart or the consent of agencies involved.
(c) Materials, supplies, and equipment procured from Government sources of supply
under the procedures described herein must be used exclusively in connection with
management and operating contract work, except as otherwise authorized by the
Heads of the Contracting Activities.
(d) Many supply facilities and contracts of the Department of Defense are made
available to DOE and its management and operating contractors. Accordingly:
(1) Requisitions or purchase orders shall be submitted directly to these sources,
unless otherwise specified. Field offices will be notified by the Procurement
Executive, or designee, when such contracts and facilities are made available.
Inquiries in connection with these sources may be directed to the Procurement Executive.
(2) Contractor requisitions submitted to Defense Logistics Centers should include
the following statement. "The consignee of the supplies and materials
requisitioned herein is acting in behalf of and as agent for the Department of
Energy with respect to the expenditure of Government funds." Orders submitted
directly to DOD contractors shall be accompanied by an authorization substantially
similar to that in FAR 51.103.
(e) Contracting officers, when reviewing the procurement systems and methods of
contractors that have been authorized to use Government sources of supply, shall
assure that provision is made for documenting the justification of procurements
from commercial sources of items available from Government sources of supply.
(f) Direct procurement by DOE, rather than by a management and operating
contractor, shall be required where deemed necessary by the Head of the
Contracting Activity in order to carry out special requirements of appropriation
acts or other applicable laws relating to particular items.
(g) The Procurement Executive shall be informed of instances in which Government
sources of supply are not used because of the quality of the items available or
when a Federal Supply Schedule contractor refuses to honor an order.
[49 FR 12063, Mar. 28, 1984; 49 FR 38953, Oct. 2, 1984]
970.5102 Use of interagency motor pool vehicles and related services.
The provisions of FAR subpart 51.2, FPMR 41 CFR 101-39, and DOE-PMR 41 CFR 109-39 apply.
Subpart 970.52.Contract Clauses for Management and Operating Contracts
970.5201 General policy.
Many of the clauses set forth in subparts of FAR Part 52 and Part 952 of this
chapter apply to management and operating contracts. The clauses in this subpart
are to be used in addition to or in place of the FAR or the DEAR counterpart
contract clauses where appropriate. Further modifications and notes to certain FAR
clauses are also prescribed, in addition to those set forth in Part 952.
970.5202 Deviations.
Deviations from FAR and DEAR contract clauses and solicitation provisions shall be
made only in accordance with the deviation procedures of 48 CFR (FAR) Subpart 1.4
and written internal Departmental procedures.
[63 FR 56849, Oct. 23, 1998]
970.5203 Modifications and notes to FAR clauses.
970.5203-1 Covenant against contingent fees.
Insert the clause at FAR 52.203-5.
[60 FR 49516, Sept. 26, 1995
970.5203-2 [Reserved]
[61 FR 21975, May 13, 1996]
970.5203-3 Buy American Act.
Insert the clause at FAR 52.225-3 but substitute "use" for "deliver" in paragraph (b).
[49 FR 12063, Mar. 28, 1984, as amended at 56 FR 41965, Aug. 26, 1991]
970.5204 Clauses to be used in addition to or in place of the contract clauses
set forth in FAR 52 and DEAR 952.
970.5204-1 Security.
(a) As prescribed in 970.0404-4(a)(1), insert the Security clause found at
952.204-2 and the Classification/Declassification clause found at 952.204-70.
(b) As prescribed in 970.0404-4(a)(2), insert the following Counterintelligence
clause in contracts containing the security and classification/declassification clauses:
Counterintelligence (SEP 1997)
(a) The contractor shall take all reasonable precautions in the work under this
contract to protect DOE programs, facilities, technology, personnel, unclassified
sensitive information and classified matter from foreign intelligence threats and
activities conducted for governmental or industrial purposes, in accordance with
DOE Order 5670.3, Counterintelligence Program; Executive Order 12333, U.S.
Intelligence Activities; and other pertinent national and Departmental
Counterintelligence requirements.
(b) The contractor shall appoint a qualified employee(s) to function as the
Contractor Counterintelligence Officer. The Contractor Counterintelligence Officer
will be responsible for conducting defensive Counterintelligence briefings and
debriefings of employees traveling to foreign countries or interacting with
foreign nationals; providing thoroughly documented written reports relative to
targeting, suspicious activity and other matters of Counterintelligence interest;
immediately reporting targeting, suspicious activity and other Counterintelligence
concerns to the DOE Headquarters Counterintelligence Division; and providing
assistance to other elements of the U.S. Intelligence Community as stated in the
aforementioned Executive Order, the DOE Counterintelligence Order, and other
pertinent national and Departmental Counterintelligence requirements.
[62 FR 51800, Oct. 3, 1997]
970.5204-2 Integration of environment, safety, and health into work planning and execution.
As prescribed in 48 CFR (DEAR) 970.2303-2(a), insert the following clause.
INTEGRATION OF ENVIRONMENT, SAFETY, AND HEALTH
INTO WORK PLANNING AND EXECUTION (JUNE 1997)
(a) For the purposes of this clause,
(1) Safety encompasses environment, safety and health, including pollution
prevention and waste minimization; and
(2) Employees include subcontractor employees.
(b) In performing work under this contract, the contractor shall perform work
safely, in a manner that ensures adequate protection for employees, the public,
and the environment, and shall be accountable for the safe performance of work.
The contractor shall exercise a degree of care commensurate with the work and the
associated hazards. The contractor shall ensure that management of environment,
safety and health (ES&H) functions and activities becomes an integral but visible
part of the contractor's work planning and execution processes. The contractor
shall, in the performance of work, ensure that:
(1) Line management is responsible for the protection of employees, the public,
and the environment. Line management includes those contractor and subcontractor
employees managing or supervising employees performing work.
(2) Clear and unambiguous lines of authority and responsibility for ensuring
(ES&H) are established and maintained at all organizational levels.
(3) Personnel possess the experience, knowledge, skills, and abilities that are
necessary to discharge their responsibilities.
(4) Resources are effectively allocated to address ES&H, programmatic, and
operational considerations. Protecting employees, the public, and the environment
is a priority whenever activities are planned and performed.
(5) Before work is performed, the associated hazards are evaluated and an
agreed-upon set of ES&H standards and requirements are established which, if
properly implemented, provide adequate assurance that employees, the public, and
the environment are protected from adverse consequences.
(6) Administrative and engineering controls to prevent and mitigate hazards are
tailored to the work being performed and associated hazards. Emphasis should be on
designing the work and/or controls to reduce or eliminate the hazards and to
prevent accidents and unplanned releases and exposures.
(7) The conditions and requirements to be satisfied for operations to be initiated and conducted are established and agreed- upon by DOE and the contractor. These agreed-upon conditions and requirements
are requirements of the contract and binding upon the contractor. The extent of
documentation and level of authority for agreement shall be tailored to the
complexity and hazards associated with the work and shall be established in a
Safety Management System.
(c) The contractor shall manage and perform work in accordance with a documented
Safety Management System (System) that fulfills all conditions in paragraph (b) of
this clause at a minimum. Documentation of the System shall describe how the
contractor will:
(1) Define the scope of work;
(2) Identify and analyze hazards associated with the work;
(3) Develop and implement hazard controls;
(4) Perform work within controls; and
(5) Provide feedback on adequacy of controls and continue to improve safety management.
(d) The System shall describe how the contractor will establish, document, and
implement safety performance objectives, performance measures, and commitments in
response to DOE program and budget execution guidance while maintaining the
integrity of the System. The System shall also describe how the contractor will
measure system effectiveness.
(e) The contractor shall submit to the contracting officer documentation of its
System for review and approval. Dates for submittal, discussions, and revisions to
the System will be established by the contracting officer. Guidance on the
preparation, content, review, and approval of the System will be provided by the
contracting officer. On an annual basis, the contractor shall review and update,
for DOE approval, its safety performance objectives, performance measures, and
commitments consistent with and in response to DOE's program and budget execution
guidance and direction. Resources shall be identified and allocated to meet the
safety objectives and performance commitments as well as maintain the integrity of
the entire System. Accordingly, the System shall be integrated with the
contractor's business processes for work planning, budgeting, authorization,
execution, and change control.
(f) The contractor shall comply with, and assist the Department of Energy in
complying with, ES&H requirements of all applicable laws and regulations, and
applicable directives identified in the clause of this contract on Laws,
Regulations, and DOE Directives. The contractor shall cooperate with Federal and
non-Federal agencies having jurisdiction over ES&H matters under this contract.
(g) The contractor shall promptly evaluate and resolve any noncompliance with
applicable ES&H requirements and the System. If the contractor fails to provide
resolution or if, at any time, the contractor's acts or failure to act causes
substantial harm or an imminent danger to the environment or health and safety of
employees or the public, the contracting officer may issue an order stopping work
in whole or in part. Any stop work order issued by a contracting officer under
this clause (or issued by the contractor to a subcontractor in accordance with
paragraph (i) of this clause) shall be without prejudice to any other legal or
contractual rights of the Government. In the event that the contracting officer
issues a stop work order, an order authorizing the resumption of the work may be
issued at the discretion of the contracting officer. The contractor shall not be
entitled to an extension of time or additional fee or damages by reason of, or in
connection with, any work stoppage ordered in accordance with this clause.
(h) The contractor is responsible for compliance with the ES&H requirements
applicable to this contract regardless of the performer of the work.
(i) The contractor shall include a clause substantially the same as this clause in
subcontracts involving complex or hazardous work on site at a DOE-owned or -leased
facility. Such subcontracts shall provide for the right to stop work under the
conditions described in paragraph (g) of this clause. Depending on the complexity
and hazards associated with the work, the contractor may require that the
subcontractor submit a Safety Management System for the contractor's review and approval.
[62 FR 34842, Jun. 27, 1997]
970.5204-3 Buy American Act.Construction materials.
Include the clause at FAR 52.225-5 when the contract contains construction.
970.5204-4 New Mexico Gross Receipts and Compensating Tax.
Insert the clause at FAR 52.229-10, as prescribed in FAR 29.401-6(b), as modified
by the following note.
NOTE: In small paragraph (b) of this clause, replace the phrase "Allowable Cost
and Payment clause" with "Allowable Costs and Fixed Fee Clause" or, if it is
different, the title of the clause addressing allowable costs.
[55 FR 5462, Feb. 15, 1990]
970.5204-5 Disclosure of information.
As prescribed in 970.0404-4, insert the clause at 952.204-72.
[59 FR 9102, Jun 25, 1994]
970.5204-6 Nuclear hazards indemnity.
As prescribed in 950.7006(a), insert the clause at 952.250-70, when appropriate.
970.5204-7 Protecting the Government's interest when subcontracting with
contractors debarred, suspended, or proposed for debarment.
Include the clause at FAR 52.209-6 as prescribed in FAR 9.409(b).
[60 FR 49516, Sept. 26, 1995]
970.5204-8 Indemnity assurance to architect-engineer or supplier prior to
operation of a nuclear facility.
As prescribed in 950.7006(a), insert the clause at 952.250-70, when appropriate.
[49 FR 12063, Mar. 28, 1984, as amended at 56 FR 57830, Nov. 14, 1991]
970.5204-9 Accounts, records, and inspection.
As prescribed in 970.0407, use the following clause.
ACCOUNTS, RECORDS, AND INSPECTION (JUN 1996)
(a) Accounts. The contractor shall maintain a separate and distinct set of
accounts, records, documents, and other evidence showing and supporting all
allowable costs incurred, revenues or other applicable credits, fixed-fee
accruals, and the receipt, use, and disposition of all Government property coming
into the possession of the contractor under this contract. The system of accounts
employed by the contractor shall be satisfactory to DOE and in accordance with
generally accepted accounting principles consistently applied.
NOTE: If the contract includes the clause for "Price Reduction for Defective Cost
or Pricing Data" set forth at FAR 52.215-11, paragraph (a) above should be
modified by adding the words "or anticipated to be incurred" after the words
"allowable costs incurred."
(b) Inspection and audit of accounts and records. All books of account and records
relating to this contract shall be subject to inspection and audit by DOE at all
reasonable times, before and during the period of retention provided for in (d)
below, and the contractor shall afford DOE proper facilities for such inspection
and audit.
(c) Audit of subcontractors' records. The contractor also agrees, with respect to
any subcontracts (including fixed-price or unit-price subcontracts or purchase
orders) where, under the terms of the subcontract, costs incurred are a factor in
determining the amount payable to the subcontractor of any tier, to either conduct
an audit of the subcontractor's costs or arrange for such an audit to be performed
by the cognizant government audit agency through the contracting officer.
(d) Disposition of records. Except as agreed upon by the Government and the
contractor, all financial and cost reports, books of account and supporting
documents, and other data evidencing costs allowable, revenues, and other
applicable credits under this contract, shall be the property of the Government,
and shall be delivered to the Government or otherwise disposed of by the
contractor either as the contracting officer may from time to time direct during
the progress of the work or, in any event, as the contracting officer shall direct
upon completion or termination of this contract and final audit of accounts
hereunder. Except as provided in this contract, all other records in the
possession of the contractor relating to this contract shall be preserved by the
contractor for a period of three years after final payment under this contract or
otherwise disposed of in such manner as may be agreed upon by the Government and
the contractor.
(e) Reports. The contractor shall furnish such progress reports and schedules,
financial and cost reports, and other reports concerning the work under this
contract as the contracting officer may from time to time require.
(f) Inspections. The DOE shall have the right to inspect the work and activities
of the contractor under this contract at such time in such manner as it shall deem
appropriate.
(g) Subcontracts. The contractor further agrees to require the inclusion of
provisions similar to those in paragraphs (a) through (g) and paragraph (i) of
this clause in all subcontracts (including fixed-price or unit-price subcontracts
or purchase orders) of any tier entered into hereunder where, under the terms of
the subcontract, costs incurred are a factor in determining the amount payable to
the subcontractor.
NOTE: If the prime contract contains a "Defective Cost or Pricing Data" clause,
this paragraph (g) shall be modified by adding the following:
The contractor further agrees to include an "Audit" clause, the substance of which
is the "Audit" clause set forth at FAR 52.215-2, in each subcontract which does
not include provisions similar to those in paragraph (a) through paragraph (g) and
paragraph (i) of this clause, but which contains a "defective cost or pricing
data" clause.
(h) Internal audit. The contractor agrees to conduct an internal audit and
examination satisfactory to DOE of the records, operations, expenses, and the
transactions with respect to costs claimed to be allowable under this contract
annually and at such other times as may be mutually agreed upon. The results of
such audit, including the working papers, shall be submitted or made available to
the contracting officer.
NOTE: This paragraph (h) shall be included in (a) all cost-type contracts (or
subcontracts) involving an estimated cost exceeding $5 million and expected to run
more than 2 years, and (b) any other cost-type contract (or subcontract) where
deemed advisable by the Head of the Contracting Activity and when the contractor
(or subcontractor) already has an established internal audit organization.
(i) Comptroller General. (1) The Comptroller General of the United States, or an
authorized representative, shall have access to and the right to examine any of
the contractor's directly pertinent records involving transactions related to this
contract or a subcontract hereunder.
(2) This paragraph may not be construed to require the contractor or subcontractor
to create or maintain any record that the contractor or subcontractor does not
maintain in the ordinary course of business or pursuant to a provision of law.
(3) Nothing in this contract shall be deemed to preclude an audit by the General
Accounting Office of any transaction under this contract.
[61 FR 21975, May 13, 1996; 63 FR 56849, Oct. 23, 1998]
970.5204-10 Foreign ownership, control, or influence over contractors (FOCI).
(a) Insert the clause at 952.204-73 in a solicitation for a management and
operating contract.
(b) Insert the clause at 952.204-74 in management and operating contracts as
prescribed at 970.0404-4.
[49 FR 12063, Mar. 28, 1984, as amended at 56 FR 41965, Aug. 26, 1991]
970.5204-11 Changes.
Insert the following clause.
CHANGES (APR 1984)
(a) Changes and adjustment of fee. The contracting officer may at any time and without notice to the sureties, if any, issue written directions within the general scope of this contract requiring additional work or directing the omission of, or variation in, work
covered by this contract. If any such direction results in a material change in
the amount or character of the work described in the "Statement of Work," an
equitable adjustment of the fee, if any, shall be made in accordance with the
agreement of the parties and the contract shall be modified in writing
accordingly. Any claim by the contractor for an adjustment under this clause must
be asserted in writing within 30 days from the date of receipt by the contractor
of the notification of change; provided, however, that the contracting officer, if
he decides that the facts justify such action, may receive and act upon any such
claim asserted at any time prior to final payment under this contract. A failure
to agree on an equitable adjustment under this clause shall be deemed to be a
dispute within the meaning of the clause entitled "Disputes."
(b) Work to continue. Nothing contained in this clause shall excuse the contractor
from proceeding with the prosecution of the work in accordance with the
requirements of any direction hereunder.
970.5204-12 Contractor's organization.
As prescribed in 970.2272(b)(2), insert the following clause.
CONTRACTOR'S ORGANIZATION (JUL 1994)
(a) Organization chart. As promptly as possible after the execution of this
Contract, the contractor shall furnish to the contracting officer a chart showing
the names, duties, and organization of key personnel to be employed in connection
with the work, and shall furnish from time to time supplementary information
reflecting changes therein.
(b) Supervisory representative of contractor. Unless otherwise directed by the
contracting officer, a competent full-time resident supervisory representative of
the contractor satisfactory to the contracting officer shall be in charge of the
work at the site at all times. This also applies to off-site work.
(c) Control of employees. The contractor shall be responsible for maintaining
satisfactory standards of employee competency, conduct, and integrity and shall be
responsible for taking such disciplinary action with respect to his employees as
may be necessary. In the event the contractor fails to remove any employee from
the contract work whom DOE deems incompetent, careless, or insubordinate, or whose
continued employment on the work is deemed by DOE to be contrary to the public
interest, the Government reserves the right to require the contractor to remove
the employee.
NOTE: The contracting officer may substitute the following paragraph for (c) above.
(c) The contractor shall be responsible for maintaining satisfactory standards of
employee competency, conduct, and integrity and shall be responsible for taking
such disciplinary action with respect to its employees as may be necessary. The
contractor shall establish such standards and procedures as are necessary to
implement effectively the provisions set forth in 970.2272, and such standards and
procedures shall be subject to the approval of the contracting officer.
[49 FR 12063, Mar. 28, 1984; 49 FR 38953, Oct. 2, 1984, as amended at 56 FR 41965,
Aug. 26, 1991]
970.5204-13 Allowable costs and fixed-fee (Management and Operating contracts).
As prescribed in 48 CFR (DEAR) 970.3103(a), insert the following clause.
ALLOWABLE COSTS AND FIXED-FEE (MANAGEMENT AND
OPERATING CONTRACTS) (MAR 1998)
(a) Compensation for contractor's services. Payment for the allowable costs as
hereinafter defined, and of the fixed-fee, if any, as hereinafter provided, shall
constitute full and complete compensation for the performance of the work under
this contract.
(b) Fixed-fee. The fixed-fee payable to the contractor for the performance of the
work under this contract is $.... There shall be no adjustment in the amount of
the contractor's fixed-fee by reason of differences between any estimate of cost
for performance of the work under this contract and the actual costs for
performance of that work.
NOTE: This provision to this paragraph may be appropriately changed to cover
situations where the fee is for a period of time or different fees are allowed for
various phases of the work.
(c) Allowable costs. The allowable cost of performing the work under this contract
shall be the costs and expenses that are actually incurred by the contractor in
the performance of the contract work in accordance with its terms, that are
necessary or incident thereto, and that are determined to be allowable as set
forth in this paragraph. The determination of allowability of cost shall be based on:
(1) Allowability and reasonableness in accordance with FAR 31.201-2(d) and 31.201-3;
(2) Standards promulgated by the Cost Accounting Standards Board, if applicable;
otherwise, generally accepted accounting principles and practices appropriate to
the particular circumstances; and
(3) Recognition of all exclusions and limitations set forth in this clause or
elsewhere in this contract as to types or amounts of items of cost. Allowable
costs shall not include the cost of any item described as unallowable in paragraph
(e) of this clause except as indicated therein. Failure to mention an item of cost
specifically in paragraphs (d) or (e) of this clause shall not imply either that
it is allowable or that it is unallowable.
(d) Items of allowable cost. Subject to the other provisions of this clause, the
following items of cost of work done under this contract shall be allowable to the
extent indicated:
(1) Bonds and insurance, including self-insurance, as provided in the clause
entitled, Insurance--Litigation and Claims.
(2) Communication costs, including telephone services, local and long-distance
calls, telegrams, cablegrams, postage, and similar items.
(3) Consulting services (including legal and accounting), and related expenses, as
approved by the contracting officer, except as made unallowable by paragraphs
(e)(16) and (e)(26).
(4) Reasonable litigation and other legal expenses, including counsel fees, if
incurred in accordance with the clause of the contract entitled,
Insurance--Litigation and Claims, and the DOE approved contractor litigation
management procedures (including cost guidelines) as such procedures may be
revised from time to time, and if not otherwise made unallowable in this contract.
(5) Losses and expenses (including settlements made with the consent of the
contracting officer) sustained by the contractor in the performance of this
contract and certified in writing by the contracting officer to be reasonable,
except the losses and expenses expressly made unallowable under other provisions
of this contract.
(6) Materials, supplies, and equipment, including freight transportation, material
handling, inspection, storage, salvage, and other usual expenses incident to the
procurement, use and disposition thereof, subject to approvals required under
other provisions of this contract.
(7) Patents, purchased design, and royalty payments to the extent expressly
provided for under other provisions in this contract or as approved by the
contracting officer, and preparation of invention disclosures, reports and related
documents, and searching the art to the extent necessary to make such invention
disclosures in accordance with any "Patent Rights" clause of this contract.
(8) Personnel costs and related expenses incurred in accordance with the personnel
appendix which is hereby incorporated by reference and made a part of this
contract. It is specifically understood and agreed that said personnel appendix
sets forth in detail personnel costs and related expenses to be allowable under
this contract and is intended to document those personnel policies, practices and
plans which have been found acceptable by the contracting officer. It is further
understood and agreed that the contractor will advise DOE of any proposed changes
in any matters covered by said policies, practices or plans which relate to this
item of cost, and that the personnel appendix may be modified from time to time in
writing by mutual agreement of the contractor and DOE without execution of an
amendment to this contract for the purpose of effectuating any such changes in, or
additions to, said personnel appendix as may be agreed upon by the parties. Such
modifications shall be evidenced by execution of written numbered approval letters
from the contracting officer or his representative. Types of personnel costs and
related expenses to be incorporated into the personnel appendix, or amendments
thereto, are as follows:
(i) Salaries and wages; bonuses and incentive compensation; overtime, shift
differential, holiday, and other premium pay for time worked; nonwork time,
including vacations, holidays, sick, funeral, military, jury, witness, and voting
leave; salaries and wages to employees in their capacity as union stewards and
committeemen for time spent in handling grievances, or serving on labor management
(contractor) committees, provided, however, that the contracting officer's
approval is required in each instance of total compensation to an individual
employee at an annual rate of $... (see 970.3102-2) or more, when it is proposed
that a total of 50 percent or more of such compensation be reimbursed under DOE
cost-type contracts. Total compensation, as used here, includes only the
employee's base salary, bonus, and incentive compensation payments;
(ii) Legally required contributions to old-age and survivors' insurance,
unemployment compensation plans, and workers compensation plans, (whether or not
covered by insurance); voluntary or agree-upon plans providing benefits for
retirement, separation, life insurance, hospitalization, medical-surgical and
unemployment (whether or not such plans are covered by insurance);
(iii) Travel (except foreign travel, which requires specific approval by the
contracting officer on a case-by-case basis); incidental subsistence and other
allowances of contractor employees, in connection with performance of work under
this contract (including new employees reporting for work and transfer of
employees, the transfer of their household goods and effects and the travel and
subsistence of their dependents);
(iv) Employee relations, welfare, morale, etc.; programs including incentive or
suggestion awards; employee counseling services, health or first-aid clinics;
house or employee publications; and wellness/fitness centers;
(v) Personnel training (except special education and training courses and research
assignments calling for attendance at educational institutions which require
specific approval by the contracting officer on a case-by-case basis); including
apprenticeship training programs designed to improve efficiency and productivity
of contract operations, to develop needed skills, and to develop scientific and
technical personnel in specialized fields required in the contract work;
(vi) Recruitment of personnel (including help-wanted advertisement), including
service of employment agencies at rates not in excess of standard commercial
rates, employment office, travel of prospective employees at the request of the
contractor for employment interviews; and
(vii) Net cost of operating plant-site cafeteria, dining rooms, and canteens
attributable to the performance of the contract.
(viii) Compensation of a senior executive, provided that such compensation does
not exceed the benchmark compensation amount determined applicable for the
contractor fiscal year by the Administrator, Office of Federal Procurement Policy.
Costs of executive compensation shall be determined pursuant to Federal
Acquisition Regulation 31.205-6(p).
NOTE: In appropriate circumstances, the lead sentence in subparagraph (d)(8) may
be changed to read as follows:
"Personnel costs and related expenses incurred in accordance with established
policies, programs, and schedules, and any changes thereto during the contract
term, applicable to the contractor's private operations and consistently followed
throughout his organization, as approved by the contracting officer, such as".
(9) Repairs, maintenance, inspection, replacement, and disposal of
Government-owned property and the restoration or clean-up of site and facilities
to the extent approved by the contracting officer and as allowable under paragraph
(f) of the clause of this contract entitled, Property.
(10) Subcontracts and purchase orders, including procurements from
contractor-controlled sources, subject to approvals required by other provisions
of this contract.
(11) Subscriptions to trade, business, technical, and professional periodicals, as
approved by the contracting officer.
(12) Taxes, fees, and charges levied by public agencies which the contractor is
required by law to pay, except those which are expressly made unallowable under
other provisions of this contract.
(13) Utility services, including electricity, gas, water, and sewerage.
(14) Indemnification of the Pension Benefit Guaranty Corporation, pursuant to the
Employee Retirement Income Security Act of 1974, in accordance with FAR 31.205-6(j)(3)(iv).
(15) Establishment and maintenance of bank accounts in connection with the work
hereunder, including, but not limited to, service charges, the cost of disbursing
cash, necessary guards, cashiers, and paymasters. If payments are made by check,
facilities and arrangements for cashing checks may be provided without expense to
the employees, subject to the approval of the contracting officer.
NOTE: The following additional examples apply when the contractor performs construction.
(16) Camp operations, to the extent approved by the contracting officer.
(17) Maintenance, inspection, repair, replacement, and transportation of
construction plant and equipment to the extent not covered by rentals or insurance
and as provided in rental agreements approved by the contracting officer.
(18) Rental for (i) construction plant and equipment rented by the contractor from
others at rates and under written agreements approved by the contracting officer,
and (ii) construction plant and equipment owned and furnished by the contractor
under this contract.
(e) Items of unallowable costs. The following items of costs are unallowable under
this contract to the extent indicated:
(1) Advertising and public relations costs designed to promote the contractor or
its products, including the costs of promotional items and memorabilia such as
models, gifts and souvenirs, and the cost of memberships in civic and community
organizations; except those advertising and public relations costs
(i) Specifically required by the contract,
(ii) Approved in advance by the contracting officer as clearly in furtherance of
work performed under the contract,
(iii) That arise from requirements of the contract and that are exclusively for
recruiting personnel, acquiring scarce items for contract performance, disposing
of scrap or surplus materials, the transfer of federally owned or originated
technology to State and
local governments and to the private sector, or acquisition of contract-required
supplies and services, or
(iv) Where the primary purpose of the activity is to facilitate contract
performance in support of the DOE mission.
(2) Bad debts (including expenses of collection) and provisions for bad debts
arising out of other business of the contractor.
(3) Proposal expenses and costs of proposals.
(4) Bonuses and similar compensation under any other name, which (i) are not
pursuant to an agreement between the contractor and employee prior to the
rendering of the services or an established plan consistently followed by the
contract or (ii) are in excess of those costs which are allowable by the Internal
Revenue Code and regulations thereunder, or (iii) provide total compensation to an
employee in excess of reasonable compensation for the services rendered.
(5) Central and branch office expenses of the contractor, except as specifically
set forth in the contract.
(6) Commissions, bonuses, and fees (under whatever name) in connection with
obtaining or negotiating for a Government contract or a modification thereto,
except when paid to bona fide employees or bona fide established selling
organizations maintained by the contractor for the purpose of obtaining Government
business.
(7) Contingency reserves, provisions for.
(8) Contributions and donations, including cash, contractor-owned property and
services, regardless of the recipient.
(9) Depreciation in excess of that calculated by application of methods approved
for use by the Internal Revenue Code of 1954, as amended, including the
straight-line declining balance (using a rate not exceeding twice the rate which
would have been used had the depreciation been computed under the straight line
method), or sum-of-the-years digits method, on the basis of expected useful life,
to the cost of acquisition of the related fixed assets less estimated salvage or
residual value at the end of the expected useful life.
(10) Dividend provisions or payments and, in the case of sole proprietors and
partners, distributions of profit.
(11) Entertainment, including costs of amusement, diversion, social activities;
and directly associated costs such as tickets to shows or sports events, meals,
lodging, rentals, transportation, and gratuities; costs of membership in any
social, dining or country club or organization.
(12) Fines and penalties, except, with respect to civil fines and penalties only,
if the contractor demonstrates to the contracting officer that--
(i) Such a civil fine or penalty was incurred as a result of compliance with
specific terms and conditions of the contract or written instructions from the
contracting officer; or
(ii) Such a civil fine or penalty was imposed without regard to fault and could
not have been avoided by the exercise of due care.
(13) Government-furnished property, except to the extent that cash payment
therefor is required pursuant to procedures of DOE applicable to transfers of such
property to the contractor from others.
(14) Insurance (including any provisions of a self-insurance reserve) on any
person where the contractor under the insurance policy is the beneficiary,
directly or indirectly, and insurance against loss of or damage to Government
property as defined in Clause .....
(15) Interest, however represented (except (i) Interest incurred in compliance
with the contract clause entitled "State and local Taxes" or, (ii) imputed
interest costs relating to leases classified and accounted for as capital leases
under generally accepted accounting principles (GAAP), provided that the decision
to enter into a capital leasing arrangement has been specifically authorized and
approved by the DOE in accordance with applicable procedures and such interest
costs are recorded in an appropriately specified DOE account established for such
purpose), bond discounts and expenses, and costs of financing and refinancing
operations.
(16) Legal, accounting, and consulting services and related costs incurred in
connection with the preparation and issuance of stock, rights, organization or
reorganization, prosecution or defense of antitrust suits, prosecution of claims
against the United States, contesting actions of proposed actions of the United
States, and prosecution or defense of patent infringement litigation (except where
incurred pursuant to the contractor's performance of the Government- funded
technology transfer mission and in accordance with the Litigation and Claims article).
(17) Losses or expenses:
(i) On, or arising from the sale, exchange, or abandonment of capital assets,
including investments;
(ii) On other contracts, including the contractor's contributed portion under
cost-sharing contracts;
(iii) In connection with price reductions to and discount purchases by employees
and others from any source;
(iv) That are compensated for by insurance or otherwise or which would have been
compensated for by insurance required by law or by written direction of the
contracting officer but which the contractor failed to procure or maintain through
its own fault or negligence;
(v) That result from willful misconduct or lack of good faith on the part of any
of the contractor's managerial personnel (as that term is defined in the clause of
this contract entitled, Property);
(vi) That represent liabilities to third persons that are not allowable under the
clause of this contract entitled, Insurance-- Litigation and Claims; or
(vii) That represent liabilities to third persons for which the contractor has
expressly accepted responsibility under other terms of this contract.
(18) Maintenance, depreciation, and other costs incidental to the contractor's
idle or excess facilities (including machinery and equipment), other than
reasonable standby facilities.
NOTE: May be omitted when no contractor-owned equipment is being utilized in the
performance of the contract.
(19) Membership in trade, business, and professional organizations, except as
approved by the contracting officer.
(20) Precontract costs, except as expressly made allowable under other provisions
in this contract.
(21) Research and development costs, unless specifically provided for elsewhere in
this contract.
(22) Selling cost, except to the extent they are determined to be reasonable and
to be allocable to the contract. Allocability of selling costs to the contract
will be determined in the light of reasonable benefit to the agency program
arising from such activities as technical, consulting, demonstration, and other
services performed for such purposes as applying or adapting the contractor's
product for agency use.
(23) Storage of records pertaining to this contract after completion of operations
under this contract, irrespective of contractual or statutory requirement for the
preservation of records.
(24) Taxes, fees, and charges in connection with financing, refinancing, or
refunding operations, including listing of securities on exchanges, taxes which
are paid contrary to the clause entitled "State and local taxes," federal taxes on
net income and excess profits, special assessments on land which represent capital
improvement and taxes on accumulated funding deficiencies of, or prohibited
transactions involving, employee deferred compensation plans pursuant to section
4971 or section 4975 of the Internal Revenue Code of 1954, as amended, respectively.
(25) Travel expenses of the officers, proprietors, executives, administrative
heads and other employees of the contractor's central office or branch office
organizations concerned with the general management, supervision, and conduct of
the contractor's business as a whole, except to the extent that particular travel
is in
connection with the contract and approved by the contracting officer.
(26) Salary or other compensation (and expenses related thereto) of any individual
employed under this contract as a consultant or in another comparable employment
capacity who is an employee of another organizational and concurrently performing
work on a full-time annual basis for that organization under a cost-type contract
with DOE, except to the extent that cash payment therefor is required pursuant to
the provisions of this contract or procedure of DOE applicable to the borrowing of
such an individual from another cost-type contractor.
(27) Travel by commercial aircraft or travel by other than common carrier that is
not necessary for the performance of this contract or the cost of which exceeds
the lesser of the lowest available commercial discount airfare, Government
contract airfare, or customary standard (coach or equivalent) commercial airfare.
Airfare costs in excess of the lowest such airfare are unallowable, except when
such accommodations: Require circuitous routing; require travel during
unreasonable hours; excessively prolong travel; result in increased cost that
would offset transportation savings; would offer accommodations not reasonably
adequate for the physical or medical needs of the traveler; or are not reasonably
available to meet necessary mission requirements. Individual contractor
determinations of nonavailability of commercial discount airfare or Government
contract airfare will not be contested by DOE when the contractor can reasonably
demonstrate such nonavailability or, on an overall basis, that established
policies and procedures result in the routine use of the lowest available airfare.
However, in order for air travel costs in excess of customary standard airfare to
be allowable, the contractor must justify and document the applicable condition(s)
set forth above.
(28) Special construction industry "funds" financed by employer contributions for
such purposes as methods and materials research, public and industry relations,
market development, and disaster relief, except as specifically provided elsewhere
in this contract.
(29) Late premium payment charges related to employee deferred compensation plan insurance.
(30) Facilities capital cost of money. (CAS 414 and CAS 417).
(31) Contractor costs incurred to influence either directly or indirectly--
(i) Legislative action on any matter pending before Congress, a State legislature,
or a legislative body of a political subdivision of a State; or
(ii) Federal, State, or executive body of a political subdivision of a State
action on regulatory and contract matters as described in the "Political Activity
Cost Prohibition'' clause of this contract.
(32) Commercial automobile rental expenses unless approved by the contracting officer.
(33) Costs incurred in connection with any criminal, civil or administrative
proceeding commenced by the Federal Government or a State, local or foreign
government, as provided in the clause titled "Cost prohibitions related to legal
and other proceedings" incorporated elsewhere in this contract.
(34) Costs of alcoholic beverages.
(35) Contractor employee travel costs incurred for lodging, meals and incidental
expenses which exceed on a daily basis the applicable maximum per diem rates in
effect for Federal civilian employees at the time of travel. When the applicable
maximum per diem rate is inadequate due to special or unusual situations, the
contractor may pay employees for actual expenses in excess of such per diem rate
limitation. To be allowable, however, such payments must be properly authorized by
an officer or appropriate official of the contractor and shall not exceed the
higher amounts that may be authorized for Federal civilian employees in a similar situation.
NOTE: In contracts with profit making contractors, add the following paragraphs:
(36) Notwithstanding any other provision of this contract, the costs of bonds and
insurance are unallowable to the extent they are incurred to protect and indemnify
the contractor and/or
subcontractor against otherwise unallowable costs, unless such insurance or bond
is required by law, the express terms of this contract, or is authorized in
writing by the contracting officer. The cost of commercial insurance to protect
the contractor against the costs of correcting its own defects in materials or
workmanship is an unallowable cost.
(37) Costs of gifts; however, gifts do not include awards for performance or
awards made in recognition of employee achievements pursuant to an established
contractor plan or policy.
(38) The costs of recreation, registration fees of employees participating in
competitive fitness promotions, team activities, and sporting events except for
the costs of employees' participation in company sponsored intramural sports teams
or employee organizations designed to improve company loyalty, team work, or
physical fitness.
[49 FR 12063, Mar. 28, 1984; 49 FR 38953, Oct. 2, 1984, as amended at 51 FR 43926,
Dec. 5, 1986; 52 FR 1610, Jan. 14, 1987; 52 FR 38426, Oct. 16, 1987; 53 FR 21648,
June 9, 1988; 54 FR 27649, June 30, 1989; 55 FR 41540, Oct. 12, 1990; 56 FR 28104,
June 19, 1991; 56 FR 41966, Aug. 26, 1991; 61 FR 21975, May 13, 1996; 62 FR 34842,
Jun. 27, 1997; 63 FR 5272, Feb. 2, 1998; 63 FR 25779, May 11, 1998]
970.5204-14 Allowable costs and fixed-fee
(support contracts).
As prescribed in 48 CFR (DEAR) 970.3103(a), insert the following clause.
ALLOWABLE COSTS AND FIXED-FEE (SUPPORT
CONTRACTS) (MAR 1998)
(a) Compensation for contractor's services. Payment for the allowable cost as
hereinafter defined, and of the fixed-fee, if any, as hereinafter provided, shall
constitute full and complete compensation for the performance of the work under
this contract.
(b) Fixed-fee. The fixed-fee payable to the contractor for the performance of the
work under this contract is $ . There shall be no adjustment in the amount of the
contractor's fixed-fee by reason of differences between any estimate of cost for
performance of the work under this contract and the actual cost for performance of
that work.
NOTE: This provision to this paragraph may appropriately be changed to cover
situations where the fee is for a period of time, or different fees are allowed
for various phases of the work.
(c) Allowable costs. The allowable cost of performing the work under this contract
shall be the costs and expenses that are actually incurred by the contractor in
the performance of the contract work in accordance with its terms, that are
necessary or incident thereto, and are determined to be allowable as set forth in
this paragraph. The determination of allowability of cost hereunder shall be based
on:
(1) Allowability and reasonableness in accordance with FAR 31.201-2(d) and 31.201-3;
(2) Standards promulgated by the Cost Accounting Standards Board, if applicable;
otherwise, generally accepted accounting principles and practices appropriate to
the particular circumstances; and
(3) Recognition of all exclusions and limitations set forth in this clause or
elsewhere in this contract as to types or amounts of items of cost. Allowable
costs shall not include the cost of any item described as unallowable in paragraph
(e) of this clause except as indicated therein. Failure to mention an item of cost
specifically in paragraphs (d) or (e) of this clause shall not imply either that
it is allowable or that it is unallowable.
(d) Items of allowable cost. Subject to the other provisions of this clause, the
following items of cost of work under this contract shall be allowable to the
extent indicated:
(1) Bonds and insurance, including self-insurance, as provided in the clause
entitled Insurance.Litigation and Claims.
(2) Communication costs, including telephone services, local and long-distance
telephone calls, telegrams, cablegrams, radiograms, postage, and similar items.
(3) Consulting services (including legal and accounting) and related expenses, as
approved by the contracting officer, except as made unallowable by paragraph
(e)(14) and (e)(23).
(4) Reasonable litigation and other legal expenses, including counsel fees, if
incurred in accordance with the clause of the contract entitled,
Insurance--Litigation and Claims, in accordance with DOE approved contractor
litigation management procedures (including cost guidelines) as such procedures
may be revised from time to time, and if not otherwise made unallowable in this contract.
(5) Losses and expenses (including settlements made with the consent of the
contracting officer) sustained by the contractor in performance of this contract
and certified in writing by the contracting officer to be just and reasonable,
except the losses and expenses expressly made unallowable under other provisions
of this contract.
(6) Materials and supplies (including those withdrawn from common stores costed in
accordance with any generally recognized method that is consistently applied by
the contractor and productive of equitable results).
(7) Patents, purchased design, and royalty payments to the extent expressly
provided for under other provisions in this contract or as approved by the
contracting officer; and preparation of invention disclosures, reports, and
related documents, and searching the art to the extent necessary to make such
invention disclosures in accordance with the Patent Rights clause of this contract.
(8) Personnel costs and related expenses incurred in accordance with the personnel
appendix which is hereby incorporated by reference and made a part of this
contract. It is specifically understood and agreed that said personnel appendix
sets forth, in detail, personnel costs and related expenses to be allowable under
this contract and is intended to document those personnel policies, practices and
plans which have been found acceptable by the contracting officer. It is further
understood and agreed that the contractor will advise DOE of any proposed changes
in any matters covered by said policies, practices, or plans which relate to this
item of costs, and that the personnel appendix may be modified from time to time
in writing by mutual agreement of the contractor and DOE without execution of an
amendment to this contract for the purpose of effectuating and such changes in, or
additions to, said personnel appendix, as may be agreed upon by the parties. Such
modifications shall be evidenced by execution of written numbered approval letters
from the contracting officer or his representative. Examples of personnel costs
and related expenses to be incorporated into the personnel appendix, or amendments
thereto, are as follows:
(i) Salaries and wages; bonuses and incentive compensation; overtime, shift
differential, holiday, and other premium pay for time worked; nonwork time
including vacations, holidays, sick, funeral, military, jury, witness, and voting
leave; salaries and wages to employees in their capacity as union stewards and
committeemen for time spent in handling grievances, or serving on labor management
(contractor) committees, provided, however, that the contracting officer's
approval is required in each instance of total compensation to an individual
employee at an annual rate of $.... (See 970.3102-2) or more, when it is proposed
that a total of 50 percent or more of such compensation be reimbursed under DOE
cost-type contracts. Total compensation, as used here, includes only the
employee's base salary and bonus and incentive compensation payments.
(ii) Legally required contributions to old-age and survivor's insurance,
unemployment, compensation plans, and workmen's compensation plans (whether or not
covered by insurance); voluntary or agreed-upon plans providing benefits for
retirement, separation, life insurance, hospitalization, medical-surgical and
unemployment (whether or not such plans are covered by insurance);
(iii) Travel (except foreign-travel, which requires specific approval by the
contracting officer on a case-by-case basis); incidental subsistence and other
allowances of contractor employees, in connection with performance of work under
this contract (including new employees reporting for work and transfer of
employees, the transfer of their household goods and effects, and the travel and
subsistence of their dependents);
(iv) Employee relations, welfare, morale, etc.; programs including incentive or
suggestion awards; employee counseling services, health or first-aid clinics; and
house or employee publications; and wellness/fitness centers;
(v) Personnel training (except special education and training courses and research
assignments calling for attendance at educational institutions which require
specific approval by the contracting officer
on a case-by-case basis) including services of employment agencies at rates not in
excess of standard commercial rates, employment office, travel of prospective
employees at the request of the contractor for employment interviews; and
(vi) Recruitment of personnel (including help-wanted advertisement) including
services of employment agencies at rates not in excess of standard commercial
rates, employment office, travel of prospective employees at the request of the
contractor for employment interviews; and
(vii) Net cost of operating plant-site cafeterias, dining rooms, and canteens
attributable to the performance of the contract.
(viii) Compensation of a senior executive, provided that such compensation does
not exceed the benchmark compensation amount determined applicable for the
contractor fiscal year by the Administrator, Office of Federal Procurement Policy.
Costs of executive compensation shall be determined pursuant to Federal
Acquisition Regulation 31.205-6(p).
NOTE: In appropriate circumstances that lead sentence in subparagraph (d)(8) may
be changed to read as follows:
Personnel costs and related expenses incurred in accordance with established
policies, programs, and schedules, and any changes thereto during the contract
term, applicable to the contractor's private operations and consistently followed
throughout its organization, as approved by the contracting officer, such as:
(9) Rentals and leases of land, buildings, and equipment owned by third parties
where such items are used in the performance of the contract, except that such
rentals and leases directly chargeable to the contract shall be subject to
approval by the contracting officer.
(10) Repairs, maintenance, inspection, replacement, and disposal of
government-owned property to the extent directed or approved by the contracting
officer and as allowable under paragraph (f) of the clause of this contract
entitled, Property.
(11) Repairs, maintenance, and inspection of contractor owned property used in
connection with the performance of this contract, including reasonable standby
facilities, which are due to ordinary wear and tear from use and the action of the
elements, provided such maintenance and repairs keep the property in efficient
operating condition and do not add to its permanent value or appreciably prolong
its intended useful life; and major repair (including replacement) to such
property, as directed or approved by the contracting officer when charged directly
to the contract.
(12) Special tooling, including jigs, dies, fixtures, molds, patterns, designs and
drawings, tools, and equipment of a specialized nature generally useful to the
contractor only in the performance of this contract.
NOTE: Itemize any additional special equipment which may be appropriate, such as
loops, mockups, experimental setups, etc.
(13) Subcontracts, purchase orders, and procurement from contractor-controlled
sources, subject to approvals required by other provisions of this contract.
(14) Subscriptions to trade, business, technical, and professional periodicals, as
approved by the contracting officer when charged directly to the contract.
(15) Taxes, fees, and charges levied by public agencies which the contractor is
required by law to pay, except those which are expressly made unallowable under
other provisions of this contract.
(16) Utility services, including electricity, gas, water, steam, and sewerage.
(17) Indemnification of the Pension Benefit Guaranty Corporation pursuant to the
Employee Retirement Income Security Act of 1974, in accordance with FAR 31.205-6(j).
(e) Items of unallowable costs. The following examples of items of costs are
unallowable under this contract to the extent indicated:
(1) Advertising and public relations costs designed to promote the contractor or
its products, including the costs of promotional items and memorabilia such as
models, gifts and souvenirs, and the cost of memberships in civic and community
organizations; except those advertising and public relations costs (i)
specifically required by the contract, (ii) approved in advance by the contracting
officer as clearly in furtherance of work performed under the contract, (iii) that
arise from requirements of the contract and that are exclusively for
recruiting personnel, acquiring scarce items for contract performance disposing of
scrap or surplus materials, the transfer of federally owned or originated
technology to State and local governments and to the private sector, or
acquisition of contract-required supplies and services, publicizing community
involvement, or (iv) where the primary purpose of the activity is to facilitate
contract performance in support of the DOE mission.
(2) Bad debts (including expenses of collection) and provisions for bad debts not
arising out of the performance of this contract.
(3) Bonuses and similar compensation under any other name, which (i) are not
pursuant to an agreement between the contractor and employee prior to the
rendering of the services or an established plan consistently followed by the
contractor (ii) are in excess of those costs which are allowable by the Internal
Revenue Code and regulations thereunder, or (iii) provide total compensation to an
employee in excess of reasonable compensation for the services rendered.
(4) Commissions, bonuses, and fees (under whatever name) in connection with
obtaining or negotiating for a Government contract or a modification thereto,
except when paid to bona fide employees or bona fide established selling
organizations maintained by the contractor for the purpose of obtaining Government
business.
(5) Contingency reserves, provisions for (except provisions for reserves under a
self-insurance program to the extent that the type, coverage, rates, and premiums
would be allowable if commercial insurance were purchased to cover the same risk,
as approved by the contracting officer).
(6) Contributions and donations, including cash, contractor-owned property and
services, regardless of the recipient.
(7) Depreciation in excess of that calculated by application of methods approved
for use by the Internal Revenue Service under the Internal Revenue Code of 1954,
as amended, including the straight-line declining balance (using a rate not
exceeding twice the rate which would have been used had the depreciation been
computed under the straight-line method) or sum-of-the-years digits method, on the
basis of expected useful life, to the cost of acquisition of the related fixed
assets less estimated salvage or residual value at the end of the expected useful
life. Amortization or depreciation of unrealized appreciation of values of assets
or of assets fully amortized or depreciated on the contractors books of account is
unallowable.
(8) Dividend provisions or payments and, in the case of sole proprietors and
partners, distributions of profits.
(9) Entertainment, including costs of amusement, diversion, social activities; and
directly associated costs such as tickets to shows or sports events, meals,
lodging, rentals, transportation, and gratuities; costs of membership in any
social, dining or country club or organization.
(10) Fines and penalties, except, with respect to civil fines and penalties only,
if the contractor demonstrates to the contracting officer that--
(i) Such a civil fine or penalty was incurred as a result of compliance with
specific terms and conditions of the contract or written instructions from the
contracting officer; or
(ii) Such a civil fine or penalty was imposed without regard to fault and could
not have been avoided by the exercise of due care.
(11) Government-furnished property, except to the extent that cash payment
therefor is required pursuant to procedures of the DOE applicable to transfers of
such property to the contractor from others.
(12) Insurance (including and provision of a self-insurance reserve) on any person
where the contractor under the insurance policy is the beneficiary, directly or
indirectly, and insurance against loss or damage to Government property.
(13) Interest, however represented (except (i) Interest incurred in compliance
with the contract clause entitled "State and local Taxes" or, (ii) imputed
interest costs relating to leases classified and accounted for as capital leases
under generally accepted accounting principles (GAAP), provided that the decision
to enter into a capital leasing arrangement has been specifically authorized and
approved by the DOE in accordance with applicable procedures and such interest
costs are recorded in an appropriately specified DOE account established for such
purpose), bond discounts and expenses, and costs of financing and refinancing
operations.
(14) Legal, accounting, and consulting services, and related costs incurred in
connection with the preparation of prospectuses, preparation and issuance of stock
rights, organization or reorganization, prosecution or defense of antitrust suits,
prosecution of claims against the United States, contesting actions or proposed
actions of the United States, and prosecution or defense of patent infringement litigation.
(15) Losses or expenses:
(i) On, or arising from the sale, exchange, or abandonment of capital assets,
including investments;
(ii) On other contracts, including the contractor's contributed portion under
cost-sharing contracts;
(iii) In connection with price reductions to and discount purchases by employees
and others from any source;
(iv) That are compensated for by insurance or otherwise or which would have been
compensated for by insurance required by law or by written direction of the
contracting officer but which the contractor failed to procure or maintain through
its own fault or negligence;
(v) That result from willful misconduct or lack of good faith on the part of any
of the contractor's managerial personnel (as that term is defined in the clause of
this contract entitled, Property);
(vi) That represent liabilities to third persons that are not allowable under the
clause of this contract entitled, Insurance-- Litigation and Claims; or
(vii) That represent liabilities to third persons for which the contractor has
expressly accepted responsibility under other terms of this contract.
(16) Maintenance, depreciation, and other costs incidental to the contractor's
idle or excess facilities (including machinery and equipment) other than
reasonable standby facilities.
(17) Membership in trade, business, and professional organizations except as
approved by the contracting officer.
(18) Precontract costs, except as expressly made allowable under other provisions
in this contract.
(19) Reconversion, alteration, restoration, or rehabilitation of the contractor's
facilities, except as expressly provided elsewhere in this contract.
(20) Selling costs, except to the extent they are determined to be reasonable and
to be allocable to the contract. Allocability of selling costs to the contract
will be determined in the light of reasonable benefit to the agency program
arising from such purposes as applying or adapting the contractor's product for
agency use.
(21) Storage or records pertaining to this contract after completion of operations
under this contract irrespective of contract or statutory requirement for the
preservation of records.
(22) Taxes, fees, and charges in connection with financing, refinancing or
refunding operations, including the listing of securities on exchanges; taxes
which are paid contrary to the clause entitled "State and local taxes;" Federal
taxes on net income and excess profits; special assessments on land which
represent capital improvement and taxes on accumulated funding deficiencies of, or
prohibited transactions involving, employee deferred compensation plans pursuant
to section 4971 or section 4975 of the Internal Revenue Code of 1954, as amended, respectively.
(23) Salary or other compensation (and expenses related thereto) of any individual
employed under this contract as a consultant or in another comparable employment
capacity who is an employee of another organization and concurrently performing
work on a full-time annual basis for that organization under a cost-type contract
with DOE, except to the extent that cash payment thereto is required pursuant to
the provisions of this contract or procedures of the DOE applicable to the
borrowing of such an individual from another cost-type contractor.
(24) Travel by commercial aircraft or travel by other than common carrier that is
not necessary for the performance of this contract or the cost of which exceeds
the lesser of the lowest available commercial discount airfare, Government
contract airfare, or customary standard (coach or equivalent) commercial airfare.
Airfare costs in excess of the lowest such airfare are unallowable, except when
such accommodations: Require circuitous routing; require travel during
unreasonable hours; excessively prolong travel; result in increased cost that
would offset transportation savings; would offer accommodations not reasonably
adequate for the physical or medical needs of the traveler; or are not reasonably
available to meet necessary mission requirements. Individual contractor
determinations of nonavailability of commercial discount airfare or Government
contract airfare will not be contested by DOE when the contractor can reasonably
demonstrate such nonavailability or, on an overall basis, that established
policies and procedures result in the routine use of the lowest available airfare.
However, in order for air travel costs in excess of customary standard airfare to
be allowable, the contractor must justify and document the applicable condition(s)
set forth above.
(25) Late premium payment charges related to employee deferred compensation plan
insurance, in accordance with FAR 31.205-6(j).
(26) Research and development costs, unless specifically provided for elsewhere in
this contract.
(27) Bidding expenses and costs of proposals.
(28) Facilities capital cost of money (CAS-414 and CAS-417).
(29) Contractor costs incurred to influence either directly or indirectly--
(i) Legislative action on any matter pending before Congress, a State legislature,
or a legislative body of a political subdivision of a State; or
(ii) Federal, State, or local executive branch action on regulatory and contract
matters as described in the "Political Activity Cost Prohibition" clause of this contract.
(30) Commercial automobile rental costs unless approved by the contracting officer.
(31) Costs incurred in connection with any criminal, civil or administrative
proceeding commenced by the Federal Government or a State, local or foreign
government, as provided in the clause titled "Cost prohibitions related to legal
and other proceedings" incorporated elsewhere in this contract.
(32) Costs of alcoholic beverages.
(33) Contractor employee travel costs incurred for lodging, meals and incidental
expenses which exceed on a daily basis the applicable maximum per diem rates in
effect for Federal civilian employees at the time of travel. When the applicable
maximum per diem rate is inadequate due to special or unusual situations, the
contractor may pay employees for actual expenses in excess of such per diem rate
limitation. To be allowable, however, such payments must be properly authorized by
an officer or appropriate official of the contractor and shall not exceed the
higher amounts that may be authorized for Federal civilian employees in a similar situation..
(34) Notwithstanding any other provision of this contract, the costs of bonds and
insurance are unallowable to the extent they are incurred to protect and indemnify
the contractor and/or subcontractor against otherwise unallowable costs, unless
such insurance or bond is required by law, the express terms of this contract, or
is authorized in writing by the contracting officer. The cost of commercial
insurance to protect the contractor against the costs of correcting its own
defects in materials or workmanship is an unallowable cost.
(35) Costs of gifts; however, gifts do not include awards for performance or
awards made in recognition of employee achievements pursuant to an established
contractor plan or policy.
(36) The costs of recreation, registration fees of employees participating in
competitive fitness promotions, team activities, and sporting events except for
the costs of employees' participation in company sponsored intramural sports teams
or employee organizations designed to improve company loyalty, team work, or
physical fitness.
[49 FR 12063, Mar. 28, 1984, as amended at 51 FR 43926, Dec. 5, 1986; 52 FR 1610,
Jan. 14, 1987; 53 FR 21649, June 9, 1988; 55 FR 41540, Oct. 12, 1990; 56 FR 28105,
June 19, 1991, and 58 FR 61625, Nov. 22, 1993; 61 FR 21975, May 13, 1996; 62 FR
34842, Jun. 27, 1997; 63 FR 5272, Feb. 2, 1998; 63 FR 25779, May 11, 1998]
970.5204-15 Obligation of funds.
As prescribed in 970.15405(c), insert the following clause.
OBLIGATION OF FUNDS (APR 1994)
(a) Obligation of funds. The amount presently obligated by the Government with
respect to this contract is .... dollars ($...). Such amount may be increased
unilaterally by DOE by written notice to the contractor and may be increased or
decreased by written agreement of the parties (whether or not by formal
modification of this contract). Estimated revenues and receipts from others for
work and services to be performed under this contract are not included in this
amount .... obligated with respect to this contract. Such revenues and receipts,
to the extent actually received by the contractor shall be available and used for
the payment of allowable costs as provided in the article entitled "Payments and
Advances." Nothing in this paragraph (a) is to be construed as authorizing the
contractor to exceed limitations stated in financial plans established by DOE and
furnished to the contractor from time to time under this contract.
(b) Limitation on payment by the Government. Except as otherwise provided in this
contract and except for costs which may be incurred by the contractor pursuant to
the clause entitled "Termination," or costs of claims allowable under the contract
occurring after completion or termination and not released by the contractor at
the time of financial settlement of the contract in accordance with the clause
entitled "Payments and Advances," payment by the Government under this contract on
account of allowable costs shall not, in the aggregate, exceed the amount
obligated with respect to this contract, less the contractor's fixed fee. Unless
expressly negated in this contract, payment on account of those costs excepted in
the preceding sentence which are in excess of the amount obligated with respect to
this contract shall be subject to the availability of (1) revenues and receipts
deposited to the Government's account as provided in the clause entitled "Payments
and Advances," and (2) other funds which DOE may legally use for such purpose,
provided DOE will use its best efforts to obtain the appropriation of funds for
this purpose if not otherwise available.
(c) Notices.Contractor excused from further performance. The contractor shall
notify DOE in writing whenever the unexpended balance of funds (including revenues
and receipts) available under paragraph (a) above, plus the contractor's best
estimate of revenues and receipts to be received during the .. day period
hereinafter specified, is in the contractor's best judgment sufficient to continue
contract operations at the programmed rate for only .. days and to cover the
contractor's unpaid fixed fee, and outstanding commitments and liabilities on
account of costs allowable under the contract at the end of such period. Whenever
the unexpended balance of funds (including revenues and receipts) available under
paragraph (a) above, less the amount of the contractor's fixed fee then earned but
not paid, is in the contractor's best judgment either sufficient only to liquidate
outstanding commitments and liabilities on account of costs allowable under this
contract or is equal to zero, the contractor shall immediately notify DOE and
shall make no further commitments or expenditures (except to liquidate existing
commitments and liabilities), and, unless the parties otherwise agree, the
contractor shall be excused from further performance (except such performance as
may become necessary in connection with termination by the Government) and the
performance of all work hereunder will be deemed to have been terminated for the
convenience of the Government in accordance with the provisions of the article
entitled "Termination."
(d) Financial plans; cost and commitment limitations. In addition to the
limitations provided for elsewhere in this contract, DOE may, through financial
plans or other directives issued to the contractor, establish controls on the
costs to be incurred and commitments to be made in the performance of the contract
work. Such plans and instruction may be amended or supplemented from time to time
by DOE. The contractor hereby agrees to comply with the specific limitations
(ceilings) on costs and commitments set forth in such plans and directives, to use
its best efforts to comply with other requirements of such plans and directive,
and to promptly notify DOE in writing, whenever it has reason to believe the
authorized financial levels of costs and commitments will be exceeded or
substantially underrun.
NOTE: This paragraph (d) may be omitted in contracts which expressly or otherwise
provided a contractual basis for equivalent controls in a separate article.
(e) Government's right to terminate not affected. The giving of any notice under
this clause shall not be construed to waive or impair any right of the Government
to terminate the contract under the provisions of the article entitled "Termination."
[49 FR 12063, Mar. 28, 1984, as amended at 56 FR 41966, Aug. 26, 1991 and 58 FR
32306, Jun. 9, 1993; 63 FR 56849, Oct. 23, 1998]
970.5204-16 Payments and advances.
As prescribed in 48 CFR (DEAR) 970.3270, insert the following clause.
PAYMENTS AND ADVANCES (JUNE 1997)
(a) Installments of fixed-fee. Ninety percent (90%) of the fixed-fee shall become
due and payable in periodic installments in amounts based on the proportion of the
work then completed, as determined by the contracting officer, and the balance
upon completion and acceptance of all work under this contract. Fixed-fee payments
shall be made by direct payment or withdrawn from funds advanced or available
under this contract, as determined by the contracting officer. The contracting
officer may offset against any such fee payment, the amounts owed to the
Government by the contractor, including any amounts owed for disallowed costs
under this contract. No fixed-fee payment may be withdrawn against the
letter-of-credit without prior written approval of the contracting officer.
NOTE 1: Where a separate fixed-fee is provided for a separate item of work, this
subparagraph should be modified to permit payment of the entire fixed-fee upon
completion of that item.
NOTE 2: When award-fee provisions in this clause are used, in lieu of paragraph
(a), use the following text:
(a) Payment of Base Fee and Award Fee. The base fee, if any, is payable in equal
monthly installments. Award fee pool amounts earned are payable following the
issuance by the FDO of a Determination of Award Fee Pool Amount Earned, in
accordance with the clause of this contract entitled, Award Fee: Base Fee and
Award Fee. Base fee and award fee pool amount earned payments shall be made by
direct payment or withdrawn from funds advanced or available under this contract,
as determined by the contracting officer. The contracting officer may offset
against any such fee payment, the amounts owed to the Government by the
contractor, including any amounts owed for disallowed costs under this contract.
No base fee or award fee pool amount earned payment may be withdrawn against the
letter-of-credit without prior written approval of the contracting officer.
(b) Payments on Account of Allowable Costs. The contracting officer and the
contractor shall agree as to the extent to which payment for allowable costs or
payments for other items specifically approved in writing by the contracting
officer shall be made from advances of Government funds. When pension
contributions are paid by the contractor to the retirement fund less frequently
than quarterly, accrued costs therefor shall be excluded from costs for payment
purposes until such costs are paid. If pension contribution are paid on a
quarterly or more frequent basis, accrual therefor may be included in costs for
payment purposes, provided that they are paid to the fund within 30 days after the
close of the period covered. If payments are not made to the fund within such
30-day period, pension contribution costs shall be excluded from cost for payment
purposes until payment has been made.
(c) Special bank account.use. All advances of Government funds shall be withdrawn
pursuant to a letter of credit in favor of the bank or, in the option of the
Government, shall be made by check payable to the contractor, and shall be
deposited only in the Special Bank Account referred to in the Agreement for
Special Bank Account, which is attached hereto and incorporated into this contract
as an appendix. The contractor shall likewise deposit in the Special Bank Account
any other revenues received by the contractor in connection with the work under
this contract. No part of the funds in the Special Bank Account shall be (1)
mingled with any funds of the contractor or (2) used for a purpose other than that
of making payments for costs allowable under this contract or payments for other
items specifically approved in writing by the contracting officer. If the
contracting officer shall at any time determine that the balance on such bank
account exceeds the contractor's current needs, the contractor shall promptly make
such disposition of the excess as the contracting officer may direct.
(d) Title to funds advanced. Title to the unexpended balance of any funds advanced
and of any bank account established pursuant to this clause shall remain in the
Government and be superior to any claim or lien of the bank of deposit or others.
It is understood that an advance to the contractor hereunder is not a loan to the
contractor, and will not require the payment of interest by the contractor, and
that the contractor acquires no right, title or interest in or to such advance
other than the right to make expenditures therefrom, as provided in this clause.
NOTE 3: The following paragraph (e) shall be included in management and operating
contracts with integrated contractors.
(e) Review and approval of costs incurred. The contractor shall prepare and submit
annually as of September 30, a voucher for the total of net expenditures accrued
(i.e., net costs incurred) for the period covered by the voucher, and DOE, after
audit and appropriate adjustment, will approve such voucher. This approval by DOE
will constitute an acknowledgment by DOE that the net costs incurred are allowable
under the contract and that they have been recorded in the accounts maintained by
the contractor in accordance with DOE accounting policies, but will not relieve
the contractor of responsibility for DOE's assets in its care, for appropriate
subsequent adjustments, or for errors later becoming known to DOE.
NOTE 4: It should be omitted in contracts with nonintegrated contractors.
(f) Financial settlement. The Government shall promptly pay to the contractor the
unpaid balance of allowable costs and fixed fee upon termination of the work,
expiration of the term of the contract, or completion of the work and its
acceptance by the Government after (1) compliance by the contractor with DOE's
patent clearance requirements, and (2) the furnishing by the contractor of:
(i) An assignment of the contractor's rights to any refunds, rebates, allowances,
accounts receivable, or other credits applicable to allowable costs under the contract;
(ii) A closing financial statement;
(iii) The accounting for Government-owned property required by the clause entitled
"Property;" and
(iv) A release discharging the Government, its officers, agents, and employees
from all liabilities, obligations, and claims arising out of or under this
contract subject only to the following exceptions:
(A) Specified claims in stated amounts or in estimated amounts where the amounts
are not susceptible to exact statement by the contractor;
(B) Claims, together with reasonable expenses incidental thereto, based upon liabilities of the contractor to third parties arising out of
the performance of this contract; provided that such claims are not known to the
contractor on the date of the execution of the release; and provided further that
the contractor gives notice of such claims in writing to the contracting officer
promptly, but not more than one (1) year after the contractor's right of action
first accrues. In addition, the contractor should provide prompt notice to the
contracting officer of all potential claims under this clause, whether in
litigation or not (see also Contract Clause..., DEAR 970.5204-31, "Litigation and
Claims"); and
(C) Claims for reimbursement of costs (other than expenses of the contractor by
reason of any indemnification of the Government against patent liability),
including reasonable expenses incidental thereto, incurred by the contractor under
the provisions of this contract relating to patents.
In arriving at the amount due the contractor under this clause, there shall be
deducted, any claim which the Government may have against the contractor in
connection with this contract, and deductions due under the terms of this
contract, and not otherwise recovered by or credited to the Government. The
unliquidated balance of the Special Bank Account may be applied to the amount due
and any balance shall be returned to the Government forthwith.
(g) Claims. Claims for credit against funds advanced for payment shall be
accompanied by such supporting documents and justification as the contracting
officer shall prescribe.
(h) Discounts. The contractor shall take and afford the Government the advantage
of all known and available cash and trade discounts, rebates, allowances, credits,
salvage, and commissions unless the contracting officer finds that action is not
in the best interest of the Government.
(i) Revenues. All revenues other than the contractor's fixed fee or fees, if any,
accruing to the contractor in connection with the work under this contract shall
be Government property and shall be deposited in the Special Bank Account to be
available for payment of allowable cost under this contract.
(j) Direct payment of charges. The Government reserves the right, upon ten days
written notice from the contracting officer to the contractor, to pay directly to
the persons concerned, all amounts due which otherwise would be allowable under
this contract. Any payment so made shall discharge the Government of all liability
to the contractor therefor.
[49 FR 12063, Mar. 28, 1984, as amended at 54 FR 48614, Nov. 24, 1989; 55 FR
31053, July 31, 1990; 56 FR 28106, June 19, 1991; 62 FR 34842, Jun. 27, 1997]
970.5204-17 Political activity cost prohibition.
As prescribed in 970.3103(b), insert the following clause.
POLITICAL ACTIVITY COST PROHIBITION
(DEC 1997)
(a) Pursuant to the allowable cost provisions established elsewhere under the
contract, costs associated with the following activities are not reimbursable
under the contract:
(1) Attempts to influence the outcome of any Federal, State, or local election,
referendum, initiative, or similar procedure, through in-kind or cash
contributions, endorsements, publicity, or similar activities;
(2) Establishing, administering, contributing to, or paying the expenses of a
political party, campaign, political action committee, or other organization
established for the purpose of influencing the outcomes of elections;
(3) Any attempt to influence (i) the introduction of Federal or State legislation,
or (ii) the enactment or modification of any pending Federal or State legislation
through communication with any member or employee of the Congress or State
legislature (including efforts to influence state or local officials to engage in
similar lobbying activity), or with any government official or employee in
connection with a decision to sign or veto enrolled legislation;
(4) Any attempt to influence (i) the introduction of Federal or State legislation,
or (ii) the enactment or modification of any pending Federal or State legislation
by preparing, distributing or using publicity or propaganda, or by urging members
of the general public or any segment thereof to contribute to or participate in
any mass demonstration, march, rally, fund raising drive, lobbying campaign or
letter writing or telephone campaign; or
(5) Legislative liaison activities, including attendance at legislative sessions
or committee hearings, gathering information regarding legislation, and analyzing
the effect of legislation, when such activities are carried on in support of or in
knowing preparation for an effort to engage in unallowable activities.
(6) Contractor costs incurred to influence (directly or indirectly) Federal,
State, or local executive branch action on regulatory and contract matters.
(b) Costs of the following activities are excepted from the coverage of paragraph
(a) of this clause; provided that the resultant contract costs are reasonable and
otherwise comply with the allowable cost provisions of the contract:
(1) Providing Members of Congress, their staff members or staff of cognizant
legislative committees, in response to a request (written or oral, prior or
contemporaneous) from Members of Congress, their staff members or staff of
cognizant legislative committees, or as otherwise directed by the Contracting
Officer, information or expert advice of a factual technical, or scientific
nature, with respect to topics directly related to the performance of the contract
proposed legislation. In providing this information or expert advice, the
contractor shall indicate to the recipient that it is not presenting the views of
DOE. Reasonable costs for transportation, lodging or meals incurred by contractor
employees for the purpose of providing such information or expert advice shall
also be reimbursable, provided the request for such information or expert advice
is a prior written request signed by a Member of Congress, and provided such costs
also comply with the allowable cost provisions of the contract.
(2) Providing State legislatures or subdivisions thereof, their staff members, or
staff of cognizant legislative committees, in response to a prior written request
from a State legislator, or as otherwise directed by the Contracting Officer,
information or expert advice of factual, technical, or scientific nature, with
respect to topics directly related to the performance of the contract or proposed
legislation. In providing this information or expert advice, the contractor shall
indicate to the recipient that it is not presenting the views of DOE. Reasonable
costs for transportation, lodging, or meals incurred by contractor employees shall
be reimbursable, provided such costs also comply with the allowable costs
provision of the contract.
(3) Any lobbying made unallowable under subparagraph (a)(3) above to influence
State legislation in order to directly reduce contract cost, or to avoid material
impairment of the contractor's authority to perform the contract if authorized by
the contracting officer.
(4) Any activity specifically authorized by statute to be undertaken with funds
from the contract.
(c) Unallowable lobbying costs incurred, if any, shall not be charged to DOE, paid
for with DOE funds or recorded as allowable cost in DOE's system of accounts.
(d) The contractor's annual certification, submitted as part of its annual claim
(i.e., Voucher Accounting for Net Expenditures Accrued required under the clause
titled "Payments and Advances") or cost incurred statement, that the costs claimed
are allowable under the contract, shall also serve as the contractor's
certification that the requirements and standards of this clause have been
complied with.
(e) The contractor shall maintain adequate records to demonstrate that the annual
certifications of claimed costs as being allowable comply with the requirements of
this clause.
(f) Time logs, calendars, or similar records shall not be created for purposes of
complying with this clause during any particular calendar month when: (1) An
employee engages in legislative liaison activities (as delineated in paragraphs
(a) and (b) of this clause) 25 percent or less of the employees's compensated
hours of employment during that calendar month, and (2) within the preceding
five-year period, the contractor has not materially misstated allowable or
unallowable costs of any nature, including legislative liaison costs. When
conditions (f)(1) and (2) of this clause are met, the contractor is not required
to establish records to support the allowability of claimed costs in addition to
records already required or maintained. Also, when conditions (f) (1) and (2) of
this clause are met, the absence of time logs, calendars, or similar records will
not serve as a basis for disallowing costs by contesting estimates of legislative
liaison activity time spent by employees during any calendar month.
(g) During contract performance, the contractor should resolve, in advance, any
significant questions or disagreements between the contractor and DOE concerning
compliance with this clause.
(h) In providing information or expert advice under paragraph (b)(1) and (b)(2) of
this clause, the contractor shall advise the Contracting Officer in advance or as
soon as practicable.
[53 FR 21649, June 9, 1988; 60 FR 63645, Dec 12, 1995; 63 FR 5272, Feb. 2, 1998]
970.5204-18 [Reserved]
[56 FR 28106, June 19, 1991; 62 FR 34842, Jun. 27, 1997]
970.5204-19 Printing clause for management and operating contracts.
As prescribed in 970.5101, insert the following clause.
PRINTING (APR 1984)
(a) To the extent that duplicating or printing services may be required in the
performance of this contract, the Contractor shall provide or secure such services
in accordance with the Government Printing and Binding Regulations, Title 44 of
the U.S. Code, and DOE Directives relative thereto.
(b) The term "Printing" includes the following processes: composition,
platemaking, presswork, binding, microform publishing, or the end items produced
by such processes. Provided, however, that performance of a requirement under this
contract involving the duplication of less than 5,000 copies of a single page, or
no more than 25,000 units in the aggregate of multiple pages, will not be deemed
to be printing.
(c) Printing services not obtained in compliance with this guidance shall result
in the cost of such printing being disallowed.
(d) In all subcontracts hereunder which require printing (as that term is defined
in Title I of the U.S. Government Printing and Binding Regulations), the
Contractor shall include a provision substantially the same as this clause.
970.5204-20 Management controls.
As prescribed in 970.0901, insert the following clause.
MANAGEMENT CONTROLS (AUG 1993)
(a) The contractor shall be responsible for maintaining, as an integral part of
its organization, effective systems of management controls for both administrative
and programmatic functions. Management controls comprise the plan of organization,
methods and procedures adopted by management to reasonably ensure that: the
mission and functions assigned to the contractor are properly executed; efficient
and effective operations are promoted; resources are safeguarded against theft,
fraud, waste, and unauthorized use; all obligations and costs that are incurred
under the contract are in compliance with applicable clauses and other current
terms, conditions, and intended purposes; all revenues, expenditures, and all
other transactions and assets are properly recorded, managed, and reported; and
financial, statistical, and other reports necessary to maintain accountability and
managerial control are accurate, reliable, and timely. The systems of controls
employed by the contractor shall be documented and satisfactory to DOE. Such
systems shall be an integral part of the contractor's management functions,
including defining specific roles and responsibilities for each level of
management, and holding employees accountable for the adequacy of the management
systems and internal controls in their areas of assigned responsibility. The
contractor shall, as part of the internal audit program required elsewhere in this
contract, periodically review the management systems and internal controls
employed in programs and administrative areas to ensure that they are adequate to
provide reasonable assurance that the objectives of the system are being
accomplished and that these systems and controls are working effectively.
(b) The contractor shall be responsible for maintaining, as a part of its
operational responsibilities, a baseline quality assurance program that implements
documented performance, quality standards, and control and assessment techniques.
[56 FR 65448, Dec. 17, 1991]
970.5204-21 Property.
As prescribed in 970.4501, insert the following clause.
PROPERTY (JUNE 1997)
(a) Furnishing of Government property. The Government reserves the right to
furnish any property or services required for the performance of the work under
this contract.
(b) Title to property. Except as otherwise provided by the contracting officer, title to all materials, equipment, supplies, and tangible personal property of every kind and description purchased by the contractor, for the cost of which the contractor is entitled to be reimbursed as a direct item of cost under this contract, shall pass directly from the vendor to the Government. The Government reserves the right to inspect, and to accept or reject, any item of such property. The contractor shall make such disposition of rejected items as the contracting officer shall direct. Title to other property, the cost of which is reimbursable to the contractor under this contract, shall pass to and vest in the Government upon (1) issuance for use of such property in the performance of this contract, or (2) commencement of processing or use of such property in the performance of this contract, or (3) reimbursement of the cost thereof by the Government,
whichever first occurs. Property furnished by the Government and property
purchased or furnished by the contractor, title to which vests in the Government,
under this paragraph are hereinafter referred to as Government property. Title to
Government property shall not be affected by the incorporation of the property
into or the attachment of it to any property not owned by the Government, nor
shall such Government property or any part thereof, be or become a fixture or lose
its identity as personalty by reason of affixation to any realty.
(c) Identification. To the extent directed by the contracting officer, the
contractor shall identify Government property coming into the contractor's
possession or custody, by marking and segregating in such a way, satisfactory to
the contracting officer, as shall indicate its ownership by the Government.
(d) Disposition. The contractor shall make such disposition of Government property
which has come into the possession or custody of the contractor under this
contract as the contracting officer may direct during the progress of the work or
upon completion or termination of this contract. The contractor may, upon such
terms and conditions as the contracting officer may approve, sell, or exchange
such property, or acquire such property at a price agreed upon by the contracting
officer and the contractor as the fair value thereof. The amount received by the
contractor as the result of any disposition, or the agreed fair value of any such
property acquired by the contractor, shall be applied in reduction of costs
allowable under this contract or shall be otherwise credited to account to the
Government, as the contracting officer may direct. Upon completion of the work or
the termination of this contract, the contractor shall render an accounting, as
prescribed by the contracting officer, of all government property which had come
into the possession or custody of the contractor under this contract.
(e) Protection of government property.management of high-risk property and
classified materials.
(1) The contractor shall take all reasonable precautions, and such other actions
as may be directed by the contracting officer, or in the absence of such
direction, in accordance with sound business practice, to safeguard and protect
government property in the contractor's possession or custody.
(2) In addition, the contractor shall ensure that adequate safeguards are in
place, and adhered to, for the handling, control and disposition of high-risk
property and classified materials throughout the life cycle of the property and
materials consistent with the policies, practices and procedures for property
management contained in the Federal Property Management regulations (41 CFR
chapter 101), the Department of Energy Property Management regulations (41 CFR
chapter 109), and other applicable regulations.
(3) High-risk property is property, the loss, destruction, damage to, or the
unintended or premature transfer of which could pose risks to the public, the
environment, or the national security interests of the
United States. High-risk property includes proliferation sensitive, nuclear
related dual use, export controlled, chemically or radioactively contaminated,
hazardous, and specially designed and prepared property, including property on the
militarily critical technologies list.
(f) Risk of loss of Government property.
(1)(i) The contractor shall not be liable for the loss or destruction of, or
damage to, Government property unless such loss, destruction, or damage was caused
by any of the following:
(A) Willful misconduct or lack of good faith on the part of the contractor's
managerial personnel;
(B) Failure of the contractor's managerial personnel to take all reasonable steps
to comply with any appropriate written direction of the contracting officer to
safeguard such property under paragraph (e) of this clause; or
(C) Failure of contractor managerial personnel to establish, administer, or
properly maintain an approved property management system in accordance with
paragraph (i)(1) of this clause.
(ii) If, after an initial review of the facts, the contracting officer informs the
contractor that there is reason to believe that the loss, destruction of, or
damage to the government property results from conduct falling within one of the
categories set forth above, the burden of proof shall be upon the contractor to
show that the contractor should not be required to compensate the government for
the loss, destruction, or damage.
(2) In the event that the contractor is determined liable for the loss,
destruction or damage to Government property in accordance with (f)(1) of this
clause, the contractor's compensation to the Government shall be determined as follows:
(i) For damaged property, the compensation shall be the cost of repairing such
damaged property, plus any costs incurred for temporary replacement of the damaged
property. However, the value of repair costs shall not exceed the fair market
value of the damaged property. If a fair market value of the property does not
exist, the contracting officer shall determine the value of such property,
consistent with all relevant facts and circumstances.
(ii) For destroyed or lost property, the compensation shall be the fair market
value of such property at the time of such loss or destruction, plus any costs
incurred for temporary replacement and costs associated with the disposition of
destroyed property. If a fair market value of the property does not exist, the
contracting officer shall determine the value of such property, consistent with
all relevant facts and circumstances.
(3) The portion of the cost of insurance obtained by the contractor that is
allocable to coverage of risks of loss referred to in paragraph (f)(1) of this
clause is not allowable.
(g) Steps to be taken in event of loss. In the event of any damage, destruction,
or loss to Government property in the possession or custody of the contractor with
a value above the threshold set out in the contractor's approved property
management system, the contractor:
(1) Shall immediately inform the contracting officer of the occasion and extent thereof,
(2) Shall take all reasonable steps to protect the property remaining, and
(3) Shall repair or replace the damaged, destroyed, or lost property in accordance
with the written direction of the contracting officer. The contractor shall take
no action prejudicial to the right of the Government to recover therefore, and
shall furnish to the Government, on request, all reasonable assistance in
obtaining recovery.
(h) Government property for Government use only. Government property shall be used
only for the performance of this contract.
(i) Property Management.
(1) Property Management System.
(i) The contractor shall establish, administer, and properly maintain an approved property management system of accounting for and control, utilization, maintenance, repair, protection, preservation, and disposition of Government property in its possession under the contract. The contractor's property management system shall be submitted to the contracting officer for approval and shall be maintained and administered in accordance with sound business practice, applicable Federal Property Management regulations and Department of Energy Property Management regulations, and such
directives or instructions which the contracting officer may from time to time prescribe.
(ii) In order for a property management system to be approved, it must provide for:
(A) Comprehensive coverage of property from the requirement identification,
through its life cycle, to final disposition;
(B) Employee personal responsibility and accountability for Government-owned property;
(C) Full integration with the contractor's other administrative and financial
systems; and
(D) A method for continuously improving property management practices through the
identification of best practices established by "best in class'' performers.
(iii) Approval of the contractor's property management system shall be contingent
upon the completion of the baseline inventory as provided in subparagraph (i)(2)
of this clause.
(2) Property Inventory.
(i) Unless otherwise directed by the contracting officer, the contractor shall
within six months after execution of the contract provide a baseline inventory
covering all items of Government property.
(ii) If the contractor is succeeding another contractor in the performance of this
contract, the contractor shall conduct a joint reconciliation of the property
inventory with the predecessor contractor. The contractor agrees to participate in
a joint reconciliation of the property inventory at the completion of this
contract. This information will be used to provide a baseline for the succeeding
contract as well as information for closeout of the predecessor contract.
(j) The term "contractor's managerial personnel" as used in this clause means the
contractor's directors, officers and any of its managers, superintendents, or
other equivalent representatives who have supervision or direction of:
(1) All or substantially all of the contractor's business; or
(2) All or substantially all of the contractor's operations at any one facility or
separate location to which this contract is being performed; or
(3) A separate and complete major industrial operation in connection with the
performance of this contract; or
(4) A separate and complete major construction, alteration, or repair operation in
connection with performance of this contract; or
(5) A separate and discrete major task or operation in connection with the
performance of this contract.
Note: Substitute the following paragraph (j) for nonprofit contractors:
(j) The term "contractor's managerial personnel" as used in this clause means the
contractor's directors, officers and any of its managers, superintendents, or
other equivalent representatives who have supervision or direction of all or
substantially all of:
(1) The contractor's business; or
(2) The contractor's operations at any one facility or separate location at which
this contract is being performed; or
(3) The contractor's Government property system and/or a Major System Acquisition
or Major Project as defined in DOE Order 4700.1 (Version in effect on effective
date of contract).
(k) The contractor shall include this clause in cost reimbursable contracts.
[49 FR 12063, Mar. 28, 1984; 49 FR 38953, Oct. 2, 1984, as amended at 56 FR 28106,
June 19, 1991; 60 FR 49516 Sept. 26, 1995; 62 FR 34842, Jun. 27, 1997]
970.5204-22 Contractor purchasing system.
Insert the following clause.
CONTRACTOR PURCHASING SYSTEM
(NOV 1997)
(a) General. The contractor shall develop, implement, and maintain formal
policies, practices, and procedures to be used in the award of subcontracts
consistent with this clause, 48 CFR (DEAR) 970.5204-44, and 48 CFR (DEAR) 970.71.
The contractor's purchasing system and methods shall be fully documented,
consistently applied, and acceptable to DOE in accordance with 48 CFR (DEAR)
970.7102. The contractor shall maintain file documentation which is appropriate to
the value of the purchase and is adequate to establish the propriety of the
transaction and the price paid. The contractor's purchasing performance will be
evaluated against such performance criteria and measures as may be set forth
elsewhere in this contract. DOE reserves the right at any time to require that the
contractor submit for approval any or all purchases under this contract. The
contractor shall not purchase any item or service the purchase of which is
expressly prohibited by the written direction of DOE and shall use such special
and directed sources as may be expressly required by the DOE contracting officer.
The contractor shall manage a Self-Assessment Program and shall submit to the
contracting officer a copy of Self-Assessment reports in accordance with written
direction and guidance provided by the contracting officer. DOE reserves the right
to review and approve the contractor's purchasing system in accordance with 48 CFR
subpart 44.3, and DOE implementing policy and guidance. The contractor's approved
purchasing system and methods shall include the requirements set forth in
paragraphs (b) through (w) of this clause.
(b) Acquisition of utility services. Utility services shall be acquired in
accordance with the requirements of 48 CFR 970.41.
(c) Acquisition of Real Property. Real property shall be acquired in accordance
with 48 CFR (DEAR) Subpart 917.74.
(d) Advance Notice of Proposed Subcontract Awards. Advance notice shall be
provided in accordance with 48 CFR (DEAR) 970.7109.
(e) Audit of Subcontractors.
(1) The contractor shall provide for:
(i) periodic post-award audit of cost-reimbursement
subcontractors at all tiers, and
(ii) audits, where necessary, to provide a valid basis for pre-award or cost or
price analysis.
(2) Responsibility for determining the costs allowable under each
cost-reimbursement subcontract remains with the contractor or next higher-tier
subcontractor. The contractor shall provide, in appropriate cases, for the timely
involvement of the contractor and the DOE contracting officer in resolution of
subcontract cost allowability.
(3) Where audits of subcontractors at any tier are required, arrangements may be
made to have the cognizant Federal agency perform the audit of the subcontract.
These arrangements shall be made administratively between DOE and the other agency
involved and shall provide for the cognizant agency to audit in an appropriate
manner in light of the magnitude and nature of the subcontract. In no case,
however, shall these arrangements preclude determination by the DOE contracting
officer of the allowability or unallowability of subcontractor costs claimed for
reimbursement by the contractor.
(4) Allowable costs for cost reimbursable subcontracts are to be determined in
accordance with the cost principles of FAR Part 31, appropriate for the type of
organization to which the subcontract is to be awarded, as supplemented by 48 CFR
(DEAR) Part 931. Allowable costs in the purchase or transfer from
contractor-affiliated sources shall be determined in accordance with 48 CFR (DEAR)
970.7105 and 48 CFR (DEAR) 970.3102-15(b).
(f) Bonds and Insurance.
(1) The contractor shall require performance bonds in penal amounts as set forth
in FAR 28.102-2(a) for all fixed priced and unit-priced construction subcontracts
in excess of $100,000. The contractor shall consider the use of performance bonds
in fixed price nonconstruction subcontracts, where appropriate.
(2) For fixed-price, unit-priced and cost reimbursement construction subcontracts
in excess of $100,000 a payment bond shall be obtained on Standard Form 25A
modified to name the contractor as well as the United States of America as
obligees. The penal amounts shall be determined in accordance with 48 CFR (FAR)
28.102-2(b).
(3) For fixed-price, unit-priced and cost-reimbursement construction subcontracts, greater than $25,000, but not greater than $100,000, the contractor shall select two or more of the payment protections at 48 CFR (FAR) 28.102-1(b), giving particular consideration to the inclusion of an irrevocable letter of credit as one of the selected alternatives.
(4) A subcontractor may have more than one acceptable surety in both construction
and other subcontracts, provided that in no case will the liability of any one
surety exceed the maximum penal sum for which it is qualified for any one
obligation. For subcontracts other than construction, a co-surety (two or more
sureties together) may reinsure amounts in excess of their individual capacity,
with each surety having the required underwriting capacity that appears on the
list of acceptable corporate sureties.
(g) Buy American. The contractor shall comply with the
provisions of the Buy American Act as reflected in 48 CFR (DEAR) 970.5203-3 and 48
CFR (DEAR) 970.5204-3. The contractor shall forward determinations of
nonavailability of individual items to the DOE contracting officer for approval.
Items in excess of $100,000 require the prior concurrence of the Head of
Contracting Activity. If, however, the contractor has an approved purchasing
system, the Head of the Contracting Activity may authorize the contractor to make
determinations of nonavailability for individual items valued at $100,000 or less.
(h) Construction and Architect-Engineer Subcontracts.
(1) Independent Estimates. A detailed, independent estimate of costs shall be
prepared for all construction work to be subcontracted.
(2) Specifications. Specifications for construction shall be prepared in
accordance with the DOE publication entitled "General Design Criteria Manual."
(3) Prevention of Conflict of Interest.
(i) The contractor shall not award a subcontract for
construction to the architect-engineer firm or an affiliate that prepared the
design. This prohibition does not preclude the award of a "turnkey" subcontract so
long as the subcontractor assumes all liability for defects in design and
construction and consequential damages.
(ii) The contractor shall not award both a cost-reimbursement subcontract and a
fixed-price subcontract for construction or architect-engineer services or any
combination thereof to the same firm where those subcontracts will be performed at
the same site.
(iii) The contractor shall not employ the construction subcontractor or an
affiliate to inspect the firm's work. The contractor shall assure that the working
relationships of the construction subcontractor and the subcontractor inspecting
its work and the authority of the inspector are clearly defined.
(i) Contractor-Affiliated Sources. Equipment, materials, supplies, or services
from a contractor-affiliated source shall be purchased or transferred in
accordance with 48 CFR (DEAR) 970.7105.
(j) Contractor-Subcontractor Relationship. The obligations of the contractor under
paragraph (a) of this clause, including the development of the purchasing system
and methods, and purchases made pursuant thereto, shall not relieve the contractor
of any obligation under this contract (including, among other things, the
obligation to properly supervise, administer, and coordinate the work of
subcontractors). Subcontracts shall be in the name of the contractor, and shall
not bind or purport to bind the Government.
(k) Government Property. Identification, inspection, maintenance, protection, and
disposition of Government property shall conform with the policies and principles
of FAR Part 45, 48 CFR (DEAR) 945, the Federal Property Management Regulations 41
CFR 101, the DOE Property Management Regulations 41 CFR 109, and their contracts.
(l) Indemnification. Except for Price-Anderson Nuclear Hazards Indemnity, no
subcontractor may be indemnified except with the prior approval of the Procurement
Executive.
(m) Leasing of Motor Vehicles. Contractors shall comply with FAR 8.11 and 48 CFR
(DEAR) 908.11.
(n) Make-or-Buy Plans. Acquisition of property and services shall be obtained on a
least-cost basis, consistent with the requirements of the Make-or-Buy Plan clause
of this contract and the contractor's approved make-or-buy plan.
(o) Management, Acquisition and Use of Information Resources. Requirements for
automatic data processing resources and telecommunications facilities, services,
and equipment, shall be reviewed and approved in accordance with applicable DOE
Orders and regulations regarding information resources.
(p) Priorities, Allocations and Allotments. Priorities, allocations and allotments
shall be extended to appropriate subcontracts in accordance with the clause or
clauses of this contract dealing with priorities and allocations.
(q) Purchase of Special Items. Purchase of the following items shall be in
accordance with the following provisions of 48 CFR (DEAR) 908.71 and the Federal
Property Management Regulations, 41 CFR 101:
(1) Motor vehicles--48 CFR 908.7101
(2) Aircraft--48 CFR 908.7102
(3) Security Cabinets--48 CFR 908.7106
(4) Alcohol--48 CFR 908.7107
(5) Helium--48 CFR 908.7108
(6) Fuels and packaged petroleum products--48 CFR 908.7109
(7) Coal--48 CFR 908.7110
(8) Arms and Ammunition--48 CFR 908.7111
(9) Heavy Water--48 CFR 908.7121(a)
(10) Precious Metals--48 CFR 908.7121(b)
(11) Lithium--48 CFR 908.7121(c)
(12) Products and services of the blind and severely handicapped--41 CFR 101-26.701
(13) Products made in Federal penal and correctional institutions--41 CFR 101-26.702
(r) Purchase vs. Lease Determinations. Contractors shall determine whether
required equipment and property should be purchased or leased, and establish
appropriate thresholds for application of lease vs. purchase determinations. Such
determinations shall be made:
(1) at time of original acquisition;
(2) when lease renewals are being considered; and
(3) at other times as circumstances warrant.
(s) Quality Assurance. Contractors shall provide no less protection for the
Government in its subcontracts than is provided in the prime contract.
(t) Setoff of Assigned Subcontractor Proceeds. Where a subcontractor has been
permitted to assign payments to a financial institution, the assignment shall
treat any right of setoff in accordance with 48 CFR (DEAR) 932.803.
(u) Strategic and Critical Materials. The contractor may use strategic and
critical materials in the National Defense Stockpile.
(v) Termination. When subcontracts are terminated as a result of the termination
of all or a portion of this contract, the contractor shall settle with
subcontractors in conformity with the policies and principles
relating to settlement of prime contracts in FAR subparts 49.1, 49.2 and 49.3.
When subcontracts are terminated for reasons other than termination of this
contract, the contractor shall settle such subcontracts in general conformity with
the policies and principles in FAR subparts 49.1, 49.2, 49.3 and 49.4. Each such
termination shall be documented and consistent with the terms of this contract.
Terminations which require approval by the Government shall be supported by
accounting data and other information as may be directed by the contracting officer.
(w) Unclassified Controlled Nuclear Information. Subcontracts involving
unclassified uncontrolled nuclear information shall be treated in accordance with
10 CFR Part 1017.
[53 FR 24231, June 27, 1988; 54 FR 1288, Jan. 12, 1989, as amended at 55 FR 41540,
Oct. 12, 1990; 60 FR 49516, Sept. 26, 1995; 62 FR 53754, Oct. 16, 1997; 63 FR
56849, Oct. 23, 1998]
970.5204-23 Taxes.
As prescribed in 970.2903 insert the following clause.
STATE AND LOCAL TAXES (APR 1984)
(a) The contractor agrees to notify the contracting officer of any State or local
tax, fee, or charge levied or purported to be levied on or collected from the
contractor with respect to the contract work, any transaction thereunder, or
property in the custody or control of the contractor and constituting an allowable
item of cost if due and payable, but which the contractor has reason to believe,
or the contracting officer has advised the contractor, is or may be inapplicable
or invalid;* and the contractor further agrees to refrain from paying any such
tax, fee, or charge unless authorized in writing by the contracting officer. Any
State or local tax, fee, or charge paid with the approval of the contracting
officer or on the basis of advice from the contracting officer that such tax, fee,
or charge is applicable and valid, and which would otherwise be an allowable item
of cost, shall not be disallowed as an item of cost by reason of any subsequent
ruling or determination that such tax, fee, or charge was in fact inapplicable or invalid.
*Requirement for notice may be broadened to include all State and local taxes
which may be claimed as allowable costs when considered to be appropriate.
(b) The contractor agrees to take such action as may be required or approved by
the contracting officer to cause any State or local tax, fee, or charge which
would be an allowable cost to be paid under protest; and to take such action as
may be required or approved by the contracting officer to seek recovery of any
payments made, including assignment to the Government or its designee of all
rights to an abatement or refund thereof, and granting permission for the
Government to join with the contractor in any proceedings for the recovery thereof
or to sue for recovery in the name of the contractor. If the contracting officer
directs the contractor to institute litigation to enjoin the collection of or to
recover payment of any such tax, fee, or charge referred to above, or if a claim
or suit is filed against the contractor for a tax, fee, or charge it has refrained
from paying in accordance with this article, the procedures and requirements of
the article entitled "Litigation and Claims" shall apply and the costs and
expenses incurred by the contractor shall be allowable items of costs, as provided
in this contract, together with the amount of any judgment rendered against the contractor.
(c) The Government shall hold the contractor harmless from penalties and interest
incurred through compliance with this clause. All recoveries or credits in respect
of the foregoing taxes, fees, and charges (including interest) shall inure to and
be for the sole benefit of the Government.
[62 FR 2310, Jan. 16, 1997]
970.5204-24 [Reserved]
970.5204-25 Workmanship and materials.
Insert the following clause.
WORKMANSHIP AND MATERIALS (APR 1984)
(a) Grade of workmanship and materials. Unless otherwise directed by the
contracting officer or expressly provided for by specifications issued under this contract:
(1) All workmanship shall be first class; and
(2) All articles, equipment and materials incorporated in the work are to be:
(i) New and of the most suitable grade of their respective kinds for the purpose;
(ii) In accordance with any applicable drawings and specifications; and
(iii) Installed to the satisfaction and with the approval of the contracting officer.
Where equipment, materials, or articles are referred to in the specifications as
"equal to" any particular standard, the contracting officer shall decide the
question of equality.
(b) Samples and test results. If the contracting officer so requires, the
contractor shall submit for approval samples of or test results on any materials
proposed to be incorporated in the work before making any commitment for the
purchase of such materials.
970.5204-26 [Reserved]
[49 FR 12063, Mar. 28, 1984, as amended at 56 FR 41966, Aug. 26, 1991; 62 FR
34842, Jun. 27, 1997]
970.5204-27 Consultant or other comparable employment services of contractor employees.
(a) The following clause shall be included in all cost-reimbursement type
contracts identified in 970.2272(b)(3).
CONSULTANT OR OTHER COMPARABLE EMPLOYMENT
SERVICES (APR 1984)
The contractor shall require all employees who are employed full-time (an
individual who performs work under the cost-type contract on a full-time annual
basis) or part-time (50 percent or more of regular annual compensation received
under terms of a contract with DOE) on the contract work to disclose to the
contractor all consultant or other comparable employment services which the
employees propose to undertake for others. The contractor shall transmit to the
contracting officer all information obtained from such disclosures. The contractor
will require any employee who will be employed full-time on the contract o agree,
as a condition of his participation in such work, that he will not perform
consultant or other comparable employment services for another DOE contractor
under its contract with DOE, except with the prior approval of the contractor.
(b) The following clause shall be included in all contracts identified in
970.2272(b)(4).
CONSULTANT OR OTHER COMPARABLE EMPLOYMENT
SERVICES (MAY 1989)
The contractor shall require all employees who are employed full-time (an
individual who performs work under the cost-type contract on a full-time annual
basis) or part-time (50 percent or more of regular annual compensation received
under terms of a contract with DOE) on the contract work to disclose to the
contractor all consultant or other comparable employment services which the
employees propose to undertake for others. The contractor shall transmit to the
contracting officer all information obtained from such disclosures. The contractor
will require any employee who will be employed full-time on the contract work to
agree, as a condition of his participation in such work, that he will not perform
consultant or other comparable employment services for another DOE contractor in
the same or related energy field or another organization except with the prior
approval of the contractor. If the contractor believes, with respect to any
employee who is employed full-time on the contract work, that any proposed
consultant or other comparable employment service may involve: (1) A rate of
remuneration significantly in excess of the employee's regular rate of
remuneration; (2) a significant question concerning possible conflict with DOE's
policies regarding conduct of employees of DOE's contractors; (3) the contractor's
responsibility to report fully and promptly to DOE all significant research and
development information; or (4) the patent provisions of the contractor's contract
with DOE, the contractor shall obtain the prior approval of the contracting
officer for such consultant or other comparable employment service.
[49 FR 12063, Mar. 28, 1984; 49 FR 38953, Oct. 2, 1984; 54 FR 27649, June 30, 1989]
970.5204-28 Assignment.
Insert the following clause.
ASSIGNMENT (APR 1984)
Neither this contract nor any interest therein nor claim thereunder shall be
assigned or transferred by the contractor except as expressly authorized in
writing by the contracting officer.
970.5204-29 Permits or licenses.
Insert the following clause.
PERMITS OR LICENSES (APR 1984)
Except as otherwise directed by the contracting officer, the contractor shall
procure all necessary permits or licenses and abide by all applicable laws,
regulations, and ordinances of the United States and of the state, territory, and
political subdivision in which the work under this contract is performed.
970.5204-30 Notice of Labor disputes
As prescribed in 970.2201(b)(5)(ii), insert the clause at FAR 52.222-1.
970.5204-31 Insurance.litigation and claims.
As prescribed in 48 CFR (DEAR) 970.2830(a), insert the following clause.
INSURANCE--LITIGATION AND CLAIMS (JUNE 1997)
(a) The contractor may, with the prior written authorization of the contracting
officer, and shall, upon the request of the Government, initiate litigation
against third parties, including proceedings before administrative agencies, in
connection with this contract. The contractor shall proceed with such litigation
in good faith and as directed from time to time by the contracting officer.
(b) The contractor shall give the contracting officer immediate notice in writing
of any legal proceeding, including any proceeding before an administrative agency,
filed against the contractor arising out of the performance of this contract.
Except as otherwise directed by the contracting officer, in writing, the
contractor shall furnish immediately to the contracting officer copies of all
pertinent papers received by the contractor with respect to such action. The
contractor, with the prior written authorization of the contracting officer, shall
proceed with such litigation in good faith and as directed from time to time by
the contracting officer.
(c)(1) Except as provided in paragraph (c)(2) of this clause, the contractor shall
procure and maintain such bonds and insurance as required by law or approved in
writing by the contracting officer.
(2) The contractor may, with the approval of the contracting officer, maintain a
self-insurance program; provided that, with respect to workers' compensation, the
contractor is qualified pursuant to statutory authority.
(3) All bonds and insurance required by this clause shall be in a form and amount
and for those periods as the contracting officer may require or approve and with
sureties and insurers approved by the contracting officer.
(d) The contractor agrees to submit for the contracting officer's approval, to the extent and in the manner required by the contracting officer, any other bonds and insurance that are maintained by the contractor in connection with the performance of this contract and for which the contractor seeks reimbursement. If an insurance cost (whether a premium for commercial insurance or related to self-insurance) includes a portion covering costs made unallowable elsewhere in the contract, and the share of the cost for coverage for the unallowable cost is determinable, the portion of the cost that is
otherwise an allowable cost under this contract is reimbursable to the extent
determined by the contracting officer.
(e) Except as provided in subparagraphs (g) and (h) of this clause, or
specifically disallowed elsewhere in this contract, the contractor shall be reimbursed--
(1) For that portion of the reasonable cost of bonds and insurance allocable to
this contract required in accordance with contract terms or approved under this
clause, and
(2) For liabilities (and reasonable expenses incidental to such liabilities,
including litigation costs) to third persons not compensated by insurance or
otherwise without regard to and as an exception to the clause of this contract
entitled, Obligation of Funds (48 CFR (DEAR) 970.5204-15).
(f) The Government's liability under paragraph (e) of this clause is subject to
the availability of appropriated funds. Nothing in this contract shall be
construed as implying that the Congress will, at a later date, appropriate funds
sufficient to meet deficiencies.
(g) Notwithstanding any other provision of this contract, the contractor shall not
be reimbursed for liabilities (and expenses incidental to such liabilities,
including litigation costs, counsel fees, judgment and settlements)--
(1) Which are otherwise unallowable by law or the provisions of this contract; or
(2) For which the contractor has failed to insure or to maintain insurance as
required by law, this contract, or by the written direction of the contracting officer.
(h) In addition to the cost reimbursement limitations contained in DEAR
970.3101-3, and notwithstanding any other provision of this contract, the
contractor's liabilities to third persons, including employees but excluding costs
incidental to workers' compensation actions, (and any expenses incidental to such
liabilities, including litigation costs, counsel fees, judgments and settlements)
shall not be reimbursed if such liabilities were caused by contractor managerial personnel's
(1) Willful misconduct,
(2) Lack of good faith, or
(3) Failure to exercise prudent business judgment, which means failure to act in
the same manner as a prudent person in the conduct of competitive business; or, in
the case of a non-profit educational institution, failure to act in the manner
that a prudent
person would under the circumstances prevailing at the time the decision to incur
the cost is made.
(i) The burden of proof shall be upon the contractor to establish that costs
covered by paragraph (h) of this clause are allowable and reasonable if, after an
initial review of the facts, the contracting officer challenges a specific cost or
informs the contractor that there is reason to believe that the cost results from
willful misconduct, lack of good faith, or failure to exercise prudent business
judgment by contractor managerial personnel.
(j)(1) All litigation costs, including counsel fees, judgments and settlements
shall be differentiated and accounted for by the contractor so as to be separately
identifiable. If the contracting officer provisionally disallows such costs, then
the contractor may not use funds advanced by DOE under the contract to finance the
litigation.
(2) Punitive damages are not allowable unless the act or failure to act which gave
rise to the liability resulted from compliance with specific terms and conditions
of the contract or written instructions from the contracting officer.
(3) The portion of the cost of insurance obtained by the contractor that is
allocable to coverage of liabilities referred to in paragraph (g)(1) of this
clause is not allowable.
(4) The term "contractor's managerial personnel" is defined in clause paragraph
(j) of 48 CFR (DEAR) 970.5204-21.
(k) The contractor may at its own expense and not as an allowable cost procure for
its own protection insurance to compensate the contractor for any unallowable or
unreimbursable costs incurred in connection with contract performance.
(l) If any suit or action is filed or any claim is made against the contractor,
the cost and expense of which may be reimbursable to the contractor under this
contract, and the risk of which is then uninsured or is insured for less than the
amount claimed, the contractor shall--
(1) Immediately notify the contracting officer and promptly furnish copies of all
pertinent papers received;
(2) Authorize Department representatives to collaborate with: in-house or
DOE-approved outside counsel in settling or defending the claim; or counsel for
the insurance carrier in settling or defending the claim if the amount of the
liability claimed exceeds the amount of coverage, unless precluded by the terms of
the insurance contract; and
(3) Authorize Department representatives to settle the claim or to defend or
represent the contractor in and/or to take charge of any litigation, if required
by the Department, if the liability is not insured or covered by bond. In any
action against more than one Department contractor, the Department may require the
contractor to be represented by common counsel. Counsel for the contractor may, at
the contractor's own expense, be associated with the Department representatives in
any such claim or litigation.
[56 FR 28106, June 19, 1991, as amended at 56 FR 41966, Aug. 26, 1991; 62 FR 2310,
Jan. 16, 1997; 62 FR 34842, Jun. 27, 1997]
970.5204-32 [Reserved]
[56 FR 28107, June 19, 1991; 62 FR 2310, Jan. 16, 1997; 62 FR 34842, Jun. 27, 1997]
970.5204-33 Priorities and allocations.
(a) The following clause shall be used in management and operating contracts for
military and atomic energy construction, operations and other directly related
activity, where the programs have been authorized pursuant to the Atomic Energy
Act of 1954, as amended.
PRIORITIES AND ALLOCATIONS (APR 1994)
The contractor shall follow the rules and procedures of the Defense Priorities and
Allocations System (DPAS) regulation (15 CFR Part 700) in obtaining controlled
materials and other products and materials needed for contract performance.
(b) The following clause shall be used in management and operating contracts in
support of programs and projects which may be determined to maximize domestic
energy supplies.
PRIORITIES AND ALLOCATIONS.DOMESTIC ENERGY
SUPPLIES (APR 1994)
A program or project under this contract may be determined to be eligible for
priorities and allocations support as provided for by section 101(c) of the
Defense Production Act of 1950, as amended by the Energy Policy and Conservation
Act (Pub. L. 94-163, 42 U.S.C. 6201 et seq.) if it is determined that its purpose
is to maximize domestic energy supplies. Eligibility is dependent on an executive
decision on a case-by-case basis with the decision being jointly made by the
Department of Energy and Commerce.
DOE regulations regarding material allocation and priority performance under
contracts or orders to maximize domestic energy supplies can be found at Part 216
of Title 10 of the Code of Federal Regulations (10 CFR Part 216).
Additional guidance is provided by DOE Publication MA-0192, "Priorities and
Allocations Support for Energy: Keeping Energy Programs on Schedule," dated August
1985, as it may from time to time be revised. Copies may be obtained by written
request to: Department of Energy, Office of Scientific and Technical Information
(OSTI), Post Office Box 62, Oak Ridge, Tennessee 37830.
[52 FR 38426, Oct. 16, 1987; 62 FR 2310, Jan. 16, 1997]
970.5204-35 Controls in the national interest
Insert the following clause in contracts with educational institutions involving
unclassified work.
CONTROLS IN THE NATIONAL INTEREST (JUL 1994)
The contractor agrees to comply with the requirements of DOE 1240.2 (See current
version), Unclassified Visits and Assignments by Foreign Nationals, and to such
other DOE requirements of the same general nature as the parties may agree to from
time to time; these requirements relate to unclassified work, and they shall not
be construed to limit or affect in any way the contractor's obligation to conform
to all security regulations and requirements of DOE pertaining to classified work.
[59 FR 24357, May 11, 1994; 62 FR 2310, Jan. 16, 1997]
970.5204-36 Preventing Conflicts of Interest in University Research
Insert the following clause in contracts with universities where DOE has major
investments in facilities but does not own or lease the land.
PREVENTING CONFLICTS OF INTEREST IN UNIVERSITY
RESEARCH (DEC 1994)
The parties agree that the university has adopted policies and procedures,
designed to avoid conflict-of-interest situations, which are in substantial
conformance with the Joint Statement of the Council of American Association of
University Professors and the American Council on Education of December 1964,
entitled, "On Preventing Conflicts of Interest in Government-Sponsored Research at
Universities," which policies and procedures will be applied in connection with
this contract.
970.5204-37 Statement of work (management and operating contracts).
See 970.1002.
[59 FR 9102, Feb. 25, 1994]
970.5204-38 Special clause for procurement of construction.
As prescribed in 970.1002(c) and 970.3601, insert the following clause in
management and operating contracts when the contractor is to perform no
Davis-Bacon work with his own forces but may procure construction by subcontract:
GOVERNMENT FACILITY SUBCONTRACT APPROVAL
(APR 1994)
Upon request of the contracting officer and acceptance thereof by the contractor,
the contractor shall procure, by subcontract, the construction of new facilities
or the alteration or repair of Government-owned facilities at the plant. Any
subcontract entered into under this paragraph shall be subject to the written
approval of the contracting officer and shall contain the provisions relative to
labor and wages required by law to be included in contracts for the construction,
alteration, and/or repair, including painting and decorating, of a public building
or public work.
[49 FR 12063, Mar. 28, 1984; 49 FR 38953, Oct. 2, 1984; 62 FR 2310, Jan. 16, 1997]
970.5204-39 Acquisition and Use of Environmentally Preferable Products and Services.
As prescribed in 48 CFR (DEAR) 970.2304-2, insert the following clause in
management and operating contracts.
ACQUISITION AND USE OF ENVIRONMENTALLY
PREFERABLE PRODUCTS AND SERVICES (OCT 1995)
(a) In the performance of this contract, the Contractor shall comply with the
requirements of the following issuances:
(1) Executive Order 12873 of October 20, 1993, entitled "Federal Acquisition,
Recycling, and Waste Prevention,"
(2) Section 6002 of the Resource Conservation and Recovery Act (RCRA) of 1976, as
amended (42 U.S.C. 6962, Pub. L. 94-580, 90 Stat. 2822),
(3) Title 40 of the Code of Federal Regulations, Subchapter I, Part 247
(Comprehensive Guidelines for the Procurement of Products Containing Recovered
Materials) and such other Subchapter I Parts or Comprehensive Procurement
Guidelines as the Environmental Protection Agency may issue from time to time as
guidelines for the procurement of products that contain recovered/recycled materials,
(4) "U.S. Department of Energy Affirmative Procurement Program for Products
Containing Recovered Materials" and related guidance document(s), as they are
identified in writing by the Department.
(b) The Contractor shall prepare and submit reports on matters related to the use of environmentally preferable products and services
from time to time in accordance with written direction (e.g., in a specified
format) from the Contracting Officer.
(c) In complying with the requirements of paragraph (a) of this clause, the
Contractor shall coordinate its concerns and seek implementing guidance on Federal
and Departmental policy, plans, and program guidance with the DOE recycling point
of contact, who shall be identified by the Contracting Officer. Reports required
pursuant to paragraph (b) of this clause, shall be submitted through the DOE
recycling point of contact.
[60 FR 47492, Sept. 13, 1995]
970.5204-40 Technology Transfer Mission
As prescribed in 48 CFR 970.73, insert the following clause:
TECHNOLOGY TRANSFER MISSION (JAN 1996)
This clause has as its purpose implementation of the National Competitiveness
Technology Transfer Act of 1989 (Sections 3131, 3132, 3133, and 3157 of Pub. L.
101-189 and as amended by Pub. L. 103-160, Sections 3134 and 3160). The Contractor
shall conduct technology transfer activities with a purpose of providing benefit
from Federal research to U.S. industrial competitiveness.
(a) Authority.
(1) In order to ensure the full use of the results of research
and development efforts of, and the capabilities of, the Laboratory, technology
transfer, including Cooperative Research and Development Agreements (CRADAs), is
established as a mission of the Laboratory consistent with the policy, principles
and purposes of Sections 11(a)(1) and 12(g) of the Stevenson-Wydler Technology
Innovation Act of 1980, as amended (15 U.S.C. 3710a); Section 3132(b) of Pub. L.
101-189, Sections 3134 and 3160 of P.L. 103-160, and of Chapter 38 of the Patent
Laws (35 U.S.C. 200 et seq.); Section 152 of the Atomic Energy Act of 1954, as
amended (42 U.S.C. 2182); Section 9 of the Federal Nonnuclear Energy Research and
Development Act of 1974 (42 U.S.C. 5908); and Executive Order 12591 of April 10, 1987.
(2) In pursuing the technology transfer mission, the Contractor is authorized to
conduct activities including but not limited to: identifying and protecting
Intellectual Property made, created or acquired at or by the Laboratory;
negotiating licensing agreements and assignments for Intellectual Property made,
created or acquired at or by the Laboratory that the Contractor controls or owns;
bailments; negotiating all aspects of and entering into CRADAs; providing
technical consulting and personnel exchanges; conducting science education
activities and reimbursable Work for Others (WFO); providing information
exchanges; and making available laboratory or weapon production user facilities.
It is fully expected that the Contractor shall use all of the mechanisms available
to it to accomplish this technology transfer mission, including, but not limited
to, CRADAs, user facilities, WFO, science education activities, consulting,
personnel, assignments, and licensing in accordance with this clause.
(b) Definitions
(1) Contractor's Laboratory Director means the individual who has supervision over
all or substantially all of the Contractor's operations at the Laboratory.
(2) Intellectual Property means patents, trademarks, copyrights, mask works,
protected CRADA information, and other forms of comparable property rights
protected by Federal Law and other foreign counterparts.
(3) Cooperative Research and Development Agreement (CRADA) means any agreement
entered into between the Contractor as operator of the Laboratory, and one or more
parties including at least one non-Federal party under which the Government,
through its laboratory, provides personnel, services, facilities, equipment,
intellectual property, or other resources with or without reimbursement (but not
funds to non-Federal parties) and the non-Federal parties provide funds,
personnel, services, facilities, equipment, intellectual property, or other
resources toward the conduct of specified research or development efforts which
are consistent with the missions of the Laboratory; except that such term does not
include a procurement contract, grant, or cooperative agreement as those terms are
used in sections 6303, 6304, and 6305 of Title 31 of the United States Code.
(4) Joint Work Statement (JWS) means a proposal for a CRADA prepared by the
Contractor, signed by the Contractor's Laboratory Director or designee which
describes the following:
(i) Purpose;
(ii) Scope of Work which delineates the rights and responsibilities of the
Government, the Contractor and Third Parties, one of which must be a non-Federal party;
(iii) Schedule for the work; and
(iv) Cost and resource contributions of the parties associated with the work and
the schedule.
(5) Assignment means any agreement by which the Contractor transfers ownership of
Laboratory Intellectual Property, subject to the Government's retained rights.
(6) Laboratory Biological Materials means biological materials capable of
replication or reproduction, such as plasmids, deoxyribonucleic acid molecules,
ribonucleic acid molecules, living organisms of any sort and their progeny,
including viruses, prokaryote and eukaryote cell lines, transgenic plants and
animals, and any derivatives or modifications thereof or products produced
through their use or associated biological products, made under this contract by
Laboratory employees or through the use of Laboratory research facilities.
(7) Laboratory Tangible Research Product means tangible material results of
research which
(i) are provided to permit replication, reproduction, evaluation or confirmation
of the research effort, or to evaluate its potential commercial utility;
(ii) are not materials generally commercially available; and
(iii) were made under this contract by Laboratory employees or through the use of
Laboratory research facilities.
(8) Bailment means any agreement in which the Contractor permits the commercial or
non- commercial transfer of custody, access or use of Laboratory Biological
Materials or Laboratory Tangible Research Product for a specified purpose of
technology transfer or research and development, including without limitation
evaluation, and without transferring ownership to the bailee.
(c) Allowable Costs.
(1) The Contractor shall establish and carry out its technology transfer efforts through appropriate organizational elements consistent with the requirements for an Office of Research and Technology Applications (ORTA) pursuant to paragraphs (b) and (c) of Section 11 of the Stevenson-Wydler Technology Innovation Act of 1980, as amended (15 U.S.C. 3710). The costs associated with the conduct of technology transfer through the ORTA including activities associated with obtaining, maintaining, licensing, and assigning
Intellectual Property rights, increasing the potential for the transfer of
technology, and the widespread notice of technology transfer opportunities, shall
be deemed allowable provided that such costs meet the other requirements of the
allowable costs provisions of this Contract. In addition to any separately
designated funds, these costs in any fiscal year shall not exceed an amount equal
to 0.5 percent of the operating funds included in the Federal research and
development budget (including Work For Others) of the Laboratory for that fiscal
year without written approval of the Contracting Officer.
(2) The Contractor's participation in litigation to enforce or defend Intellectual
Property claims incurred in its technology transfer efforts shall be as provided
in the clause entitled "Litigation and Claims" of this Contract.
(d) Conflicts of Interest.Technology Transfer. The Contractor shall have
implementing procedures that seek to avoid employee and organizational conflicts
of interest, or the appearance of conflicts of interest, in the conduct of its
technology transfer activities. These procedures shall apply to other persons
participating in Laboratory research or related technology transfer activities.
Such implementing procedures shall be provided to the Contracting Officer for
review and approval within sixty (60) days after execution of this contract. The
Contracting Officer shall have thirty (30) days thereafter to approve or require
specific changes to such procedures. Such implementing procedures shall include
procedures to:
(1) Inform employees of and require conformance with standards of conduct and
integrity in connection with the CRADA activity in accordance with the provisions
of paragraph (n)(5) of this clause;
(2) Review and approve employee activities so as to avoid conflicts of interest
arising from commercial utilization activities relating to Contractor-developed
Intellectual Property;
(3) Conduct work performed using royalties so as to avoid interference with or
adverse effects on ongoing DOE projects and programs;
(4) Conduct activities relating to commercial utilization of Contractor-developed
Intellectual Property so as to avoid interference with or adverse effects on user
facility or WFO activities of the Contractor;
(5) Conduct DOE-funded projects and programs so as to avoid the appearance of
conflicts of interest or actual conflicts of interest with non-Government funded work;
(6) Notify the Contracting Officer with respect to any new work to be performed or
proposed to be performed under the Contract for DOE or other Federal agencies
where the new work or proposal involves Intellectual Property in which the
Contractor has obtained or intends to request or elect title;
(7) Except as provided elsewhere in this Contract, obtain the approval of the
Contracting Officer for any licensing of or assignment of title to Intellectual
Property rights by the Contractor to any business or corporate affiliate of the Contractor;
(8) Obtain the approval of the Contracting Officer prior to any assignment,
exclusive licensing, or option for exclusive licensing, of Intellectual Property
to any person who has been a Laboratory employee within the previous two years or
to the company in which he or she is a principal; and
(9) Notify non-Federal sponsors of WFO activities, or non-Federal users of user
facilities, of any relevant Intellectual Property interest of the Contractor prior
to execution of WFOs or
user agreements.
(10) Notify DOE prior to evaluating a proposal by a third party or DOE, when the
subject matter of the proposal involves an elected or waived subject invention
under this contract or one in which the Contractor intends to elect to retain
title under this contract.
(e) Fairness of Opportunity. In conducting its technology transfer activities,
the Contractor shall prepare procedures and take all reasonable measures to ensure
widespread notice of availability of technologies suited for transfer and
opportunities for exclusive licensing and joint research arrangements. The
requirement to widely disseminate the availability of technology transfer
opportunities does not apply to a specific application originated outside of the
Laboratory and by entities other than the Contractor.
(f) U.S. Industrial Competitiveness.
(1) In the interest of enhancing U.S. Industrial
Competitiveness, the Contractor shall, in its licensing and assignments of
Intellectual Property, give preference in such a manner as to enhance the accrual
of economic and technological benefits to the U.S. domestic economy. The
Contractor shall consider the following factors in all of its licensing and
assignment decisions involving Laboratory intellectual property where the
Laboratory obtains rights during the course of the Contractor's operation of the
Laboratory under this contract:
(i) whether any resulting design and development will be performed in the United
States and whether resulting products, embodying parts, including components
thereof, will be substantially manufactured in the United States; or
(ii) (A) whether the proposed licensee or assignee has a business unit located in
the United States and whether significant economic and technical benefits will
flow to the United States as a result of the license or assignment agreement; and
(B) in licensing any entity subject to the control of a foreign company or
government, whether such foreign government permits United States agencies,
organizations or other persons to enter into cooperative research and development
agreements and licensing agreements, and has policies to protect United States
Intellectual Property rights.
(2) If the Contractor determines that neither of the conditions in paragraphs
(f)(1)(i) or (ii) of this clause are likely to be fulfilled, the Contractor, prior
to entering into such an agreement, must obtain the approval of the Contracting
Officer. The Contracting Officer shall act on any such requests for approval
within thirty (30) days.
(3) The Contractor agrees to be bound by the provisions of 35 U.S.C. 204
(Preference for United States industry).
(g) Indemnity--Product Liability. In entering into written technology transfer
agreements, including but not limited to, research and development agreements,
licenses, assignments and CRADAs, the Contractor agrees to include in such
agreements a requirement that the U.S. Government and the Contractor, except for
any negligent acts or omissions of the Contractor, be indemnified for all damages,
costs, and expenses, including attorneys' fees, arising from personal injury or
property damage occurring as a result of the making, using or selling of a
product, process or service by or on behalf of the Participant, its assignees or
licensees which was derived from the work performed under the agreement. The
Contractor shall identify and obtain the approval of the Contracting Officer for
any proposed exceptions to this requirement such as where State or local law
expressly prohibit the Participant from providing indemnification or where the
research results will be placed in the public domain.
(h) Disposition of Income.
(1) Royalties or other income earned or retained by the Contractor as a result of performance of authorized technology transfer activities herein shall be used by the Contractor for scientific research, development, technology transfer, and education at the Laboratory, consistent with the research and development mission and objectives
of the Laboratory and subject to Section 12(b)(5) of the Stevenson-Wydler
Technology Innovation Act of 1980, as amended (15 U.S.C. 3710a(b)(5)) and Chapter
38 of the Patent Laws (35 U.S.C. 200 et seq.) as amended through the effective
date of this contract award or modification. If the net amounts of such royalties
and income received from patent licensing after payment of patenting costs,
licensing costs, payments to inventors and other expenses incidental to the
administration of Subject Inventions during any fiscal year exceed 5 percent of
the Laboratory's budget for that fiscal year, 75 percent of such excess amounts
shall be paid to the Treasury of the United States, and the remaining amount of
such excess shall be used by the Contractor for the purposes as described above in
this paragraph. Any inventions arising out of such scientific research and
development activities shall be deemed to be Subject Inventions under the Contract.
(2) The Contractor shall include as a part of its annual Laboratory Institutional
Plan or other such annual document a plan setting out those uses to which
royalties and other income received as a result of performance of authorized
technology transfer activities herein will be applied at the Laboratory, and at
the end of the year, provide a separate accounting for how the funds were actually
used. Under no circumstances shall these royalties and income be used for an
illegal augmentation of funds furnished by the U.S. Government.
(3) The Contractor shall establish subject to the approval of the Contracting
Officer a policy for making awards or sharing of royalties with Contractor
employees, other coinventors and coauthors, including Federal employee coinventors
when deemed appropriate by the Contracting Officer.
(i) Transfer to Successor Contractor. In the event of termination or upon the
expiration of this Contract, any unexpended balance of income received for use at
the Laboratory shall be transferred, at the Contracting Officer's request, to a
successor contractor, or in the absence of a successor contractor, to such other
entity as designated by the Contracting Officer. The Contractor shall transfer
title, as one package, to the extent the Contractor retains title, in all patents
and patent applications, licenses, accounts containing royalty revenues from such
license agreements, including equity positions in third party entities, and other
Intellectual Property rights which arose at the Laboratory, to the successor
contractor or to the Government as directed by the Contracting Officer.
(j) Technology Transfer Affecting the National Security.
(1) The Contractor shall notify and obtain the approval of the Contracting
Officer, prior to entering into any technology transfer arrangement, when such
technology or any part of such technology is classified or sensitive under Section
148 of the Atomic Energy Act (42 U.S.C. 2168). Such notification shall include
sufficient information to enable DOE to determine the extent that
commercialization of such technology would enhance or diminish security interests
of the United States, or diminish communications within DOE's nuclear weapon
production complex. DOE shall use its best efforts to complete its determination
within sixty (60) days of the Contractor's notification, and provision of any
supporting information, and DOE shall promptly notify the Contractor as to whether
the technology is transferable.
(2) The Contractor shall include in all of its technology transfer agreements with
third parties, including, but not limited to, CRADAs, licensing agreements and
assignments, notice to such third parties that the export of goods and/or
Technical Data from the United States may require some form of export control
license or other authority from the U.S. Government and that failure to obtain
such export control license may result in criminal liability under U.S. laws.
(3) For other than fundamental research as defined in National Security Decision
Directive 189, the Contractor is responsible to conduct internal export control
reviews and assure that technology is transferred in accordance with applicable law.
(k) Records. The Contractor shall maintain records of its technology transfer
activities in a manner and to the extent satisfactory to the DOE and specifically
including, but not limited to, the licensing agreements, assignments and the
records required to implement the requirements of paragraphs (e), (f), and (h) of
this clause and shall provide reports to the Contracting Officer to enable DOE to
maintain the reporting requirements of Section 12(c)(6) of the Stevenson-Wydler
Technology Innovation Act of 1980, as amended (15 U.S.C. 3710a(c)(6)). Such
reports shall be made annually in a format to be agreed upon between the
Contractor and DOE and in such a format which will serve to adequately inform DOE
of the Contractor's technology transfer activities while protecting any data not
subject to disclosure under the Rights in Technical Data clause and paragraph (n)
of this clause. Such records shall be made available in accordance with the
clauses of this Contract pertaining to inspection, audit and examination of records.
(l) Reports to Congress. To facilitate DOE's reporting to Congress, the Contractor
is required to submit annually to DOE a technology transfer plan for conducting
its technology transfer function for the upcoming year, including plans for
securing Intellectual Property rights in Laboratory innovations with commercial
promise and plans for managing such innovations so as to benefit the
competitiveness of United States industry. This plan shall be provided to the
Contracting Officer on or before October 1st of each year.
(m) Oversight and Appraisal. The Contractor is responsible for developing and
implementing effective internal controls for all technology transfer activities
consistent with the audit and record requirements of this Contract. Laboratory
Contractor performance in implementing the technology transfer mission and the
effectiveness of the Contractor's procedures will be evaluated by the Contracting
Officer as part of the annual appraisal process, with input from the cognizant
Secretarial Officer or program office.
(n) Technology Transfer Through Cooperative Research and Development Agreements.
Upon approval of the Contracting Officer and as provided in a DOE approved Joint
Work Statement (JWS), the Laboratory Director or his designee may enter into
CRADAs on behalf of the DOE subject to the requirements set forth in this paragraph.
(1) Review and Approval of CRADAs
(i) Except as otherwise directed in writing by the Contracting Officer, each JWS
shall be submitted to the Contracting Officer for approval. The Contractor's
Laboratory Director or designee shall provide a program mission impact statement
and shall include an impact statement regarding related Intellectual Property
rights known by the Contractor to be owned by the Government to assist the
Contracting Officer in his approval determination.
(ii) The Contractor shall also include (specific to the proposed CRADA), a
statement of compliance with the Fairness of Opportunity requirements of paragraph
(e) of this clause.
(iii) Within ninety (90) days after submission of a JWS, the Contracting Officer
shall approve, disapprove or request modification to the JWS. If a modification is
required, the Contracting Officer shall approve or disapprove any resubmission of
the JWS within thirty (30) days of its resubmission, or ninety (90) days from the
date of the original submission, whichever is later. The Contracting Officer shall
provide a written explanation to the Contractor's Laboratory Director or designee
of any disapproval or requirement for modification of a JWS.
(iv) Upon approval of a JWS, the Contractor's Laboratory Director or designee may
submit a CRADA, based upon the approved JWS, to the Contracting Officer. The
Contracting Officer, within thirty (30) days of receipt of the CRADA, shall
approve or request modification of the CRADA. If the Contracting Officer requests
a modification of the CRADA, an explanation of such request shall be provided to
the Laboratory Director or designee.
(v) Except as otherwise directed in writing by the Contracting Officer, the
Contractor shall not enter into, or begin work under, a CRADA until approval of
the CRADA has been granted by the Contracting Officer. The Contractor may submit
its proposed CRADA to the Contracting Officer at the time of submitting its
proposed JWS or any time thereafter. However, the Contracting Officer is not
obligated to respond under paragraph (n)(1)(iv) of this clause until within thirty
(30) days after approval of the JWS or thirty (30) days after submittal of the
CRADA, whichever is later.
(2) Selection of Participants. The Contractor's Laboratory Director or designee in
deciding what CRADA to enter into shall:
(i) Give special consideration to small business firms, and consortia involving
small business firms;
(ii) Give preference to business units located in the United States which agree
that products or processes embodying Intellectual Property will be substantially
manufactured or practiced in the United States and, in the case of any industrial
organization or other person subject to the control of a foreign company or
government, take into consideration whether or not such foreign government permits
United States agencies, organizations, or other persons to enter into cooperative
research and development agreements and licensing agreements;
(iii) Provide Fairness of Opportunity in accordance with the requirements of
paragraph (e) of this clause; and
(iv) Give consideration to the Conflicts of Interest requirements of paragraph (d)
of this clause.
(3) Withholding of Data
(i) Data that is first produced as a result of research and development activities
conducted under a CRADA and that would be a trade secret or commercial or
financial data that would be privileged or confidential, if such data had been
obtained from a non-Federal third party, may be protected from disclosure under
the Freedom of Information Act as provided in the Stevenson- Wydler Technology
Innovation Act of 1980, as amended (15 U.S.C. 3710a(c)(7)) for a period as agreed
in the CRADA of up to five (5)years from the time the data is first produced. The
DOE shall cooperate with the Contractor in protecting such data.
(ii) Unless otherwise expressly approved by the Contracting Officer in advance for
a specific CRADA, the Contractor agrees, at the request of the Contracting
Officer, to transmit such data to other DOE facilities for use by DOE or its
Contractors by or on behalf of the Government. When data protected pursuant to
paragraph (n)(3)(i) of this clause is so transferred, the Contractor shall clearly
mark the data with a legend setting out the restrictions against private use and
further dissemination, along with the expiration date of such restrictions.
(iii) In addition to its authority to license Intellectual Property, the
Contractor may enter into licensing agreements with third parties for data
developed by the Contractor under a CRADA subject to other provisions of this
Contract. However, the Contractor shall neither use the protection against
dissemination nor the licensing of data as an alternative to the submittal of
invention disclosures which include data protected pursuant to paragraph (n)(3)(i)
of this clause.
(4) Work For Others and User Facility Programs
(i) WFO and User Facility Agreements (UFAs) are not CRADAs and will be available
for use by the Contractor in addition to CRADAs for achieving utilization of
employee expertise and unique facilities for maximizing technology transfer. The
Contractor agrees form prospective CRADA participants, which are intending to
substantially pay full cost recovery for the effort under a proposed CRADA, of the
availability of alternative forms of agreements, i.e., WFO and UFA, and of the
Class Patent Waiver provisions associated therewith.
(ii) Where the Contractor believes that the transfer of technology to the U.S.
domestic economy will benefit from, or other equity considerations dictate, an
arrangement other than the Class Waiver of patent rights to the sponsor in WFO and
UFAs, a request may be made to the Contracting Officer for an exception to the
Class Waivers.
(iii) Rights to inventions made under agreements other than funding agreements
with third parties shall be governed by the appropriate provisions incorporated,
with DOE approval, in such agreements, and the provisions in such agreements take
precedence over any disposition of rights contained in this Contract. Disposition
of rights under any such agreement shall be in accordance with any DOE class
waiver (including Work for Others and User Class Waivers) or individually
negotiated waiver which applies to the agreement.
(5) Conflicts of Interest
(i) Except as provided in paragraph (n)(5)(iii) of this clause, the Contractor
shall assure that no employee of the Contractor shall have a substantial role
(including an advisory role) in the preparation, negotiation, or approval of a
CRADA, if, to such employee's knowledge:
(A) Such employee, or the spouse, child, parent, sibling, or partner of such
employee, or an organization (other than the Contractor) in which such employee
serves as an officer, director, trustee, partner, or employee--
(1) holds financial interest in any entity, other than the Contractor, that has a
substantial interest in the preparation, negotiation, or approval of the CRADA;
(2) receives a gift or gratuity from any entity, other than the Contractor, that
has a substantial interest in the preparation, negotiation, or approval of the
CRADA; or
(B) A financial interest in any entity, other than the Contractor, that has a
substantial interest in the preparation, negotiation, or approval of the CRADA, is
held by any person or organization with whom such employee is negotiating or has
any arrangement concerning prospective employment.
(ii) The Contractor shall require that each employee of the Contractor who has a
substantial role (including an advisory role) in the preparation, negotiation, or
approval of a CRADA certify through the Contractor to the Contracting Officer that
the circumstances described in paragraph (n)(5)(i) of this clause do not apply to
that employee.
(iii) The requirements of paragraphs (n)(5)(i) and (n)(5)(ii) of this clause shall
not apply in a case where the Contracting Officer is advised by the Contractor in
advance of the participation of an employee described in those paragraphs in the
preparation, negotiation or approval of a CRADA of the nature of and extent of any
financial interest described in paragraph (n)(5)(i) of this clause, and the
Contracting Officer determines that such financial interest is not so substantial
as to be considered likely to affect the integrity of the Contractor employee's
participation in the process of preparing, negotiating, or approving the CRADA.
(o) Technology Transfer in Other Cost-Sharing Agreements. In conducting research
and development activities in cost-shared agreements not covered by paragraph (n)
of this clause, the Contractor, with prior written permission of the Contracting
Officer, may provide for the withholding of data produced thereunder in accordance
with the applicable provisions of paragraph (n)(3) of this clause.
(End of clause)
Alternate I (Jan 1996). As prescribed in 970.7330(b), add the following definition
under paragraph (b) and new paragraph (p):
(b)(8) Privately funded technology transfer means the prosecuting, maintaining,
licensing, and marketing of inventions which are not owned by the Government (and
not related to CRADAs) when such activities are conducted entirely without the use
of Government funds.
(p) Nothing in paragraphs (c) Allowable Costs, (e) Fairness of Opportunity, (f)
U.S. Industrial Competitiveness, (g) Indemnity - Product Liability, (h)
Disposition of Income, and (i) Transfer to Successor Contractor of this clause are
intended to apply to the contractor's privately funded technology transfer
activities if such privately funded activities are addressed elsewhere in the
contract.
Alternate II (Jan 1996). As prescribed in 970.7330(c), the phrase "weapon
production facility" may be substituted wherever the word "laboratory" appears in
the clause.
[53 FR 21649, June 9, 1988; 53 24830, June 30, 1988; 60 FR 66510, Dec. 22, 1995]
970.5204-41 [Reserved]
[49 FR 12042, Mar. 28, 1984; 49 FR 38952, Oct. 2, 1984; 62 FR 2310, Jan. 16, 1997;
62 FR 34842, Jun. 27, 1997]
970.5204-42 Key personnel.
As prescribed in 970.2201(b)(1), insert this clause.
KEY PERSONNEL (APR 1984)
It having been determined that the employees whose names appear (below or in
Appendix ..), or persons approved by the contracting officer as persons of
substantially equal abilities and qualifications, are necessary for the successful
performance of this contract, the contractor agrees to assign such employees or
persons to the performance of the work under this contract and shall not reassign
or remove any of them without the consent of the contracting officer. Whenever,
for any reason, one or more of the aforementioned employees is unavailable for
assignment for work under the contract, the contractor shall, with the approval of
the contracting officer, replace such employee with an employee of substantially
equal abilities and qualifications.
970.5204-43 Other Government contractors.
Insert the following clause, when appropriate.
OTHER GOVERNMENT CONTRACTORS (APR 1994)
The Government may undertake or award other contracts for additional work or
services. The contractor agrees to fully cooperate with such other contractors and
Government employees and carefully fit its own work to such other work as may be
directed by the contracting officer. The contractor shall not commit or permit any
act which will interfere with the performance of work by any other contractor or
by Government employees.
[62 FR 2310, Jan. 16, 1997]
970.5204-44 Flowdown of contract requirements to subcontracts.
FLOWDOWN OF CONTRACT REQUIREMENTS TO
SUBCONTRACTS (FEB 1997) [as revised on 7/30/97]
(a) The contractor shall include the clauses in paragraph (b) of this clause in
appropriate subcontracts.
(1) To the extent that the clause is included in this prime contract, the
contractor shall comply with that portion of the clause that directs application
to subcontracts.
(2) To the extent that the clause is not included in this prime contract, or where
it is included but there is no instruction for treatment in subcontracts, the
contractor shall include the clause in accordance with applicable regulatory
guidance which would apply if the subcontract were a prime contract with the
Federal government.
(3) In all cases, where a regulation is cited, the contractor shall comply with
the regulation in administration of the related clause.
(b) Clauses and related regulations.
(1) Air Transportation by U.S.-Flag Carriers. Clause at FAR 52.247-63.
(2) Anti-Kickback Act of 1986. Clause at FAR 52.203-7.
(3) Clean Air and Water. Clause at FAR 52.223-2, and follow the requirements of
FAR 23.1.
(4) Contract Work Hours and Safety Standards Act. Clause at FAR 52.222-4, and
follow the requirements of FAR 22.3.
(5) Cost or Pricing Data. Clauses prescribed at 48 CFR (DEAR) 970.15406-2, and
appropriate contract provisions similar to those set forth at 48 CFR 52.215-10 and
48 CFR 52.215-11, that provide for the reduction of a negotiated subcontract price
by any significant amount that the subcontract price was increased because of the
submission of defective cost or pricing data by a subcontractor at any tier.
(6) Cost and Schedule Control Systems. Clause at 48 CFR (DEAR) 970.5204-50.
(7) Cost Accounting Standards. Clause at FAR 52.230-2, as prescribed in 48 CR
(DEAR) 970.30.
(8) Davis-Bacon Act. Clauses as directed at FAR 22.407, and follow the
requirements of FAR 22.4 to the same extent that they would apply if the
subcontract had been directly awarded by DOE. 48 CFR (DEAR) Subpart 922.4 and 48
CFR (DEAR) 970.2273 provide guidance to assist in determining the applicability of
these regulations.
(9) Employment of the Handicapped. Clause at FAR 52.222-36, and follow the
requirements of FAR 22.14.
(10) Environmental and Occupational Safety and Health. Clauses as prescribed in 48
CFR (DEAR) 970.2303-2.
(11) Equal Employment Opportunity. Clauses as prescribed in FAR 22.810, as
applicable, and follow the requirements of FAR 22.8, 48 CFR (DEAR) 922.8, E.O.
11246 and 41 CFR Part 60.
(12) [Reserved]
(13) Foreign Travel. Clause at 48 CFR (DEAR) 970.5204-52.
(14) Nuclear Hazards Indemnity. Clause at 48 CFR (DEAR) 970.2870.
(15) Organizational Conflicts of Interest. Clause at 48 CFR (DEAR) 952.209-72 in
accordance with 48 CFR (DEAR) 970.0905.
(16) Patent, Data and Copyrights. Appropriate clauses as required by 48 CFR (DEAR)
Parts 927 and 970.
(17) Printing. Clause at 48 CFR (DEAR) 970.5204-19.
(18) Privacy Act. Clauses at FAR 52.224-1 and FAR 52.224-2, and follow the
requirements of FAR 24.1.
(19) Accounts, Records, and Inspection. Clause at 48 CFR (DEAR) 970.5204-9.
(20) Safeguarding Classified Information. Appropriate clauses as prescribed at 48
CFR (DEAR) 970.0404.
(21) Service Contract Act. Clauses at FAR 52.222-40 and FAR 52.222-41.
(22) Small Business and Small Disadvantaged Business Concerns. Clause at FAR 52.219-9.
(23) Special Disabled and Vietnam Era Veterans. Clause at FAR 52.222-35, and
follow the requirements of FAR Subpart 22.13.
(24) Taxes. Clause similar to 48 CFR (DEAR) 970.5204-23 cost-reimbursement. An
appropriate tax clause covering tax matters should also be included in fixed-price
subcontracts.
(25) Termination. Appropriate clause or clauses as set forth at FAR 52.249-1
through 52.249-14.
(c) Other. Omission from the foregoing list of contract flowdown provisions shall
not be construed as waiving a requirement for the contractor to comply with a
flowdown requirement for subcontracts appearing elsewhere in this contract.
[60 FR 49517, Sept. 26,1995; 61 FR 21975, May 13, 1996; 62 FR 2310, Jan. 16, 1997;
62 FR 40748, Jul. 30, 1997; 62 FR 53754, Oct. 16, 1997; 63 FR 56849, Oct. 23,
1998]
970.5204-45 Termination.
Insert the following clause.
TERMINATION (OCT 1995)
(a) This contract shall continue until .... unless sooner terminated in accordance
with the provisions which follow:
(1) The performance of work under this contract may be terminated by the
Government in whole, or from time to time in part, (i) whenever the contractor
shall default in performance, and shall fail to cure the fault or failure within
such period as the contracting officer may allow after receipt from the
contracting officer of a notice specifying the fault or failure, or (ii) whenever,
for any reason, the contracting officer shall determine any such termination is
for the best interest of the Government. Termination of the work hereunder shall
be effected by delivery of a notice of termination specifying whether termination
is for default of the contractor or for the convenience of the Government, the
extent to which performance of work under the contract shall be terminated, and
the date upon which such termination shall become effective. Any such termination
shall be without prejudice to any claim which either party may have against the
other. If, after notice of termination under the provisions of paragraph (a)(1)(i)
of this section, it is determined for any reason that the contractor was not in
default, such notice of default shall be deemed to have been issued pursuant to
paragraph (a)(1)(ii) of this section, and the rights and obligations of the
parties hereto shall in such event be governed accordingly.
(2) Upon receipt of notice of termination, in accordance with (1) above, the
contractor shall, to the extent directed in writing by the contracting officer,
discontinue the terminated work and the placing of orders for materials,
facilities, supplies, and services in connection therewith, and shall proceed, if,
and to the extent required by the contracting officer, to cancel promptly and
settle with the approval of the contracting officer, existing orders,
subcontracts, and commitments insofar as such orders, subcontracts, and
commitments pertain to this contract.
(b) Upon the termination of this contract, full and complete settlement of all
claims of the contractor and of DOE arising out of this contract shall be made as follows:
(1) The Government shall have the right in its discretion to assume sole
responsibility for any or all obligations, commitments, and claims that the
contractor may have undertaken or incurred, the cost of which are allowable in
accordance with the provisions of this contract; and the contractor shall, as a
condition of receiving the payments mentioned in this article, execute and deliver
all such papers and; take all such steps as the contracting officer may require
for the purpose of fully vesting in the Government any rights and benefits the
contractor may have under or in connection with such obligations, commitments, or claims.
(2) The Government shall treat as allowable costs all expenditures made in
accordance with and allowable under the clause entitled "Allowable Costs and Fixed
Fee," not previously so allowed or otherwise credited for work performed prior to
the effective date of termination, together with expenditures as may be incurred
for a reasonable time thereafter with the approval of, or as directed by, the
contracting officer.
(3) The Government shall treat as allowable costs, to the extent not included in
paragraph (b)(2) of this section, the costs of settling and paying claims arising
out of the termination of work under orders, subcontracts, and commitments as
provided in paragraph (a)(2) of this section.
(4) The Government shall treat as allowable costs the reasonable costs of
settlement, including accounting, legal, clerical, and other expenses reasonably
necessary for the preparation of settlement claims and supporting data with
respect to the termination of the contract and for the termination and settlement
of orders and subcontracts thereunder, together with such further expenditures
made by the contractor after the date of termination for the protection or
disposition of Government property as are approved or required by the contracting
officer; provided, however, that if the termination is for default of the
contractor, there shall not be included any amount for preparation of the
contractor's settlement proposal.
(5) If performance of work under this contract is terminated in whole by the Government, the fixed fee of the contractor shall be prorated to and including the effective date of such termination. In addition, if the termination is for the convenience of the Government, the contractor shall be paid a fixed fee in an amount to be agreed upon as compensation for its services in closing out the work under this contract after the effective date of such termination. The additional fixed fee is to be negotiated as soon as practicable after service of notice of termination, shall take into account the estimate of the cost of the services and managerial effort to be rendered under this clause after the effective date of termination, and shall be provided for in a supplement or amendment to this contract prior to final settlement hereunder. Pending agreement as to the amount of such fee, the contractor shall diligently proceed with the performance of the services required under this clause. No additional fee will be paid if the contract is terminated due to the default of the contractor. In the
event of a partial termination by the Government, an equitable adjustment shall be
made in the fixed fee if such termination results in a material decrease in the
level of the contractor's management effort. Any failure to agree on the right to
or the amount of any adjustment shall be deemed a dispute within the purview of
the clause hereof entitled "Disputes."
(6) The obligation of the Government to make any of the payments required by this
clause or any other provisions of this contract shall be subject to any unsettled
claims in connection with this contract which the Government may have against the contractor.
(c) Prior to final settlement, the contractor shall furnish a release as required
in the clause entitled "Payments and Advances" and account for Government-owned
property as may be required by the contracting officer: provided, however, that
unless the contracting officer requires an inventory, the maintenance and
disposition of the records of Government-owned property in accordance with the
clause entitled "Accounts, Records and Inspection" shall be accepted by the
contracting officer as full compliance with all requirements of this contract
pertaining to an accounting for such property.
[60 FR 49517 Sept. 26, 1995; 62 FR 2310, Jan. 16, 1997; 62 FR 40748, Jul. 30, 1997]
970.5204-48 [Reserved]
970.5204-50 [Reserved]
[49 FR 12042, Mar. 28, 1984, as amended at 56 FR 41965, Aug. 26, 1991; 60 FR
49517, Sept. 26, 1995; 62 FR 2310, Jan. 16, 1997]
970.5204-51 [Reserved]
970.5204-52 Foreign travel.
When foreign travel may be required under the contract, insert the clause at 952.247-70.
[62 FR 2310, Jan. 16, 1997]
970.5204-53 Contractor employee travel discounts.
As prescribed in 952.251-70 when the circumstances described in 951.7002 apply.
[54 FR 17738, Apr. 25, 1989]
970.5204-54 Total available fee: base fee amount and performance fee amount.
As prescribed in 48 CFR 970.15404-4-11(a), insert the following clause. The clause should be tailored to reflect the contract's actual inclusion of base fee amount and performance fee amount. Total Available Fee: Base Fee Amount and Performance Fee Amount (April 1999)
(a) Total available fee. Total available fee, consisting of a base fee amount (which may be zero) and a performance fee amount (consisting of an incentive fee component for objective performance requirements, an award fee component for subjective performance requirements, or both) determined in accordance with the provisions of this clause, is available for payment in accordance with the clause of this contract entitled ``Payments and advances.'' (b) Fee Negotiations. Prior to the beginning of each fiscal year under this contract, or other appropriate period as mutually agreed upon and, if exceeding one year, approved by the Procurement Executive, or designee, the Contracting Officer and Contractor shall enter into negotiation of the requirements for the year or appropriate period, including the evaluation areas and individual requirements subject to incentives, the total available fee, and the allocation of fee. The Contracting Officer shall modify this contract at the conclusion of each negotiation to reflect the negotiated requirements, evaluation areas and individual requirements subject to incentives, the total available fee, and the allocation of fee. In the event the parties fail to agree on the requirements, the evaluation areas and individual requirements subject to incentives, the total available fee, or the allocation of fee, a unilateral determination will be made by the Contracting Officer. The total available fee amount shall be allocated to a twelve month cycle composed of one or more evaluation periods, or such longer period as may be mutually agreed to between the parties and approved by the Procurement Executive, or designee. (c) Determination of Total Available Fee Amount Earned. (1) The Government shall, at the conclusion of each specified evaluation period, evaluate the contractor's performance of all requirements, including performance based incentives completed during the period, and determine the total available fee amount earned. At the Contracting Officer's discretion, evaluation of incentivized performance may occur at the scheduled completion of specific incentivized requirements. (2) The DOE Operations/Field Office Manager, or designee, will be (insert title of DOE Operations/Field Office Manager, or designee). The contractor agrees that the determination as to the total available fee earned is a unilateral determination made by the DOE Operations/Field Office Manager, or designee . (3) The evaluation of contractor performance shall be in accordance with the Performance Evaluation and Measurement Plan(s) described in subparagraph (d) of this clause unless otherwise set forth in the contract. The Contractor shall be promptly advised in writing of the fee determination, and the basis of the fee determination. In the event that the contractor's performance is considered to be less than the level of performance set forth in the Statement of Work, as amended to include the current Work Authorization Directive or similar document, for any contract requirement, it will be considered by the DOE Operations/Field Office Manager, or designee, who may at his/her discretion adjust the fee determination to reflect such performance. Any such adjustment shall be in accordance with the clause entitled ``Conditional Payment of Fee, Profit, or Incentives'' if contained in the contract. (d) Performance Evaluation and Measurement Plan(s). To the extent not set forth elsewhere in the contract: (1) The Government shall establish a Performance Evaluation and Measurement Plan(s) upon which the determination of the total available fee amount earned shall be based. The Performance Evaluation and Measurement Plan(s) will address all of the requirements of contract performance specified in the contract directly or by reference. A copy of the Performance Evaluation and Measurement Plan(s) shall be provided to the Contractor: (i) Prior to the start of an evaluation period if the requirements, evaluation areas, specific incentives, amount of fee, and allocation of fee to such evaluation areas and specific incentives have been mutually agreed to by the parties; or (ii) Not later than thirty days prior to the scheduled start date of the evaluation period, if the requirements, evaluation areas, specific incentives, amount of fee, and allocation of fee to such evaluation areas and specific incentives have been unilaterally established by the Contracting Officer. (2) The Performance Evaluation and Measurement Plan(s) will set forth the criteria upon which the Contractor will be evaluated relating to any technical, schedule, management, and/or cost objectives selected for evaluation. Such criteria should be objective, but may also include subjective criteria. The Plan(s) shall also set forth the method by which the total available fee amount will be allocated and the amount earned determined. (3) The Performance Evaluation and Measurement Plan(s) may, consistent with the contract statement of work, be revised during the period of performance. The Contracting Officer shall notify the contractor: (i) Of such unilateral changes at least ninety calendar days prior to the end of the affected evaluation period and at least thirty calendar days prior to the effective date of the change; (ii) Of such bilateral changes at least sixty calendar days prior to the end of the affected evaluation period; or (iii) If such change, whether unilateral or bilateral, is urgent and high priority, at least thirty calendar days prior to the end of the evaluation period. (e) Schedule for total available fee amount earned determinations. The DOE Operations/Field Office Manager, or designee, shall issue the final total available fee amount earned determination in accordance with the schedule set forth in the Performance Evaluation and Measurement Plan(s). However, a determination must be made within sixty calendar days after the receipt by the Contracting Officer of the Contractor's self-assessment, if one is required or permitted by paragraph (f) of this clause, or seventy calendar days after the end of the evaluation period, whichever is later. If the Contracting Officer evaluates the Contractor's performance of specific requirements on their completion, the payment of any earned fee amount must be made within seventy calendar days (or such other time period as mutually agreed to between the Contracting Officer and the Contractor) after such completion. If the determination is delayed beyond that date, the Contractor shall be entitled to interest on the determined total available fee amount earned at the rate established by the Secretary of the Treasury under section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) that is in effect on the payment date. This rate is referred to as the ``Renegotiation Board Interest Rate,'' and is published in the Federal Register semiannually on or about January 1 and July 1. The interest on any late total available fee amount earned determination will accrue daily and be compounded in 30-day increments inclusive from the first day after the schedule determination date through the actual date the determination is issued. That is, interest accrued at the end of any 30-day period will be added to the determined amount of fee earned and be subject to interest if not paid in the succeeding 30-day period. Alternate I: When the award fee cycle consists of two or more evaluation periods, add the following as paragraph (c)(4): At the sole discretion of the Government, unearned total available fee amounts may be carried over from one evaluation period to the next, so long as the periods are within the same award fee cycle. Alternate II: When the award fee cycle consists of one evaluation period, add the following as paragraph (c)(4): Award fee not earned during the evaluation period shall not be allocated to future evaluation periods. Alternate III: When the DOE Operations/Field Office Manager, or designee, requires the contractor to submit a self-assessment, add the following text as paragraph (f): Contractor self-assessment. Following each evaluation period, the Contractor shall submit a self-assessment within (Insert Number) calendar days after the end of the period. This self-assessment shall address both the strengths and weaknesses of the Contractor's performance during the evaluation period. Where deficiencies in performance are noted, the Contractor shall describe the actions planned or taken to correct such deficiencies and avoid their recurrence. The DOE Operations/Field Office Manager, or designee, will review the Contractor's self-assessment, if submitted, as part of its independent evaluation of the contractor's management during the period. A self-assessment, in and of itself may not be the only basis for the award fee determination. Alternate IV: When the DOE Operations/Field Office Manager, or designee, permits the contractor to submit a self-assessment at the contractor's option, add the following text as paragraph (f): Contractor self-assessment. Following each evaluation period, the Contractor may submit a self-assessment, provided such assessment is submitted within (Insert Number) calendar days after the end of the period. This self-assessment shall address both the strengths and weaknesses of the Contractor's performance during the evaluation period. Where deficiencies in performance are noted, the Contractor shall describe the actions planned or taken to correct such deficiencies and avoid their recurrence. The DOE Operations/ Field Office Manager, or designee, will review the Contractor's self-assessment, if submitted, as part of its independent evaluation of the Contractor's management during the period. A self-assessment, in and of itself may not be the only basis for the award fee determination.
[56 FR 28108, June 19, 1991; 62 FR 2310, Jan. 16, 1997; 63 FR 56849, Oct. 23, 1998; 64 FR 12219, March 11, 1999]
970.5204-55 [Reserved]
[56 FR 28108, June 19, 1991 as amended at 58 FR 32306, Jun. 9, 1993; 62 FR 2310,
Jan. 16, 1997; 62 FR 34842, Jun. 27, 1997]
970.5204-56 [Reserved]
[56 FR 28110, June 19, 1991; 62 FR 2310, Jan. 16, 1997; 62 FR 34842, Jun. 27, 1997]
970.5204-57 Agreement regarding workplace substance abuse programs at DOE facilities.
As prescribed in 970.2305-4(a), insert the following provision:
AGREEMENT REGARDING WORKPLACE SUBSTANCE
ABUSE PROGRAMS AT DOE SITES (SEP 1997)
(a) Any contract awarded as a result of this solicitation will be subject to the
policies, criteria, and procedures of 10 CFR part 707, Workplace Substance Abuse
Programs at DOE Sites.
(b) By submission of its offer, the officer agrees to provide to the contracting
officer, within 30 days after notification of selection for award, or award of a
contract, whichever occurs first, pursuant to this solicitation, its written
workplace substance abuse program consistent with the requirements of 10 CFR part 707.
(c) Failure of the offeror to agree to the condition of responsibility set forth
in paragraph (b) of this provision, renders the offeror unqualified and ineligible
for award.
(End of Provision)
[57 FR 32677, July 22, 1992; 62 FR 2310, Jan. 16, 1997; 62 FR 42072, Aug. 5, 1997]
970.5204-58 Workplace substance abuse programs at DOE sites.
As prescribed in 970.2305-4(b), insert the following clause:
WORKPLACE SUBSTANCE ABUSE PROGRAMS AT
DOE SITES (Aug 1992)
(a) Program Implementation. The contractor shall, consistent with 10 CFR part 707,
Workplace Substance Abuse Programs at DOE Sites, incorporated herein by reference
with full force and effect, develop, implement, and maintain a workplace substance
abuse program.
(b) Remedies. In addition to any other remedies available to the Government, the
contractor's failure to comply with the requirements of 10 CFR part 707 or to
perform in a manner consistent with its approved program may render the contractor
subject to: the suspension of contract payments, or, where applicable, a reduction
in award fee; termination for default; and suspension or debarment.
(c) Subcontracts. (1) The contractor agrees to notify the contracting officer
reasonably in advance of, but not later than 30 days prior to, the award of any
subcontract the contractor believes may be subject to the requirements of 10 CFR
part 707.
(2) The DOE prime contractor shall require all subcontracts subject to the
provisions of 10 CFR part 707 to agree to develop and implement a workplace
substance abuse program that complies with the requirements of 10 CFR part 707,
Workplace Substance Abuse Programs at DOE Sites, as a condition for award of the
subcontract. The DOE prime contractor shall review and approve each
subcontractor's program, and shall periodically monitor each subcontractor's
implementation of the program for effectiveness and compliance with 10 CFR part 707.
(3) The contractor agrees to include, and require the inclusion of, the
requirements of this clause in all subcontracts, at any tier, that are subject to
the provisions of 10 CFR part 707.
(End of clause)
[57 FR 32677, July 22, 1992]
970.5204-59 Whistleblower Protection for Contractor Employees.
As prescribed in 970.2274-2, insert the following clause in
management and operating contracts. As prescribed in 922.7101, insert
the following clause in contracts that are not management and operating
contracts involving work performed on behalf of DOE directly related to
activities at DOE-owned or -leased sites.
Whistleblower Protection for Contractor Employees (APR 1999)
(a) The contractor shall comply with the requirements of ``DOE
Contractor Employee Protection Program'' at 10 CFR part 708 for work
performed on behalf of DOE directly related to activities at DOE-
owned or -leased sites.
(b) The contractor shall insert or have inserted the substance
of this clause, including this paragraph (b), in subcontracts at all
tiers, for subcontracts involving work performed on behalf of DOE
directly related to activities at DOE-owned or -leased sites.
[57 FR 57638, Dec. 4, 1993 as corrected; 64 FR 12861, March 15, 1999.]
970.5204-60 Facilities management.
Pursuant to 970.72 the following clause is to be used in contracts providing for
contractor management of a DOE-owned or DOE-controlled facility or facilities.
FACILITIES MANAGEMENT (NOV 1997)
Copies of DOE Directives referenced herein are available from the contracting officer.
(a) Site development planning. The Government shall provide to the contractor site
development guidance for the facilities and lands for which the contractor is
responsible under the terms and conditions of this contract. Based upon this
guidance, the contractor shall prepare, and maintain through annual updates, a
Long-Range Site Development Plan (Plan) to reflect those actions necessary to keep
the development of these facilities current with the needs of the Government and
allow the contractor to successfully accomplish the work required under this
contract. In developing this Plan, the contractor shall follow the procedural
guidance set forth in the applicable DOE Directives in the Life Cycle Facility
Operations Series listed elsewhere in this contract. The contractor shall use the
Plan to manage and control the development of facilities and lands. All plans and
revisions shall be approved by the Government.
(b) General design criteria. The general design criteria which shall be utilized
by the contractor in managing the site for which it is responsible under this
contract are those specified in the applicable DOE Directives in the 6430, Design
Criteria, series listed elsewhere in this contract. The contractor shall comply
with these mandatory, minimally acceptable requirements for all facility designs
with regard to any building acquisition, new facility, facility addition or
alteration or facility lease undertaken as part of the site development activities
of paragraph (a) above. This includes on-site constructed buildings,
pre-engineered buildings, plan-fabricated modular buildings, and temporary
facilities. For existing facilities, original design criteria apply to the
structure in general; however, additions or modifications shall comply with this
directive and the associated latest editions of the references therein. An
exception may be granted for off-site office space being leased by the contractor
on a temporary basis.
(c) Energy management. The contractor shall manage the facilities for which it is
responsible under the terms and conditions of this contract in an energy efficient
manner in accordance with the applicable DOE Directives in the Life Cycle Facility
Operations Series listed elsewhere in this contract. The contractor shall develop
a 10-year energy management plan for each site with annual reviews and revisions.
The contractor shall submit an annual report on progress toward achieving the
goals of the 10- year plan for each individual site, and an energy conservation
analysis report for each new building or building addition project. Any
acquisition of utility services by the contractor shall be conducted in accordance
with 48 CFR 970.41.
(d) Subcontract requirements. To the extent the contractor subcontracts
performance of any of the responsibilities discussed in this clause, the
subcontract shall contain the requirements of this clause relative to the
subcontracted responsibilities.
[58 FR 34924, Jun. 30, 1993; 62 FR 2310, Jan. 16, 1997; 62 FR 53754, Oct. 16, 1997]
970.5204-61 Cost prohibitions related to legal and other proceedings.
As prescribed in 48 CFR (DEAR) 970.3103(c), insert the following clause.
COST PROHIBITIONS RELATED TO LEGAL AND OTHER
PROCEEDINGS (JUNE 1997)
(a) Definitions.
Conviction, as used in this section, means a judgment or conviction of a criminal
offense by any court of competent jurisdiction, whether entered upon a verdict or
a plea, including a conviction due to a plea of nolo contendere.
Costs include, but are not limited to, administrative and clerical expenses; the
cost of legal services, whether performed by in-house or private counsel; the
costs of the services of accountants, consultants, or others retained by the
contractor to assist it; all elements of compensation, related costs, and expenses
of employees, officers and directors; and any similar costs incurred before,
during, and after commencement of a proceeding which bears a direct relationship
to the proceeding.
Fraud, as used herein, means
(i) Acts of fraud or corruption or attempts to defraud the Government or to
corrupt its agents,
(ii) Acts which constitute a cause for debarment or suspension under FAR
9.406-(2)(a) and FAR 9.407-(2)(a), and
(iii) Acts which violate the False Claims Act, 31 U.S.C. 3729-3731, or the
Anti-kickback Act, 41 U.S.C. 51 and 54.
Penalty does not include restitution, reimbursement, or compensatory damages.
Proceeding includes an investigation.
(b) Except as otherwise described in this section, costs incurred in connection
with any proceeding brought by a third party in the name of the United States
under the False Claims Act, 31 U.S.C. 3730, or costs incurred in connection with
any criminal, civil or administrative proceeding by the Federal Government, or a
State, local or foreign government, are not allowable if the proceeding relates to
a violation of, or failure to comply with a Federal, State, local or foreign
statute or regulation by the contractor, and results in any of the following
dispositions:
(1) In a criminal proceeding, conviction.
(2) In a civil or administrative proceeding involving an allegation of fraud or
similar misconduct, a determination of contractor liability.
(3) In the case of any civil or administrative proceeding, the imposition of a
monetary penalty.
(4) A final decision by an appropriate Federal official to debar or suspend the
contractor, to rescind or void a contract, or to terminate a contract for default
by reason of a violation of or failure to comply with a law or regulation.
(5) A disposition by consent or compromise, if the action could have resulted in
any of the dispositions described in paragraphs (b) (1), (2), (3) or (4) of this
section.
(6) Not covered by paragraphs (b) (1) through (5) of this section, but where the
underlying alleged contractor misconduct was the same as that which led to a
different proceeding whose costs are unallowable by reason of paragraphs (b) (1)
through (5) of this section.
(c)(1) If a proceeding referred to in paragraph (b) of this section is commenced
by the Federal Government and is resolved by consent or compromise pursuant to an
agreement entered into by the contractor and the Federal Government, then the
costs incurred by the contractor in connection with such proceeding that are
otherwise unallowable under paragraph (b) of this section may be allowed to the
extent specifically provided in such agreement.
(2) In the event of a settlement of any proceeding brought by a third party under
the False Claims Act in which the United States did not intervene, reasonable
costs incurred by the contractor in connection with such a proceeding that are not
otherwise unallowable by regulation or by separate agreement with the United
States, may be allowed if the contracting officer, in consultation with his or her
legal advisor, determines that there was very little likelihood that the third
party would have been successful on the merits.
(d) If a proceeding referred to in paragraph (b) of this section is commenced by a
State, local or foreign government, the contracting officer may allow the costs
incurred in such proceeding, provided the Procurement Executive determines that
the costs were incurred as a result of compliance with a specific term or
condition of the contract, or specific written direction of the contracting
officer.
(e) Costs incurred in connection with a proceeding described in paragraph (b) of
this section, but which are not made unallowable by that paragraph, may be allowed
by the contracting officer only to the extent that:
(1) The total costs incurred are reasonable in relation to the activities required
to deal with the proceeding and the underlying cause of action;
(2) Payment of the costs incurred, as allowable and allocable contract costs, is
not prohibited by any other provision(s) of this contract;
(3) The costs are not otherwise recovered from the Federal Government or a third
party, either directly as a result of the proceeding or otherwise; and
(4) The amount of costs allowed does not exceed 80 percent of the total costs
incurred and otherwise allowable under the contract. Such amount that may be
allowed (up to the 80 percent limit) shall not exceed the percentage determined by
the contracting officer to be appropriate, considering the complexity of
procurement litigation, generally accepted principles governing the award of legal
fees in civil actions involving the United States as a party, and such other
factors as may be appropriate. The amount of reimbursement allowed for legal costs
in connection with any proceeding described in subparagraph (c)(2) shall be the
amount determined to be reasonable by the contracting officer but shall not exceed
80 percent of otherwise allowable costs incurred. Agreements reached under
paragraph (c) of this subsection shall be subject to this limitation. If, however,
an agreement explicitly states the amount of otherwise allowable incurred legal
fees and limits the allowable recovery to 80 percent or less of the stated legal
fees, no additional limitation need be applied.
(f) Contractor costs incurred in connection with the defense of suits brought by
employees or ex-employees of the contractor under section 2 of the Major Fraud Act
of 1988, including the cost of all relief necessary to make such employee whole,
where the contractor was found liable or settled, are unallowable.
(g) Costs which may be unallowable under this clause, including directly
associated costs, shall be differentiated and accounted for by the contractor so
as to be separately identifiable. During the pendency of any proceeding covered by
paragraphs (b) and (f) of this section, the contracting officer shall generally
withhold payment and not authorize the use of funds advanced under the contract
for the payment of such costs. However, the contracting officer may, in
appropriate circumstances, provide for conditional payment upon provision of
adequate security, or other adequate assurance, and agreements by the contractor
to repay all unallowable costs, plus interest, if the costs are subsequently
determined to be unallowable.
[58 FR 61625, Nov. 22, 1993; 62 FR 2310, Jan. 16, 1997; 62 FR 34842, Jun. 27, 1997]
970.5204-62 [Reserved]
[59 FR 5531 Feb. 7, 1994; 62 FR 34842, Jun. 27, 1997]
970.5204-63 Collective bargaining agreements.management and operating contracts.
As prescribed in 970.2201(b)(5)(ii), insert the following clause:
COLLECTIVE BARGAINING AGREEMENTS-MANAGEMENT
AND OPERATING CONTRACTS
(AUG 1993)
When negotiating collective bargaining agreements applicable to the work force
under this contract, the Contractor shall use its best efforts to ensure such
agreements contain provisions designed to assure continuity of services. All such
agreements entered into during the contract period of performance should provide
that grievances and disputes involving the interpretation or application of the
agreement will be settled without resorting to strike, lockout, or other
interruption of normal operations. For this purpose, each collective bargaining
agreement should provide an effective grievance procedure with arbitration as its
final step, unless the parties mutually agree upon some other method of assuring
continuity of operations. As part of such agreements, management and labor should
agree to cooperate fully with the Federal Mediation and Conciliation Service. The
contractor shall include the substance of this clause in any subcontracts for
protective services or other services performed on the DOE-owned site which will
affect the continuity of operation of the facility.
[58 FR 36149, Jul. 6, 1993]
970.5204-71 Patent Rights-Nonprofit Management and Operating Contractors
As prescribed at 970.2703, insert the clause at 952.227-11, Patent
Rights-Retention by the Contractor (Short Form) with the following changes:
PATENT RIGHTS-NONPROFIT MANAGEMENT AND
OPERATING CONTRACTORS (FEB 1995)
1. Replace subparagraph (e)(1) with the following:
(e)(1) The contractor may request the right to reserve a revocable, nonexclusive,
royalty-free license throughout the world in each subject invention to which the
Government obtains title, except if the contractor fails to disclose the invention
within the times specified in paragraph (c) of this clause. When DOE approves such
reservation, the contractor's license will extend to its domestic subsidiaries and
affiliates, if any, within the corporate structure of which the contractor is a
party and includes the right to grant sublicenses of the same scope to the extent
the contractor was legally obligated to do so at the time the contract was
awarded. The license is transferable only with the approval of DOE, except when
transferred to the successor of that part of the contractor's business to which
the invention pertains.
2. Add the following paragraphs (m) and (n):
(m) Transfer to successor contractor. (1) In the event of termination or
expiration of this contract, the contractor shall transfer any unexpended balance
of income received relating to intellectual property, in accordance with
instructions from the contracting officer, to a successor contractor, or in the
absence of a successor contractor, to such other entity as designated by the
contracting officer. The contractor shall also transfer title, as one package, in
all patents and patent applications, license agreements, accounts containing
royalty revenues from such license agreements, including equity positions in
third-party entities, and other intellectual property that arose under the
performance of this contract, to the successor contractor or to the Government, as
directed by the contracting officer. (2) The Government agrees that the recipient
of such title shall assume any remaining obligations and liabilities in connection
with the patents and patent applications.
(n) Facilities license.
In addition to the rights of the parties with respect to inventions or discoveries
conceived or first actually reduced to practice in the course of or under this
contract, the contractor agrees to and does hereby grant to the Government an
irrevocable, nonexclusive, paid- up license in and to any inventions or
discoveries regardless of when conceived or actually reduced to practice or
acquired by the contractor at any time through completion of this contract and
which are incorporated or embodied in the construction of the facility or which
are utilized in the operation of the facility or which cover articles, materials,
or products manufactured at the facility (1) to practice or have practiced by or
for the Government at the facility, and (2) to transfer such license with the
transfer of that facility. The acceptance or exercise by the Government of these
rights shall not prevent the Government at any time from contesting the
enforceability, validity or scope of, or title to, any rights or patents herein
licensed.
(End of clause)
[60 FR 11812, Mar. 3, 1995]
970.5204-72 Patent Rights-Profit making Management and Operating Contractors
As prescribed at 970.2703, insert the clause at 952.227-13, Patent
Rights-Retention by the Government, with the following changes:
PATENT RIGHTS -- PROFIT-MAKING MANAGEMENT AND
OPERATING CONTRACTORS (FEB 1995)
1. Add the following paragraphs (j) and (k):
(j) Transfer to successor contractor.
(1) In the event of termination or expiration of this contract, the contractor
shall transfer any unexpended balance of income received relating to intellectual
property, in accordance with instructions from the contracting officer, to a
successor contractor, or in the absence of a successor contractor, to such other
entity as designated by the contracting officer. The contractor shall also
transfer title, as one package, in all patents and patent applications, license
agreements, accounts containing royalty revenues from such license agreements,
including equity positions in third-party entities, and other intellectual
property that arose under the performance of this contract, to the successor
contractor or to the Government, as directed by the contracting officer.
(2) The Government agrees that the recipient of such title shall assume any
remaining obligations and liabilities in connection with the patents and patent
applications.
(k) Facilities License.
In addition to the rights of the parties with respect to inventions or discoveries
conceived or first actually reduced to practice in the course of or under this
contract, the contractor agrees to and does hereby grant to the Government an
irrevocable, nonexclusive, paid- up license in and to any inventions or
discoveries regardless of when conceived or actually reduced to practice or
acquired by the contractor at any time through completion of this contract and
which are incorporated or embodied in the construction of the facility or which
are utilized in the operation of the facility or which cover articles, materials,
or products manufactured at the facility (1) to practice or have practiced by or
for the Government at the facility, and (2) to transfer such license with the
transfer of that facility. The acceptance or exercise by the Government of these
rights shall not prevent the Government at any time from contesting the
enforceability, validity or scope of, or title to, any rights or patents herein licensed.
(End of clause)
[60 FR 11812, Mar. 3, 1995]
970.5204-73 Notice regarding options.
As prescribed in 48 CFR (DEAR) 970.1702-2(a), insert the following provision:
NOTICE REGARDING OPTIONS (JUNE 1996)
The contract resulting from this solicitation is expected to include one or more
options to extend the term of the contract. Exercise of any option to extend the
term of contract will be at the unilateral right of the Department of Energy. The
contractor's performance under the basic contract, including any previously
exercised options, will be among the significant considerations in the
Department's decision to exercise any option.
970.5204-74 Option to extend the term of the contract.
As prescribed in 48 CFR (DEAR) 970.1702-2(b), insert the following clause:
OPTION TO EXTEND THE TERM OF THE CONTRACT
(JUNE 1996)
(a) The Department of Energy may unilaterally extend the term of this
performance-based management contract by written notice to the contractor within
[Insert the period of time in which the contracting officer has to exercise the
option]; provided, that the Department of Energy shall give the contractor a
preliminary written notice of its intent to extend at least twelve (12) months
before the basic term of the contract expires. The preliminary notice does not
commit the Department of Energy to an extension.
(b) The option(s) to extend the contract is identified in [Specify section of contract and clause number and name] of the contract. The Department of Energy may exercise any, or all, of the options identified in the contract. The total duration of this contract,
including the exercise of any option(s) under this clause, shall not exceed 120 months.
[Interim rule 61 FR 32584, Jun. 24, 1996;
final rule 62 FR 34872, Jun. 27, 1997]
970.5204-75 Preexisting conditions.
As prescribed in 48 CFR (DEAR) 970.3103(d), insert the following clause.
PREEXISTING CONDITIONS (JUNE 1997)
(a) The Department of Energy agrees to reimburse the contractor, and the
contractor shall not be held responsible, for any liability (including without
limitation, a claim involving strict or absolute liability and any civil fine or
penalty), expense, or remediation cost, but limited to those of a civil nature,
which may be incurred by, imposed on, or asserted against the contractor arising
out of any condition, act, or failure to act which occurred before the contractor
assumed responsibility on [Insert date contract began]. To the extent the acts or
omissions of the contractor cause or add to any liability, expense or remediation
cost resulting from conditions in existence prior to [Insert date contract began],
the contractor shall be responsible in accordance with the terms and conditions of
this contract.
(b) The obligations of the Department of Energy under this clause are subject to
the availability of appropriated funds.
Alternate I. As prescribed in 48 CFR (DEAR) 970.3103(d), substitute the following
paragraph (a):
(a) Any liability, obligation, loss, damage, claim (including without limitation,
a claim involving strict or absolute liability), action, suit, civil fine or
penalty, cost, expense or disbursement, which may be incurred or imposed, or
asserted by any party and arising out of any condition, act or failure to act
which occurred before [Insert date this clause was included in contract], in
conjunction with the management and operation of [Insert name of facility], shall
be deemed incurred under Contract No. [Insert number of prior contract].
Alternate II. As prescribed in 48 CFR (DEAR) 970.3103(d), include the following
paragraph (c):
(c) The contractor has the duty to inspect the facilities and sites and timely
identify to the contracting officer those conditions which it believes could give
rise to a liability, obligation, loss, damage, penalty, fine, claim, action, suit,
cost, expense, or disbursement or areas of actual or potential noncompliance with
the terms and conditions of this contract or applicable law or regulation. The
contractor has the responsibility to take corrective action, as directed by the
contracting officer and as required elsewhere in this contract.
[62 FR 34842, Jun. 27, 1997]
970.5204-76 Make-or-buy plan.
As prescribed in 48 CFR (DEAR) 970.15407-2-3, insert the following clause:
MAKE-OR-BUY PLAN (JUNE 1997)
(a) Definitions.
Buy item means a work activity, supply, or service to be produced or performed by
an outside source, including a subcontractor or an affiliate, subsidiary, or
division of the contractor.
Make item means a work activity, supply, or service to be produced or performed by
the contractor using its personnel and other resources at the Department of Energy
facility or site.
Make-or-buy plan means a contractor's written program for the contract that
identifies work efforts or requirements that either are "make items" or "buy items"
(b) Make-or-buy plan. The contractor shall develop and implement a make-or-buy
plan that establishes a preference for providing supplies and services on a
least-cost basis, subject to any specific make or buy criteria identified in the
contract or otherwise provided by the contracting officer. In developing and
implementing its make-or-buy plan, the contractor agrees to assess subcontracting
opportunities and implement subcontracting decisions in accordance with the following:
(1) The contractor shall conduct internal productivity improvement and
cost-reduction programs so that in-house performance options can be made more
efficient and cost-effective.
(2) The contractor shall consider subcontracting opportunities with the maximum
practicable regard for open communications with potentially affected employees and
their representatives. Similarly, a contractor shall communicate its plans,
activities, cost-benefit analyses, and decisions to those stakeholders, including
representatives of the community and local businesses, likely to be affected by
such actions.
(c) Submission and approval. For new contract awards, the contractor shall submit
an initial make-or-buy plan, for approval, within 180 days after contract award.
If the existing contract is to be extended, the contractor shall submit a
make-or-buy plan for review and approval at least 90 days prior to the
commencement of the negotiations for the extension. The following documentation
shall be prepared and submitted:
(1) A description of the each work item, and if appropriate, the identification of
the associated Work Authorization or Work Breakdown Structure element;
(2) The categorization of each work item as "must make," "must buy," or "can make
or buy," with the reasons for such categorization in consideration of the program
specific make or buy criteria (including least cost considerations). For non-core
capabilities categorized as "must make," a cost/benefit analysis must be performed
for each item if:
(i) The contractor is not the least-cost performer, and
(ii) A program specific make-or-buy criterion does not otherwise justify a "must
make'' categorization;
(3) A decision to either "make'' or "buy" in consideration of the program specific
make or buy criteria (including least cost considerations) for work effort
categorized as "can make or buy";
(4) Identification of potential suppliers and subcontractors, if known, and their
location and size status;
(5) A recommendation to defer a make or buy decision where categorization of an
identifiable work effort is impracticable at the time of initial development of
the plan and a schedule for future re-evaluation;
(6) A description of the impact of a change in current practice of making or
buying on the existing work force; and
(7) Any additional information appropriate to support and explain the plan.
(d) Conduct of operations. Once a make-or-buy plan is approved, the contractor
shall perform in accordance with the plan.
(e) Changes to the make-or-buy plan. The make-or-buy plan established in
accordance with paragraph (b) of this clause shall remain in effect for the term
of the contract, unless:
(1) A lesser period is provided either for the total plan or for individual items
or work effort;
(2) The circumstances supporting the make-or-buy decisions change, or
(3) New work is identified.
At least annually, the contractor shall review its approved make-or-buy plan to
ensure that it reflects current conditions. Changes to the approved make-or-buy
plan shall be submitted in advance of the effective date of the proposed change in
sufficient time to permit evaluation and review. Changes shall be submitted in
accordance with the instructions provided by the contracting officer. Modification
of the make-or-buy plan to incorporate proposed changes or additions shall be
effective upon the contractor's receipt of the contracting officer's written
approval.
[62 FR 34842, Jun. 27, 1997; 63 FR 56849, Oct. 23, 1998]
970.5204-77 Workforce Restructuring Under Section 3161 of the National Defense
Authorization Act for Fiscal Year 1993.
As prescribed in 48 CFR (DEAR) 970.2602-2, insert the following clause.
WORKFORCE RESTRUCTURING UNDER SECTION
3161 OF THE NATIONAL DEFENSE AUTHORIZATION
ACT FOR FISCAL YEAR 1993 (JUNE 1997)
(a) Consistent with the objectives of Section 3161 of the National Defense
Authorization Act for Fiscal Year 1993, 42 U.S.C. 7274h, in instances where the
Department of Energy has determined that a change in workforce at a Department of
Energy Defense Nuclear Facility is necessary, the contractor agrees to (1) comply
with the Department of Energy Workforce Restructuring Plan for the facility, if
applicable, and (2) use its best efforts to accomplish workforce restructuring or
displacement so as to mitigate social and economic impacts.
(b) The requirements of this clause shall be included in subcontracts at any tier
(except subcontracts for commercial items pursuant to 41 U.S.C. 403) expected to
exceed $500,000.
[62 FR 34842, Jun. 27, 1997]
970.5204-78 Laws, regulations, and DOE directives.
As prescribed in 48 CFR (DEAR) 970.0470-2, insert the following clause.
LAWS, REGULATIONS, AND DOE DIRECTIVES (JUNE 1997)
(a) In performing work under this contract, the contractor shall comply with the
requirements of applicable Federal, State, and local laws and regulations
(including DOE regulations), unless relief has been granted in writing by the
appropriate regulatory agency. A List of Applicable Laws and regulations (List A)
may be appended to this contract for information purposes. Omission of any
applicable law or regulation from List A does not affect the obligation of the
contractor to comply with such law or regulation pursuant to this paragraph.
(b) In performing work under this contract, the contractor shall comply with the
requirements of those Department of Energy directives, or parts thereof,
identified in the List of Applicable Directives (List B) appended to this
contract. Except as otherwise provided for in paragraph (c) of this clause, the
contracting officer may, from time to time and at any time, revise List B by
unilateral modification to the contract to add, modify, or delete specific
requirements. Prior to revising List B, the contracting officer shall notify the
contractor in writing of the Department's intent to revise List B and provide the
contractor with the opportunity to assess the effect of the contractor's
compliance with the revised list on contract cost and funding, technical
performance, and schedule; and identify any potential inconsistencies between the
revised list and the other terms and conditions of the contract. Within 30 days
after receipt of the contracting officer's notice, the contractor shall advise the
contracting officer in writing of the potential impact of the contractor's
compliance with the revised list. Based on the information provided by the
contractor and any other information available, the contracting officer shall
decide whether to revise List B and so advise the contractor not later than 30
days prior to the effective date of the revision of List B. The contractor and the
contracting officer shall identify and, if appropriate, agree to any changes to
other contract terms and conditions, including cost and schedule, associated with
the revision of List B pursuant to the clause entitled, Changes, of this contract.
(c) Environmental, safety, and health (ES&H) requirements appropriate for work
conducted under this contract may be determined by a DOE approved process to
evaluate the work and the associated hazards and identify an appropriately
tailored set of standards, practices, and controls, such as a tailoring process
included in a DOE approved Safety Management System implemented under 48 CFR
(DEAR) 970.5204-2. When such a process is used, the set of tailored (ES&H)
requirements, as approved by DOE pursuant to the process, shall be incorporated
into List B as contract requirements with full force and effect. These
requirements shall supersede, in whole or in part, the contractual environmental,
safety, and health requirements previously made applicable to the contract by List
B. If the tailored set of requirements identifies an alternative requirement
varying from an ES&H requirement of an applicable law or regulation, the
contractor shall request an exemption or other appropriate regulatory relief
specified in the regulation.
(d) The contractor is responsible for compliance with the requirements made
applicable to this contract, regardless of the performer of the work. The
contractor is responsible for flowing down the necessary provisions to
subcontracts at any tier to which the contractor determines such requirements apply.
[62 FR 34842, Jun. 27, 1997]
970.5204-79 Access to and ownership of records.
As prescribed in 48 CFR (DEAR) 970.0407-3, insert the following clause.
ACCESS TO AND OWNERSHIP OF RECORDS (JUNE 1997)
(a) Government-owned records. Except as provided in paragraph (b) of this clause, all records acquired or generated by the contractor in its performance of this contract shall be the property of the Government and shall be delivered to the Government or otherwise disposed of by the contractor either as the contracting officer may from time to time direct during the process of the work or, in any
event, as the contracting officer shall direct upon completion or termination of
the contract.
(b) Contractor-owned records. The following records are considered the property of
the contractor and are not within the scope of paragraph (a) of this clause. [The
contracting officer shall identify which of the following categories of records
will be included in the clause.]
(1) Employment-related records (such as workers' compensation files; employee
relations records, records on salary and employee benefits; drug testing records,
labor negotiation records; records on ethics, employee concerns, and other
employee related
investigations conducted under an expectation of confidentiality; employee
assistance program records; and personnel and medical/ health-related records and
similar files), except for those records described by the contract as being
maintained in Privacy Act systems of records.
(2) Confidential contractor financial information, and correspondence between the
contractor and other segments of the contractor located away from the DOE facility
(i.e., the
contractor's corporate headquarters);
(3) Records relating to any procurement action by the contractor, except for
records that under 48 CFR (DEAR) 970.5204-9, Accounts, Records, and Inspection,
are described as the property of the Government; and
(4) Legal records, including legal opinions, litigation files, and documents
covered by the attorney-client and attorney work product privileges; and
(5) The following categories of records maintained pursuant to the technology
transfer clause of this contract:
(i) Executed license agreements, including exhibits or appendices containing
information on royalties, royalty rates, other financial information, or
commercialization plans, and all related documents, notes and correspondence.
(ii) The contractor's protected Cooperative Research and Development Agreement
(CRADA) information and appendices to a CRADA that contain licensing terms and
conditions, or royalty or royalty rate information.
(iii) Patent, copyright, mask work, and trademark application files and related
contractor invention disclosures, documents and correspondence, where the
contractor has elected rights or has permission to assert rights and has not
relinquished such rights or turned such rights over to the Government.
(c) Contract completion or termination. In the event of completion or termination
of this contract, copies of any of the contractor-owned records identified in
paragraph (b) of this clause, upon the request of the Government, shall be
delivered to DOE or its designees, including successor contractors. Upon delivery,
title to such records shall vest in DOE or its designees, and such records shall
be protected in accordance with applicable federal laws (including the Privacy
Act), as appropriate.
(d) Inspection, copying, and audit of records. All records acquired or generated
by the contractor under this contract in the possession of the contractor,
including those described at paragraph (b) of this clause, shall be subject to
inspection, copying, and audit by the Government or its designees at all
reasonable times, and the contractor shall afford the Government or its designees
reasonable facilities for such inspection, copying, and audit; provided, however,
that upon request by the contracting officer, the contractor shall deliver such
records to a location specified by the contracting officer for inspection,
copying, and audit. The Government or its designees shall use such records in
accordance with applicable federal laws (including the Privacy Act), as appropriate.
(e) Applicability. Paragraphs (b), (c), and (d) of this clause apply to all
records without regard to the date or origination of such records.
(f) Records retention standards. Special records retention standards, described at
DOE Order 1324.5B, Records Management Program and DOE Records Schedules (version
in effect on effective date of contract), are applicable for the classes of
records described therein, whether or not the records are owned by the Government
or the contractor. In addition, the contractor shall retain individual radiation
exposure records generated in the performance of work under this contract until
DOE authorizes disposal. The Government may waive application of these record
retention schedules, if, upon termination or completion of the contract, the
Government exercises its right under paragraph (c) of this clause to obtain copies
and delivery of records described in paragraphs (a) and (b) of this clause.
(g) Flow down. The contractor shall include the requirements of this clause in all
subcontracts that are of a cost-reimbursement type if any of the following factors
is present:
(1) The value of the subcontract is greater than $2 million (unless specifically
waived by the contracting officer);
(2) The contracting officer determines that the subcontract is, or involves, a
critical task related to the contract; or
(3) The subcontract includes 48 CFR (DEAR) 970.5204-2, Integration of Environment,
Safety, and Health into Work Planning and Execution, or similar clause.
[62 FR 34842, Jun. 27, 1997]
970.5204-80 Overtime management.
As prescribed in 48 CFR (DEAR) 970.2275-2, insert the following clause:
OVERTIME MANAGEMENT (JUNE 1997)
(a) The contractor shall maintain adequate internal controls to ensure that
employee overtime is authorized only if cost effective and necessary to ensure
performance of work under this contract.
(b) The contractor shall notify the contracting officer when in any given year it
is likely that overtime usage as a percentage of payroll may exceed 4%.
(c) The contracting officer may require the submission, for approval, of a formal
annual overtime control plan whenever contractor overtime usage as a percentage of
payroll has exceeded, or is likely to exceed, 4%, or if the contracting officer
otherwise deems overtime expenditures excessive. The plan shall include, at a minimum:
(1) An overtime premium fund (maximum dollar amount);
(2) Specific controls for casual overtime for non-exempt employees;
(3) Specific parameters for allowability of exempt overtime;
(4) An evaluation of alternatives to the use of overtime; and
(5) Submission of a semi-annual report that includes for exempt and non-exempt employees:
(i) Total cost of overtime;
(ii) Total cost of straight time;
(iii) Overtime cost as a percentage of straight-time cost;
(iv) Total overtime hours;
(v) Total straight-time hours; and
(vi) Overtime hours as a percentage of straight-time hours.
[62 FR 34842, Jun. 27, 1997 ]
970.5204-81 Diversity Plan
As prescribed in 48 CFR (DEAR) 970.2602-2(b), insert the following clause.
Diversity Plan (DEC 1997)
The Contractor shall submit a Diversity Plan to the Contracting Officer for
approval within 90 days after the effective date of this contract. The contractor
shall submit an update to its Plan with its annual fee proposal. Guidance for
preparation of a Diversity Plan is provided in Appendix __. The Plan shall include
innovative strategies for increasing opportunities to fully use the talents and
capabilities of a diverse work force. The Plan shall address, at a minimum, the
Contractor's approach for promoting diversity through (1) the Contractor's work
force, (2) educational outreach, (3) community involvement and outreach, (4)
subcontracting, and (5) economic development (including technology transfer).
[62 FR 63423, Nov. 28, 1997]
970.5204-82 Rights in data--facilities.
Insert the following clause in the management and operating contracts in
accordance with 48 CFR 970.2707.
Rights in Data--Facilities (Feb 1998)
(a) Definitions.
(1) Computer data bases, as used in this clause, means a collection of data in a
form capable of, and for the purpose of, being stored in, processed, and operated
on by a computer. The term
does not include computer software.
(2) Computer software, as used in this clause, means (i) computer programs which
are data comprising a series of instructions, rules, routines, or statements,
regardless of the media in which recorded, that allow or cause a computer to
perform a specific operation or series of operations and (ii) data comprising
source code listings, design details, algorithms, processes, flow charts,
formulae, and related material that would enable the computer program to be
produced, created, or compiled. The term does not include computer data bases.
(3) Data, as used in this clause, means recorded information, regardless of form
or the media on which it may be recorded. The term includes technical data and
computer software. The term
"data" does not include data incidental to the administration of this contract,
such as financial, administrative, cost and pricing, or management information.
(4) Limited rights data, as used in this clause, means data, other than computer
software, developed at private expense that embody trade secrets or are commercial
or financial and confidential or privileged. The Government's rights to use,
duplicate, or disclose limited rights data are as set forth in the Limited Rights
Notice of subparagraph (e) of this clause.
(5) Restricted computer software, as used in this clause, means computer software
developed at private expense and that is a trade secret; is commercial or
financial and is confidential or
privileged; or is published copyrighted computer software, including minor
modifications of any such computer software. The Government's rights to use,
duplicate, or disclose restricted computer software are as set forth in the
Restricted Rights Notice of paragraph (f) of this clause.
(6) Technical data, as used in this clause, means recorded data, regardless of
form or characteristic, that are of a scientific or technical nature. Technical
data does not include computer software, but does include manuals and
instructional materials and technical
data formatted as a computer data base.
(7) Unlimited rights, as used in this clause, means the rights of the Government
to use, disclose, reproduce, prepare derivative works, distribute copies to the
public, including by electronic means, and perform publicly and display publicly,
in any manner, including by electronic means, and for any purpose whatsoever, and
to have or permit others to do so.
(b) Allocation of Rights.
(1) The Government shall have:
(i) Ownership of all technical data and computer software first produced in the
performance of this Contract;
(ii) Unlimited rights in technical data and computer software specifically used in
the performance of this Contract, except as
provided herein regarding copyright, limited rights data, or restricted computer
software, or except for other data specifically protected by statute for a period
of time or, where, approved by DOE, appropriate instances of the DOE Work for
Others Program;
(iii) The right to inspect technical data and computer software first produced or
specifically used in the performance of this Contract at all reasonable times. The
Contractor shall make
available all necessary facilities to allow DOE personnel to perform such
inspection;
(iv) The right to have all technical data and computer software first produced or
specifically used in the performance of this Contract delivered to the Government
or otherwise disposed of by the Contractor, either as the Contracting Officer may
from time to time direct during the progress of the work or in any event as the
Contracting Officer shall direct upon completion or termination of this Contract.
The Contractor agrees to leave a copy of such data at the facility or plant to
which such data relate, and to make available for access or to deliver to the
Government such data upon request by the Contracting Officer. If such data are
limited rights data or restricted computer software, the rights of the Government
in such data shall be governed solely by the provisions of paragraph (e) of this
clause ("Rights in Limited Rights Data") or paragraph (f) of this clause ("Rights
in Restricted Computer Software"); and
(v) The right to remove, cancel, correct, or ignore any markings not authorized by
the terms of this Contract on any data furnished hereunder if, in response to a
written inquiry by DOE concerning the propriety of the markings, the Contractor
fails to respond thereto within 60 days or fails to substantiate the propriety of
the markings. In either case DOE will notify the Contractor of the action taken.
(2) The Contractor shall have:
(i) The right to withhold limited rights data and restricted computer software
unless otherwise provided in accordance with the provisions of this clause; and
(ii) The right to use for its private purposes, subject to patent, security or other provisions of this Contract, data it first produces in the
performance of this Contract, except for data in DOE's Uranium Enrichment
Technology, including diffusion, centrifuge, and atomic vapor laser isotope
separation, provided the data requirements of this Contract have been met as of
the date of the private use of such data.
(3) The Contractor agrees that for limited rights data or restricted computer
software or other technical, business or financial data in the form of recorded
information which it receives from, or is given access to by, DOE or a third
party, including a DOE Contractor or subcontractor, and for technical data or
computer software it first produces under this Contract which is authorized to be
marked by DOE, the Contractor shall treat such data in accordance with any
restrictive legend contained thereon.
(c) Copyrighted Material.
(1) The Contractor shall not, without prior written authorization of the Patent
Counsel, assert copyright in any technical data or computer software first
produced in the performance of this contract. To the extent such authorization is
granted, the Government reserves for itself and others acting on its behalf, a
nonexclusive, paid-up, irrevocable, world-wide license for Governmental purposes
to publish, distribute, translate, duplicate, exhibit, and perform any such data
copyrighted by the Contractor.
(2) The Contractor agrees not to include in the technical data or computer
software delivered under the contract any material copyrighted by the Contractor
and not to knowingly include any
material copyrighted by others without first granting or obtaining at no cost a
license therein for the benefit of the Government of the same scope as set forth
in paragraph (c)(1) of this clause. If
the Contractor believes that such copyrighted material for which the license
cannot be obtained must be included in the technical data or computer software to
be delivered, rather than merely incorporated therein by reference, the Contractor
shall obtain the written authorization of the Contracting Officer to include such
material in the technical data or computer software prior to its delivery.
(d) Subcontracting.
(1) Unless otherwise directed by the Contracting Officer, the Contractor agrees to
use in subcontracts in which technical data or computer software is expected to be
produced or in subcontracts for supplies that contain a requirement for production
or delivery of data in accordance with the policy and procedures of 48 CFR (FAR)
Subpart 27.4 as supplemented by 48 CFR (DEAR) 927.401 through 927.409, the clause
entitled "Rights in Data-General" at 48 CFR
52.227-14 modified in accordance with 927.409(a) and including Alternate V.
Alternates II through IV of that clause may be included as appropriate with the
prior approval of DOE Patent Counsel, and the Contractor shall not acquire rights
in a subcontractor's limited rights data or restricted computer software, except
through the use of Alternates II or III, respectively, without the prior approval
of DOE Patent Counsel. The clause at FAR 52.227-16, Additional Data
Requirements, shall be included in subcontracts in accordance with DEAR
927.409(h). The contractor shall use instead the Rights in Data-Facilities clause
at DEAR 970.5204-82 in subcontracts, including subcontracts for related support
services, involving the design or operation of any plants or facilities or
specially designed equipment for such plants or facilities that are managed or
operated under its contract with DOE.
(2) It is the responsibility of the Contractor to obtain from its subcontractors
technical data and computer software and rights therein, on behalf of the
Government, necessary to fulfill the
Contractor's obligations to the Government with respect to such data. In the event
of refusal by a subcontractor to accept a clause affording the Government such
rights, the Contractor shall:
(i) Promptly submit written notice to the Contracting Officer setting forth
reasons or the subcontractor's refusal and other pertinent information which may
expedite disposition of the matter, and
(ii) Not proceed with the subcontract without the written authorization of the
Contracting Officer.
(3) Neither the Contractor nor higher-tier subcontractors shall use their power to
award subcontracts as economic leverage to acquire rights in a subcontractor's
limited rights data or restricted computer software for their private use.
(e) Rights in Limited Rights Data.
Except as may be otherwise specified in this Contract as data which are not
subject to this paragraph, the Contractor agrees to and does hereby grant to the
Government an irrevocable, nonexclusive, paid-up license by or for the Government,
in any limited rights data of the Contractor specifically used in the performance
of this Contract, provided, however, that to the extent that any limited rights
data when furnished or delivered is specifically identified by the Contractor at
the time of initial delivery to the Government or a representative of the
Government, such data shall not be used within or outside the Government except as
provided in the "Limited Rights Notice" set forth. All such limited rights data
shall be marked with the following "Limited Rights Notice":
Limited Rights Notice
These data contain "limited rights data," furnished under Contract No.
______________ with the United States Department of Energy which may be duplicated
and used by the Government with the express limitations that the ``limited rights
data'' may not be disclosed outside the Government or be used for purposes of
manufacture without prior permission of the Contractor, except that further
disclosure or use may be made solely for the following purposes:
(a) Use (except for manufacture) by support services contractors within the scope
of their contracts;
(b) This "limited rights data" may be disclosed for evaluation purposes under the
restriction that the "limited rights data" be retained in confidence and not be
further disclosed;
(c) This "limited rights data" may be disclosed to other contractors participating
in the Government's program of which this Contract is a part for information or
use (except for manufacture) in connection with the work performed under their
contracts and under the restriction that the "limited rights data" be retained in
confidence and not be further disclosed;
(d) This "limited rights data" may be used by the Government or others on its
behalf for emergency repair or overhaul work under the restriction that the
"limited rights data" be retained in confidence and not be further disclosed; and
(e) Release to a foreign government, or instrumentality thereof, as the interests
of the United States Government may require, for information or evaluation, or for
emergency repair or overhaul work by such government. This Notice shall be marked
on any reproduction of this data in whole or in part.
(End of Notice)
(f) Rights in Restricted Computer Software.
(1) Except as may be otherwise specified in this Contract as data which are not subject to this paragraph, the Contractor agrees to and does hereby grant to the Government an irrevocable, nonexclusive, paid-up, license by or for the Government, in any restricted computer software of the Contractor specifically used in the performance of this Contract, provided, however, that to the extent that any restricted computer software when furnished or delivered is specifically identified by the Contractor at the time of initial delivery to the Government or a representative of the Government, such data shall not be used within or outside the Government except as provided in the "Restricted Rights Notice" set forth below. All such restricted
computer software shall be marked with the following "Restricted Rights Notice":
Restricted Rights Notice-Long Form
(a) This computer software is submitted with restricted rights under Department of
Energy Contract No. ______________ . It may not be used, reproduced, or disclosed
by the Government except as provided in paragraph (b) of this notice.
(b) This computer software may be:
(1) Used or copied for use in or with the computer or computers for which it was
acquired, including use at any Government installation to which such computer or
computers may be transferred;
(2) Used, copied for use, in a backup or replacement computer if any computer for
which it was acquired is inoperative or is replaced;
(3) Reproduced for safekeeping (archives) or backup purposes;
(4) Modified, adapted, or combined with other computer software, provided that
only the portions of the derivative software consisting of the restricted computer
software are to be made subject to the same restricted rights; and
(5) Disclosed to and reproduced for use by contractors under a service contract
(of the type defined in FAR 37.101) in accordance with subparagraphs (b)(1)
through (4) of this Notice, provided the Government makes such disclosure or
reproduction subject to these
restricted rights.
(c) Notwithstanding the foregoing, if this computer software has been published
under copyright, it is licensed to the Government, without disclosure
prohibitions, with the rights set forth in the restricted rights notice above.
(d) This Notice shall be marked on any reproduction of this computer software, in
whole or in part.
(End of Notice)
(2) Where it is impractical to include the Restricted Rights Notice on restricted
computer software, the following short-form Notice may be used in lieu thereof:
Restricted Rights Notice--Short Form
Use, reproduction, or disclosure is subject to restrictions set forth in the Long
Form Notice of DOE Contract No. ______________ with (name of Contractor ).
(End of Notice)
(3) If the software is embedded, or if it is commercially impractical to mark it
with human readable text, then the symbol R and the clause date (mo/yr), in
brackets or a box, a [R-mo/yr], may be used. This will be read to mean restricted
computer software, subject to the rights of the Government as described in the
Long Form Notice, in effect as of the date indicated next to the symbol. The
symbol shall not be used to mark human readable material. In the event this
Contract contains any variation to the rights in the Long Form Notice, then the
contract number must also be cited.
(4) If restricted computer software is delivered with the copyright notice of 17
U.S.C. 401, the software will be presumed to be published copyrighted computer
software licensed to the
Government without disclosure prohibitions and with unlimited rights, unless the
Contractor includes the following statement with such copyright notice
"Unpublished-rights reserved under the Copyright Laws of the United States."
(g) Relationship to patents. Nothing contained in this clause creates or is
intended to imply a license to the Government in any patent or is intended to be
construed as affecting the scope of any licenses or other rights otherwise granted
to the Government under any patent.
(End of Clause)
Alternate I (Feb 1998): In accordance with 970.2706(g), insert the phrase "and
except Restricted Data in category C-24, 10 CFR part 725, in which DOE has
reserved the right to receive reasonable compensation for the use of its
inventions and discoveries, including related data and technology" after "laser
isotope separation" and before the comma in paragraph (b)(2)(ii) of the clause at
970.5204-83, as appropriate.
(End of Alternate)
[63 FR 10499, Mar. 4, 1998]
970.5204-83 Rights in Data-Technology Transfer.
Insert the following clause in management and operating contracts in accordance
with 48 CFR 970.2707.
Rights in Data-Technology Transfer (Feb 1998)
(a) Definitions.
(1) Computer data bases, as used in this clause, means a collection of data in a
form capable of, and for the purpose of, being stored in, processed, and operated
on by a computer. The term
does not include computer software.
(2) Computer software, as used in this clause, means (i) computer programs which
are data comprising a series of instructions, rules, routines, or statements,
regardless of the media in which recorded, that allow or cause a computer to
perform a specific operation or series of operations and (ii) data comprising
source code listings, design details, algorithms, processes, flow charts,
formulae, and related material that would enable the computer program to be
produced, created, or compiled. The term does not include computer data bases.
(3) Data, as used in this clause, means recorded information, regardless of form
or the media on which it may be recorded. The term includes technical data and
computer software. The term
"data" does not include data incidental to the administration of this contract,
such as financial, administrative, cost and pricing, or management information.
(4) Limited rights data, as used in this clause, means data, other than computer
software, developed at private expense that embody trade secrets or are commercial
or financial and confidential or privileged. The Government's rights to use,
duplicate, or disclose limited rights data are as set forth in the Limited Rights
Notice of paragraph (g) of this clause.
(5) Restricted computer software, as used in this clause, means computer software
developed at private expense and that is a trade secret; is commercial or
financial and is confidential or
privileged; or is published copyrighted computer software, including minor
modifications of any such computer software. The Government's rights to use,
duplicate, or disclose restricted computer software are as set forth in the
Restricted Rights Notice of subparagraph (h) of this clause.
(6) Technical data, as used in this clause, means recorded data, regardless of
form or characteristic, that are of a scientific or technical nature. Technical
data does not include computer software, but does include manuals and
instructional materials and technical
data formatted as a computer data base.
(7) Unlimited rights, as used in this clause, means the rights of the Government
to use, disclose, reproduce, prepare derivative works, distribute copies to the
public, including by electronic means, and perform publicly and display publicly,
in any manner, including by electronic means, and for any purpose whatsoever, and
to have or permit others to do so.
(b) Allocation of Rights.
(1) The Government shall have:
(i) Ownership of all technical data and computer software first produced in the
performance of this Contract;
(ii) Unlimited rights in technical data and computer software specifically used in
the performance of this Contract, except as provided herein regarding copyright,
limited rights data, or restricted computer software, and except for data subject
to the withholding provisions for protected Cooperative Research and Development
Agreement (CRADA) information in accordance with Technology Transfer actions under
this Contract, or other data specifically protected by statute for a period of
time or, where, approved by DOE, appropriate instances of the DOE Work for Others
Program;
(iii) The right to inspect technical data and computer software first produced or
specifically used in the performance of this Contract at all reasonable times. The
Contractor shall make available all necessary facilities to allow DOE personnel to
perform such inspection;
(iv) The right to have all technical data and computer software first produced or
specifically used in the performance of this Contract delivered to the Government
or otherwise disposed of by the Contractor, either as the Contracting Officer may
from time to time direct during the progress of the work or in any event as the
Contracting Officer shall direct upon completion or termination of this Contract.
The Contractor agrees to leave a copy of such data at the facility or plant to
which such data relate, and to make available for access or to deliver to the
Government such data upon request by the Contracting Officer. If such data are
limited rights data or restricted computer software. the rights of the Government
in such data shall be governed solely by the provisions of paragraph (g) of this
clause ("Rights in Limited Rights Data") or paragraph (h) of this clause ("Rights
in Restricted Computer Software"); and (v) The right to remove, cancel, correct,
or ignore any markings not authorized by the terms of this Contract on any data
furnished hereunder if, in response to a written inquiry by DOE concerning the
propriety of the markings, the Contractor fails to respond thereto within 60 days
or fails to substantiate the propriety of the markings. In either case DOE will
notify the Contractor of the action taken.
(2) The Contractor shall have:
(i) The right to withhold limited rights data and restricted computer software
unless otherwise provided in provisions of this clause;
(ii) The right to use for its private purposes, subject to patent, security or
other provisions of this Contract, data it first produces in the performance of
this Contract, except for data in DOE's Uranium Enrichment Technology, including
diffusion, centrifuge, and atomic vapor laser isotope separation, provided the
data requirements of this Contract have been met as of the date of the private use
of such data; and
(iii) The right to assert copyright subsisting in scientific and technical
articles as provided in paragraph (d) of this clause and the right to request
permission to assert copyright subsisting in
works other than scientific and technical articles as provided in paragraph (e) of
this clause.
(3) The Contractor agrees that for limited rights data or restricted computer
software or other technical business or financial data in the form of recorded
information which it receives from, or is given access to by DOE or a third party,
including a DOE contractor or subcontractor, and for technical data or computer
software it first produces under this Contract which is authorized
to be marked by DOE, the Contractor shall treat such data in accordance with any
restrictive legend contained thereon.
(c) Copyright (General).
(1) The Contractor agrees not to mark, register, or otherwise assert copyright in
any data in a published or unpublished work, other than as set forth in paragraphs
(d) and (e) of this clause.
(2) Except for material to which the Contractor has obtained the right to assert
copyright in accordance with either paragraph (d) or (e) of this clause, the
Contractor agrees not to include in the data delivered under this Contract any
material copyrighted by the Contractor and not to knowingly include any material
copyrighted by others without first granting or obtaining at no cost a license
therein for the benefit of the Government of the same scope as set forth in
paragraph (d) of this clause. If the Contractor believes that such copyrighted
material for which the license cannot be obtained must be included in the data to
be delivered, rather than merely incorporated therein by reference, the Contractor
shall obtain the written authorization of the Contracting Officer to include such
material in the data prior to its delivery.
(d) Copyrighted works (scientific and technical articles).
(1) The Contractor shall have the right to assert, without prior approval of the
Contracting Officer, copyright subsisting in scientific and technical articles
composed under this contract or based on or containing data first produced in the
performance of this Contract, and published in academic, technical or professional
journals, symposia, proceedings, or similar works. When assertion of copyright is
made, the Contractor shall affix the applicable copyright notice of 17 U.S.C. 401
or 402 and acknowledgment of Government sponsorship (including contract number) on
the data when such data are delivered to the Government as well as when the data
are published or deposited for registration as a published work in the U.S.
Copyright Office. The Contractor grants to the Government, and others acting on
its behalf, a nonexclusive, paid-up, irrevocable, world-wide license in such
copyrighted data to reproduce, prepare derivative works, distribute copies to the
public, and perform publicly and display publicly, by or on behalf of the
Government.
(2) The contractor shall mark each scientific or technical article first produced
or composed under this Contract and submitted for journal publication or similar
means of dissemination with a notice, similar in all material respects to the
following, on the front reflecting the Government's non-exclusive, paid-up,
irrevocable, world-wide license in the copyright.
Notice: This manuscript has been authored by [insert the name of the Contractor]
under Contract No. [insert the contract number] with the U.S. Department of
Energy. The United States Government retains and the publisher, by accepting the
article for publication, acknowledges that the United States Government retains a
non-exclusive, paid-up, irrevocable, world-wide license to publish or reproduce
the published form of this manuscript, or allow others to do so, for United States
Government purposes.
(End of Notice)
(3) The title to the copyright of the original of unclassified graduate theses and
the original of related unclassified scientific papers shall vest in the author
thereof, subject to the right of DOE to retain duplicates of such documents and to
use such documents for any purpose whatsoever without any claim on the part of the
author or the contractor for additional compensation.
(e) Copyrighted works (other than scientific and technical articles and data produced under a CRADA). The Contractor may obtain permission to assert copyright subsisting in technical data and
computer software first produced by the Contractor in performance of this
Contract, where the Contractor can show that commercialization would be enhanced
by such copyright protection, subject to the following:
(1) Contractor Request to Assert Copyright.
(i) For data other than scientific and technical articles and data produced under
a CRADA, the Contractor shall submit in writing to Patent Counsel its request to
assert copyright in data first
produced in the performance of this Contract pursuant to this clause. The right of
the Contractor to copyright data first produced under a CRADA is as described in
the individual CRADA. Each request by the Contractor must include:
(A) The identity of the data (including any computer program) for which the
Contractor requests permission to assert copyright, as well as an abstract which
is descriptive of the data and is suitable for dissemination purposes, (B) The
program under which it was funded, (C) Whether, to the best knowledge of the
Contractor, the data is subject to an international treaty or agreement, (D)
Whether the data is subject to export control, (E) A statement that the Contractor
plans to commercialize the data in compliance with the clause of this contract
entitled "Technology Transfer Mission," within five (5) years after obtaining
permission to assert copyright or, on a case-by-case basis, a specified longer
period where the Contractor can demonstrate that the ability to commercialize
effectively is dependent upon such longer period, and (F) For data other than
computer software, a statement explaining why the assertion of copyright is
necessary to enhance commercialization and is consistent with DOE's dissemination
responsibilities.
(ii) For data that is developed using other funding sources in addition to DOE
funding, the permission to assert copyright in accordance with this clause must
also be obtained by the Contractor from all other funding sources prior to the
Contractor's request to Patent Counsel. The request shall include the Contractor's
certification or other documentation acceptable to Patent Counsel demonstrating
such permission has been obtained.
(iii) Permission for the Contractor to assert copyright in excepted categories of
data as determined by DOE will be expressly withheld. Such excepted categories
include data whose release (A) would be detrimental to national security, i.e.,
involve classified information or data or sensitive information under Section 148
of the Atomic Energy Act of 1954, as amended, or are subject to export control for
nonproliferation and other nuclear-related national security purposes, (B) would
not enhance the appropriate transfer or dissemination and commercialization of
such data, (C) would have a negative impact on U.S. industrial competitiveness,
(D) would prevent DOE from meeting its obligations under treaties and
international agreements, or (E) would be detrimental to one or more of DOE's
programs. Additional excepted categories may be added by the Assistant General
Counsel for Technology Transfer and Intellectual Property. Where data are
determined to be under export control restriction, the Contractor may obtain
permission to assert copyright subject to the provisions of this clause for
purposes of limited commercialization in a manner that complies with export
control statutes and applicable regulations. In addition, notwithstanding any
other provision of this Contract, all data developed with Naval Reactors' funding
and those data that are classified fall within excepted categories. The rights of
the Contractor in data are subject to the disposition of data rights in the
treaties and international agreements identified under this Contract as well as
those additional treaties and international agreements which DOE may from time to
time identify by unilateral amendment to the Contract; such amendment listing
added treaties and international agreements is effective only for data which is
developed after the date such treaty or international agreement is added to this
Contract. Also, the Contractor will not be permitted to assert copyright in data
in the form of various technical reports generated by the Contractor under the
Contract without first obtaining the advanced written permission of the
Contracting Officer.
(2) DOE Review and Response to Contractor's Request. The Patent Counsel shall use
its best efforts to respond in writing within 90 days of receipt of a complete
request by the Contractor to assert copyright in technical data and computer
software pursuant to this clause. Such response shall either give or withhold
DOE's permission for the Contractor to assert copyright or advise the Contractor
that DOE needs additional time to respond and the reasons therefor.
(3) Permission for Contractor to Assert Copyright.
(i) For computer software, the Contractor shall furnish to the DOE designated,
centralized software distribution and control point, the Energy Science and
Technology Software Center, at the time permission to assert copyright is given
under paragraph (e)(2) of this clause: (A) an abstract describing the software
suitable for publication, (B) the source code for each software program, and (C)
the object code and at least the minimum support documentation needed by a
technically competent user to understand and use the software. The Patent Counsel,
for good cause shown by the Contractor, may allow the minimum support
documentation to be delivered within 60 days after permission to assert copyright
is given or at such time the minimum support documentation becomes available. The
Contractor acknowledges that the DOE designated software distribution and control
point may provide a technical description of the software in an announcement
identifying its availability from the copyright holder.
(ii) Unless otherwise directed by the Contracting Officer, for data other than
computer software to which the Contractor has received permission to assert
copyright under paragraph (e)(2) of this clause above, the Contractor shall within
sixty (60) days of obtaining such permission furnish to DOE's Office of Scientific
and Technical Information (OSTI) a copy of such data as well as an abstract of the
data suitable for dissemination purposes. The Contractor acknowledges that OSTI
may provide an abstract of the data in an announcement to DOE, its contractors and
to the public identifying its availability from the copyright holder.
(iii) For a five year period or such other specified period as specifically
approved by Patent Counsel beginning on the date the Contractor is given
permission to assert copyright in data, the
Contractor grants to the Government, and others acting on its behalf, a paid-up,
nonexclusive, irrevocable worldwide license in such copyrighted data to reproduce,
prepare derivative works and perform publicly and display publicly, by or on
behalf of the Government. Upon request, the initial period may be extended after
DOE approval. The DOE approval will be based on the standard that the work is
still commercially available and the market demand is being met.
(iv) After the period approved by Patent Counsel for application of the limited
Government license described in paragraph (e)(3)(iii) of this clause, or if, prior
to the end of such period(s), the Contractor abandons commercialization activities
pertaining to the data to which the Contractor has been given permission to assert
copyright, the Contractor grants to the Government, and others acting on its
behalf, a paid-up, nonexclusive, irrevocable worldwide license in such copyrighted
data to reproduce, distribute copies to the public, prepare derivative works,
perform publicly and display publicly, and to permit others to do so.
(v) Whenever the Contractor asserts copyright in data pursuant to this paragraph
(e), the Contractor shall affix the applicable copyright notice of 17 U.S.C. 401
or 402 on the copyrighted data and also an acknowledgment of the Government
sponsorship and license rights of paragraphs (e)(3) (iii) and (iv) of this clause.
Such action shall be taken when the data are delivered to the Government,
published, licensed or deposited for registration as a published work in the U.S.
Copyright Office. The acknowledgment of Government sponsorship
and license rights shall be as follows: Notice: These data were produced by
(insert name of Contractor) under Contract No. ______________ with the Department
of Energy. For (period approved by DOE Patent Counsel) from (date permission to
assert copyright was obtained), the Government is granted for itself
and others acting on its behalf a nonexclusive, paid-up, irrevocable worldwide
license in this data to reproduce, prepare derivative works, and perform publicly
and display publicly, by or on behalf of the Government. There is provision for
the possible extension of the term of this license. Subsequent to that period or
any extension granted, the Government is granted for itself and others acting on
its behalf a nonexclusive, paid-up, irrevocable worldwide license in this data to
reproduce, prepare derivative works, distribute copies to the public, perform
publicly and display publicly, and to permit others to do so. The specific term of
the license can be identified by inquiry made to Contractor or DOE. Neither the
United States nor the United States Department of Energy, nor any of their
employees, makes any warranty, express or implied, or assumes any legal liability
or responsibility for the accuracy, completeness, or usefulness of any data ,
apparatus, product, or process disclosed, or represents that its use would not
infringe privately owned
rights.
(End of Notice)
(vi) With respect to any data to which the Contractor has received permission to
assert copyright, the DOE has the right, during the five (5) year or specified
longer period approved by Patent Counsel as provided for in paragraph (e) of this
clause, to request the Contractor to grant a nonexclusive, partially exclusive or
exclusive license in any field of use to a responsible applicant(s) upon terms
that are reasonable under the circumstances, and if the Contractor refuses such
request, to grant such license itself, if the DOE determines that the Contractor
has not made a satisfactory demonstration that either it or its licensee(s) is
actively pursuing commercialization of the data as set forth in subparagraph
(e)(1)(A) of this clause. Before licensing under this subparagraph (vi), DOE shall
furnish the Contractor a written request for the Contractor to grant the stated
license, and the Contractor shall be allowed thirty (30) days (or such longer
period
as may be authorized by the Contracting Officer for good cause shown in writing by
the Contractor) after such notice to show cause why the license should not be
granted. The Contractor shall have the right to appeal the decision of the DOE to
grant the stated license
to the Invention Licensing Appeal Board as set forth in 10 CFR 781.65--"Appeals".
(vii) No costs shall be allowable for maintenance of copyrighted data, primarily
for the benefit of the Contractor and/or a licensee which exceeds DOE Program
needs, except as expressly provided in writing by the Contracting Officer. The
Contractor may use its net royalty income to effect such maintenance costs.
(viii) At any time the Contractor abandons commercialization activities for data
for which the Contractor has received permission to assert copyright in accordance
with this clause, it shall advise OSTI and Patent Counsel and upon request assign
the copyright to the Government so that the Government can distribute the data to
the public.
(4) The following notice may be placed on computer software prior to any
publication and prior to the Contractor's obtaining permission from the Department
of Energy to assert copyright in the computer software pursuant to paragraph
(c)(3) of this section.
Notice: This computer software was prepared by [insert the Contractor's name and
the individual author], hereinafter the Contractor, under Contract [insert the
Contract Number] with the Department of Energy (DOE). All rights in the computer
software are reserved by DOE on behalf of the United States Government and the
Contractor as provided in the Contract. You are authorized to use this computer
software for Governmental purposes but it is not to be released or distributed to
the public. NEITHER THE GOVERNMENT NOR THE CONTRACTOR MAKES ANY WARRANTY, EXPRESS
OR IMPLIED, OR ASSUMES ANY LIABILITY FOR THE USE OF THIS SOFTWARE. This notice
including this sentence must appear on any copies of this computer software.
(End of Notice)
(5) a similar notice can be used for data, other than computer software, upon
approval of DOE Patent Counsel.
(f) Subcontracting.
(1) Unless otherwise directed by the Contracting Officer, the Contractor agrees to
use in subcontracts in which technical data or computer software is expected to be
produced or in subcontracts for supplies that contain a requirement for production
or delivery of data in accordance with the policy and procedures of 48 CFR (FAR)
Subpart 27.4 as supplemented by 48 CFR (DEAR) 927.401 through 927.409, the clause
entitled "Rights in Data-General" at 48 CFR
52.227-14 modified in accordance with 927.409(a) and including Alternate V.
Alternates II through IV of that clause may be included as appropriate with the
prior approval of DOE Patent Counsel, and the Contractor shall not acquire rights
in a subcontractor's limited rights data or restricted computer software, except
through the use of Alternates II or III, respectively, without the prior approval
of DOE Patent Counsel. The clause at FAR 52.227-16, Additional Data
Requirements, shall be included in subcontracts in accordance with DEAR
927.409(h). The Contractor shall use instead the Rights in Data--Facilities clause
at DEAR 970.5204-82 in subcontracts, including subcontracts for related support
services, involving the design or operation of any plants or facilities or
specially designed equipment for such plants or facilities that are managed or
operated under its contract with DOE.
(2) It is the responsibility of the Contractor to obtain from its subcontractors
technical data and computer software and rights therein, on behalf of the
Government, necessary to fulfill the Contractor's obligations to the Government
with respect to such data. In the event of refusal by a subcontractor to accept a
clause affording the Government such rights, the Contractor shall:
(i) Promptly submit written notice to the Contracting Officer setting forth
reasons or the subcontractor's refusal and other pertinent information which may
expedite disposition of the matter, and
(ii) Not proceed with the subcontract without the written authorization of the
Contracting Officer.
(3) Neither the Contractor nor higher-tier subcontractors shall use their power to
award subcontracts as economic leverage to acquire rights in a subcontractor's
limited rights data and
restricted computer software for their private use.
(g) Rights in Limited Rights Data.
Except as may be otherwise specified in this Contract as data which are not
subject to this paragraph, the Contractor agrees to and does hereby grant to the
Government an irrevocable nonexclusive, paid-up license by or for the Government,
in any limited rights data of the Contractor specifically used in the performance
of this Contract, provided, however, that to the extent that any limited rights
data when furnished or delivered is specifically identified by the Contractor at
the time of initial delivery to the Government or a representative of the
Government, such data shall not be used within or outside the Government except as
provided in the "Limited Rights Notice" set forth below. All such limited rights
data shall be marked with the following "Limited Rights Notice:"
Limited Rights Notice
These data contain "limited rights data," furnished under Contract No.
______________ with the United States Department of Energy which may be duplicated
and used by the Government with the
express limitations that the "limited rights data" may not be disclosed outside
the Government or be used for purposes of manufacture without prior permission of
the Contractor, except that further disclosure or use may be made solely for the
following
purposes:
(a) Use (except for manufacture) by support services contractors within the scope
of their contracts;
(b) This "limited rights data" may be disclosed for evaluation purposes under the
restriction that the "limited rights data" be retained in confidence and not be
further disclosed;
(c) This "limited rights data" may be disclosed to other contractors participating
in the Government's program of which this Contract is a part for information or
use (except for manufacture) in connection with the work performed under their
contracts and under the restriction that the "limited rights data" be retained in
confidence and not be further disclosed;
(d) This "limited rights data" may be used by the Government or others on its
behalf for emergency repair or overhaul work under the restriction that the
"limited rights data" be retained in confidence and not be further disclosed; and
(e) Release to a foreign government, or instrumentality thereof, as the interests
of the United States Government may require, for information or evaluation, or for
emergency repair or overhaul work by such government.
This Notice shall be marked on any reproduction of this data in
whole or in part.
(End of Notice)
(h) Rights in Restricted Computer Software.
(1) Except as may be otherwise specified in this Contract as data which are not
subject to this paragraph, the Contractor agrees to and does hereby grant to the
Government an irrevocable, nonexclusive, paid-up, license by or for the
Government, in any restricted computer software of the Contractor specifically
used in the performance of this Contract; provided, however, that to the extent
that any restricted computer software when furnished or delivered is specifically
identified by the Contractor at the time of initial delivery to the Government or
a representative of the Government, such data shall not be used within or outside
the Government except as provided in the "Restricted Rights Notice" set forth
below. All such restricted computer software shall be marked with the following
"Restricted Rights Notice:"
Restricted Rights Notice--Long Form
(a) This computer software is submitted with restricted rights under Department of
Energy Contract No. ______________ . It may not be used, reproduced, or disclosed
by the Government except as provided in paragraph (b) of this notice.
(b) This computer software may be:
(1) Used or copied for use in or with the computer or computers for which it was
acquired, including use at any Government installation to which such computer or
computers may be transferred;
(2) Used, copied for use, in a backup or replacement computer if any computer for
which it was acquired is inoperative or is replaced;
(3) Reproduced for safekeeping (archives) or backup purposes;
(4) Modified, adapted, or combined with other computer software, provided that
only the portions of the derivative software consisting of the restricted computer
software are to be made
subject to the same restricted rights; and
(5) Disclosed to and reproduced for use by contractors under a service contract
(of the type defined in FAR 37.101) in accordance with subparagraphs (b)(1)
through (4) of this Notice, provided the Government makes such disclosure or
reproduction subject to these
restricted rights.
(c) Notwithstanding the foregoing, if this computer software has been published
under copyright, it is licensed to the Government, without disclosure
prohibitions, with the rights set forth in the restricted rights notice above.
(d) This Notice shall be marked on any reproduction of this computer software, in
whole or in part.
(End of Notice)
(2) Where it is impractical to include the Restricted Rights Notice on restricted
computer software, the following short-form Notice may be used in lieu thereof:
Restricted Rights Notice--Short Form
Use, reproduction, or disclosure is subject to restrictions set forth in the Long
Form Notice of DOE Contract No. ______________ with (name of Contractor).
(End of Notice)
(3) If the software is embedded, or if it is commercially impractical to mark it
with human readable text, then the symbol R and the clause date (mo/yr) in
brackets or a box, a [R-mo/yr], may be used. This will be read to mean restricted
computer software, subject to the rights of the Government as described in the
Long Form Notice, in effect as of the date indicated next to the symbol. The
symbol shall not be used to mark human readable material. In the event this
Contract contains any variation to the rights in the Long Form Notice, then the
contract number must also be cited.
(4) If restricted computer software is delivered with the copyright notice of 17
U.S.C. 401, the software will be presumed to be published copyrighted computer
software licensed to the Government without disclosure prohibitions and with
unlimited rights, unless the Contractor includes the following statement with such
copyright notice "Unpublished-rights reserved under the Copyright Laws of the
United States."
(i) Relationship to patents.
Nothing contained in this clause creates or is intended to imply a license to the
Government in any patent or is intended to be construed as affecting the scope of
any licenses or other rights otherwise granted to the Government under any patent.
(End of Clause)
Alternate I (Feb. 1998): In accordance with 970.2706(g), insert the phrase "and
except Restricted Data in category C-24, 10 CFR part 725, in which DOE has
reserved the right to receive reasonable compensation for the use of its
inventions and discoveries, including related data and technology" after "laser
isotope separation" and before the comma in paragraph (b)(2)(ii) of the clause at
970.5204-83, as appropriate.
(End of Alternate)
[63 FR 10499, Mar. 4, 1998]
970.5204-84 Waiver of limitations on severance payments to foreign nationals.
As prescribed in subpart 970.25, insert the following solicitation provision, or
its alternate 1, clause:
WAIVER OF LIMITATIONS ON SEVERANCE PAYMENTS TO
FOREIGN NATIONALS (DEC. 1997).
Pursuant to Department of Energy Acquisition Regulation (DEAR) subpart 970.25, the
cost allowability limitations in (DEAR) subpart 970.3102-2(i)(iv) and (v) are
waived for this contract.
Alternate 1 (DEC. 1997).
Substitute the following paragraph for the foregoing solicitation provision when
the waiver of limitations to severance payments for foreign nationals has not been
predetermined by the Department.
Pursuant to Department of Energy Acquisition Regulation (DEAR) subpart 970.25, the
Department will consider waiving the cost allowability limitations in (DEAR) 48
CFR 970.3102-2(i)(iv) and (v) for this contract.
[63 FR 5272, Feb. 2, 1998]
970.5204-85 Reduction or suspension of advance, partial, or progress payments
upon finding of substantial evidence of fraud.
As prescribed in 48 CFR 970.3272, insert the following clause:
REDUCTION OR SUSPENSION OF ADVANCE, PARTIAL, OR PROGRESS PAYMENTS (DEC. 1997)
(a) The contracting officer may reduce or suspend further advance, partial, or
progress payments to the contractor upon a written determination by the Secretary
that substantial evidence exists that the contractor's request for advance,
partial, or progress payment is based on fraud.
(b) The contractor shall be afforded a reasonable opportunity to respond in writing.
[63 FR 5272, Feb. 2, 1998]
970.5204-86 Conditional payment of fee, profit, or incentives.
As prescribed in 48 CFR 970.15404-4-11(b), insert the following clause:
Conditional Payment of Fee, Profit, Or Incentives (April 1999) In order for the Contractor to receive all otherwise earned fee, fixed fee, profit, or share of cost savings under the contract in an evaluation period, the Contractor must meet the minimum requirements in paragraphs (a) and (b) of this clause and if Alternate I is applicable (a) through (d) of this clause. If the Contractor does not meet the minimum requirements, the DOE Operations/Field Office Manager or designee may make a unilateral determination to reduce the evaluation period's otherwise earned fee, fixed fee, profit or share of cost savings as described in the following paragraphs of this clause. (a) Minimum requirements for Environment, Safety & Health (ES&H) Program. The Contractor shall develop, obtain DOE approval of, and implement a Safety Management System in accordance with the provisions of the clause entitled, ``Integration of Environment, Safety and Health into Work Planning and Execution,'' if included in the contract, or as otherwise agreed to with the Contracting Officer. The minimal performance requirements of the system will be set forth in the approved Safety Management System, or similar document. If the Contractor fails to obtain approval of the Safety Management System or fails to achieve the minimum performance requirements of the system during the evaluation period, the DOE Operations/Field Office Manager or designee, at his/her sole discretion, may reduce any otherwise earned fees, fixed fee, profit or share of cost savings for the evaluation period by an amount up to the amount earned. (b) Minimum requirements for catastrophic event. If, in the performance of this contract, there is a catastrophic event (such as a fatality, or a serious workplace-related injury or illness to one or more Federal, contractor, or subcontractor employees or the general public, loss of control over classified or special nuclear material, or significant damage to the environment), the DOE Operations/Field Office Manager or designee may reduce any otherwise earned fee for the evaluation period by an amount up to the amount earned. In determining any diminution of fee, fixed fee, profit, or share of cost savings resulting from a catastrophic event, the DOE Operations/Field Office Manager or designee will consider whether willful misconduct and/or negligence contributed to the occurrence and will take into consideration any mitigating circumstances presented by the contractor or other sources. Alternate I: Add the following paragraphs (c) and (d) in contracts awarded on a cost-plus-award-fee, incentive fee or multiple fee basis: (c) Minimum requirements for specified level of performance. (1) At a minimum the Contractor must perform the following: (i) The requirements with specific incentives at the level of performance set forth in the Statement of Work, Work Authorization Directive, or similar document unless an otherwise minimal level of performance has been established in the specific incentive; (ii) All of the performance requirements directly related to requirements specifically incentivized at a level of performance such that the overall performance of these related requirements is at an acceptable level; and (iii) All other requirements at a level of performance such that the total performance of the contract is not jeopardized. (2) The evaluation of the Contractor's achievement of the level of performance shall be unilaterally determined by the Contracting Officer. To the extent that the Contractor fails to achieve the minimum performance levels specified in the Statement of Work, Work Authorization Directive, or similar document, during the evaluation period, the DOE Operations/Field Office Manager, or designee, may reduce any otherwise earned fee, fixed fee, profit, or shared net savings for the evaluation period. Such reduction shall not result in the total of earned fee, fixed fee, profit, or shared net savings being less than 25% of the total available fee amount. Such 25% shall include base fee, if any. (d) Minimum requirements for cost performance. (1) Requirements incentivized by other than cost incentives must be performed within their specified cost constraint and must not adversely impact the costs of performing unrelated activities. (2) The performance of requirements with a specific cost incentive must not adversely impact the costs of performing unrelated requirements. (3) The Contractor's performance within the stipulated cost performance levels for the evaluation period shall be determined by the Contracting Officer. To the extent the Contractor fails to achieve the stipulated cost performance levels, the DOE Operations/ Field Office Manager, or designee, at his/her sole discretion, may reduce in whole or in part any otherwise earned fee, fixed fee, profit, or shared net savings for the evaluation period. Such reduction shall not result in the total of earned fee, fixed fee, profit or shared net savings being less than 25% of the total available fee amount. Such 25% shall include base fee, if any.
[64 FR 12219, March 11, 1999]
970.5204-87 Cost reduction.
As prescribed in 48 CFR 970.15404-4-11(c), insert the following clause: Cost Reduction (April 1999) (a) General. It is the Department of Energy's (DOE's) intent to have its facilities and laboratories operated in an efficient and effective manner. To this end, the Contractor shall assess its operations and identify areas where cost reductions would bring cost efficiency to operations without adversely affecting the level of performance required by the contract. The Contractor, to the maximum extent practical, shall identify areas where cost reductions may be effected, and develop and submit Cost Reduction Proposals (CRPs) to the Contracting Officer. If accepted, the Contractor may share in any shared net savings from accepted CRPs in accordance with paragraph (g) of this clause. (b) Definitions. Administrative cost is the contractor cost of developing and administering the CRP. Design, process, or method change is a change to a design, process, or method which has established cost, technical and schedule baseline, is defined, and is subject to a formal control procedure. Such a change must be innovative, initiated by the contractor, and applied to a specific project or program. Development cost is the Contractor cost of up-front planning, engineering, prototyping, and testing of a design, process, or method. DOE cost is the Government cost incurred implementing and validating the CRP. Implementation cost is the Contractor cost of tooling, facilities, documentation, etc., required to effect a design, process, or method change once it has been tested and approved. Net Savings means a reduction in the total amount (to include all related costs and fee) of performing the effort where the savings revert to DOE control and may be available for deobligation. Such savings may result from a specific cost reduction effort which is negotiated on a cost-plus-incentive-fee, fixed-price incentive, or firm-fixed-price basis, or may result directly from a design, process, or method change. They may also be savings resulting from formal or informal direction given by DOE or from changes in the mission, work scope, or routine reorganization of the Contractor due to changes in the budget. Shared Net Savings are those net savings which result from: (1) A specific cost reduction effort which is negotiated on a cost-plus-incentive-fee or fixed-price incentive basis, and is the difference between the negotiated target cost of performing an effort as negotiated and the actual allowable cost of performing that effort or (2) A design, process, or method change, which occurs in the fiscal year in which the change is accepted and the subsequent fiscal year, and is the difference between the estimated cost of performing an effort as originally planned and the actual allowable cost of performing that same effort utilizing a revised plan intended to reduce costs along with any Contractor development costs, implementation costs, administrative costs, and DOE costs associated with the revised plan. Administrative costs and DOE costs are only included at the discretion of the Contracting Officer. Savings resulting from formal or informal direction given by the DOE or changes in the mission, work scope, or routine reorganization of the Contractor due to changes in the budget are not to be considered as shared net savings for purposes of this clause and do not qualify for incentive sharing. (c) Procedure for submission of CRPs. (1) CRPs for the establishment of cost-plus-incentive-fee, fixed-price incentive, or firm-fixed-price efforts or for design, process, or methods changes submitted by the Contractor shall contain, at a minimum, the following: (i) Current Method (Baseline)--A verifiable description of the current scope of work, cost, and schedule to be impacted by the initiative; and supporting documentation. (ii) New Method (New Proposed Baseline)--A verifiable description of the new scope of work, cost, and schedule, how the initiative will be accomplished; and supporting documentation. (iii) Feasibility Assessment--A description and evaluation of the proposed initiative and benefits, risks, and impacts of implementation. This evaluation shall include an assessment of the difference between the current method (baseline) and proposed new method including all related costs. (2) In addition, CRPs for the establishment of cost-plus- incentive-fee, fixed-price incentive, or firm-fixed-price efforts shall contain, at a minimum, the following: (i) The proposed contractual arrangement and the justification for its use; and (ii) A detailed cost/price estimate and supporting rationale. If the approach is proposed on an incentive basis, minimum and maximum cost estimates should be included along with any proposed sharing arrangements. (d) Evaluation and Decision. All CRPs must be submitted to and approved by the Contracting Officer. Included in the information provided by the CRP must be a discussion of the extent the proposed cost reduction effort may: (1) Pose a risk to the health and safety of workers, the community, or to the environment; (2) Result in a waiver or deviation from DOE requirements, such as DOE Orders and Joint oversight agreements; (3) Require a change in other contractual agreements; (4) Result in significant organizational and personnel impacts; (5) Create a negative impact on the cost, schedule, or scope of work in another area; (6) Pose a potential negative impact on the credibility of the Contractor or the DOE; and (7) Impact successful and timely completion of any of the work in the cost, technical, and schedule baseline. (e) Acceptance or Rejection of CRPs. Acceptance or rejection of a CRP is a unilateral determination made by the Contracting Officer. The Contracting Officer will notify the Contractor that a CRP has been accepted, rejected, or deferred within (Insert Number) days of receipt. The only CRPs that will be considered for acceptance are those which the Contractor can demonstrate, at a minimum, will: (1) Result in net savings (in the sharing period if a design, process, or method change); (2) Not reappear as costs in subsequent periods; and (3) Not result in any impairment of essential functions. (f) The failure of the Contracting Officer to notify the Contractor of the acceptance, rejection, or deferral of a CRP within the specified time shall not be construed as approval. (g) Adjustment to Original Estimated Cost and Fee. If a CRP is established on a cost-plus-incentive-fee, fixed-price incentive or firm-fixed-price basis, the originally estimated cost and fee for the total effort shall be adjusted to remove the estimated cost and fee amount associated with the CRP effort. (h) Sharing Arrangement. If a CRP is accepted, the Contractor may share in the shared net savings. For a CRP negotiated on a cost- plus-incentive-fee or fixed-price incentive basis, with the specific incentive arrangement (negotiated target costs, target fees, share lines, ceilings, profit, etc.) set forth in the contractual document authorizing the effort, the Contractor's share shall be the actual fee or profit resulting from such an arrangement. For a CRP negotiated as a cost savings incentive resulting from a design, process, or method change, the Contractor's share shall be a percentage, not to exceed 25% of the shared net savings. The specific percentage and sharing period shall be set forth in the contractual document. (i) Validation of Shared Net Savings. The Contracting Officer shall validate actual shared net savings. If actual shared net savings cannot be validated, the contractor will not be entitled to a share of the net shared savings. (j) Relationship to Other Incentives. Only those benefits of an accepted CRP not rewardable under other clauses of this contract shall be rewarded under this clause. (k) Subcontracts. The Contractor may include a clause similar to this clause in any subcontract. In calculating any estimated shared net savings in a CRP under this contract, the Contractor's administration, development, and implementation costs shall include any subcontractor's allowable costs, and any CRP incentive payments to a subcontractor resulting from the acceptance of such CRP. The Contractor may choose any arrangement for subcontractor CRP incentive payments, provided that the payments not reduce the DOE's share of shared net savings.
[64 FR 12219, March 11, 1999] 970.5204-88 Limitation on Fee. As prescribed in 48 CFR 970.15404-4-11(d), insert the following provision:
Limitation on Fee (April 1999)
For the purpose of this solicitation, fee amounts shall not exceed the total available fee allowed by the fee policy at 48 CFR 970.15404-4 or as specifically stated elsewhere in the solicitation. The Government reserves the unilateral right, in the event an offeror's proposal is selected for award, to limit: fixed fee to not exceed an amount established pursuant to 48 CFR 970.15404-4-4; and total available fee to not exceed an amount established pursuant to 48 CFR 970.15404-4-8; or fixed fee or total available fee to an amount as specifically stated elsewhere in the solicitation.
[64 FR 12219, March 11, 1999]
970.5204-89 Requirement for Guarantee of Performance
In accordance with 970.0902(d), insert the following provision in appropriate solicitations.
Requirement for Guarantee of Performance (APR 1999)
The successful proposer is required by other provisions of this solicitation to organize a dedicated corporate entity to carry out the work under the contract to be awarded as a result of this solicitation. The successful proposer will be required, as part of the determination of responsibility of the newly organized, dedicated corporate entity and as a condition of the award of the contract to that entity, to furnish a guarantee of that entity's performance. That guarantee of performance must be satisfactory in all respects to the Department of Energy.
[64 FR 16649 April 6, 1999]
Subpart 970.70.Use of DOE Facilities for Work for Others
970.7000 Mission-oriented solicitation.
Contractors shall be required to promptly advise the DOE contracting officer of
any advance notices of, or solicitations for, requirements which would logically
involve DOE facilities or resources operated or managed by the contractor,
received from other agencies pursuant to FAR 34.005. Management and operating
contracts shall provide that the contractor shall not respond or otherwise propose
to participate in response to the requirements of such solicitations
unless the contractor shall have first obtained the written approval of the DOE
manager of the field activity having cognizance over the contract. Such approval
shall not be given except in compliance with DOE directives and with the
concurrence of the appropriate Senior Program Official.
Subpart 970.71.Management and Operating Contractor Purchasing
[53 FR 24232, June 27, 1988, unless otherwise noted.]
970.7101 General.
(a) The Department of Energy contracts for the management and operation of DOE
facilities, the design and production of nuclear weapons, energy research and
development, and the performance of other services. These management and operating
(M&O) contractors have been selected for their technical and managerial expertise
and are expected to bring to bear these technical and managerial skills to
accomplish the significant Federal mission(s) described in their contracts with,
and work plans approved by, DOE.
(b) Purchasing done by management and operating contractors is one area in which
the particular skills of the contractors will be brought to bear in order to more
readily accomplish the contractors' assigned missions. The contracting procedures
of the contractor's organization, therefore, form the basis for the development of
a purchasing system and methods that will comply with its contract with DOE and
this subpart.
[60 FR 28741 Jun. 2, 1995]
970.7102 DOE responsibility.
(a) In the Department of Energy, overall responsibility for the oversight of the
performance of management and operating contractors, including their purchasing
activities, rests with the cognizant DOE contracting activity and, in particular,
the Head of the Contracting Activity (HCA). Contracting officers are responsible
for management and operating contractors' conformance with this subpart and their
contracts, and for determining whether those purchasing activities provide timely
and effective support to DOE programs.
(b) In carrying out their overall responsibilities, HCAs shall:
(1) Require management and operating contractors to maintain written descriptions
of their individual purchasing systems and methods and further require that, upon
award or extension of the contract, the entire written description be submitted to
the contracting officer for review and acceptance;
(2) Require that any changes to the management and operating contractor's written
description having any substantive impact upon the contractor's purchasing system
and methods be submitted to the contracting officer for review and acceptance
prior to issuance;
(3) Ensure review of individual purchasing actions of certain types or above
stated dollar levels by the contracting officer pursuant to 48 CFR (FAR) 44.2 or
as set forth in the contractor's approved system and methods; and
(4) Ensure that periodic appraisals (e.g. Contractor Purchasing System Review
(CPSR) and Surveillance Review) of the contractor's management of all facets of
the purchasing function are performed by the contracting officer in accordance
with established policies. (See 970.7103).
(c) In performing the reviews required by paragraphs (b) (1) and (2) and the
appraisals of paragraph (b)(4) of this section, HCAs shall assure that contracting
officers determine that the contractors' written systems and methods are
consistent with this subpart and the provisions of their contracts.
[60 FR 28741, Jun. 2, 1995]
970.7103 Contractor purchasing system
The following shall apply to the purchasing systems of management and operating
contractors:
(a) The objective of a management and operating contractor's purchasing system is
to deliver to its customers on a timely basis those best value products and
services necessary to accomplish the purposes of the Government's contract. To
achieve this objective, contractors are expected to use their experience,
expertise and initiative consistent with this subpart.
(b) The purchasing systems and methods used by management and operating
contractors shall be well-defined, consistently applied, and shall follow
purchasing practices appropriate for the requirement and dollar value of the
purchase. It is anticipated that purchasing practices and procedures will vary
among contractors and according to the type and kinds of purchases to be made.
(c) Contractor purchases are not Federal procurements, and are not directly
subject to the Federal Acquisition Regulations in 48 CFR. Nonetheless, certain
Federal laws, Executive Orders, and regulations may affect contractor purchasing,
as required by statute, regulation, or contract terms and conditions.
(d) Contractor purchasing systems shall identify and apply the best in commercial
purchasing practices and procedures (although nothing precludes the adoption of
Federal procurement practices and procedures) to achieve system objectives. Where
specific requirements do not otherwise apply, the contractor purchasing system
shall provide for appropriate measures to ensure the:
(1) Acquisition of quality products and services at fair and reasonable prices;
(2) Use of capable and reliable subcontractors who either (i) Have track records
of successful past performance, or (ii) Can demonstrate a current superior ability
to perform;
(3) Minimization of acquisition lead-time and administrative costs of purchasing;
(4) Use of effective competitive techniques;
(5) Reduction of performance risks associated with subcontractors, and
facilitation of quality relationships which can include techniques such as
partnering agreements, ombudsmen, and alternative disputes procedures;
(6) Use of self-assessment and benchmarking techniques to support continuous
improvement in purchasing;
(7) Maintenance of the highest professional and ethical standards; and
(8) Maintenance of file documentation appropriate to the value of the purchase and
which is adequate to establish the propriety of the transaction and the price paid.
[53 FR 24232, June 27, 1988; 54 FR 1288, Jan. 12, 1989, 58 FR 32306, Jun. 9, 1993;
60 FR 28741, Jun 2, 1995]
970.7104 [Reserved]
[60 FR 18032, Apr. 10, 1995; 60 FR 22302, May 5, 1995; 60 FR 30006, Jun. 7, 1995;
60 FR 49518, Sept. 26, 1995]
970.7105 Purchasing from contractor-affiliated sources.
(a) A management and operating contractor may purchase from sources affiliated with the contractor (any division, subsidiary, or affiliate of the contractor or
its parent company) in the same manner as from other sources, provided:
(1) The management and operating contractor's purchasing function is independent
of the proposed contractor-affiliated source;
(2) The same terms and conditions would apply if the purchase were from a third party;
(3) Award is made in accordance with policies and procedures designed to permit
effective competition which have been approved by the contracting officer. (This
requirement for competition shall not preclude acquisition of technical services
from contractor-affiliated entities where those entities have a special expertise,
and the basis therefor is documented.); and
(4) The award is legally enforceable where the entities are separately incorporated.
(b) Subcontracts for performance of contract work itself (as distinguished from
the purchase of supplies and services needed in connection with the performance of
work) require DOE authorization and may involve an adjustment of the contractor's
fee, if any. If the management and operating contractor seeks authorization to
have some part of the contract work performed by a contractor-affiliated source,
and that contractor's performance of that work was a factor in the negotiated fee,
DOE approval would normally require:
(1) That the contractor-affiliated source perform such work without fee or profit,
or
(2) An equitable downward adjustment to the management and operating contractor's
fee, if any.
(c) Determination on cost of money allowance as prescribed at FAR 31.205-10 shall
be treated as follows:
(1) When a purchase from a contractor-affiliated source results from competition
and is in accord with provisions and conditions of paragraphs (a)(1) through
(a)(4) of this section, the contractor-affiliated source may include cost of money
as an allowable element of the costs of its goods or services supplied to the
contractor; provided:
(i) The purchase is based on cost as set forth in 970.3102-15 and
(ii) The cost of money amount is computed in accordance with FAR 31.205-10 and
related procedures (see 970.30).
(2) When a purchase from a contractor-affiliated source is made non-competitively,
cost of money shall not be considered an allowable element of the cost of the
contractor-affiliated source purchase.
970.7108 Review and approval.
(a) The Heads of the Contracting Activities shall establish thresholds by
subcontract type and dollar level for the review and approval of proposed
subcontracting actions by each management and operating contractor under their
cognizance. Such thresholds may not exceed the authority delegated to the Head of
the Contracting Activity by the Procurement Executive. In establishing these
review and approval thresholds, the Heads of the Contracting Activities should
consider such factors as the following:
(1) The nature of work to be performed under the management and operating
contract;
(2) The size, experience, ability, reliability, and organization of the management
and operating contractor's purchasing function;
(3) The internal controls, procedures, and organizational stature of the
management and operating contractor's purchasing function; and
(4) Policies with respect to such reviews and approvals established by the
Procurement Executive.
(b) Prior approval shall be required for the subcontracting of any work a
contractor is obligated to perform under a contract entered into under section 41,
entitled Production of Special Nuclear Material, of the Atomic Energy Act of 1954,
as amended.
(c) The Heads of the Contracting Activities shall take such action as may be
required to insure compliance with the procedure for purchasing from
contractor-affiliated sources or the purchase of specific items, or classes of
items, which by the terms of the contract may require DOE approval.
(d) The Heads of the Contracting Activities may raise or lower the review and approval thresholds established pursuant to paragraph (a) of this section at any time. Such action may be considered upon the periodic review of the contractor's purchasing system, but in any case those adjusted thresholds may not
exceed the approval authority delegated to the Head of the Contracting Activity by
the Procurement Executive.
(e) Department of Energy approvals of specific proposed purchases pursuant to this
subpart shall communicate that such approval does not relieve the management and
operating contractor of any obligation under its prime contract with DOE; is given
without prejudice to any rights or claims of the Government thereunder; creates no
obligation on the part of the Government to the subcontractor, and is not a
predetermination of the allowability of costs to be incurred under the subcontract.
(f) Contracting officers shall assure that management and operating contractors
establish and maintain subcontract files which contain those documents essential
to present an accurate and adequate record of all purchasing transactions.
(g) Contracting officers shall assure that management and operating contractors
document purchases in writing, setting forth the information and data used in
determining that the purchases are in the best interest of the Government. The
scope and detail of this documentation shall be consistent with the nature, dollar
value, and complexity of the purchase.
(h) The Heads of the Contracting Activities will assure that the contracting
activity establishes and maintains files of the documents associated with the
review and approval of subcontract actions subject to DOE review and approval.
Those files shall include, among other necessary documentation, an appraisal of
the proposed action by the contracting activity and a copy of the approving or
disapproving document forwarded to the management and operating contractor,
containing a listing of any deficiencies, a listing of any required corrective
actions, any suggestions, or other relevant comments.
970.7109 Advance notification.
(a) Pursuant to section 304(b) of the Federal Property and Administrative Service
Act of 1949, as amended (41 U.S.C. 254(b)) contracting officers shall assure that
the written description of the management and operating contractor's purchasing
system and methods provides for advance notice to the DOE contracting officer of
the proposed award of the following specified types of subcontracts, except as
stated in paragraph (b) of this section:
(1) Cost reimbursement-type subcontracts of any award value; and (2) Fixed
price-type subcontracts which exceed $25,000; and
(3) Purchases from contractor-affiliated sources over a value established by the HCA.
(b) Pursuant to section 602(d)13 of the Act (40 U.S.C. 474(13)) referred to in
paragraph (a) of this section, the advance notification requirement for the types
of purchases listed in paragraphs (a) (1) and (2) of this section shall not apply
to subcontracts relating to functions derived from the Atomic Energy Commission.
(c) The advance notice shall contain, as a minimum, a description of work,
estimated cost, type of contract or reimbursement provisions, and extent of
competition, or justification for a noncompetitive purchase procurement. The
contracting officer may at any time request additional information that must be
furnished promptly and prior to award of the subcontract.
970.7110 Nuclear material transfers.
(a) Management and operating contractors, in preparing contracts or other
agreements in which monetary payments or credits depend on the quantity and
quality of nuclear material, shall be required to assure that each such contract
or agreement contains a:
(1) Description of the material to be transferred;
(2) Provision specifying the method by which the quantities are to be measured and
reported;
(3) Provision specifying the procedures to be used in resolving any differences
arising as a result of such measurements;
(4) Provision for the use of an independent third party as an umpire to settle
unresolved differences in the analytical samples; and
(5) Provision specifying in detail which party shall bear the costs of resolving a
difference and what constitutes such costs.
(b) The provisions providing for resolution of measurement differences must be
such that resolution is always accomplished, while at the same time minimizing any
advantage one party may have over the other.
Subpart 970.72.Facilities Management.
970.7201 Policy.
Contractors managing DOE facilities shall be required to comply with the DOE Directives applicable to
facilities management. To accomplish this, all management and operating contracts
which include contractor management of a DOE-owned facility shall contain the
clause at 970.5204-60, Facilities management, specifying the Directives applicable
to the contractual situation at the DOE facility involved.
[58 FR 34924, Jun. 30, 1993]
Subpart 970.73.Technology Transfer.
970.7310 General.
This subpart prescribes policies and procedures for implementing the National
Competitiveness Technology Transfer Act of 1989. The Act required that technology
transfer be established as a mission of each Government-owned laboratory operated
under contract by a non-Federal entity. The National Defense Authorization Act for
Fiscal Year 1994 expanded the definition of laboratory to include weapon
production facilities that are operated for national security
purposes and are engaged in the production, maintenance, testing, or dismantlement
of a nuclear weapon or its components.
970.7320 Policy.
All new awards for or extensions of existing DOE laboratory or weapon production
facility management and operating contracts shall have technology transfer,
including authorization to award Cooperative Research and Development Agreements
(CRADAs), as a laboratory or facility mission under Section 11(a)(1) of the
Stevenson-Wydler Technology Innovation Act of 1980, as amended. A management and
operating contractor for a facility not deemed to be a laboratory or weapon
production facility may be authorized on a case-by-case basis to support the DOE
technology transfer mission including, but not limited to, participating in CRADAs
awarded by DOE laboratories and weapon production facilities.
970.7330 Contract clause.
(a) The contracting officer shall insert the clause at 970.5204-40, Technology
transfer mission, in each solicitation for a new or an extension of an existing
laboratory or weapon production facility management and operating contract.
(b) If the contractor is a nonprofit organization or small business eligible under
35 U.S.C. 200 et seq., to receive title to any inventions under the contract and
proposes to fund at private expense the maintaining, licensing, and marketing of
the inventions, the contracting officer shall use the basic clause with its
Alternate I.
(c) The contracting officer may substitute the Alternate II phrase "weapon
production facility" wherever the word "laboratory" appears in the clause where
the facility is operated for national security purposes and engaged in the
production, maintenance, testing, or dismantlement of a nuclear weapon or its components.
[60 FR 66510, Dec. 22, 1995]
970-1
.