House Purchases on Contracts

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					                                                   TITLE 41—PUBLIC CONTRACTS




Chap.                                                                       Sec.   Sec.
1.         General Provisions .............................                   1    11.        No contracts or purchases unless authorized
2.         Termination of War Contracts .........                           101                 or under adequate appropriation; report to
3.         Procurement of Supplies and Serv-                                                    the Congress.
                                                                                   11a.       Contracts for fuel by Secretary of the Army
             ices by Armed Services [Re-
                                                                                                without regard to current fiscal year.
             pealed] ................................................       151    12.        No contract to exceed appropriation.
4.         Procurement Procedures ..................                        201    13.        Contracts limited to one year.
5.         Judicial Review of Administrative                                       13a.       Repealed.
             Decisions ............................................         321    14.        Restriction on purchases of land.
6.         Service Contract Labor Standards                                 351    15.        Transfers of contracts; assignments; assignee
7.         Office of Federal Procurement Pol-                                                   not subject to reduction or setoff.
             icy ........................................................   401    16 to 21. Repealed or Omitted.
                                                                                   22.        Interest of Member of Congress.
8.         Federal Grants and Cooperative                                          23.        Orders or contracts for material placed with
             Agreements [Repealed, See Chap-                                                    Government-owned establishments deemed
             ter 63 of Title 31, Money and Fi-                                                  obligations.
             nance] .................................................       501    24.        Contracts for transportation of moneys, bul-
9.         Contract Disputes ...............................                601                 lion, coin, and securities.
10.        Drug-Free Workplace .........................                    701    24a to 34. Omitted or Repealed.
                                                                                   35.        Contracts for materials, etc., exceeding
        CHAPTER 1—GENERAL PROVISIONS                                                            $10,000; representations and stipulations.
                                                                                   36.        Liability for contract breach; cancellation;
Sec.                                                                                            completion by Government agency; employ-
1 to 4a.   Repealed.                                                                            ee’s wages.
5.         Advertisements for proposals for purchases                              37.        Distribution of list of persons breaching con-
             and contracts for supplies or services for                                         tract; future contracts prohibited.
             Government departments; application to                                38.        Administration of Walsh-Healey provisions;
             Government sales and contracts to sell and                                         officers and employees; appointment; inves-
             to Government corporations.                                                        tigations; rules and regulations.
5a.        Definitions.                                                            39.        Hearings on Walsh-Healey provisions by Sec-
6.         Repealed.                                                                            retary of Labor; witness fees; failure to
6a.        Advertisements for proposals for purchases                                           obey order; punishment.
             and contracts for supplies or services for                            40.        Exceptions from Walsh-Healey provisions;
             Government departments; limited to par-                                            modification of contracts; variations; over-
             ticular agencies under specified circum-                                           time; suspension of representations and
             stances.                                                                           stipulations.
6a–1.      Architect of the Capitol, exception from ad-                            41.        ‘‘Person’’ defined in Walsh-Healey provisions.
             vertisement requirements.                                             42.        Effect of Walsh-Healey provisions on other
6a–2.      Architect of the Capitol, authority for per-                                         laws.
             sonal services contracts with legal entities.                         43.        Walsh-Healey provisions not applicable to
6a–3.      House of Representatives, exception from ad-                                         certain contracts.
             vertisement requirements.                                             43a.       Administrative procedure provisions.
6a–4.      Director of the Congressional Budget Office,                            43b.       Manufacturers and regular dealers.
             exception from advertisement require-                                 44.        Separability of Walsh-Healey provisions.
             ments.                                                                45.        Effective date of Walsh-Healey provisions; ex-
6b.        Miscellaneous exceptions from advertisement                                          ception as to representations with respect
             requirements.                                                                      to minimum wages.
6c to 6ll. Repealed or Omitted.                                                    46.        Committee for Purchase From People Who
6mm.       Transferred.                                                                         Are Blind or Severely Disabled.
7 to 7d. Repealed.                                                                 47.        Duties and powers of the Committee.
8.         Opening bids.                                                           48.        Procurement requirements for the Govern-
9, 10.     Repealed or Omitted.                                                                 ment; nonapplication to prison-made prod-
10a.       American materials required for public use.                                          ucts.
10b.       Contracts for public works; specification for                           48a.       Audit.
             use of American materials; blacklisting                               48b.       Definitions.
             contractors violating requirements.                                   48c.       Authorization of appropriations.
10b–1.     Omitted.                                                                49.        Defense employment; honorable discharge
10b–2.     Limitation on authority to waive Buy Amer-                                           from land and naval forces as equivalent to
             ican Act requirement.                                                              birth certificate.
10b–3.     Annual report relating to Buy American Act.                             50.        ‘‘Defense contractor’’ defined.
10c.       Definition of terms used in sections 10a, 10b,                          51.        Short title.
             and 10c.                                                              52.        Definitions.
10d.       Clarification of Congressional intent regard-                           53.        Prohibited conduct.
             ing sections 10a and 10b(a).                                          54.        Criminal penalties.


        Page 1
§§ 1 to 4a                                  TITLE 41—PUBLIC CONTRACTS                                                  Page 2

Sec.                                                              § 602(a)(1), formerly title V, § 502(a)(1), 63 Stat. 399, eff.
55.          Civil actions.                                       July 1, 1949, renumbered by act Sept. 5, 1950, ch. 849,
56.          Administrative offsets.                              § 6(a), (b), 64 Stat. 583.
57.          Contractor responsibilities.
58.          Inspection authority.                                                       CODIFICATION
                  EXECUTIVE ORDER NO. 10925                         R.S. § 3709 derived from act Mar. 2, 1861, ch. 84, § 10, 12
  Ex. Ord. No. 10925, Mar. 6, 1961, 26 F.R. 1977, which re-       Stat. 220.
lated to nondiscrimination provisions in Government                                      AMENDMENTS
contracts and established the President’s Committee
on Equal Employment Opportunity, was revoked by                      1983—Pub. L. 98–191 substituted ‘‘$25,000’’ for
section 403 of Ex. Ord. No. 11246, Sept. 24, 1965, 30 F.R.        ‘‘$10,000’’.
12319, set out as a note under section 2000e of Title 42,            1974—Pub. L. 93–356 substituted ‘‘$10,000’’ for ‘‘$2,500’’.
The Public Health and Welfare.                                       1958—Pub. L. 85–800 substituted ‘‘$2,500’’ for ‘‘$500’’.
                                                                     1949—Act June 30, 1949, substituted ‘‘$500’’ for ‘‘$100’’.
§§ 1 to 4a. Repealed. Oct. 21, 1941, ch. 452, 55 Stat.               1946—Act Aug. 2, 1946, among other changes, inserted
     743                                                          cls. (1), (3), and (4), and made section applicable to sales
                                                                  and contracts of sale by the Government, except in cer-
  Section 1, R.S. § 512; act Feb. 4, 1929, ch. 146, §§ 1, 3, 45   tain cases.
Stat. 1147, establish a return office for filing returns of
contracts made by Secretaries of War, Navy and Inte-                        EFFECTIVE DATE OF 1949 AMENDMENT
rior and appointed a clerk for this office.                         Amendment by act June 30, 1949, effective July 1,
  Section 2, R.S. § 513, required clerk to file all returns.
  Section 3, R.S. § 514, required clerk to keep an index          1949, see section 605, formerly section 505, of act June
book.                                                             30, 1949, ch. 288, 63 Stat. 403; renumbered by act Sept. 5,
  Section 4, R.S. § 515, required clerk to provide cer-           1950, ch. 849, § 6(a), (b), 64 Stat. 583.
tified copies of any returns for an established fee.                              EXEMPTION OF FUNCTIONS
  Section 4a, act Feb. 4, 1929, ch. 146, §§ 1, 3, 45 Stat.
1147, transferred returns office to General Accounting              Functions authorized by Foreign Assistance Act of
Office and imposed duties relating thereto upon Comp-             1961, as amended, as exempt, see Ex. Ord. No. 11223, May
troller General.                                                  12, 1965, 30 F.R. 6635, set out as a note under section 2393
                                                                  of Title 22, Foreign Relations and Intercourse.
§ 5. Advertisements for proposals for purchases
     and contracts for supplies or services for                     SECTION INAPPLICABLE TO ARMED SERVICES AND
     Government departments; application to                        NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
     Government sales and contracts to sell and                     Section inapplicable to procurement or sale of prop-
     to Government corporations                                   erty or services by Armed Services and National Aero-
                                                                  nautics and Space Administration, see section 2314 of
  Unless otherwise provided in the appropriation                  Title 10, Armed Forces.
concerned or other law, purchases and contracts
for supplies or services for the Government may                                    REPEAL OF EXEMPTIONS
be made or entered into only after advertising a                    Section 9(b) of act Aug. 2, 1946, provided: ‘‘Exemp-
sufficient time previously for proposals, except                  tions from section 3709, Revised Statutes [this section],
(1) when the amount involved in any one case                      in other law in amounts of $100 or less are hereby re-
does not exceed $25,000, (2) when the public ex-                  pealed.’’
igencies require the immediate delivery of the
                                                                  § 5a. Definitions
articles or performance of the service, (3) when
only one source of supply is available and the                      The word ‘‘department’’ as used in this Act
Government purchasing or contracting officer                      shall be construed to include independent estab-
shall so certify, or (4) when the services are re-                lishments, other agencies, wholly owned Gov-
quired to be performed by the contractor in per-                  ernment corporations (the transactions of which
son and are (A) of a technical and professional                   corporations shall be subject to the authoriza-
nature or (B) under Government supervision and                    tions and limitations of this Act, except that
paid for on a time basis. Except (1) as authorized                section 5 of this title shall apply to their admin-
by section 1638 1 of Appendix to title 50, (2) when               istrative transactions only), and the govern-
otherwise authorized by law, or (3) when the rea-                 ment of the District of Columbia, but shall not
sonable value involved in any one case does not                   include the Senate, House of Representatives, or
exceed $500, sales and contracts of sale by the                   office of the Architect of the Capitol, or the offi-
Government shall be governed by the require-                      cers or employees thereof. The words ‘‘continen-
ments of this section for advertising.                            tal United States’’ as used herein shall be con-
  In the case of wholly owned Government cor-                     strued to mean the forty-eight States and the
porations, this section shall apply to their ad-                  District of Columbia. The word ‘‘Government’’
ministrative transactions only.                                   shall be construed to include the government of
(R.S. § 3709; Aug. 2, 1946, ch. 744, § 9(a), (c), 60              the District of Columbia. The word ‘‘appropria-
Stat. 809; June 30, 1949, ch. 288, title VI, § 602(f),            tion’’ shall be construed as including funds made
formerly title V, § 502(e), 63 Stat. 403; renum-                  available by legislation under section 9104 of
bered Sept. 5, 1950, ch. 849, §§ 6(a), (b), 8(c), 64              title 31.
Stat. 583, and amended Pub. L. 85–800, § 7, Aug.
                                                                  (Aug. 2, 1946, ch. 744, § 18, 60 Stat. 811.)
28, 1958, 72 Stat. 967; Pub. L. 93–356, § 1, July 25,
1974, 88 Stat. 390; Pub. L. 98–191, § 9(b), Dec. 1,                                  REFERENCES IN TEXT
1983, 97 Stat. 1332.)                                               This Act, referred to in text, means act Aug. 2, 1946,
                     REFERENCES IN TEXT                           ch. 744, 60 Stat. 806. For complete classification of this
                                                                  Act to the Code see Tables.
  Section 1638 of Appendix to title 50, referred to in
text, was repealed by act June 30, 1949, ch. 288, title VI,                              CODIFICATION
                                                                    ‘‘Section 9104 of title 31’’ substituted in text for ‘‘sec-
 1 See   References in Text note below.                           tion 104 of the Government Corporation Control Act,
Page 3                                      TITLE 41—PUBLIC CONTRACTS                                                        § 6a

approved December 6, 1945 [31 U.S.C. 849]’’ on authority            Stat. 1110; June 28, 1941, ch. 259, 55 Stat. 344; Oct.
of Pub. L. 97–258, § 4(b), Sept. 13, 1982, 96 Stat. 1067, the       31, 1951, ch. 654, §§ 1(106)–(108), 3(8), (9), 4(9), 65
first section of which enacted Title 31, Money and Fi-              Stat. 705, 708, 709; Pub. L. 85–75, July 1, 1957, 71
nance.
                                                                    Stat. 251.)
  Section was formerly classified to section 73b–4 of
title 5 prior to the general revision and reenactment of                                   CODIFICATION
Title 5, Government Organization and Employees by
                                                                      Opening par., and subsecs. (a), (f), (h), and (j) of this
Pub. L. 89–554, Sept. 6, 1966 80 Stat. 378.
                                                                    section are from act Oct. 10, 1940, § 2, opening par., and
§ 6. Repealed. Oct. 31, 1951, ch. 654, § 1(98)–(105),               pars. (a), (f), and (j). Remainder of paragraphs of sec-
                                                                    tion 2 were repealed. See 1951 amendment note set out
     65 Stat. 705
                                                                    under this section.
   Section, acts Oct. 10, 1940, ch. 851, § 1, 54 Stat. 1109;          Subsec. (o) of this section, which was from Act May
June 28, 1941, ch. 258, titles II, III, IV, 55 Stat. 281, 289,      13, 1926, ch. 294, § 1, 44 Stat. 547, made section 5 of this
292, 302; June 8, 1942, ch. 396, 56 Stat. 347; July 2, 1942,        title inapplicable to the Architect of the Capitol in the
ch. 472, titles II, III, IV, 56 Stat. 483, 500, 505; June 28,       purchase of supplies and equipment and procurement of
1943, ch. 173, titles I, II, 57 Stat. 236, 243; June 26, 1944,      services when the aggregate amount thereof did not ex-
ch. 277, titles I, II, 58 Stat. 351, 358; June 13, 1945, ch. 189,   ceed $1,000 in any instance and was omitted as super-
59 Stat. 256; July 1, 1946, ch. 530, 60 Stat. 405; June 30,         seded by section 6a–1 of this title.
1947, ch. 166, title II, § 204, 61 Stat. 208; June 30, 1949, ch.      Subsec. (p) of this section, which was from act June
288, title I, §§ 103, 104(a), 63 Stat. 380, which excepted          12, 1917, ch. 27, § 1, 40 Stat. 144, made section 5 of this
from provisions of section 5 of this title a number of              title inapplicable to expenditures not exceeding $50 by
specified Government departments and agencies, when                 the United States Geological Survey and was repealed
purchases or services were not in excess of certain spec-           by act Oct. 31, 1951, ch. 654, § 1(106), 65 Stat. 705.
ified amounts up to $500.                                                                PRIOR PROVISIONS
   Another provision of title III of act July 2, 1942, ch.
472, 56 Stat. 493, which also had been shown as one of                A prior section 6a, acts Jan. 25, 1929, ch. 102, title IV,
the sources of this former section, made an exception               45 Stat. 1136; Apr. 18, 1930, ch. 184, title IV, 46 Stat. 215;
with respect to purchases or services rendered for the              Feb. 23, 1931, ch. 280, title IV, 46 Stat. 1352; July 1, 1932,
Office of the Administrator of Civil Aeronautics, when              ch. 361, title IV, 47 Stat. 520; Mar. 1, 1933, ch. 144, title
the aggregate amount involved did not exceed $100.                  IV, 47 Stat. 1409; Apr. 7, 1934, ch. 104, title IV, 48 Stat.
That provision was not repealed, but, if it did not ex-             568; Mar. 22, 1935, ch. 39, § 1, 49 Stat. 102; May 15, 1936,
pire with that act, which was an appropriation act, it              ch. 405, 49 Stat. 1347; June 16, 1937, ch. 359, title IV, 50
was superseded by section 5 of this title, as amended.              Stat. 298; Apr. 27, 1938, ch. 180, title IV, 52 Stat. 285;
   A prior section 6, acts Feb. 27, 1893, ch. 168, 27 Stat.         June 29, 1939, ch. 249, 53 Stat. 921; June 26, 1940, ch. 428,
485; Mar. 1, 1899, ch. 325, 30 Stat. 957; Mar. 2, 1911, ch.         title I, 54 Stat. 575, excepted Department of Labor from
192, 36 Stat. 975; May 18, 1916, ch. 125, 39 Stat. 126; Mar.        the provisions of section 5 of this title, prior to repeal
1, 1919, ch. 86, 40 Stat. 1262; May 29, 1920, ch. 214, 41 Stat.     by act Oct. 10, 1940, ch. 851, § 4, 54 Stat. 1111.
677; June 12, 1922, ch. 218, 42 Stat. 638; Feb. 13, 1923, ch.                              AMENDMENTS
72, 42 Stat. 1244; Feb. 15, 1934, ch. 13, 48 Stat. 351, related
to exceptions to the requirements of section 5 of this                 1957—Subsec. (o). Pub. L. 85–75 substituted ‘‘$1,000’’
title, prior to repeal by act Oct. 10, 1940, ch. 851, § 4, 54       for ‘‘$500’’.
                                                                       1951—Subsec. (a). Act Oct. 31, 1951, § 3(8), struck out
Stat. 1111. See sections 5, 6a, and 6b of this title.
                                                                    ‘‘to any purchases when the aggregate amount involved
§ 6a. Advertisements for proposals for purchases                    does not exceed $500, nor’’ before ‘‘to any leases’’.
                                                                       Subsec. (b). Act Oct. 31, 1951, § 1(107), repealed subsec.
     and contracts for supplies or services for
                                                                    (b) which related to Botanic Garden.
     Government departments; limited to particu-                       Subsec. (c). Act Oct. 31, 1951, § 1(107), repealed subsec.
     lar agencies under specified circumstances                     (c) which also related to Botanic Garden.
                                                                       Subsec. (d). Act Oct. 31, 1951, § 1(107), repealed subsec.
   Section 5 of this title shall not be construed to                (d) which related to Bureau of the Budget.
apply under any appropriation Act to the follow-                       Subsec. (e). Act Oct. 31, 1951, § 1(107), repealed subsec.
ing departments and independent offices under                       (e) which related to Bureau of Foreign and Domestic
the circumstances specified herein:                                 Commerce.
   (a) American Battle Monuments Commission—                           Subsec. (g). Act Oct. 31, 1951, § 1(107), repealed subsec.
to any leases in foreign countries for office or                    (g) which related to Department of the Interior.
                                                                       Subsec. (h). Act Oct. 31, 1951, § 3(9), struck out ‘‘to any
garage space.                                                       purchase or service when the aggregate amount does
   (b) to (e) Repealed. Oct. 31, 1951, ch. 654,                     not exceed $100, or with respect to articles, materials,
§ 1(107), 65 Stat. 705.                                             or supplies for use outside the United States when the
   (f) The Bureau of Interparliamentary Union                       aggregate amount involved does not exceed $300; or’’
for Promotion of International Arbitration—to                       before ‘‘when the purchase’’.
stenographic reporting services by contract if                         Subsec. (i). Act Oct. 31, 1951, § 1(107), repealed subsec.
deemed necessary.                                                   (i) which related to Federal Communications Commis-
                                                                    sion.
   (g) Repealed. Oct. 31, 1951, ch. 654, § 1(107), 65                  Subsec. (k). Act Oct. 31, 1951, § 1(107), repealed subsec.
Stat. 705.                                                          (k) which related to Medical Department of the Army.
   (h) Department of State—when the purchase                           Subsec. (l). Act Oct. 31, 1951, § 1(107), repealed subsec.
or service relates to the packing of personal and                   (l) which related to Social Security Board.
household effects of Diplomatic, Consular, and                         Subsec. (m). Act Oct. 31, 1951, § 1(107), repealed subsec.
Foreign Service officers and clerks for foreign                     (m) which related to Bureau of Mines.
                                                                       Subsec. (n). Act Oct. 31, 1951, § 1(107), repealed subsec.
shipment.
                                                                    (n) which related to Bureau of Reclamation.
   (i) Repealed. Oct. 31, 1951, ch. 654, § 1(107), 65                  Subsec. (o). Act Oct. 31, 1951, § 4(9), increased the max-
Stat. 705.                                                          imum from $200 to $500.
   (j) The International Committee of Aerial                           1941—Subsec. (m). Act June 28, 1941, reaffirmed provi-
Legal Experts—to stenographic and other serv-                       sion respecting Bureau of Mines.
ice by contract as deemed necessary.                                                          REPEALS
(June 12, 1917, ch. 27, 40 Stat. 144; May 13, 1926,                   Section 1(108) of act Oct. 31, 1951, repealed the proviso
ch. 294, 44 Stat. 547; Oct. 10, 1940, ch. 851, § 2, 54              in act June 28, 1941, cited as a credit to this section,
§ 6a–1                                      TITLE 41—PUBLIC CONTRACTS                                                  Page 4

which excepted expenditures not exceeding $500 by the                1974—Pub. L. 93–356 substituted ‘‘$10,000’’ for ‘‘$2,500’’.
Bureau of Mines from section 5 of this title.
  Section 1(106) of act Oct. 31, 1951, repealed the proviso         § 6a–2. Architect of the Capitol, authority for per-
in act June 12, 1917, cited as a credit to this section,                sonal services contracts with legal entities
which excepted expenditures not exceeding $50 by the
United States Geological Survey from section 5 of this                Notwithstanding any other provision of law,
title.                                                              the Architect of the Capitol is authorized to
  Section 4(a) of act Oct. 10, 1940, provided for repeal of         contract for personal services with any firm,
all prior laws, which are covered by that act and that
                                                                    partnership, corporation, association, or other
any rights or liabilities existing under those repealed
sections or parts of sections shall not be affected by              legal entity in the same manner as he is author-
their repeal.                                                       ized to contract for personal services with indi-
                                                                    viduals under the provisions of section 5 of this
         LEASES FOR FOREIGN SERVICE OFFICES                         title.
  Provisions contained in annual appropriation acts for
the Department of State authorizing the Secretary of                (Pub. L. 96–558, Dec. 19, 1980, 94 Stat. 3263.)
State to enter into leases for Foreign Service offices
and grounds for periods not exceeding ten years with-               § 6a–3. House of Representatives, exception from
out regard to section 5 of this title were made perma-                  advertisement requirements
nent, and are covered by section 2670 of Title 22, For-
eign Relations and Intercourse.
                                                                      Section 5 of this title does not apply to pur-
                                                                    chases and contracts for supplies or services for
          BUREAU OF EMPLOYEES’ COMPENSATION                         any office of the House of Representatives in
   Section 5 of this title not applicable to any purchase           any fiscal year.
or service of the Bureau of Employees’ Compensation
outside continental United States when the aggregate                (Pub. L. 108–7, div. H, title I, § 104, Feb. 20, 2003,
amount involved does not exceed $500 under acts July                117 Stat. 354.)
8, 1947, ch. 210, title II, 61 Stat. 264; June 14, 1948, ch. 465,
title II, 62 Stat. 396; June 29, 1949, ch. 275, title II, 63        § 6a–4. Director of the Congressional Budget Of-
Stat. 284. This Bureau, with its functions, transferred                 fice, exception from advertisement require-
from Federal Security Agency to Department of Labor                     ments
by Reorg. Plan No. 19, of 1950, § 1, eff. May 24, 1950, 15
F.R. 3178, 64 Stat. 1271, set out in the Appendix to Title          (a) Exception
5, Government Organization and Employees.                             The Director of the Congressional Budget Of-
      GOVERNMENT-OWNED FURNITURE REMOVED TO                         fice may enter into agreements or contracts
                 WASHINGTON, D.C.                                   without regard to section 5 of this title.
  Act July 30, 1947, ch. 359, title I, 61 Stat. 594, provided       (b) Effective Date
in part: ‘‘That removal to the seat of government of                  This section shall apply to fiscal year 2003 and
Government-owned or leased furniture, equipment, sup-
plies, and other property and household goods and per-              each fiscal year thereafter.
sonal effects of employees, and costs of restoration of             (Pub. L. 108–7, div. H, title I, § 1102, Feb. 20, 2003,
leased office space when required, may be accomplished              117 Stat. 370.)
without regard to section 3709 of the Revised Statutes
[section 5 of this title]’’.                                        § 6b. Miscellaneous exceptions from advertise-
   SECTION INAPPLICABLE TO ARMED SERVICES AND                           ment requirements
  NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
                                                                    (a) Control of insects, pests, and grass diseases
  Section inapplicable to procurement or sale of prop-
erty or services by Armed Services and National Aero-                 Materials and equipment for the control of in-
nautics and Space Administration, see section 2314 of               cipient or emergency outbreaks of insects, pests,
Title 10, Armed Forces.                                             or grass diseases, including grasshoppers, Mor-
                                                                    mon crickets, and chinch bugs, may be procured
§ 6a–1. Architect of the Capitol, exception from                    with any sums appropriated to carry out the
    advertisement requirements                                      provisions of sections 148 to 148e 1 of title 7 with-
  On and after July 27, 1965, the purchase of sup-                  out regard to the provisions of section 5 of this
plies and equipment and the procurement of                          title, and the transportation thereof may be
services for all branches under the Architect of                    under such conditions and means as shall be de-
the Capitol may be made in the open market                          termined by the Secretary of Agriculture to be
without compliance with section 5 of this title                     most advantageous.
in the manner common among businessmen,                             (b) Omitted
when the aggregate amount of the purchase or
the service does not exceed $25,000 in any in-                      (c) Operations on Menominee Indian Reservation
stance.                                                               All contracts for labor or supplies necessary
(Pub. L. 89–90, July 27, 1965, 79 Stat. 276; Pub. L.                for the carrying on of operations on the Menom-
93–356, § 2, July 25, 1974, 88 Stat. 390; Pub. L.                   inee Indian Reservation pursuant to the Act of
98–191, § 9(c), Dec. 1, 1983, 97 Stat. 1332.)                       March 28, 1908 (35 Stat. 51), as amended, shall be
                                                                    exempt from the requirements of section 5 of
                      PRIOR PROVISIONS
                                                                    this title.
  A prior section 6a–1, acts June 25, 1910, ch. 431, § 23, 36
Stat. 861; May 18, 1916, ch. 125, § 1, 39 Stat. 126; Jan. 12,       (d) Sale of Indian produced forest products
1927, ch. 27, 44 Stat. 936, related to purchase of Indian             The lumber and other forest products pro-
supplies, prior to repeal by act Oct. 10, 1940, ch. 851, § 4,       duced by Indian enterprises from the forests on
54 Stat. 1111.                                                      Indian reservations may be sold under such reg-
                        AMENDMENTS                                  ulations as the Secretary of the Interior may
   1983—Pub.     L.   98–191    substituted     ‘‘$25,000’’   for
‘‘$10,000’’.                                                         1 See   References in Text note below.
Page 5                                    TITLE 41—PUBLIC CONTRACTS                                                 §§ 6c to 6jj

prescribe, without compliance with section 5 of                   52 Stat. 424; Mar. 16, 1939, ch. 11, 53 Stat. 539; June 25,
this title.                                                       1940, ch. 421, 54 Stat. 566, excepted Rural Electrification
                                                                  Administration from provisions of section 5 of this title
(June 24, 1940, ch. 412, 54 Stat. 504; Oct. 10, 1940,             when aggregate amount involved did not exceed $100.
ch. 851, § 3, 54 Stat. 1111.)                                       Section 6d, acts June 22, 1936, ch. 689, 49 Stat. 1605;
                                                                  June 28, 1937, ch. 396, 50 Stat. 344; May 23, 1938, ch. 259,
                   REFERENCES IN TEXT                             52 Stat. 426; Mar. 16, 1939, ch. 11, 53 Stat. 540, excepted
  Sections 148 to 148e of title 7, referred to in subsec.         Social Security Board from provisions of section 5 of
(a), were repealed. Sections 148, 148a, and 148c to 148e          this title when aggregate amount involved did not ex-
were repealed by Pub. L. 106–224, title IV, § 438(a)(6),          ceed $100.
June 20, 2000, 114 Stat. 454, and section 148b was re-              Section 6e, acts May 14, 1937, ch. 180, title I, 50 Stat.
pealed by Act Oct. 10, 1940, ch. 851, § 4, 54 Stat. 1111.         139; Mar. 28, 1938, ch. 55, 52 Stat. 123; May 6, 1939, ch. 115,
  Act of March 28, 1908 (35 Stat. 51), referred to in sub-        title I, 53 Stat. 656; Mar. 25, 1940, ch. 71, title I, 54 Stat.
sec. (c), probably means act Mar. 28, 1908, ch. 111, 35           56, excepted Treasury Department from provisions of
Stat. 51, which is not classified to the Code.                    section 5 of this title when aggregate amount involved
                                                                  did not exceed $50.
                        CODIFICATION                                Section 6f, acts June 16, 1937, ch. 359, title I, 50 Stat.
                                                                  273; Apr. 27, 1938, ch. 180, title I, 52 Stat. 258; June 29,
  Subsecs. (a) to (c) are from act Oct. 10, 1940. Subsec.
                                                                  1939, ch. 248, title I, 53 Stat. 896; May 14, 1940, ch. 189,
(b), which related to obligations of Civilian Conserva-
                                                                  title I, 54 Stat. 192, excepted Department of State from
tion Corps, was omitted because the Corps was liq-
                                                                  provisions of section 5 of this title when aggregate
uidated June 30, 1944.
                                                                  amount involved did not exceed certain specified
  Subsec. (d) is from act June 24, 1940, which was for-
                                                                  amounts.
merly classified to section 6mm of this title.
                                                                    Section 6g, acts June 16, 1937, ch. 359, title II, 50 Stat.
  Subsec. (e), which related to the employment of ex-
                                                                  275; Apr. 27, 1938, ch. 180, title II, 52 Stat. 260; June 29,
perts or consultants in the Canal Zone, was from the
                                                                  1939, ch. 248, title II, 53 Stat. 898; May 14, 1940, ch. 189,
General Government Matters Appropriation Act, 1962,
                                                                  title III, 54 Stat. 201, 202, excepted Federal Bureau of
Pub. L. 87–125, title III, § 301, Aug. 3, 1961, 75 Stat. 279,
                                                                  Investigation from provisions of section 5 of this title
and was omitted as not repeated in subsequent appro-
                                                                  when aggregate amount did not exceed $50.
priation acts. Provisions similar to former subsec. (e)
                                                                    Section 6h, acts June 16, 1937, ch. 359, title III, 50
were contained in the following prior appropriation
                                                                  Stat. 285; Apr. 27, 1938, ch. 180, title III, 52 Stat. 272, ex-
acts:
                                                                  cepted Bureau of Air Commerce from provisions of sec-
  May 13, 1960, Pub. L. 86–451, title II, § 201, 74 Stat. 101.
                                                                  tion 5 of this title when aggregate amount involved did
  July 13, 1959, Pub. L. 86–88, title II, § 201, 73 Stat. 208.
                                                                  not exceed $100.
  June 25, 1958, Pub. L. 85–469, title II, § 203, 72 Stat. 236.     Section 6i, acts June 28, 1937, ch. 396, 50 Stat. 335; May
  June 13, 1957, Pub. L. 85–52, title II, § 203, 71 Stat. 79,     23, 1938, ch. 259, 52 Stat. 417; Mar. 16, 1939, ch. 11, 53 Stat.
as amended Mar. 28, 1958, Pub. L. 85–352, ch. II, § 201, 72       532; Apr. 18, 1940, ch. 107, 54 Stat. 124, excepted Federal
Stat. 52.                                                         Trade Commission from provisions of section 5 of this
  June 20, 1956, ch. 415, title II, § 203, 70 Stat. 324.          title when aggregate amount involved did not exceed
  June 30, 1955, ch. 253, title II, § 203, 69 Stat. 236.          $50.
  June 30, 1954, ch. 425, § 104, 68 Stat. 335.                      Section 6j, acts June 28, 1937, ch. 396, 50 Stat. 338; May
  July 27, 1953, ch. 245, § 104, 67 Stat. 202.                    23, 1938, ch. 259, 52 Stat. 420; Mar. 16, 1939, ch. 11, 53 Stat.
  July 11, 1952, ch. 669, § 104, 66 Stat. 584.                    534; Apr. 18, 1940, ch. 107, 54 Stat. 133, excepted Inter-
  Oct. 24, 1951, ch. 556, § 104, 65 Stat. 622.                    state Commerce Commission from provisions of section
  Sept. 6, 1950, ch. 896, Ch. IX, § 103, 64 Stat. 730.            5 of this title when aggregate amount involved did not
  Oct. 13, 1949, ch. 688, § 4, 63 Stat. 852.                      exceed $50.
  June 25, 1948, ch. 655, § 4, 62 Stat. 1026.                       Section 6k, acts June 28, 1937, ch. 396, 50 Stat. 339;
  July 31, 1947, ch. 411, § 4, 61 Stat. 694.                      May 23, 1938, ch. 259, 52 Stat. 421; Mar. 16, 1939, ch. 11,
  May 2, 1946, ch. 247, § 4, 60 Stat. 167.                        53 Stat. 536; Apr. 18, 1940, ch. 107, 54 Stat. 135, excepted
  Mar. 31, 1945, ch. 45, § 4, 59 Stat. 45.                        National Archives from provisions of section 5 of this
  June 26, 1944, ch. 275, § 4, 58 Stat. 333.                      title when aggregate amount did not exceed $50.
  June 2, 1943, ch. 115, § 4, 57 Stat. 99.                          Section 6l, acts June 28, 1937, ch. 396, 50 Stat. 339; May
  Apr. 28, 1942, ch. 246, § 5, 56 Stat. 225.                      23, 1938, ch. 259, 52 Stat. 422; Mar. 16, 1939, ch. 11, 53 Stat.
  June 24, 1940, ch. 412, 54 Stat. 504.                           537; June 26, 1940, ch. 428, title IV, 54 Stat. 595, excepted
                     PRIOR PROVISIONS                             National Labor Relations Board from provisions of sec-
                                                                  tion 5 of this title when aggregate amount involved did
  A prior section 6b, acts Feb. 23, 1931, ch. 281, 46 Stat.       not exceed $50.
1363; June 30, 1932, ch. 330, 47 Stat. 460; June 16, 1933, ch.      Section 6m, acts June 28, 1937, ch. 396, 50 Stat. 341;
101, 48 Stat. 292; Mar. 28, 1934, ch. 102, title I, 48 Stat.      May 23, 1938, ch. 259, 52 Stat. 423; Mar. 16, 1939, ch. 11,
514; Feb. 2, 1935, ch. 3, 49 Stat. 11; Mar. 19, 1936, ch. 156,    53 Stat. 538; June 26, 1940, ch. 428, title VI, 54 Stat. 596,
49 Stat. 1173; June 28, 1937, ch. 396, 50 Stat. 336; May 23,      excepted Railroad Retirement Board from provisions of
1938, ch. 259, 52 Stat. 418; Mar. 16, 1939, ch. 11, 53 Stat.      section 5 of this title when aggregate amount involved
532; Apr. 18, 1940, ch. 107, 54 Stat. 131, excepted General       did not exceed $50.
Accounting Office from provisions of section 5 of this              Section 6n, acts June 28, 1937, ch. 396, 50 Stat. 342;
title, prior to repeal by act Oct. 10, 1940, ch. 851, § 4, 54     May 23, 1938, ch. 259, 52 Stat. 425; Mar. 16, 1939, ch. 11,
Stat. 1111.                                                       53 Stat. 539; Apr. 18, 1940, ch. 107, 54 Stat. 136, excepted
                                                                  Securities and Exchange Commission from provisions
                 TRANSFER OF FUNCTIONS                            of section 5 of this title when aggregate amount in-
  Functions of all officers, agencies and employees of            volved did not exceed $50.
Department of Agriculture transferred, with certain ex-             Section 6o, act Apr. 6, 1937, ch. 69, § 3, as added May
ceptions, to Secretary of Agriculture by Reorg. Plan              9, 1938, ch. 192, 52 Stat. 344, excepted control of insects
No. 2 of 1953, § 1, eff. June 4, 1953, 18 F.R. 3219, 67 Stat.     and plant diseases from provisions of section 5 of this
633, set out in the Appendix to Title 5, Government Or-           title.
ganization and Employees.                                           Section 6p, act May 23, 1938, ch. 259, 52 Stat. 417, Mar.
                                                                  16, 1939, ch. 11, 53 Stat. 531; Apr. 18, 1940, ch. 107, 54 Stat.
§§ 6c to 6jj. Repealed. Oct. 10, 1940, ch. 851, § 4, 54           124, excepted Federal Power Commission from provi-
    Stat. 1111                                                    sions of section 5 of this title when aggregate amount
                                                                  involved did not exceed $50.
 Section 6c, acts June 22, 1936, ch. 689, 49 Stat. 1604;            Section 6q, acts June 25, 1938, ch. 681, title I, 52 Stat.
June 28, 1937, ch. 396, 50 Stat. 341; May 23, 1938, ch. 259,      1117; Mar. 16, 1939, ch. 11, 53 Stat. 535; Apr. 18, 1940, ch.
§ 6kk                                     TITLE 41—PUBLIC CONTRACTS                                                      Page 6

107, 54 Stat. 134, excepted Maritime Labor Board from             United States and Mexico, from provisions of section 5
provisions of section 5 of this title when aggregate              of this title when aggregate amount involved did not
amount involved did not exceed $100.                              exceed $500.
  Section 6r, acts Mar. 16, 1939, ch. 11, 53 Stat. 527; Apr.        Section 6gg, act May 14, 1940, ch. 189, title IV, 54 Stat.
18, 1940, ch. 107, 54 Stat. 116, excepted Civil Aeronautics       211, excepted Administrative Office of United States
Authority from provisions of section 5 of this title              Courts from provisions of section 5 of this title when
when aggregate amount involved did not exceed $100.               aggregate amount involved did not exceed $50.
  Section 6s, acts Aug. 7, 1935, ch. 455, 49 Stat. 540; Feb.        Section 6hh, act June 11, 1940, ch. 313, title I, 54 Stat.
11, 1936, ch. 49, 49 Stat. 1123; May 15, 1936, ch. 405, 49        290, excepted Navy Department from provisions of sec-
Stat. 1316; June 16, 1937, ch. 359, 50 Stat. 267; Apr. 27,        tion 5 of this title when aggregate amount involved did
1938, ch. 180, 52 Stat. 254; June 29, 1939, ch. 248, title I,     not exceed $50.
53 Stat. 892; May 14, 1940, ch. 189, title I, 54 Stat. 188, ex-     Section 6ii, acts Jan. 25, 1929, ch. 102, title III, 45 Stat.
cepted International Technical Committee of Aerial                1119; Apr. 18, 1930, ch. 184, title III, 46 Stat. 198; Feb. 23,
Legal Experts from provisions of section 5 of this title.         1931, ch. 280, title III, 46 Stat. 1334; July 1, 1932, ch. 361,
  Section 6t, acts May 15, 1936, ch. 405, 49 Stat. 1315;          title III, 47 Stat. 502; Mar. 1, 1933, ch. 144, title III, 47
June 16, 1937, ch. 359, 50 Stat. 267; Apr. 27, 1938, ch. 180,     Stat. 1393; Apr. 7, 1934, ch. 104, title III, 48 Stat. 551;
52 Stat. 253; June 29, 1939, ch. 248, title I, 53 Stat. 891,      Mar. 22, 1935, ch. 39, 49 Stat. 90; May 15, 1936, ch. 405, 49
excepted Bureau of Interparliamentary Union for Pro-              Stat. 1336; June 16, 1937, ch. 359, title III, 50 Stat. 287;
motion of International Arbitration from provisions of            Apr. 27, 1938, ch. 180, title III, 52 Stat. 273; June 29, 1939,
section 5 of this title.                                          ch. 248, title III, 53 Stat. 909, excepted Bureau of For-
  Section 6u, acts Feb. 20, 1929, ch. 270, 45 Stat. 1243;         eign and Domestic Commerce from provisions of sec-
Apr. 19, 1930, ch. 201, 46 Stat. 243; Feb. 23, 1931, ch. 281,     tion 5 of this title when aggregate amount involved did
46 Stat. 1370; Feb. 2, 1935, ch. 3, 49 Stat. 16; Mar. 19, 1936,   not exceed $100.
ch. 156, 49 Stat. 1180; June 28, 1937, ch. 396, 50 Stat. 345;       Section 6jj, acts May 13, 1926, ch. 294, 44 Stat. 548;
May 23, 1938, ch. 259, 52 Stat. 427; Mar. 16, 1939, ch. 11,       Feb. 23, 1927, ch. 168, 44 Stat. 1157; May 14, 1928, ch. 551,
53 Stat. 542; Apr. 18, 1940, ch. 107, 54 Stat. 137, excepted      45 Stat. 528; Feb. 28, 1929, ch. 367, 45 Stat. 1397; June 6,
Tariff Commission (now International Trade Commis-                1930, ch. 407, 46 Stat. 516; Feb. 20, 1931, ch. 234, 46 Stat.
sion) from provisions of section 5 of this title when ag-         1186; June 30, 1932, ch. 314, 47 Stat. 393; Feb. 28, 1933, ch.
gregate amount involved did not exceed $50.                       134, 47 Stat. 1362; May 30, 1934, ch. 372, 48 Stat. 828; July
  Section 6v, acts June 28, 1937, ch. 396, 50 Stat. 331;          8, 1935, ch. 374, 49 Stat. 471; Apr. 17, 1936, ch. 233, 49 Stat.
May 23, 1938, ch. 259, 52 Stat. 412; Mar. 16, 1939, ch. 11,       1226; May 18, 1937, ch. 223, 50 Stat. 181; May 17, 1938, ch.
53 Stat. 525; Apr. 18, 1940, ch. 107, 54 Stat. 113, excepted      236, 52 Stat. 392; June 16, 1939, ch. 208, 53 Stat. 834; June
American Battle Monuments Commission from provi-                  18, 1940, ch. 396, 54 Stat. 474, excepted Botanic Garden,
sions of section 5 of this title when aggregate amount            in purchase of trees and plants, from provisions of sec-
involved did not exceed $500.                                     tion 5 of this title when aggregate amount involved did
  Section 6v–1, act Apr. 18, 1940, ch. 107, 54 Stat. 113, ex-     not exceed $300.
cepted American Battle Monuments Commission, when
entering into leases in foreign countries, from provi-            § 6kk. Omitted
sions of section 5 of this title.
  Section 6w, acts June 16, 1938, ch. 464, 52 Stat. 750;                                  CODIFICATION
June 30, 1939, ch. 253, title II, 53 Stat. 978; June 25, 1940,
                                                                    Section, acts Apr. 17, 1936, ch. 233, 49 Stat. 1226; May
ch. 421, 54 Stat. 568, excepted Farm Credit Administra-
                                                                  18, 1937, ch. 223, 50 Stat. 181; May 17, 1938, ch. 236, 52
tion from provisions of section 5 of this title when ag-
                                                                  Stat. 393; June 16, 1939, ch. 208, 53 Stat. 834; June 18,
gregate amount did not exceed $50.
                                                                  1940, ch. 396, 54 Stat. 474, which excepted Botanic Gar-
  Section 6x, act Aug. 25, 1937, ch. 757, title I, 50 Stat.
                                                                  den, in purchase of supplies and equipment, from provi-
759, excepted United States Maritime Commission from
                                                                  sions of section 5 of this title when aggregate amount
provisions of section 5 of this title when aggregate
                                                                  did not exceed $50, was superseded by subsection (b) of
amount did not exceed $100.
                                                                  section 6a of this title which was itself repealed by act
  Section 6y, acts Aug. 9, 1939, ch. 633, title I, 53 Stat.
                                                                  Oct. 31, 1951, ch. 654, § 1(107), 65 Stat. 705.
1318; June 18, 1940, ch. 395, 54 Stat. 443, excepted Bureau
of Mines from provisions of section 5 of this title when
aggregate amount did not exceed $500.
                                                                  § 6ll. Repealed. Oct. 10, 1940, ch. 851, § 4, 54 Stat.
  Section 6z, act Apr. 18, 1940, ch. 107, 54 Stat. 112, ex-            1111
cepted Bureau of the Budget (now Office of Manage-
                                                                    Section, act Apr. 22, 1926, ch. 171, 44 Stat. 314, ex-
ment and Budget) from provisions of section 5 of this
                                                                  cepted National Advisory Committee for Aeronautics
title when aggregate amounts involved did not exceed
                                                                  from provisions of section 5 of this title when aggregate
certain specified sums.
                                                                  amount involved did not exceed $50.
  Section 6aa, act Apr. 18, 1940, ch. 107, 54 Stat. 118, ex-
cepted Federal Communications Commission from pro-
                                                                  § 6mm. Transferred
visions of section 5 of this title when aggregate amount
did not exceed $50.                                                                       CODIFICATION
  Section 6bb, act Apr. 18, 1940, ch. 107, 54 Stat. 119, ex-
cepted Federal Loan Agency from provisions of section               Section, act June 24, 1940, ch. 412, 54 Stat. 504, which
5 of this title when aggregate amounts involved did not           excepted forest products by Indian enterprises from the
exceed certain specified sums.                                    forests on Indian reservations, was transferred to sub-
  Section 6cc, act Apr. 18, 1940, ch. 107, 54 Stat. 120, ex-      sec. (d) of section 6b of this title.
cepted Federal Home Loan Bank from provisions of sec-
tion 5 of this title when aggregate amounts involved              §§ 7 to 7d. Repealed. June 30, 1949, ch. 288, title
did not exceed certain specified sums.                                 VI,   § 602(a)(29)–(31),   formerly     title  V,
  Section 6dd, act Apr. 18, 1940, ch. 107, 54 Stat. 131, ex-           § 502(a)(29)–(31), 63 Stat. 401; renumbered
cepted General Accounting Office from provisions of                    Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583
section 5 of this title when aggregate amount involved
did not exceed $50.                                                 Section 7, act June 17, 1910, ch. 297, § 4, 36 Stat. 531;
  Section 6ee, acts Feb. 11, 1927, ch. 104, 44 Stat. 1081;        Ex. Ord. No. 6166, § 1, eff. June 10, 1933, as amended by
Apr. 18, 1940, ch. 107, 54 Stat. 137, excepted Tariff Com-        Ex. Ord. No. 6623, eff. Mar. 1, 1934, related to advertise-
mission (now International Trade Commission) from                 ments and contracts for miscellaneous supplies for ex-
provisions of section 5 of this title when aggregate              ecutive departments and other government establish-
amount involved did not exceed $50.                               ments in Washington; Procurement Division in Depart-
  Section 6ff, act May 14, 1940, ch. 189, title I, 54 Stat.       ment of Treasury; bond of contractor; and purchase or
189, excepted International Boundary Commission,                  drawing of supplies.
Page 7                                   TITLE 41—PUBLIC CONTRACTS                                              § 10a

  Section 7a, act Feb. 27, 1929, ch. 354, § 1, 45 Stat. 1341;   from articles, materials, or supplies mined, pro-
Ex. Ord. No. 6166, § 1, eff. June 10, 1933, as amended by       duced, or manufactured, as the case may be, in
Ex. Ord. No. 6623, eff. Mar. 1, 1934, related to consolida-     the United States, shall be acquired for public
tion and coordination of government purchases.
                                                                use. This section shall not apply with respect to
  Section 7b, act Feb. 27, 1929, ch. 354, § 2, 45 Stat. 1342;
Ex. Ord. No. 6166, § 1, June 10, 1933, as amended by Ex.        articles, materials, or supplies for use outside
Ord. No. 6623, Mar. 1, 1934, provided for requisition of        the United States, or if articles, materials, or
supplies and reimbursement.                                     supplies of the class or kind to be used or the ar-
  Section 7c, act Feb. 27, 1929, ch. 354, § 3, 45 Stat. 1342;   ticles, materials, or supplies from which they
Ex. Ord. No. 6166, § 1, eff. June 10, 1933, as amended by       are manufactured are not mined, produced, or
Ex. Ord. No. 6623, eff. Mar. 1, 1934, provided for a general    manufactured, as the case may be, in the United
supply fund and reports and audits.                             States in sufficient and reasonably available
  Section 7c–1, act May 14, 1935, ch. 110, 49 Stat. 234; Ex.
                                                                commercial quantities and of a satisfactory
Ord. No. 6166, § 1, eff. June 10, 1933, as amended by Ex.
Ord. No. 6623, eff. Mar. 1, 1934, related to expenditures       quality. This section shall not apply to manu-
incidental to operation of government fuel yards.               factured articles, materials, or supplies procured
  Section 7d, act Feb. 27, 1929, ch. 354, § 4, 45 Stat. 1342,   under any contract the award value of which is
related to Secretary of Treasury’s authority to pre-            less than or equal to the micro-purchase thresh-
scribe regulations.                                             old under section 428 of this title.
                 EFFECTIVE DATE OF REPEAL                       (b) Reports
                                                                  (1) In general
 Repeal effective July 1, 1949, see section 605 of act
June 30, 1949.                                                      Not later than 180 days after the end of each
                                                                  of fiscal years 2007 through 2011, the head of
§ 8. Opening bids                                                 each Federal agency shall submit to the Com-
                                                                  mittee on Homeland Security and Govern-
  Whenever proposals for supplies have been so-
                                                                  mental Affairs of the Senate and the Commit-
licited, the parties responding to such solicita-
                                                                  tee on Oversight and Government Reform of
tion shall be duly notified of the time and place
                                                                  the House of Representatives a report on the
of opening the bids, and be permitted to be
                                                                  amount of the acquisitions made by the agen-
present either in person or by attorney, and a
                                                                  cy in that fiscal year of articles, materials, or
record of each bid shall then and there be made.
                                                                  supplies purchased from entities that manu-
(R.S. § 3710.)                                                    facture the articles, materials, or supplies out-
                       CODIFICATION
                                                                  side of the United States.
                                                                  (2) Contents of report
  R.S. § 3710 derived from Res. Jan. 31, 1868, No. 8, 15
Stat. 246.                                                          The report required by paragraph (1) shall
                                                                  separately include, for the fiscal year covered
                  EXEMPTION OF FUNCTIONS                          by such report—
  Functions authorized by Foreign Assistance Act of                    (A) the dollar value of any articles, mate-
1961, as amended, as exempt, see Ex. Ord. No. 11223, eff.           rials, or supplies that were manufactured
May 12, 1965, 30 F.R. 6635, set out as a note under sec-            outside the United States;
tion 2393 of Title 22, Foreign Relations and Intercourse.              (B) an itemized list of all waivers granted
                                                                    with respect to such articles, materials, or
§ 9. Repealed. Feb. 19, 1948, ch. 65, § 11(a), 62 Stat.             supplies under this Act, and a citation to the
     25                                                             treaty, international agreement, or other
  Section, R.S. § 3717, related to separate proposals for           law under which each waiver was granted;
works or material or labor. See sections 2303 to 2305 of               (C) if any articles, materials, or supplies
Title 10, Armed Forces.                                             were acquired from entities that manufac-
                                                                    ture articles, materials, or supplies outside
                 EFFECTIVE DATE OF REPEAL                           the United States, the specific exception
  Repeal effective 90 days after Feb. 19, 1948, see section         under this section that was used to purchase
13 of act Feb. 19, 1948.                                            such articles, materials, or supplies; and
                                                                       (D) a summary of—
§ 10. Omitted                                                            (i) the total procurement funds expended
                       CODIFICATION
                                                                       on articles, materials, and supplies manu-
                                                                       factured inside the United States; and
  Section, act Mar. 3, 1875, ch. 133, § 2, 18 Stat. 455, re-             (ii) the total procurement funds ex-
lated to preferential treatment of American material                   pended on articles, materials, and supplies
in contracts for public improvements, was superseded.                  manufactured outside the United States.
See sections 10a to 10d of this title.
                                                                  (3) Public availability
§ 10a. American materials required for public use                   The head of each Federal agency submitting
(a) In general                                                    a report under paragraph (1) shall make the
                                                                  report publicly available to the maximum ex-
  Notwithstanding any other provision of law,                     tent practicable.
and unless the head of the department or inde-                    (4) Exception for intelligence community
pendent establishment concerned shall deter-
mine it to be inconsistent with the public inter-                   This subsection shall not apply to acquisi-
est, or the cost to be unreasonable, only such                    tions made by an agency, or component there-
unmanufactured articles, materials, and sup-                      of, that is an element of the intelligence com-
plies as have been mined or produced in the                       munity as specified in, or designated under,
United States, and only such manufactured arti-                   section 401a(4) of title 50.
cles, materials, and supplies as have been manu-                (Mar. 3, 1933, ch. 212, title III, § 2, 47 Stat. 1520;
factured in the United States substantially all                 Pub. L. 100–418, title VII, § 7005(b), Aug. 23, 1988,
§ 10b                                    TITLE 41—PUBLIC CONTRACTS                                                Page 8

102 Stat. 1553; Pub. L. 103–355, title IV, § 4301(b),             ‘‘(a) GENERAL RULE.—For purposes of title III of the
Oct. 13, 1994, 108 Stat. 3347; Pub. L. 110–28, title            Act of March 3, 1933 (47 Stat. 1520; 41 U.S.C. 10a–10c) [41
VIII, § 8306, May 25, 2007, 121 Stat. 211.)                     U.S.C. 10a, 10b, 10b–1, 10c], commonly known as the Buy
                                                                American Act, a cofferdam or any other temporary
                  REFERENCES IN TEXT                            structure to be constructed by the Secretary of the
  This Act, referred to in subsec. (b)(2)(B), probably          Army, acting through the Chief of Engineers, shall be
                                                                treated in the same manner as a permanent dam con-
should be ‘‘this title’’, meaning title III of act Mar. 3,
                                                                structed by the Secretary of the Army.
1933, ch. 212, 47 Stat. 1520, known as the Buy American
                                                                  ‘‘(b) APPLICABILITY.—Subsection (a) shall only apply
Act, which is classified generally to sections 10a, 10b,        to contracts entered into after the date of the enact-
and 10c of this title. For complete classification of title     ment of this Act [July 19, 1988].’’
III to the Code, see Short Title note below and Tables.
                                                                               EXEMPTION OF FUNCTIONS
                       AMENDMENTS
                                                                  Functions authorized by Foreign Assistance Act of
  2007—Pub. L. 110–28 designated existing provisions as         1961, as amended, as exempt, see Ex. Ord. No. 11223, eff.
subsec. (a), inserted heading, and added subsec. (b).           May 12, 1965, 30 F.R. 6635, set out as a note under sec-
  1994—Pub. L. 103–355 inserted at end ‘‘This section           tion 2393 of Title 22, Foreign Relations and Intercourse.
shall not apply to manufactured articles, materials, or
supplies procured under any contract the award value            APPLICABILITY OF BUY AMERICAN ACT WITH RESPECT TO
of which is less than or equal to the micro-purchase                           EUROPEAN COMMUNITY
threshold under section 428 of this title.’’                      For applicability of Buy American Act to procure-
  1988—Pub. L. 100–418, §§ 7004, 7005(b), temporarily sub-      ments covered by agreement with the European Com-
stituted ‘‘Federal agency’’ for ‘‘department or inde-           munity on government procurement, see Ex. Ord. No.
pendent establishment’’. See Effective and Termination          12849, May 25, 1993, 58 F.R. 30931, set out as a note under
Dates of 1988 Amendment note below.                             section 2511 of Title 19, Customs Duties.
          EFFECTIVE DATE OF 1994 AMENDMENT
                                                                § 10b. Contracts for public works; specification
  Section 4301(c) of Pub. L. 103–355 provided that: ‘‘Not-          for use of American materials; blacklisting
withstanding any other provision of law—
    ‘‘(1) section 32 of the Office of Federal Procurement           contractors violating requirements
  Policy Act [41 U.S.C. 428], as added by subsection (a);         (a) Every contract for the construction, alter-
  and                                                           ation, or repair of any public building or public
    ‘‘(2) the amendment made by subsection (b) [amend-
  ing this section];
                                                                work in the United States growing out of an ap-
shall take effect on the date of the enactment of this          propriation heretofore made or hereafter to be
Act [Oct. 13, 1994] and shall be implemented in the Fed-        made shall contain a provision that in the per-
eral Acquisition Regulation not later than 60 days after        formance of the work the contractor, sub-
such date of enactment.’’                                       contractors, material men, or suppliers, shall
        EFFECTIVE AND TERMINATION DATES OF 1988                 use only such unmanufactured articles, mate-
                      AMENDMENT                                 rials, and supplies as have been mined or pro-
                                                                duced in the United States, and only such manu-
  Section 7004 of title VII of Pub. L. 100–418 provided
that: ‘‘The amendments made by this title [see Short            factured articles, materials, and supplies as
Title of 1988 Amendment note below] shall cease to be           have been manufactured in the United States
effective on April 30, 1996, unless the Congress, after re-     substantially all from articles, materials, or
viewing the report required by section 305(k) of the            supplies mined, produced, or manufactured, as
Trade Agreements Act of 1979 [former 19 U.S.C. 2515(k)],        the case may be, in the United States except as
and other relevant information, extends such date.              provided in section 10a of this title: Provided,
After such date, the President may modify or termi-             however, That if the head of the department or
nate any or all actions taken pursuant to such amend-           independent establishment making the contract
ments.’’
  Section 7005(f) of title VII of Pub. L. 100–418 provided      shall find that in respect to some particular ar-
that: ‘‘The amendments made by this section [amend-             ticles, materials, or supplies it is impracticable
ing sections 10a, 10b, 10c, and 10d of this title and sec-      to make such requirement or that it would un-
tion 2511 of Title 19, Customs Duties] shall take effect        reasonably increase the cost, an exception shall
upon enactment [Aug. 23, 1988].’’                               be noted in the specifications as to that particu-
            SHORT TITLE OF 1988 AMENDMENT                       lar article, material, or supply, and a public
                                                                record made of the findings which justified the
  Section 7001 of title VII of Pub. L. 100–418 provided         exception.
that: ‘‘This title [enacting section 10b–1 of this title,
                                                                  (b) If the head of a department, bureau, agen-
amending this section, sections 10b, 10c, and 10d of this
title, and sections 2511 and 2515 of Title 19, Customs Du-      cy, or independent establishment which has
ties, enacting provisions set out as notes under section        made any contract containing the provision re-
10a of this title, and amending provisions set out as           quired by subsection (a) of this section finds
notes under section 10c of this title] may be cited as          that in the performance of such contract there
the ‘Buy American Act of 1988’.’’                               has been a failure to comply with such provi-
                       SHORT TITLE                              sions, he shall make public his findings, includ-
                                                                ing therein the name of the contractor obligated
  Section 7, formerly section 5, of title III of act Mar.       under such contract, and no other contract for
3, 1933, as added by Pub. L. 103–355, title X, § 10005(f)(4),
Oct. 13, 1994, 108 Stat. 3409, and renumbered and amend-
                                                                the construction, alteration, or repair of any
ed by Pub. L. 104–106, div. D, title XLIII, § 4321(a)(11),      public building or public work in the United
Feb. 10, 1996, 110 Stat. 671, provided that: ‘‘This title       States or elsewhere shall be awarded to such
[enacting this section, sections 10b and 10c of this title,     contractor, subcontractors, material men, or
and provisions set out as notes under section 10c of this       suppliers with which such contractor is associ-
title] may be cited as the ‘Buy American Act’.’’                ated or affiliated, within a period of three years
IMPLEMENTATION OF BUY AMERICAN ACT WITH RESPECT                 after such findings is made public.
      TO CERTAIN WATER RESOURCE PROJECTS                        (Mar. 3, 1933, ch. 212, title III, § 3, 47 Stat. 1520;
  Pub. L. 100–371, title V, § 508, July 19, 1988, 102 Stat.     Pub. L. 100–418, title VII, § 7005(c), Aug. 23, 1988,
875, provided that:                                             102 Stat. 1553.)
Page 9                                    TITLE 41—PUBLIC CONTRACTS                                                      § 10b–2

                        AMENDMENTS                                rescind the Secretary’s blanket waiver of the
  1988—Subsec. (a). Pub. L. 100–418, §§ 7004, 7005(c)(1),         Buy American Act with respect to such types of
which directed that this section be temporarily amend-            products produced in that foreign country.
ed by substituting ‘‘Federal agency’’ for ‘‘department              (2) An agreement referred to in paragraph (1)
or independent establishment’’, was executed to subsec.           is any reciprocal defense procurement memoran-
(a) as the probable intent of Congress. See Termination           dum of understanding between the United States
Date of 1988 Amendment note below.                                and a foreign country pursuant to which the
  Subsec. (b). Pub. L. 100–418, §§ 7004, 7005(c)(2), tempo-
                                                                  Secretary of Defense has prospectively waived
rarily substituted ‘‘Federal agency’’ for ‘‘department,
bureau, agency, or independent establishment’’. See               the Buy American Act for certain products in
Termination Date of 1988 Amendment note below.                    that country.
                                                                  (b) Definition
         TERMINATION DATE OF 1988 AMENDMENT
                                                                    For purposes of this section, the term ‘‘Buy
  Amendment by Pub. L. 100–418 to cease to be effective
on Apr. 30, 1996, unless Congress, after reviewing report         American Act’’ means title III of the Act enti-
required by former section 2515(k) of Title 19, Customs           tled ‘‘An Act making appropriations for the
Duties, extends such date, see section 7004 of Pub. L.            Treasury and Post Office Departments for the
100–418, set out as an Effective and Termination Dates            fiscal year ending June 30, 1934, and for other
of 1988 Amendment note under section 10a of this title.           purposes’’, approved March 3, 1933 (41 U.S.C. 10a
PROHIBITION ON USE OF FUNDS FOR CONSTRUCTION CON-
                                                                  et seq.).
 TRACTS WITH CONTRACTORS OF FOREIGN COUNTRIES                     (Pub. L. 103–160, div. A, title VIII, § 849(c), (d),
 WHICH DENY UNITED STATES CONTRACTORS FAIR OP-                    Nov. 30, 1993, 107 Stat. 1725.)
 PORTUNITIES IN CONSTRUCTION PROJECTS OF THAT
 COUNTRY’S GOVERNMENT                                                                REFERENCES IN TEXT
  Provisions prohibiting the obligation or expenditure              The Buy American Act, referred to in text, is title III
of funds to enter into any contract for construction, al-         of act Mar. 3, 1933, ch. 212, 47 Stat. 1520, as amended,
teration, or repair of any public building or public work         which enacted sections 10a, 10b, and 10c of this title,
in the United States or any territory or possession of            and enacted provisions set out as notes under section
the United States with any contractor or subcontractor            10c of this title. For complete classification of this Act
of a foreign country, or any supplier of products of a            to the Code, see Short Title note set out under section
foreign country, during any period in which such for-             10a of this title and Tables.
eign country denies fair and equitable market opportu-
nities for products and services of the United States in                                  CODIFICATION
procurement or bidding for construction projects that               Subsecs. (a) and (b) were in the original subsecs. (c)
cost more than $500,000 and are funded in whole or in             and (d), respectively, and were editorially redesignated
part by the government of such foreign country or by              for purposes of codification.
an entity controlled directly or indirectly by such for-            Pub. L. 103–160, § 849(c), (d), which comprises this sec-
eign country were contained in the following appro-               tion, was formerly set out as a note under this section.
priation acts:
  Pub. L. 101–516, title III, § 340, Nov. 5, 1990, 104 Stat.                          SIMILAR PROVISIONS
2187.                                                                Provisions similar to those in this section and sec-
  Pub. L. 101–514, title V, § 511, Nov. 5, 1990, 104 Stat.        tion 10b–3 of this title were contained in the following
2098.                                                             acts:
  Pub. L. 100–202, § 109, Dec. 22, 1987, 101 Stat. 1329–434;         Pub. L. 111–118, div. A, title VIII, § 8030, Dec. 19, 2009,
Pub. L. 105–362, title XIV, § 1401(d), Nov. 10, 1998, 112         123 Stat. 3435.
Stat. 3294.                                                          Pub. L. 110–329, div. C, title VIII, § 8030, Sept. 30, 2008,
                                                                  122 Stat. 3627.
§ 10b–1. Omitted                                                     Pub. L. 110–116, div. A, title VIII, § 8029, Nov. 13, 2007,
                        CODIFICATION                              121 Stat. 1321.
                                                                     Pub. L. 109–289, div. A, title VIII, § 8027, Sept. 29, 2006,
   Section, act Mar. 3, 1933, ch. 212, title III, § 4, as added   120 Stat. 1279.
Aug. 23, 1988, Pub. L. 100–418, title VII, § 7002(2), 102 Stat.      Pub. L. 109–148, div. A, title VIII, § 8030, Dec. 30, 2005,
1545; amended Oct. 13, 1994, Pub. L. 103–355, title VII,          119 Stat. 2705.
§ 7206(a), 108 Stat. 3382, which related to prohibition on           Pub. L. 108–287, title VIII, § 8032, Aug. 5, 2004, 118 Stat.
procurement contracts, was omitted in view of section             977.
7004 of Pub. L. 100–418 which provided that the amend-               Pub. L. 108–87, title VIII, § 8033, Sept. 30, 2003, 117 Stat.
ment by Pub. L. 100–418 enacting this section ceased to           1079.
be effective on Apr. 30, 1996. See section 7004 of Pub. L.           Pub. L. 107–248, title VIII, § 8033, Oct. 23, 2002, 116 Stat.
100–418, set out as an Effective and Termination Dates            1544.
of 1988 Amendment note under section 10a of this title.              Pub. L. 107–117, div. A, title VIII, § 8036, Jan. 10, 2002,
   Another prior section 4 of act Mar. 3, 1933, was tempo-        115 Stat. 2255.
rarily renumbered section 5 and is set out as a note                 Pub. L. 106–259, title VIII, § 8036, Aug. 9, 2000, 114 Stat.
under section 10c of this title.                                  682.
                                                                     Pub. L. 106–79, title VIII, § 8038, Oct. 25, 1999, 113 Stat.
§ 10b–2. Limitation on authority to waive Buy                     1239.
    American Act requirement                                         Pub. L. 105–262, title VIII, § 8038, Oct. 17, 1998, 112 Stat.
                                                                  2305.
(a) Buy American Act waiver rescissions                              Pub. L. 105–56, title VIII, § 8040, Oct. 8, 1997, 111 Stat.
  (1) If the Secretary of Defense, after consulta-                1229.
tion with the United States Trade Representa-                        Pub. L. 104–208, div. A, title I, § 101(b) [title VIII,
tive, determines that a foreign country which is                  § 8042], Sept. 30, 1996, 110 Stat. 3009–71, 3009–97.
                                                                     Pub. L. 104–61, title VIII, § 8051, Dec. 1, 1995, 109 Stat.
party to an agreement described in paragraph (2)
                                                                  662.
has violated the terms of the agreement by dis-                      Pub. L. 103–335, title VIII, § 8058, Sept. 30, 1994, 108
criminating against certain types of products                     Stat. 2631.
produced in the United States that are covered                       Pub. L. 103–139, title VIII, § 8069, Nov. 11, 1993, 107
by the agreement, the Secretary of Defense shall                  Stat. 1455.
§ 10b–3                                   TITLE 41—PUBLIC CONTRACTS                                                 Page 10

  Pub. L. 102–396, title IX, § 9096, Oct. 6, 1992, 106 Stat.      (Mar. 3, 1933, ch. 212, title III, § 1, 47 Stat. 1520;
1924, as amended by Pub. L. 103–355, title VII, § 7206(b),        Proc. No. 2695, eff. July 4, 1946, 11 F.R. 7517, 60
Oct. 13, 1994, 108 Stat. 3382.                                    Stat. 1352; Pub. L. 86–70, § 43, June 25, 1959, 73
  Pub. L. 102–190, div. A, title VIII, § 833, Dec. 5, 1991, 105
                                                                  Stat. 151; Pub. L. 86–624, § 28, July 12, 1960, 74
Stat. 1447.
  Pub. L. 102–172, title VIII, § 8123, Nov. 26, 1991, 105         Stat. 419; Pub. L. 100–418, title VII, § 7005(a), Aug.
Stat. 1205.                                                       23, 1988, 102 Stat. 1552.)
  Pub. L. 101–189, div. A, title VIII, § 823, Nov. 29, 1989,                        REFERENCES IN TEXT
103 Stat. 1504.
                                                                    For definition of Canal Zone, referred to in subsec.
§ 10b–3. Annual report relating to Buy American                   (b), see section 3602(b) of Title 22, Foreign Relations
    Act                                                           and Intercourse.

  The Secretary of Defense shall submit to Con-                                         CODIFICATION
gress, not later than 60 days after the end of                      Words ‘‘the Philippine Islands’’ in subsec. (b) of this
each fiscal year, a report on the amount of pur-                  section were deleted as obsolete in view of recognition
chases by the Department of Defense from for-                     of independence of the Philippines by Proc. No. 2695,
eign entities in that fiscal year. Such report                    which was issued pursuant to section 1394 of Title 22,
                                                                  Foreign Relations and Intercourse, and is set out as a
shall separately indicate the dollar value of
                                                                  note under section 1394.
items for which the Buy American Act (41 U.S.C.
10a et seq.) was waived pursuant to any of the                                          AMENDMENTS
following:                                                          1988—Subsec. (c). Pub. L. 100–418, §§ 7004, 7005(a), tem-
    (1) Any reciprocal defense procurement                        porarily added subsec. (c) which read as follows: ‘‘The
  memorandum of understanding described in                        term ‘Federal agency’ has the meaning given such term
  section 10b–2(a)(2) of this title.                              by section 472 of title 40, which includes the Depart-
    (2) The Trade Agreements Act of 1979 (19                      ments of the Army, Navy, and Air Force.’’ See Termi-
  U.S.C. 2501 et seq.)                                            nation Date of 1988 Amendment note below.
                                                                    1960—Subsec. (b). Pub. L. 86–624 struck out Hawaii.
    (3) Any international agreement to which                        1959—Subsec. (b). Pub. L. 86–70 struck out Alaska.
  the United States is a party.
                                                                          TERMINATION DATE OF 1988 AMENDMENT
(Pub. L. 104–201, div. A, title VIII, § 827, Sept. 23,
1996, 110 Stat. 2611; Pub. L. 105–85, div. A, title                 Amendment by Pub. L. 100–418 to cease to be effective
VIII, § 846, Nov. 18, 1997, 111 Stat. 1845; Pub. L.               on Apr. 30, 1996, unless Congress, after reviewing report
                                                                  required by former section 2515(k) of Title 19, Customs
105–261, div. A, title VIII, § 812, Oct. 17, 1998, 112            Duties, extends such date, see section 7004 of Pub. L.
Stat. 2086.)                                                      100–418, set out as an Effective and Termination Dates
                   REFERENCES IN TEXT                             of 1988 Amendment note under section 10a of this title.

  The Buy American Act, referred to in text, is title III                              EFFECTIVE DATE
of act Mar. 3, 1933, ch. 212, 47 Stat. 1520, as amended,             Section 4 of title III of act Mar. 3, 1933, as tempo-
which enacted sections 10a, 10b, and 10c of this title,           rarily renumbered § 5 by Pub. L. 100–418, title VII,
and enacted provisions set out as notes under section             § 7002(1), Aug. 23, 1988, 102 Stat. 1545, provided: ‘‘This
10c of this title. For complete classification of this Act        title [enacting this section and sections 10a and 10b of
to the Code, see Short Title note set out under section           this title] shall take effect on the date of its enactment
10a of this title and Tables.                                     [Mar. 3, 1933], but shall not apply to any contract en-
  The Trade Agreements Act of 1979, referred to in par.           tered into prior to such effective date.’’
(2), is Pub. L. 96–39, July 26, 1979, 93 Stat. 144. For com-
plete classification of this Act to the Code, see Ref-                                  SEPARABILITY
erences in Text note set out under section 2501 of Title             Section 5 of title III of act Mar. 3, 1933, as tempo-
19, Customs Duties, and Tables.                                   rarily renumbered § 6 by Pub. L. 100–418, title VII,
                        AMENDMENTS                                § 7002(1), Aug. 23, 1988, 102 Stat. 1545, provided: ‘‘If any
                                                                  provision of this Act [see Tables for classification], or
  1998—Pub. L. 105–261 substituted ‘‘60 days’’ for ‘‘90           the application thereof to any person or circumstances,
days’’ in introductory provisions.                                is held invalid, the remainder of the Act, and the appli-
  1997—Pub. L. 105–85 substituted ‘‘90 days’’ for ‘‘120           cation thereof to other persons or circumstances, shall
days’’ in introductory provisions.                                not be affected thereby.’’
                    SIMILAR PROVISIONS                            § 10d. Clarification of Congressional intent re-
  Provisions similar to those in this section were con-               garding sections 10a and 10b(a)
tained in the acts listed in the Similar Provisions note
set out under section 10b–2 of this title.                          In order to clarify the original intent of Con-
                                                                  gress, hereafter, section 10a of this title and that
§ 10c. Definition of terms used in sections 10a,                  part of section 10b(a) of this title preceding the
    10b, and 10c                                                  words ‘‘Provided, however,’’ shall be regarded as
  When used in sections 10a, 10b, and 10c of this                 requiring the purchase, for public use within the
title—                                                            United States, of articles, materials, or supplies
  (a) The term ‘‘United States’’, when used in a                  manufactured in the United States in sufficient
geographical sense, includes the United States                    and reasonably available commercial quantities
and any place subject to the jurisdiction there-                  and of a satisfactory quality, unless the head of
of;                                                               the department or independent establishment
  (b) The terms ‘‘public use’’, ‘‘public building’’,              concerned shall determine their purchase to be
and ‘‘public work’’ shall mean use by, public                     inconsistent with the public interest or their
building of, and public work of, the United                       cost to be unreasonable.
States, the District of Columbia, Puerto Rico,                    (Oct. 29, 1949, ch. 787, title VI, § 633, 63 Stat. 1024;
American Samoa, the Canal Zone, and the Vir-                      Pub. L. 100–418, title VII, § 7005(d), Aug. 23, 1988,
gin Islands.                                                      102 Stat. 1553.)
Page 11                                 TITLE 41—PUBLIC CONTRACTS                                                     § 11

                      AMENDMENTS                              and during such period as the President may determine
                                                              that it is in the national interest to provide to such
  1988—Pub. L. 100–418, §§ 7004, 7005(d), temporarily sub-
                                                              areas preference in the award of Government contracts:
stituted ‘‘Federal agency’’ for ‘‘department or inde-
                                                              Provided, that nothing in this section shall prevent the
pendent establishment’’. See Termination Date of 1988
                                                              rejection of a bid or offered price which is excessive; or
Amendment note below.
                                                                (d) To reject any bid or offer for materials of foreign
        TERMINATION DATE OF 1988 AMENDMENT                    origin if such rejection is necessary to protect essential
                                                              national-security interests after receiving advice with
  Amendment by Pub. L. 100–418 to cease to be effective
                                                              respect thereto from the President or from the Director
on Apr. 30, 1996, unless Congress, after reviewing report
                                                              [now Administrator] of the Federal Emergency Man-
required by former section 2515(k) of Title 19, Customs
                                                              agement Agency. In providing this advice the Director
Duties, extends such date, see section 7004 of Pub. L.
                                                              [Administrator] shall be governed by the principle that
100–418, set out as an Effective and Termination Dates
                                                              exceptions under this section shall be made only upon
of 1988 Amendment note under section 10a of this title.
                                                              a clear showing that the payment of a greater differen-
     EX. ORD. NO. 10582. UNIFORM PROCEDURES FOR               tial than the procedures of this section generally pre-
                   DETERMINATIONS                             scribe is justified by consideration of national security.
                                                                SEC. 4. The head of each executive agency shall issue
   Ex. Ord. No. 10582, Dec. 17, 1954, 19 F.R. 8723, as        such regulations as may be necessary to insure that
amended by Ex. Ord. No. 11051, Sept. 27, 1962, 27 F.R.        procurement practices under his jurisdiction conform
9683; Ex. Ord. No. 12148, July 20, 1979, 44 F.R. 43239; Ex.   to the provisions of this order.
Ord. No. 12608, Sept. 9, 1987, 52 F.R. 34617, provided:         SEC. 5. This order shall apply only to contracts en-
   SECTION 1. As used in this order, (a) the term ‘‘mate-     tered into after the date hereof. In any case in which
rials’’ includes articles and supplies, (b) the term ‘‘ex-    the head of an executive agency proposing to purchase
ecutive agency’’ includes executive department, inde-         domestic materials determines that a greater differen-
pendent establishment, and other instrumentality of           tial than that provided in this order between the cost
the executive branch of the Government, and (c) the           of such materials of domestic origin and materials of
term ‘‘bid or offered price of materials of foreign ori-      foreign origin is not unreasonable or that the purchase
gin’’ means the bid or offered price of such materials        of materials of domestic origin is not inconsistent with
delivered at the place specified in the invitation to bid     the public interest, this order shall not apply. A writ-
including applicable duty and all costs incurred after        ten report of the facts of each case in which such a de-
arrival in the United States.                                 termination is made shall be submitted to the Presi-
   SEC. 2. (a) For the purposes of this order materials       dent through the Director of the Office of Management
shall be considered to be of foreign origin if the cost of    and Budget by the official making the determination
the foreign products used in such materials constitutes       within 30 days thereafter.
fifty per centum or more of the cost of all the products
used in such materials.                                       § 11. No contracts or purchases unless authorized
   (b) For the purposes of the said act of March 3, 1933           or under adequate appropriation; report to
[see Tables for classification], and the other laws re-
                                                                   the Congress
ferred to in the first paragraph of the preamble of this
order, the bid or offered price of materials of domestic        (a) No contract or purchase on behalf of the
origin shall be deemed to be unreasonable, or the pur-        United States shall be made, unless the same is
chase of such materials shall be deemed to be inconsist-      authorized by law or is under an appropriation
ent with the public interest, if the bid or offered price
thereof exceeds the sum of the bid or offered price of
                                                              adequate to its fulfillment, except in the De-
like materials of foreign origin and a differential com-      partment of Defense and in the Department of
puted as provided in subsection (c) of this section.          Homeland Security with respect to the Coast
   (c) The executive agency concerned shall in each in-       Guard when it is not operating as a service in
stance determine the amount of the differential re-           the Navy, for clothing, subsistence, forage, fuel,
ferred to in subsection (b) of this section on the basis      quarters, transportation, or medical and hos-
of one of the following-described formulas, subject to        pital supplies, which, however, shall not exceed
the terms thereof:
                                                              the necessities of the current year.
   (1) The sum determined by computing six per centum
of the bid or offered price of materials of foreign origin.
                                                                (b) The Secretary of Defense and the Secretary
   (2) The sum determined by computing ten per centum         of Homeland Security with respect to the Coast
of the bid or offered price of materials of foreign origin    Guard when it is not operating as a service in
exclusive of applicable duty and all costs incurred after     the Navy shall immediately advise the Congress
arrival in the United States: provided that when the          of the exercise of the authority granted in sub-
bid or offered price of materials of foreign origin           section (a) of this section, and shall report quar-
amounts to less than $25,000, the sum shall be deter-         terly on the estimated obligations incurred pur-
mined by computing ten per centum of such price ex-
                                                              suant to the authority granted in subsection (a)
clusive only of applicable duty.
   SEC. 3. Nothing in this order shall affect the author-     of this section.
ity or responsibility of an executive agency:                 (R.S. § 3732; June 12, 1906, ch. 3078, 34 Stat. 255;
   (a) To reject any bid or offer for reasons of the na-      Pub. L. 89–687, title VI, § 612(e), Oct. 15, 1966, 80
tional interest not described or referred to in this
                                                              Stat. 993; Pub. L. 98–557, § 17(e), Oct. 30, 1984, 98
order; or
   (b) To place a fair proportion of the total purchases      Stat. 2868; Pub. L. 104–106, div. D, title XLIII,
with small business concerns in accordance with sec-          § 4322(b)(4), Feb. 10, 1996, 110 Stat. 677; Pub. L.
tion 302(b) of the Federal Property and Administrative        109–241, title IX, § 902(c), July 11, 2006, 120 Stat.
Services Act of 1949, as amended [41 U.S.C. 252(b)], sec-     566.)
tion 2(b) of the Armed Services Procurement Act of
                                                                                     CODIFICATION
1947, as amended [41 U.S.C. 151(b)], and section 202 of
the Small Business Act of 1953 [15 U.S.C. 631]; or              R.S. § 3732 derived from act Mar. 2, 1861, ch. 84, § 10, 12
   (c) To reject a bid or offer to furnish material of for-   Stat. 220.
eign origin in any situation in which the domestic sup-
                                                                                     AMENDMENTS
plier offering the lowest price for furnishing the desired
materials undertakes to produce substantially all of            2006—Pub. L. 109–241 substituted ‘‘of Homeland Secu-
such materials in areas of substantial unemployment,          rity’’ for ‘‘of Transportation’’ in subsecs. (a) and (b).
as determined by the Secretary of Labor in accordance           1996—Subsec. (a). Pub. L. 104–106 struck out second
with such appropriate regulations as he may establish         comma after ‘‘quarters’’.
§ 11a                                     TITLE 41—PUBLIC CONTRACTS                                                     Page 12

   1984—Subsec. (a). Pub. L. 98–557, § 17(e)(1)(A), sub-          of Title 40, Public Buildings, Property, and Works. Sec-
stituted ‘‘except in the Department of Defense and in             tion 303(b) of Title 40 was amended generally by Pub. L.
the Department of Transportation with respect to the              109–313, § 2(a)(1), Oct. 6, 2006, 120 Stat. 1734, and, as so
Coast Guard when it is not operating as a service in the          amended, no longer relates to the Federal Works Agen-
Navy’’ for ‘‘except in the War and Navy Departments’’.            cy and Commissioner of Public Buildings. See 2006
   Pub.     L.    98–557,    § 17(e)(1)(B),     substituted       Amendment note under section 303 of Title 40.
‘‘, transportation, or medical and hospital supplies’’ for           Public Buildings Branch of Procurement Division
‘‘or transportation’’, such change having been made by            (Bureau of Federal Supply) of Treasury Department
Act June 12, 1906, thereby requiring no further change            transferred to Public Buildings Administration within
in text. See Repeals note below.                                  Federal Works Agency, see Reorg. Plan No. I of 1939,
   Subsec. (b). Pub. L. 98–557, § 17(e)(2), inserted provi-       §§ 301, 303, eff. July 1, 1939, 4 F.R. 2729, 53 Stat. 1426, 1427,
sions relating to the Secretary of Transportation with            set out in the Appendix to Title 5, Government Organi-
respect to the Coast Guard when it is not operating as            zation and Employees.
a service in the Navy.                                               Functions of procurement of supplies, services,
   1966—Pub. L. 89–687 designated existing provisions as          stores, etc., exercised by any other agency transferred
subsec. (a) and added subsec (b).                                 to Procurement Division in Treasury Department by
   1906—Act June 12, 1906, inserted ‘‘medical and hos-            Ex. Ord. No. 6166, § 1, June 10, 1933, set out as a note
pital supplies’’.                                                 under section 901 of Title 5. Name of Procurement Divi-
                                                                  sion changed to Bureau of Federal Supply by Treasury
          EFFECTIVE DATE OF 1996 AMENDMENT                        Department Order 73 dated Nov. 19, 1946. Bureau trans-
  For effective date and applicability of amendment by            ferred on July 1, 1949, to General Services Administra-
Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set         tion, where it functions as Federal Supply Service [now
out as a note under section 251 of this title.                    Federal Acquisition Service], pursuant to act June 30,
                                                                  1949, ch. 288, § 102, 63 Stat. 380.
                          REPEALS
                                                                  § 12. No contract to exceed appropriation
  The first proviso under the heading ‘‘MEDICAL DE-
PARTMENT’’ in act June 12, 1906, ch. 3078, 34 Stat. 255,            No contract shall be entered into for the erec-
cited as a credit to this section, was repealed by Pub.           tion, repair, or furnishing of any public building,
L. 98–557, § 17(e)(3), Oct. 30, 1984, 98 Stat. 2868.              or for any public improvement which shall bind
§ 11a. Contracts for fuel by Secretary of the Army                the Government to pay a larger sum of money
    without regard to current fiscal year                         than the amount in the Treasury appropriated
                                                                  for the specific purpose.
  When, in the opinion of the Secretary of the
                                                                  (R.S. § 3733.)
Army, it is in the interest of the United States
so to do, he is authorized to enter into contracts                                        CODIFICATION
and to incur obligations for fuel in sufficient                     R.S. § 3733 derived from act July 25, 1868, ch. 233, § 3,
quantities to meet the requirements for one                       15 Stat. 177.
year without regard to the current fiscal year,
and payments for supplies delivered under such                    § 13. Contracts limited to one year
contracts may be made from funds appropriated                       Except as otherwise provided, it shall not be
for the fiscal year in which the contract is                      lawful for any of the executive departments to
made, or from funds appropriated or which may                     make contracts for stationery or other supplies
be appropriated for such supplies for the ensuing                 for a longer term than one year from the time
fiscal year.                                                      the contract is made.
(June 30, 1921, ch. 33, § 1, 42 Stat. 78; July 26, 1947,          (R.S. § 3735.)
ch. 343, title II, § 205(a), 61 Stat. 501.)
                                                                                          CODIFICATION
                        CODIFICATION                                R.S. § 3735 derived from Res. Jan. 31, 1868, No. 8, 15
  Section was formerly classified to section 668 of Title         Stat. 246; Res. Mar. 24, 1874, No. 6, 18 Stat. 286.
31 prior to the general revision and enactment of Title             ‘‘Except as otherwise provided,’’ was first inserted by
31, Money and Finance, by Pub. L. 97–258, § 1, Sept. 13,          the Revisers of the 1934 edition of the Code.
1982, 96 Stat. 877.                                                                EXEMPTION OF FUNCTIONS
                      CHANGE OF NAME                                Functions authorized by Foreign Assistance Act of
  Department of War designated Department of the                  1961, as amended, as exempt, see Ex. Ord. No. 11223, eff.
Army and title of Secretary of War changed to Sec-                May 12, 1965, 30 F.R. 6635, set out as a note under sec-
retary of the Army by section 205(a) of act July 26, 1947,        tion 2393 of Title 22, Foreign Relations and Intercourse.
ch. 343, title II, 61 Stat. 501. Section 205(a) of act July          SECTION INAPPLICABLE TO ARMED SERVICES AND
26, 1947, was repealed by section 53 of act Aug. 10, 1956,          NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
ch. 1041, 70A Stat. 641. Section 1 of act Aug. 10, 1956, en-
acted ‘‘Title 10, Armed Forces’’ which in sections 3010             Section inapplicable to procurement or sale of prop-
to 3013 continued Department of the Army under ad-                erty or services by Armed Services and National Aero-
ministrative supervision of Secretary of the Army.                nautics and Space Administration, see section 2314 of
                                                                  Title 10, Armed Forces.
                 TRANSFER OF FUNCTIONS
                                                                  § 13a. Repealed. Pub. L. 86–682, § 12(c), Sept. 2,
  For transfer of certain procurement and related func-
tions and property, and functions relating to finance
                                                                      1960, 74 Stat. 710
and fiscal matters, insofar as they pertain to Air Force,           Section, Joint Res. Mar. 24, 1874, No. 6, 18 Stat. 286,
from Secretary of the Army to Secretary of the Air                excepted mail bags, mail locks, and keys from provi-
Force, see Secretary of Defense Transfer Order Nos. 6,            sions of section 13 of this title.
eff. Jan. 15, 1948; 25, Oct. 14, 1948; 39, May 18, 1949; and
40 [App. B(93)], July 22, 1949.                                   § 14. Restriction on purchases of land
  Public Buildings Administration abolished by act
June 30, 1949, ch. 288, title I, § 103, 63 Stat. 380, and func-     No land shall be purchased on account of the
tions transferred to General Services Administration.             United States, except under a law authorizing
See Historical and Revision Notes under section 303(b)            such purchase.
Page 13                                TITLE 41—PUBLIC CONTRACTS                                                    § 15

(R.S. § 3736.)                                               (e) Amendment of contract
                      CODIFICATION                              Any contract of the Department of Defense,
  R.S. § 3736 derived from act May 1, 1820, ch. 52, § 7, 3
                                                             the General Services Administration, the De-
Stat. 568.                                                   partment of Energy, or any other department or
                                                             agency of the United States designated by the
§ 15. Transfers of contracts; assignments; as-               President, except any such contract under which
     signee not subject to reduction or setoff               full payment has been made, may, upon a deter-
(a) Transfer                                                 mination of need by the President, provide or be
                                                             amended without consideration to provide that
  No contract or order, or any interest therein,             payments to be made to the assignee of any
shall be transferred by the party to whom such               moneys due or to become due under such con-
contract or order is given to any other party,               tract shall not be subject to reduction or setoff.
and any such transfer shall cause the annulment              Each such determination of need shall be pub-
of the contract or order transferred, so far as the          lished in the Federal Register.
United States is concerned. All rights of action,
                                                             (f) Assignor liability arising independent of con-
however, for any breach of such contract by the
                                                                  tract
contracting parties, are reserved to the United
States.                                                         If a provision described in subsection (e) of
(b) Assignment                                               this section or a provision to the same general
                                                             effect has been at any time heretofore or is here-
  The provisions of subsection (a) of this section           after included or inserted in any such contract,
shall not apply in any case in which the moneys              payments to be made thereafter to an assignee
due or to become due from the United States or               of any moneys due or to become due under such
from any agency or department thereof, under a               contract shall not be subject to reduction or
contract providing for payments aggregating                  setoff for any liability of any nature of the as-
$1,000 or more, are assigned to a bank, trust                signor to the United States or any department
company, or other financing institution, includ-             or agency thereof which arises independently of
ing any Federal lending agency, provided:                    such contract, or hereafter for any liability of
    (1) That, in the case of any contract entered            the assignor on account of—
  into after October 9, 1940, no claim shall be as-               (1) renegotiation under any renegotiation
  signed if it arises under a contract which for-               statute or under any statutory renegotiation
  bids such assignment.                                         article in the contract;
    (2) That, unless otherwise expressly per-                     (2) fines;
  mitted by such contract, any such assignment                    (3) penalties (which term does not include
  shall cover all amounts payable under such                    amounts which may be collected or withheld
  contract and not already paid, shall not be                   from the assignor in accordance with or for
  made to more than one party, and shall not be                 failure to comply with the terms of the con-
  subject to further assignment, except that any                tract); or
  such assignment may be made to one party as                     (4) taxes, social security contributions, or
  agent or trustee for two or more parties par-                 the withholding or non withholding of taxes or
  ticipating in such financing.                                 social security contributions, whether arising
    (3) That, in the event of any such assign-                  from or independently of such contract.
  ment, the assignee thereof shall file written
                                                             (g) Accrued rights and obligations
  notice of the assignment together with a true
  copy of the instrument of the assignment                      Except as herein otherwise provided, nothing
  with—                                                      in this section shall be deemed to affect or im-
      (A) the contracting officer or the head of             pair rights or obligations heretofore accrued.
    his department or agency;                                (R.S. § 3737; Oct. 9, 1940, ch. 779, § 1, 54 Stat. 1029;
      (B) the surety or sureties upon the bond or            May 15, 1951, ch. 75, 65 Stat. 41; Pub. L. 103–355,
    bonds, if any, in connection with such con-              title II, § 2451, Oct. 13, 1994, 108 Stat. 3324; Pub. L.
    tract; and                                               104–106, div. D, title XLIII, § 4321(i)(9), Feb. 10,
      (C) the disbursing officer, if any, des-               1996, 110 Stat. 676.)
    ignated in such contract to make payment.
                                                                                    CODIFICATION
(c) Validity of assignment
                                                               R.S. § 3737 derived from act July 17, 1862, ch. 200, § 14,
  Notwithstanding any law to the contrary gov-               12 Stat. 596.
erning the validity of assignments, any assign-
ment pursuant to this section shall constitute a                                   AMENDMENTS
valid assignment for all purposes.                             1996—Subsec. (g). Pub. L. 104–106 substituted ‘‘rights
(d) Assignee liability                                       or obligations’’ for ‘‘rights of obligations’’.
                                                               1994—Pub. L. 103–355, § 2451, amended section gener-
  In any case in which moneys due or to become               ally, revising it as follows:
due under any contract are or have been as-                    Subsec. (a), designated first par. as subsec. (a) and
signed pursuant to this section, no liability of             substituted ‘‘is concerned’’ for ‘‘are concerned’’.
any nature of the assignor to the United States                Subsec. (b), designated second par. as subsec. (b) and
or any department or agency thereof, whether                 inserted subpar. and cl. designations; substituted in in-
arising from or independently of such contract,              troductory provisions ‘‘provisions of subsection (a) of
                                                             this section’’ for ‘‘provisions of the preceding para-
shall create or impose any liability on the part
                                                             graph’’ and ‘‘lending agency, provided:’’ for ‘‘lending
of the assignee to make restitution, refund, or              agency: Provided,’’; in par. designations, ‘‘That,’’ for
repayment to the United States of any amount                 ‘‘That’’ and periods for semicolons at end; and struck
heretofore since July 1, 1950, or hereafter re-              out former par. 1 which read as follows: ‘‘That in the
ceived under the assignment.                                 case of any contract entered into prior to October 9,
§ 16                                     TITLE 41—PUBLIC CONTRACTS                                                  Page 14

1940, no claim shall be assigned without the consent of           By the authority vested in me as President by the
the head of the department or agency concerned;’’.              Constitution and the laws of the United States of
   Subsec. (c), designated third par. as subsec. (c) and        America, including section 301 of title 3, United States
substituted ‘‘this section’’ for ‘‘this section,’’.             Code, I hereby designate all other departments and
   Subsec. (d), designated fourth par. as subsec. (d).          agencies of the United States as subject to this provi-
   Subsec. (e), designated first part of fifth par. as sub-     sion. Furthermore, I hereby delegate to the Secretaries
sec. (e), substituted ‘‘Department of Energy’’ for              of Defense and Energy, the Administrator of General
‘‘Atomic Energy Commission’’, ‘‘may, upon a deter-              Services, and the heads of all other departments and
mination of need by the President, provide’’ for ‘‘may,         agencies, the authority under section 2451 of the Act to
in time of war or national emergency proclaimed by              make determinations of need for their respective agen-
the President (including the national emergency pro-            cy’s contracts, subject to such further guidance as is-
claimed December 16, 1950) or by Act or joint resolution        sued by the Office of Federal Procurement Policy.
of the Congress and until such war or national emer-              The authority delegated by this memorandum may be
gency has been terminated in such manner, provide’’,            further delegated within the departments and agencies.
and ‘‘subject to reduction or set-off.’’ for ‘‘subject to re-     This memorandum shall be published in the Federal
duction or set-off,’’, and inserted ‘‘Each such deter-          Register.
mination of need shall be published in the Federal Reg-
                                                                                                  WILLIAM J. CLINTON.
ister.’’
   Subsec. (f), designated last part of fifth par. as sub-        NON-APPLICABILITY OF NATIONAL EMERGENCIES ACT
sec. (f), realigned margins of pars. (1) to (4) and sub-
stituted semicolons for commas at end, and sub-                   The provisions of the National Emergencies Act (Pub.
stituted, in introductory provisions, ‘‘If a provision de-      L. 94–412, Sept. 14, 1976, 90 Stat. 1255) not applicable to
scribed in subsection (e) of this section or a provision        the powers and authorities conferred by this section
to the same general effect has been at any time here-           and actions taken hereunder, see section 1651 of Title
tofore or is hereafter included or inserted in any such         50, War and National Defense.
contract, payments to be made thereafter to an as-
signee of any moneys due or to become due under such            MONEYS DUE UNDER LETTERS OF COMMITMENT ISSUED
contract shall not be subject to reduction or setoff for         IN CONNECTION WITH DISPOSITION OF SURPLUS AGRI-
any liability of any nature of the assignor to the               CULTURAL COMMODITIES
United States or any department or agency thereof                 Moneys due under letters of commitment issued
which arises independently of such contract, or here-           against funds or guaranties of funds supplied by Com-
after for any liability of the assignor on account of—’’        modity Credit Corporation in connection with disposi-
for ‘‘and if such provision or one to the same general ef-      tion of surplus agricultural commodities to foreign
fect has been at any time heretofore or is hereafter in-        countries, as assignable under the Assignment of
cluded or inserted in any such contract, payments to be         Claims Act of 1940, which constitutes this section and
made thereafter to an assignee of any moneys due or to          former section 203 of Title 31, Money and Finance, see
become due under such contract, whether during or               section 1702 of Title 7, Agriculture.
after such war or emergency, shall not be subject to re-
duction or set-off for any liability of any nature of the       § 16. Repealed. Oct. 21, 1941, ch. 452, 55 Stat. 743
assignor to the United States or any department or
agency thereof which arises independently of such con-             Section, R.S. § 3744; acts June 15, 1917, ch. 29, 40 Stat.
tract, or hereafter for any liability of the assignor on        198; Feb. 4, 1929, ch. 146, 45 Stat. 1147, related to require-
account of’’ and, in par. (4), ‘‘non withholding’’ for          ment that contracts made by Secretaries of War, Navy,
‘‘nonwithholding’’.                                             and Interior be in writing, and that copies thereof be
   Subsec. (g), designated sixth par. as subsec. (g).           filed in returns office of Department of the Interior.
   1951—Act May 15, 1951, made it clear that a bank or
other financing institution taking an assignment of             §§ 16a to 16d. Omitted
claims pursuant to this section would not be subject to
later recovery by the Government of amounts pre-                                       CODIFICATION
viously paid to the bank by the assignee except in cases
of fraud.                                                         Section 16a, act Jan. 12, 1927, ch. 27, 44 Stat. 936, au-
   1940—Act Oct. 9, 1940, inserted second and third pars.       thorized purchases by Department of the Interior with-
                                                                out compliance with section 16 of this title.
          EFFECTIVE DATE OF 1996 AMENDMENT                        Section 16b, acts Apr. 17, 1936, ch. 233, 49 Stat. 1226;
  For effective date and applicability of amendment by          May 18, 1937, ch. 223, 50 Stat. 181; May 17, 1938, ch. 236,
Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set       52 Stat. 393; June 16, 1939, ch. 208, 53 Stat. 834; June 18,
out as a note under section 251 of this title.                  1940, ch. 396, 54 Stat. 474, authorized purchases by Bo-
                                                                tanic Garden without compliance with section 16 of
          EFFECTIVE DATE OF 1994 AMENDMENT                      this title.
  For effective date and applicability of amendment by            Section 16c, act May 13, 1926, ch. 294, 44 Stat. 547, au-
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set      thorized purchases by Architect of Capitol without
out as a note under section 251 of this title.                  compliance with section 16 of this title.
                                                                  Section 16d, act Aug. 4, 1939, ch. 418, § 13, 53 Stat. 1197,
                DELEGATION OF AUTHORITY                         authorized purchases by Bureau of Reclamation with-
   Memorandum of President of the United States, Oct.           out compliance with section 16 of this title.
3, 1995, 60 F.R. 52289, provided:
   Memorandum for the Heads of Executive Depart-                §§ 17 to 19. Repealed. Oct. 21, 1941, ch. 452, 55
ments and Agencies                                                  Stat. 743
   Section 2451 of the Federal Acquisition Streamlining
Act of 1994, Public Law 103–355 ([amending] 41 U.S.C. 15)         Section 17, R.S. § 3745, provided that an affidavit be
(‘‘Act’’), provides, in part, that ‘‘[a]ny contract of the      affixed to the return of contract required by section 16
Department of Defense, the General Services Adminis-            of this title.
tration, the Department of Energy or any other depart-            Section 18, R.S. § 3746, provided punishment for fail-
ment or agency of the United States designated by the           ure to make returns of contracts as required by sec-
President, except [contracts where] . . . full payment          tions 16 and 17 of this title.
has been made, may, upon a determination of need by               Section 19, R.S. § 3747, imposed duty on Secretaries of
the President, provide or be amended without consider-          War, Navy, and Interior to furnish officers with letters
ation to provide that payments to be made to the as-            of instruction relating to their duties under sections 17
signee of any moneys due or to become due under [the]           and 18, contract forms, and affidavits, to insure uni-
contract shall not be subject to reduction or set-off.’’        formity.
Page 15                                   TITLE 41—PUBLIC CONTRACTS                                                         § 22

§ 20. Repealed. Pub. L. 103–355, title II, § 2452,               amended, which is classified generally to chapter 26
     Oct. 13, 1994, 108 Stat. 3326                               (§ 601 et seq.) of Title 7, Agriculture. For complete clas-
                                                                 sification of this Act to the Code, see Short Title note
  Section, R.S. § 3743; Feb. 27, 1877, ch. 69, 19 Stat. 249;     set out under section 601 of Title 7 and Tables.
July 31, 1894, ch. 174, § 18, 28 Stat. 210; June 10, 1921, ch.      The Federal Farm Loan Act, referred to in text, is
18, title III, § 304, 42 Stat. 24, provided for deposit of all   act July 17, 1916, ch. 245, 39 Stat. 360, as amended, and
contracts which required advance money or settlement             was classified principally to sections 641 et seq. of Title
of public accounts in the General Accounting Office.             12, Banks and Banking. The Federal Farm Loan Act, as
               EFFECTIVE DATE OF REPEAL                          amended, was repealed by section 5.26(a) (which was re-
                                                                 numbered as section 5.40(a) by Pub. L. 99–205, § 205(a)(2),
  For effective date and applicability of repeal, see sec-       Dec. 23, 1985, 99 Stat. 1703) of the Farm Credit Act of
tion 10001 of Pub. L. 103–355, set out as an Effective           1971, Pub. L. 92–181, Dec. 10, 1971, 85 Stat. 624. Section
Date of 1994 Amendment note under section 251 of this            5.26(a) (now 5.40(a)) of the Farm Credit Act of 1971 also
title.                                                           provided that all references in other legislation to the
                                                                 Acts repealed thereby ‘‘shall be deemed to refer to com-
§§ 20a, 20b. Repealed. Pub. L. 104–106, div. D, title            parable provisions of this Act’’. For further details, see
    XLIII, § 4321(i)(10), (11), Feb. 10, 1996, 110               notes set out under section 2001 of Title 12. For com-
    Stat. 676                                                    plete classification of the Federal Farm Loan Act to
  Section 20a, act June 15, 1940, ch. 367, 54 Stat. 398, pro-    the Code prior to such repeal, see Tables.
vided exemption from section 20 of this title for con-              The Emergency Farm Mortgage Act of 1933, referred
tracts, etc., concerning national-forest lands.                  to in text, is title II of act May 12, 1933, ch. 25, 48 Stat.
  Section 20b, act Nov. 28, 1943, ch. 328, 57 Stat. 592, pro-    31. Such title II was substantially repealed by act June
vided exemption from section 20 of this title for con-           30, 1947, ch. 166, title II, § 206(c), 61 Stat. 208; act Aug. 6,
tracts, etc., concerning use of lands or water under ju-         1953, ch. 335, § 19, 67 Stat. 400; act Oct. 4, 1961, Pub. L.
risdiction of Department of the Interior.                        87–353, § 3(a), (b), (w), 75 Stat. 773, 774; act Dec. 10, 1971,
                                                                 Pub. L. 92–181, title V, § 5.26(a), 85 Stat. 624. For com-
               EFFECTIVE DATE OF REPEAL                          plete classification of this Act to the Code, see Tables.
  For effective date and applicability of repeal, see sec-          The Federal Farm Mortgage Corporation Act, re-
tion 4401 of Pub. L. 104–106, set out as an Effective Date       ferred to in text, is act Jan. 31, 1934, ch. 7, 48 Stat. 344,
of 1996 Amendment note under section 251 of this title.          which enacted section 992a of Title 12, Banks and Bank-
                                                                 ing, and amended sections 347, 355, 723, 772, 781, 897, 1016,
§ 21. Repealed. Pub. L. 97–258, § 5(b), Sept. 13,                1020, 1020a, 1020b, 1020c, 1020d to 1020h, 1061, 1131i, 1138b
     1982, 96 Stat. 1069                                         and 1138d of Title 12, has been substantially repealed.
                                                                 For complete classification of this Act to the Code, see
  Section, acts July 31, 1894, ch. 174, § 22, 28 Stat. 210;      Tables.
June 10, 1921, ch. 18, §§ 304, 310, 42 Stat. 24, 25, provided       The Farm Credit Act of 1933, referred to in text, is act
that the heads of the several executive departments              June 16, 1933, ch. 98, 48 Stat. 2, as amended, and was
and the proper officers of other Government establish-           classified principally to subchapter IV (§ 1131 et seq.) of
ments, not within the jurisdiction of any executive de-          chapter 7 of Title 12. The Farm Credit Act of 1933, as
partment, make appropriate rules and regulations to              amended, was repealed by section 5.26(a) of the Farm
secure a proper administrative examination of all ac-            Credit Act of 1971, Pub. L. 92–181, Dec. 10, 1971, 85 Stat.
counts sent to them before their transmission to the             624. Section 5.26(a) of the Farm Credit Act of 1971 also
General Accounting Office, and for the execution of              provided that all references in other legislation to the
other requirements of section 20 of this title, insofar as       Acts repealed thereby ‘‘shall be deemed to refer to com-
the same related to the several departments or estab-
                                                                 parable provisions of this Act’’. For further details, see
lishments. See section 3521(a) of Title 31, Money and Fi-
                                                                 notes set out under section 2001 of Title 12. For com-
nance.
                                                                 plete classification of the Farm Credit Act of 1933 to
§ 22. Interest of Member of Congress                             the Code prior to such repeal, see Tables.
                                                                    The Home Owners’ Loan Act of 1933, referred to in
  No Member of Congress shall be admitted to                     text, is act June 13, 1933, ch. 64, 48 Stat. 128, as amend-
any share or part of any contract or agreement                   ed, now known as the Home Owners’ Loan Act, which
made, entered into, or accepted by or on behalf                  is classified generally to chapter 12 (§ 1461 et seq.) of
of the United States, or to any benefit to arise                 Title 12. For complete classification of this Act to the
thereupon. The provisions of this section shall                  Code, see section 1461 of Title 12 and Tables.
not apply to any contracts or agreements here-                                           CODIFICATION
tofore or hereafter entered into under the Agri-                   R.S. § 3741 derived from act Apr. 21, 1808, ch. 48, § 3, 2
cultural Adjustment Act [7 U.S.C. 601 et seq.],                  Stat. 484.
the Federal Farm Loan Act, the Emergency                           First sentence of section is based on R.S. § 3741, as
Farm Mortgage Act of 1933, the Federal Farm                      amended, and second sentence is based on act Jan. 25,
Mortgage Corporation Act, the Farm Credit Act                    1934, ch. 5, as amended and as applicable to R.S. § 3741.
of 1933, and the Home Owners’ Loan Act of 1933                                           AMENDMENTS
[12 U.S.C. 1461 et seq.], and shall not apply to
contracts or agreements of a kind which the                         1996—Pub. L. 104–106 inserted section number in origi-
                                                                 nal and substituted ‘‘Member’’ for ‘‘member’’.
Secretary of Agriculture may enter into with                        1994—Pub. L. 103–355 amended first sentence gener-
farmers: Provided, That such exemption shall be                  ally. Prior to amendment, first sentence read as fol-
made a matter of public record.                                  lows: ‘‘In every contract or agreement to be made or
(R.S. § 3741; Feb. 27, 1877, ch. 69, § 1, 19 Stat. 249;          entered into, or accepted by or on behalf of the United
Jan. 25, 1934, ch. 5, 48 Stat. 337; June 27, 1934, ch.           States, there shall be inserted an express condition
                                                                 that no Member of or Delegate to Congress shall be ad-
847, title V, § 510, 48 Stat. 1264; Aug. 26, 1937, ch.
                                                                 mitted to any share or part of such contract or agree-
821, 50 Stat. 838; Pub. L. 103–355, title VI, § 6004,            ment, or to any benefit to arise thereupon.’’
Oct. 13, 1994, 108 Stat. 3364; Pub. L. 104–106, div.                1937—Act Aug. 26, 1937, inserted provision at end of
D, title XLIII, § 4321(i)(12), Feb. 10, 1996, 110 Stat.          second sentence beginning with ‘‘and shall not apply’’.
676.)                                                               1934—Act June 27, 1934, inserted in second sentence
                                                                 ‘‘, the Federal Farm Loan Act, the Emergency Farm
                   REFERENCES IN TEXT                            Mortgage Act of 1933, the Federal Farm Mortgage Cor-
  The Agricultural Adjustment Act, referred to in text,          poration Act, the Farm Credit Act of 1933, and the
is title I of act May 12, 1933, ch. 25, 48 Stat. 31, as          Home Owners’ Loan Act of 1933’’.
§ 23                                     TITLE 41—PUBLIC CONTRACTS                                               Page 16

   Act Jan. 25, 1934, added second sentence providing          § 26. Repealed. June 30, 1949, ch. 288, title VI,
that this section shall not apply to any contracts or               § 602(a)(26), formerly title V, § 502(a)(26), 63
agreements heretofore or hereafter entered into under               Stat. 401; renumbered Sept. 5, 1950, ch. 849,
the Agricultural Adjustment Act.
   1877—Act Feb. 27, 1877, inserted ‘‘or Delegate to’’ after        § 6(a), (b), 64 Stat. 583
‘‘that no Member of’’ in first sentence.                         Section, acts Mar. 4, 1915, ch. 147, § 5, 38 Stat. 1161;
         EFFECTIVE DATE OF 1996 AMENDMENT                      May 29, 1928, ch. 901, § 1(5), 45 Stat. 986, related to ex-
                                                               change of typewriters and adding machines in part pay-
  For effective date and applicability of amendment by
                                                               ment for new machines.
Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
out as a note under section 251 of this title.                               EFFECTIVE DATE OF REPEAL
         EFFECTIVE DATE OF 1994 AMENDMENT                       Repeal effective July 1, 1949, see section 605 of act
                                                               June 30, 1949.
  For effective date and applicability of amendment by
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set     § 27. Repealed. Oct. 31, 1951, ch. 654, § 1(109), 65
out as a note under section 251 of this title.
                                                                    Stat. 705
§ 23. Orders or contracts for material placed with               Section, act June 5, 1920, ch. 235, § 7, 41 Stat. 947, re-
     Government-owned establishments deemed                    lated to disposition of typewriting machines by Gov-
     obligations                                               ernment departments and establishments.
  All orders or contracts for work or material or              §§ 28 to 34. Omitted
for the manufacture of material pertaining to
approved projects heretofore or hereafter placed                                     CODIFICATION
with Government-owned establishments shall be                    Section 28, act June 16, 1934, ch. 553, § 1, 48 Stat. 974,
considered as obligations in the same manner as                related to adjustment and settlement of claims by per-
provided for similar orders or contracts placed                sons who entered into contracts with the United States
with commercial manufacturers or private con-                  prior to Aug. 10, 1933 and claim loss due to compliance
tractors, and the appropriations shall remain                  with codes of fair competition.
                                                                 Section 29, act June 16, 1934, ch. 553, § 2, 48 Stat. 975,
available for the payment of the obligations so                related to amount allowed for settlement.
created as in the case of contracts or orders with               Section 30, act June 16, 1934, ch. 553, § 3, 48 Stat. 975,
commercial manufacturers or private contrac-                   related to limitation on the amount of profits.
tors.                                                            Section 31, act June 16, 1934, ch. 553, § 4, 48 Stat. 975,
                                                               related to time for presentment of claims.
(June 5, 1920, ch. 240, 41 Stat. 975; July 1, 1922, ch.
                                                                 Section 32, act June 16, 1934, ch. 553, § 5, 48 Stat. 975,
259, 42 Stat. 812; June 2, 1937, ch. 293, 50 Stat.             authorized appropriations for settlement of claims.
245.)                                                            Section 33, act June 16, 1934, ch. 553, § 6, 48 Stat. 975,
                      CODIFICATION                             related to procedure for settlement of claims and res-
                                                               ervation of right to prosecute for fraud and criminal
  Section is a composite of acts June 5, 1920, ch. 240,        conduct.
and July 1, 1922, ch. 259. The words ‘‘for work or mate-         Section 34, act Aug. 29, 1935, ch. 815, 49 Stat. 990, pro-
rial’’ after ‘‘All orders or contracts’’, ‘‘or contracts’’     vided that bids made subject to codes of fair competi-
after ‘‘similar orders’’, and ‘‘or private contractors’’       tion prior to Aug. 29, 1935 should not be rejected where
after ‘‘commercial manufacturers’’ in two places are           bidder agreed to be subject to Acts of Congress requir-
based on act July 1, 1922.                                     ing observance of minimum wages, maximum hours, or
                      AMENDMENTS                               limitations as to age of employees in performance of
                                                               contracts, with Federal agencies.
  1937—Act June 2, 1937, continued this section in ef-
fect.                                                          § 35. Contracts for materials, etc., exceeding
                                                                    $10,000; representations and stipulations
§ 24. Contracts for transportation of moneys, bul-
     lion, coin, and securities                                  In any contract made and entered into by any
  Whenever it is practicable contracts for the                 executive department, independent establish-
transportation of moneys, bullion, coin, notes,                ment, or other agency or instrumentality of the
bonds, and other securities of the United States,              United States, or by the District of Columbia, or
and paper shall be let to the lowest responsible               by any corporation all the stock of which is ben-
bidder therefor, after notice to all parties hav-              eficially owned by the United States (all the
ing means of transportation.                                   foregoing being hereinafter designated as agen-
                                                               cies of the United States), for the manufacture
(July 7, 1884, ch. 332, 23 Stat. 204.)                         or furnishing of materials, supplies, articles, and
                      CODIFICATION                             equipment in any amount exceeding $10,000,
   Section is from Sundry Civil Appropriation Act July         there shall be included the following representa-
7, 1884, fiscal year 1885.                                     tions and stipulations:
                                                                 (a) That all persons employed by the contrac-
§ 24a. Omitted                                                 tor in the manufacture or furnishing of the ma-
                      CODIFICATION                             terials, supplies, articles, or equipment used in
                                                               the performance of the contract will be paid,
  Section, acts June 16, 1933, ch. 101, § 5, 48 Stat. 305;
Apr. 24, 1935, ch. 78, 49 Stat. 161; Aug. 29, 1935, ch. 816,   without subsequent deduction or rebate on any
49 Stat. 991, provided for cancellation on or before           account, not less than the minimum wages as
March 31, 1936, of contracts for transportation entered        determined by the Secretary of Labor to be the
into prior to June 16, 1933.                                   prevailing minimum wages for persons employed
                                                               on similar work or in the particular or similar
§ 25. Repealed. Feb. 19, 1948, ch. 65, § 11(a), 62             industries or groups of industries currently op-
     Stat. 25                                                  erating in the locality in which the materials,
 Section, R.S. § 3729, related to contracts for bunting.       supplies, articles, or equipment are to be manu-
See section 2301 et seq. of Title 10, Armed Forces.            factured or furnished under said contract;
Page 17                                 TITLE 41—PUBLIC CONTRACTS                                                      § 35

  (b) That no person employed by the contractor                                      SHORT TITLE
in the manufacture or furnishing of the mate-                   Section 14, formerly section 12, of act June 30, 1936, as
rials, supplies, articles, or equipment used in the           added by Pub. L. 103–355, title X, § 10005(f)(5), Oct. 13,
performance of the contract shall be permitted                1994, 108 Stat. 3409, and renumbered by Pub. L. 104–106,
to work in excess of forty hours in any one                   div. D, title XLIII, § 4321(f)(1)(B), Feb. 10, 1996, 110 Stat.
week: Provided, That the provisions of this sub-              675, provided that: ‘‘This Act [enacting this section and
section shall not apply to any employer who                   sections 36 to 45 of this title] may be cited as the
                                                              ‘Walsh-Healey Act’.’’
shall have entered into an agreement with his
employees pursuant to the provisions of para-                        EXEMPTIONS TO FEDERAL RESTRICTIONS ON
graphs (1) or (2) of subsection (b) of section 207                    MARKETABILITY OF PRISON MADE GOODS
of title 29;                                                    Provisions of this section creating exemptions to
  (c) That no male person under sixteen years of              Federal regulations on marketability of prison made
age and no female person under eighteen years                 goods are not applicable unless representatives of local
of age and no convict labor will be employed by               union central bodies or similar labor union organiza-
the contractor in the manufacture or production               tions have been consulted prior to the initiation of any
or furnishing of any of the materials, supplies,              project qualifying of any exemption created by this
articles, or equipment included in such contract,             section and such paid inmate employment will not re-
                                                              sult in the displacement of employed workers, or be ap-
except that this section, or any other law or Ex-             plied in skills, crafts, or trades in which there is a sur-
ecutive order containing similar prohibitions                 plus of available gainful labor in the locality, or impair
against purchase of goods by the Federal Gov-                 existing contracts for services, see section 819(c) of
ernment, shall not apply to convict labor which               Pub. L. 90–351, set out as a note under section 1761 of
satisfies the conditions of section 1761(c) of title          Title 18, Crimes and Criminal Procedure.
18; and
                                                                            EXCEPTIONS AND EXEMPTIONS
  (d) That no part of such contract will be per-
formed nor will any of the materials, supplies,                 7 F.R. 9399 (amending Exemption Order Apr. 21, 1942,
articles, or equipment to be manufactured or                  7 F.R. 3003), which exempted female persons under 18
                                                              years of age from the provisions of subsec. (d) of this
furnished under said contract be manufactured
                                                              section, was superseded by 10 F.R. 10438.
or fabricated in any plants, factories, buildings,
or surroundings or under working conditions                   CONTRACTING AUTHORITY OF GOVERNMENT AGENCIES IN
which are unsanitary or hazardous or dangerous                  CONNECTION WITH NATIONAL DEFENSE FUNCTIONS
to the health and safety of employees engaged in                Provisions of sections 35 to 45 of this title as applica-
the performance of said contract. Compliance                  ble to Government agencies exercising certain con-
with the safety, sanitary, and factory inspection             tracting authority in connection with national-defense
laws of the State in which the work or part                   functions, see section 13 of Ex. Ord. No. 10789, set out
thereof is to be performed shall be prima-facie               as a note under section 1431 of Title 50, War and Na-
evidence of compliance with this subsection.                  tional Defense.

(June 30, 1936, ch. 881, § 1, 49 Stat. 2036; May 13,          EX. ORD. NO. 13126. PROHIBITION OF ACQUISITION OF
1942, ch. 306, 56 Stat. 277; Pub. L. 90–351, title I,          PRODUCTS PRODUCED BY FORCED OR INDENTURED CHILD
                                                               LABOR
§ 819(b), formerly § 827(b), as added Pub. L. 96–157,
§ 2, Dec. 27, 1979, 93 Stat. 1215; renumbered Pub.              Ex. Ord. No. 13126, June 12, 1999, 64 F.R. 32383, pro-
L. 98–473, title II, § 609B(f), Oct. 12, 1984, 98 Stat.       vided:
2093; Pub. L. 99–145, title XII, § 1241(b), Nov. 8,             By the authority vested in me as President by the
                                                              Constitution and the laws of the United States of
1985, 99 Stat. 734; Pub. L. 103–355, title VII,
                                                              America, and in order to continue the executive
§ 7201(1), Oct. 13, 1994, 108 Stat. 3378.)                    branch’s commitment to fighting abusive child labor
                      AMENDMENTS                              practices, it is hereby ordered as follows:
                                                                SECTION. 1. Policy. It shall be the policy of the United
  1994—Subsecs. (a) to (e). Pub. L. 103–355 redesignated      States Government, consistent with the Tariff Act of
subsecs. (b) to (e) as (a) to (d), respectively, and struck   1930, 19 U.S.C. 1307, the Fair Labor Standards Act [of
out former subsec. (a) which read as follows: ‘‘That the      1938], 29 U.S.C. 201 et. seq., and the Walsh-Healey Public
contractor is the manufacturer of or a regular dealer in      Contracts Act [Walsh-Healey Act], 41 U.S.C. 35 et seq.,
the materials, supplies, articles, or equipment to be         that executive agencies shall take appropriate actions
manufactured or used in the performance of the con-           to enforce the laws prohibiting the manufacture or im-
tract;’’.                                                     portation of goods, wares, articles, and merchandise
  1985—Subsec. (c). Pub. L. 99–145 struck out ‘‘eight         mined, produced, or manufactured wholly or in part by
hours in any one day or in excess of’’ before ‘‘forty         forced or indentured child labor.
hours’’.                                                        SEC. 2. Publication of List. Within 120 days after the
  1979—Subsec. (d). Pub. L. 90–351, § 827(b), as added by     date of this order, the Department of Labor, in con-
Pub. L. 96–157, inserted provisions relating to convict       sultation and cooperation with the Department of the
labor which satisfies the conditions of section 1761(c) of    Treasury and the Department of State, shall publish in
title 18.                                                     the Federal Register a list of products, identified by
  1942—Subsec. (c). Act May 13, 1942, inserted proviso.       their country of origin, that those Departments have a
          EFFECTIVE DATE OF 1994 AMENDMENT                    reasonable basis to believe might have been mined, pro-
                                                              duced, or manufactured by forced or indentured child
  For effective date and applicability of amendment by        labor. The Department of Labor may conduct hearings
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set    to assist in the identification of those products.
out as a note under section 251 of this title.                  SEC. 3. Procurement Regulations. Within 120 days after
                                                              the date of this order, the Federal Acquisition Regu-
          EFFECTIVE DATE OF 1985 AMENDMENT
                                                              latory Council shall issue proposed rules to implement
   Section 1241(c) of Pub. L. 99–145 provided that: ‘‘The     the following:
amendments made by this section [amending this sec-             (a) Required Solicitation Provisions. Each solicitation
tion and section 328 of former Title 40, Public Build-        of offers for a contract for the procurement of a prod-
ings, Property, and Works] shall take effect on January       uct included on the list published under section 2 of
1, 1986.’’                                                    this order shall include the following provisions:
§ 36                                   TITLE 41—PUBLIC CONTRACTS                                              Page 18

  (1) A provision that requires the contractor to certify      (b) This order does not apply to a contract that is for
to the contracting officer that the contractor or, in the    the procurement of any product, or any article, mate-
case of an incorporated contractor, a responsible offi-      rial, or supply contained in a product that is mined,
cial of the contractor has made a good faith effort to       produced, or manufactured in any foreign country if:
determine whether forced or indentured child labor was           (1) the foreign country is a party to the Agreement
used to mine, produce, or manufacture any product fur-         on Government Procurement annexed to the WTO
nished under the contract and that, on the basis of            Agreement or a party to the North American Free
those efforts, the contractor is unaware of any such use       Trade Agreement (‘‘NAFTA’’); and
of child labor; and                                              (2) the contract is of a value that is equal to or
  (2) A provision that obligates the contractor to co-         greater than the United States threshold specified in
operate fully in providing reasonable access to the con-       the Agreement on Government Procurement annexed
tractor’s records, documents, persons, or premises if          to the WTO Agreement or NAFTA, whichever is ap-
reasonably requested by authorized officials of the con-       plicable.
tracting agency, the Department of the Treasury, or            SEC. 6. Definitions. (a) ‘‘Executive agency’’ and ‘‘agen-
the Department of Justice, for the purpose of determin-      cy’’ have the meaning given to ‘‘executive agency’’ in
ing whether forced or indentured child labor was used        section 4(1) of the Office of Federal Procurement Policy
to mine, produce, or manufacture any product fur-            Act (41 U.S.C. 403(1)).
nished under the contract.                                     (b) ‘‘WTO Agreement’’ means the Agreement Estab-
  (b) Investigations. Whenever a contracting officer of      lishing the World Trade Organization, entered into on
an executive agency has reason to believe that forced        April 15, 1994.
or indentured child labor was used to mine, produce, or        (c) ‘‘Forced or indentured child labor’’ means all
manufacture a product furnished pursuant to a con-
                                                             work or service (1) exacted from any person under the
tract subject to the requirements of subsection 3(a) of
                                                             age of 18 under the menace of any penalty for its non-
this order, the head of the executive agency shall refer
                                                             performance and for which the worker does not offer
the matter for investigation to the Inspector General of
                                                             himself voluntarily; or (2) performed by any person
the executive agency and, as the head of the executive
                                                             under the age of 18 pursuant to a contract the enforce-
agency or the Inspector General determines appro-
                                                             ment of which can be accomplished by process or pen-
priate, to the Attorney General and the Secretary of
                                                             alties.
the Treasury.
  (c) Remedies.                                                SEC. 7. Judicial Review. This order is intended only to
  (1) The head of an executive agency may impose rem-        improve the internal management of the executive
edies as provided in this subsection in the case of a con-   branch and does not create any rights or benefits, sub-
tractor under a contract of the executive agency if the      stantive or procedural, enforceable by law by a party
head of the executive agency finds that the contractor:      against the United States, its agencies, its officers, or
    (i) Has furnished under the contract products that       any other person.
  have been mined, produced, or manufactured by                                                   WILLIAM J. CLINTON.
  forced or indentured child labor or uses forced or in-
  dentured child labor in the mining, production, or         § 36. Liability for contract breach; cancellation;
  manufacturing operations of the contractor;                     completion by Government agency; employ-
    (ii) Has submitted a false certification under sub-           ee’s wages
  section 3(a)(1) of this order; or
    (iii) Has failed to cooperate in accordance with the       Any breach or violation of any of the represen-
  obligation imposed pursuant to subsection 3(a)(2) of       tations and stipulations in any contract for the
  this order.                                                purposes set forth in section 35 of this title shall
  (2) The head of an executive agency, in his or her sole
discretion, may terminate a contract on the basis of         render the party responsible therefor liable to
any finding described in subsection 3(c)(1) of this order    the United States of America for liquidated
for any contract entered into after the date the regula-     damages, in addition to damages for any other
tion called for in section 3 of this order is published in   breach of such contract, the sum of $10 per day
final.                                                       for each male person under sixteen years of age
  (3) The head of an executive agency may debar or sus-      or each female person under eighteen years of
pend a contractor from eligibility for Federal contracts
                                                             age, or each convict laborer knowingly em-
on the basis of a finding that the contractor has en-
gaged in an act described in subsection 3(c)(1) of this      ployed in the performance of such contract, and
order. The provision for debarment may not exceed 3          a sum equal to the amount of any deductions,
years.                                                       rebates, refunds, or underpayment of wages due
  (4) The Administrator of General Services shall in-        to any employee engaged in the performance of
clude on the List of Parties Excluded from Federal Pro-      such contract; and, in addition, the agency of
curement and Nonprocurement Programs (maintained             the United States entering into such contract
by the Administrator as described in the Federal Ac-
                                                             shall have the right to cancel same and to make
quisition Regulation) each party that is debarred, sus-
pended, proposed for debarment or suspension, or de-         open-market purchases or enter into other con-
clared ineligible by the head of an agency on the basis      tracts for the completion of the original con-
that the person has engaged in an act described in sub-      tract, charging any additional cost to the origi-
section 3(c)(1) of this order.                               nal contractor. Any sums of money due to the
  (5) This section shall not be construed to limit the       United States of America by reason of any viola-
use of other remedies available to the head of an execu-     tion of any of the representations and stipula-
tive agency or any other official of the Federal Govern-     tions of said contract set forth in section 35 of
ment on the basis of a finding described in subsection
3(c)(1) of this order.
                                                             this title may be withheld from any amounts
  SEC. 4. Report. Within 2 years after implementation of     due on any such contracts or may be recovered
any final rule under this order, the Administrator of        in suits brought in the name of the United
General Services, with the assistance of other execu-        States of America by the Attorney General
tive agencies, shall submit to the Office of Management      thereof. All sums withheld or recovered as de-
and Budget a report on the actions taken pursuant to         ductions, rebates, refunds, or underpayments of
this order.                                                  wages shall be held in a special deposit account
  SEC. 5. Scope. (a) Any proposed rules issued pursuant
to section 3 of this order shall apply only to acquisi-      and shall be paid, on order of the Secretary of
tions for a total amount in excess of the micro-pur-         Labor, directly to the employees who have been
chase threshold as defined in section 32(f) of the Office    paid less than minimum rates of pay as set forth
of Federal Procurement Policy Act (41 U.S.C. 428(f)).        in such contracts and on whose account such
Page 19                                 TITLE 41—PUBLIC CONTRACTS                                                    § 39

sums were withheld or recovered: Provided, That               a note under section 3301 of Title 5, Government Orga-
no claims by employees for such payments shall                nization and Employees.
                                                                 ‘‘Chapter 51 and subchapter III of chapter 53 of title
be entertained unless made within one year
                                                              5’’ substituted in text for ‘‘the Classification Act of
from the date of actual notice to the contractor              1949, as amended’’ on authority of Pub. L. 89–554, § 7(b),
of the withholding or recovery of such sums by                Sept. 6, 1966, 80 Stat. 631, the first section of which en-
the United States of America.                                 acted Title 5.
(June 30, 1936, ch. 881, § 2, 49 Stat. 2037.)                                       AMENDMENTS

§ 37. Distribution of list of persons breaching                 1949—Act Oct. 28, 1949, substituted ‘‘Classification Act
                                                              of 1949’’ for ‘‘Classification Act of 1923’’.
     contract; future contracts prohibited
                                                                                       REPEALS
  The Comptroller General is authorized and di-
                                                                Act Oct. 28, 1949, ch. 782, cited as a credit to this sec-
rected to distribute a list to all agencies of the
                                                              tion, was repealed (subject to a savings clause) by Pub.
United States containing the names of persons                 L. 89–554, Sept. 6, 1966, § 8, 80 Stat. 632, 655.
or firms found by the Secretary of Labor to have
breached any of the agreements or representa-                                  TRANSFER OF FUNCTIONS
tions required by sections 35 to 45 of this title.              For transfer of functions of all other officers, employ-
Unless the Secretary of Labor otherwise rec-                  ees, and agencies of Department of Labor, with certain
ommends no contracts shall be awarded to such                 exceptions, to Secretary of Labor, with power to dele-
persons or firms or to any firm, corporation,                 gate, see Reorg. Plan No. 6 of 1950, §§ 1, 2, eff. May 24,
                                                              1950, 15 F.R. 3174, 64 Stat. 1263, set out in the Appendix
partnership, or association in which such per-                to Title 5, Government Organization and Employees.
sons or firms have a controlling interest until
three years have elapsed from the date the Sec-               § 39. Hearings on Walsh-Healey provisions by
retary of Labor determines such breach to have                     Secretary of Labor; witness fees; failure to
occurred.                                                          obey order; punishment
(June 30, 1936, ch. 881, § 3, 49 Stat. 2037.)                   Upon his own motion or on application of any
                                                              person affected by any ruling of any agency of
§ 38. Administration of Walsh-Healey provisions;              the United States in relation to any proposal or
     officers and employees; appointment; inves-              contract involving any of the provisions of sec-
     tigations; rules and regulations                         tions 35 to 45 of this title, and on complaint of
  The Secretary of Labor is authorized and di-                a breach or violation of any representation or
rected to administer the provisions of sections               stipulation as provided in said sections, the Sec-
35 to 45 of this title and to utilize such Federal            retary of Labor, or an impartial representative
officers and employees and, with the consent of               designated by him, shall have the power to hold
the State, such State and local officers and em-              hearings and to issue orders requiring the at-
ployees as he may find necessary to assist in the             tendance and testimony of witnesses and the
administration of said sections and to prescribe              production of evidence under oath. Witnesses
rules and regulations with respect thereto. The               shall be paid the same fees and mileage that are
Secretary shall appoint, subject to chapter 51                paid witnesses in the courts of the United
and subchapter III of chapter 53 of title 5, an ad-           States. In case of contumacy, failure, or refusal
ministrative officer, and such attorneys and ex-              of any person to obey such an order, any Dis-
perts, and other employees with regard to exist-              trict Court of the United States or of any Terri-
ing laws applicable to the employment and com-                tory or possession within the jurisdiction of
pensation of officers and employees of the                    which the inquiry is carried on, or within the ju-
United States, as he may from time to time find               risdiction of which said person who is guilty of
necessary for the administration of sections 35               contumacy, failure, or refusal is found, or re-
to 45 of this title. The Secretary of Labor or his            sides or transacts business, upon the application
authorized representatives shall have power to                by the Secretary of Labor or representative des-
make investigations and findings as provided in               ignated by him, shall have jurisdiction to issue
sections 35 to 45 of this title, and prosecute any            to such person an order requiring such person to
inquiry necessary to his functions in any part of             appear before him or representative designated
the United States. The Secretary of Labor shall               by him, to produce evidence if, as, and when so
have authority from time to time to make,                     ordered, and to give testimony relating to the
amend, and rescind such rules and regulations as              matter under investigation or in question; and
may be necessary to carry out the provisions of               any failure to obey such order of the court may
sections 35 to 45 of this title.                              be punished by said court as a contempt thereof;
                                                              and shall make findings of fact after notice and
(June 30, 1936, ch. 881, § 4, 49 Stat. 2038; Oct. 28,         hearing, which findings shall be conclusive upon
1949, ch. 782, title XI, § 1106(a), 63 Stat. 972.)            all agencies of the United States, and if sup-
                      CODIFICATION                            ported by the preponderance of the evidence,
                                                              shall be conclusive in any court of the United
  Provisions of second sentence of this section that au-
thorized the Secretary to appoint an administrative of-       States; and the Secretary of Labor or authorized
ficer and such attorneys and experts ‘‘without regard to      representative shall have the power, and is au-
the provisions of the civil service laws’’ were omitted       thorized, to make such decisions, based upon
as obsolete. Such appointments are subject to the civil       findings of fact, as are deemed to be necessary
service laws unless specifically excepted by such laws        to enforce the provisions of sections 35 to 45 of
or by laws enacted subsequent to Executive Order 8743,        this title.
Apr. 23, 1941, issued by the President pursuant to the
Act of Nov. 26, 1940, ch. 919, title I, § 1, 54 Stat. 1211,   (June 30, 1936, ch. 881, § 5, 49 Stat. 2038; June 25,
which covered most excepted positions into the classi-        1948, ch. 646, § 32(b), 62 Stat. 991; May 24, 1949, ch.
fied (competitive) civil service. The Order is set out as     139, § 127, 63 Stat. 107.)
§ 40                                    TITLE 41—PUBLIC CONTRACTS                                                  Page 20

                      CODIFICATION                                        EFFECTIVE DATE OF 1978 AMENDMENT
  As originally enacted, the words ‘‘, or the district          Amendment by Pub. L. 95–598 effective Oct. 1, 1979,
court of the United States for the District of Colum-         see section 402(a) of Pub. L. 95–598, set out as an Effec-
bia,’’ were set out following ‘‘Territory or possession’’.    tive Date note preceding section 101 of Title 11, Bank-
Act June 25, 1948, as amended by act May 24, 1949, sub-       ruptcy.
stituted ‘‘United States District Court for the District
of Columbia’’ for ‘‘district court of the United States       § 42. Effect of Walsh-Healey provisions on other
for the District of Columbia’’. The words ‘‘United                 laws
States District Court for the District of Columbia’’
have been deleted entirely as superfluous in view of            The provisions of sections 35 to 45 of this title
section 132(a) of Title 28, Judiciary and Judicial Proce-     shall not be construed to modify or amend Title
dure, which states that ‘‘There shall be in each judicial     III of the act entitled ‘‘An Act making appro-
district a district court which shall be a court of record    priations for the Treasury and Post Office De-
known as the United States District Court for the dis-        partments for the fiscal year ending June 30,
trict’’, and section 88 of title 28 which states that ‘‘the   1934, and for other purposes’’, approved May 3,
District of Columbia constitutes one judicial district’’.
                                                              1933 (commonly known as the Buy American
§ 40. Exceptions from Walsh-Healey provisions;                Act) [41 U.S.C. 10a et seq.], nor shall the provi-
     modification of contracts; variations; over-             sions of sections 35 to 45 of this title be con-
     time; suspension of representations and stip-            strued to modify or amend sections 3141–3144,
     ulations                                                 3146, and 3147 of title 40, nor the labor provisions
                                                              of Title II of the National Industrial Recovery
  Upon a written finding by the head of the con-              Act, approved June 16, 1933, as extended, or of
tracting agency or department that the inclu-                 section 7 of the Emergency Relief Appropriation
sion in the proposal or contract of the represen-             Act, approved April 8, 1935; nor shall the provi-
tations or stipulations set forth in section 35 of            sions of sections 35 to 45 of this title be con-
this title will seriously impair the conduct of               strued to modify or amend chapter 307 and sec-
Government business, the Secretary of Labor                   tion 4162 1 of title 18.
shall make exceptions in specific cases or other-
wise when justice or public interest will be                  (June 30, 1936, ch. 881, § 8, 49 Stat. 2039.)
served thereby. Upon the joint recommendation                                      REFERENCES IN TEXT
of the contracting agency and the contractor,
                                                                The Buy American Act, referred to in text, is title III
the Secretary of Labor may modify the terms of                of act Mar. 3, 1933, ch. 212, 47 Stat. 1520, as amended,
an existing contract respecting minimum rates                 which is classified generally to sections 10a, 10b, and
of pay and maximum hours of labor as he may                   10c of this title. For complete classification of this Act
find necessary and proper in the public interest              to the Code, see Short Title note set out under section
or to prevent injustice and undue hardship. The               10a of this title and Tables.
Secretary of Labor may provide reasonable limi-                 The National Industrial Recovery Act, referred to in
tations and may make rules and regulations al-                text, is act June 16, 1933, ch. 90, 48 Stat. 195. Title II of
lowing reasonable variations, tolerances, and ex-             the National Industrial Recovery Act was classified
                                                              principally to subchapter I (§ 401 et seq.) of chapter 8 of
emptions to and from any or all provisions of                 former Title 40, Public Buildings, Property, and Works,
sections 35 to 45 of this title respecting mini-              and was terminated June 30, 1943, by act June 27, 1942,
mum rates of pay and maximum hours of labor                   ch. 450, § 1, 56 Stat. 410. Provisions of title II of the Act
or the extent of the application of said sections             which were classified to former Title 40 were repealed
to contractors, as hereinbefore described. When-              by section 6(b) of Pub. L. 107–217, Aug. 21, 2002, 116 Stat.
ever the Secretary of Labor shall permit an in-               1304. For complete classification of this Act to the
crease in the maximum hours of labor stipulated               Code, see Tables.
                                                                Section 7 of the Emergency Relief Appropriation Act,
in the contract, he shall set a rate of pay for any
                                                              approved April 8, 1935, referred to in text, is act Apr. 8,
overtime, which rate shall be not less than one               1935, ch. 48, § 7, 49 Stat. 115, which is not classified to
and one-half times the basic hourly rate re-                  the Code.
ceived by any employee affected: Provided, That                 Section 4162 of title 18, referred to in text, was re-
whenever in his judgment such course is in the                pealed by Pub. L. 98–473, title II, § 218(a)(4), Oct. 12, 1984,
public interest, the President is authorized to               98 Stat. 2027.)
suspend any or all of the representations and                                           CODIFICATION
stipulations contained in section 35 of this title.
                                                                 ‘‘Sections 3141–3144, 3146, and 3147 of title 40’’ sub-
(June 30, 1936, ch. 881, § 6, 49 Stat. 2038; June 28,         stituted in text for ‘‘the Act entitled ‘An Act relating
1940, ch. 440, title I, § 13, 54 Stat. 681.)                  to the rate of wages for laborers and mechanics em-
                                                              ployed on public buildings of the United States and the
                      AMENDMENTS
                                                              District of Columbia by contractors and subcontrac-
 1940—Act June 28, 1940, inserted proviso.                    tors, and for other purposes’, approved March 3, 1931
                                                              (commonly known as the Bacon-Davis Act), as amended
§ 41. ‘‘Person’’ defined in Walsh-Healey provisions           from time to time’’ on authority of Pub. L. 107–217,
  Whenever used in sections 35 to 45 of this title,           § 5(c), Aug. 21, 2002, 116 Stat. 1303, the first section of
                                                              which enacted Title 40, Public Buildings, Property, and
the word ‘‘person’’ includes one or more individ-
                                                              Works.
uals, partnerships, associations, corporations,                  ‘‘Chapter 307 and section 4162 of title 18’’ substituted
legal representatives, trustees, trustees in cases            for ‘‘the Act entitled ‘An Act to provide for the diver-
under title 11, or receivers.                                 sification of employment of Federal prisoners, for their
(June 30, 1936, ch. 881, § 7, 49 Stat. 2039; Pub. L.          training and schooling in trades and occupations, and
                                                              for other purposes’, approved May 27, 1930, as amended
95–598, title III, § 326, Nov. 6, 1978, 92 Stat. 2679.)
                                                              and supplemented by the Act approved June 23, 1934’’
                      AMENDMENTS                              on authority of act June 25, 1948, ch. 645, 62 Stat. 683,
 1978—Pub. L. 95–598 substituted ‘‘trustees in cases
under title 11’’ for ‘‘trustees in bankruptcy’’.               1 See   References in Text note below.
Page 21                                 TITLE 41—PUBLIC CONTRACTS                                                      § 43b

the first section of which enacted Title 18, Crimes and                                CODIFICATION
Criminal Procedure. Prior to the enactment of Title 18,          ‘‘Section 553 of title 5’’, ‘‘subchapter II of chapter 5,
the act of May 27, 1930, as amended, had been classified       and chapter 7, of title 5’’, and ‘‘chapter 7 of title 5’’ sub-
to sections 744a to 744n of Title 18.                          stituted for ‘‘section 1003 of title 5’’, ‘‘such Act [mean-
                                                               ing the Administrative Procedure Act]’’, and ‘‘section
§ 43. Walsh-Healey provisions not applicable to                1009 of title 5’’, respectively, on authority of Pub. L.
     certain contracts                                         89–554, § 7(b), Sept. 6, 1966, 80 Stat. 631, the first section
                                                               of which enacted Title 5, Government Organization and
  Sections 35 to 45 of this title shall not apply to           Employees.
purchases of such materials, supplies, articles,
                                                                                    PRIOR PROVISIONS
or equipment as may usually be bought in the
open market; nor shall they apply to perish-                     A prior section 10 of act June 30, 1936, was renum-
ables, including dairy, livestock and nursery                  bered section 12, and is classified to section 44 of this
                                                               title.
products, or to agricultural or farm products
processed for first sale by the original produc-                                       AMENDMENTS
ers; nor to any contracts made by the Secretary                   1996—Subsec. (b). Pub. L. 104–106, § 4321(f)(2)(A), sub-
of Agriculture for the purchase of agricultural                stituted ‘‘section 35(a)’’ for ‘‘section 35(b)’’.
commodities or the products thereof. Nothing in                   Subsec. (c). Pub. L. 104–106, § 4321(f)(2)(B), struck out
said sections shall be construed to apply to car-              comma after ‘‘ ‘locality’ ’’.
                                                                  1994—Subsec. (b). Pub. L. 103–355, § 7201(2), substituted
riage of freight or personnel by vessel, airplane,
                                                               ‘‘supplier of materials’’ for ‘‘manufacturer of, or regu-
bus, truck, express, or railway line where pub-                lar dealer in, materials’’.
lished tariff rates are in effect or to common                    Subsec. (c). Pub. L. 103–355, § 7201(3), struck out ‘‘ ‘reg-
carriers subject to the Communications Act of                  ular dealer’, ‘manufacturer’,’’ before ‘‘and ‘open mar-
1934 [47 U.S.C. 151 et seq.].                                  ket’ ’’.
(June 30, 1936, ch. 881, § 9, 49 Stat. 2039.)                            EFFECTIVE DATE OF 1996 AMENDMENT
                                                                 For effective date and applicability of amendment by
                  REFERENCES IN TEXT                           Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
  The Communications Act of 1934, referred to in text,         out as a note under section 251 of this title.
is act June 19, 1934, ch. 652, 48 Stat. 1064, as amended,                EFFECTIVE DATE OF 1994 AMENDMENT
which is classified principally to chapter 5 (§ 151 et seq.)
of Title 47, Telegraphs, Telephones, and Radio-                  For effective date and applicability of amendment by
telegraphs. For complete classification of this Act to         Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set
the Code see section 609 of Title 47 and Tables.               out as a note under section 251 of this title.

                                                               § 43b. Manufacturers and regular dealers
§ 43a. Administrative procedure provisions
                                                                 (a) The Secretary of Labor may prescribe in
(a) Applicability                                              regulations the standards for determining
  Notwithstanding any provision of section 553                 whether a contractor is a manufacturer of or a
of title 5, subchapter II of chapter 5, and chapter            regular dealer in materials, supplies, articles, or
7, of title 5 shall be applicable in the administra-           equipment to be manufactured or used in the
tion of sections 35 to 39 and 41 to 43 of this title.          performance of a contract entered into by any
(b) Wage determination; administrative review                  executive department, independent establish-
                                                               ment, or other agency or instrumentality of the
  All wage determinations under section 35(a) of               United States, or by the District of Columbia, or
this title shall be made on the record after op-               by any corporation all the stock of which is ben-
portunity for a hearing. Review of any such                    eficially owned by the United States, for the
wage determination, or of the applicability of                 manufacture or furnishing of materials, sup-
any such wage determination, may be had with-                  plies, articles, and equipment.
in ninety days after such determination is made                  (b) Any interested person shall have the right
in the manner provided in chapter 7 of title 5 by              of judicial review of any legal question regard-
any person adversely affected or aggrieved                     ing the interpretation of the terms ‘‘regular
thereby, who shall be deemed to include any                    dealer’’ and ‘‘manufacturer’’, as defined pursu-
supplier of materials, supplies, articles or equip-            ant to subsection (a) of this section.
ment purchased or to be purchased by the Gov-                  (June 30, 1936, ch. 881, § 11, as added Pub. L.
ernment from any source, who is in any industry                103–355, title VII, § 7201(4), Oct. 13, 1994, 108 Stat.
to which such wage determination is applicable.                3378; amended Pub. L. 104–106, div. D, title XLIII,
(c) Judicial review                                            § 4321(f)(1)(A), Feb. 10, 1996, 110 Stat. 675.)
  Notwithstanding the inclusion of any stipula-                                     PRIOR PROVISIONS
tions required by any provision of sections 35 to                A prior section 11 of act June 30, 1936, was renum-
45 of this title in any contract subject to said               bered section 12, and is classified to section 44 of this
sections, any interested person shall have the                 title.
right of judicial review of any legal question                   Another prior section 11 of act June 30, 1936, was re-
which might otherwise be raised, including, but                numbered section 13, and is classified to section 45 of
                                                               this title.
not limited to, wage determinations and the in-
terpretation of the terms ‘‘locality’’ and ‘‘open                                      AMENDMENTS
market’’.                                                        1996—Pub. L. 104–106 transferred section in original so
(June 30, 1936, ch. 881, § 10, as added June 30, 1952,         as to appear after section 43a of this title.
ch. 530, title III, § 301, 66 Stat. 308; amended Pub.                    EFFECTIVE DATE OF 1996 AMENDMENT
L. 103–355, title VII, § 7201(2), (3), Oct. 13, 1994, 108        For effective date and applicability of amendment by
Stat. 3378; Pub. L. 104–106, div. D, title XLIII,              Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
§ 4321(f)(2), Feb. 10, 1996, 110 Stat. 675.)                   out as a note under section 251 of this title.
§ 44                                  TITLE 41—PUBLIC CONTRACTS                                       Page 22

                    EFFECTIVE DATE                          of the Government and who are conversant with
  For effective date and applicability of section, see      the problems incident to the employment of the
section 10001 of Pub. L. 103–355, set out as an Effective   blind.
Date of 1994 Amendment note under section 251 of this         (B) The President shall appoint one member
title.                                                      from persons who are not officers or employees
                                                            of the Government and who are conversant with
§ 44. Separability of Walsh-Healey provisions
                                                            the problems incident to the employment of
  If any provision of sections 35 to 45 of this             other severely handicapped individuals.
title, or the application thereof to any persons              (C) The President shall appoint one member
or circumstances, is held invalid, the remainder            from persons who are not officers or employees
of said sections, and the application of such pro-          of the Government and who represent blind indi-
visions to other persons or circumstances, shall            viduals employed in qualified nonprofit agencies
not be affected thereby.                                    for the blind.
                                                              (D) The President shall appoint one member
(June 30, 1936, ch. 881, § 12, formerly § 10, 49 Stat.
                                                            from persons who are not officers or employees
2039; renumbered § 11, June 30, 1952, ch. 530, title
                                                            of the Government and who represent severely
III, § 301, 66 Stat. 308; renumbered § 12, Pub. L.
                                                            handicapped individuals (other than blind indi-
104–106, div. D, title XLIII, § 4321(f)(1)(B), Feb. 10,
                                                            viduals) employed in qualified nonprofit agen-
1996, 110 Stat. 675.)
                                                            cies for other severely handicapped individuals.
                   PRIOR PROVISIONS                         (b) Vacancy
  A prior section 12 of act June 30, 1936, was renum-         A vacancy in the membership of the Commit-
bered section 13, and is classified to section 45 of this
                                                            tee shall be filled in the manner in which the
title.
  Another prior section 12 of act June 30, 1936, was re-    original appointment was made.
numbered section 14, and is set out as a Short Title        (c) Chairman
note under section 35 of this title.
                                                              The members of the Committee shall elect one
§ 45. Effective date of Walsh-Healey provisions;            of their number to be Chairman.
     exception as to representations with respect           (d) Terms
     to minimum wages                                         (1) Except as provided in paragraphs (2), (3),
  Sections 35 to 45 of this title shall apply to all        and (4), members appointed under paragraph (2)
contracts entered into pursuant to invitations              of subsection (a) of this section shall be ap-
for bids issued on or after ninety days from June           pointed for terms of five years. Any member ap-
30, 1936: Provided, however, That the provisions            pointed to the Committee under such paragraph
requiring the inclusion of representations with             may be reappointed to the Committee if he
respect to minimum wages shall apply only to                meets the qualifications prescribed by that
purchases or contracts relating to such indus-              paragraph.
tries as have been the subject matter of a deter-             (2) Of the members first appointed under para-
mination by the Secretary of Labor.                         graph (2) of subsection (a) of this section—
                                                                (A) one shall be appointed for a term of
(June 30, 1936, ch. 881, § 13, formerly § 11, 49 Stat.        three years,
2039; renumbered § 12, June 30, 1952, ch. 530, title            (B) one shall be appointed for a term of four
III, § 301, 66 Stat. 308; renumbered § 13, Pub. L.            years, and
104–106, div. D, title XLIII, § 4321(f)(1)(B), Feb. 10,         (C) one shall be appointed for a term of five
1996, 110 Stat. 675.)                                         years,
§ 46. Committee for Purchase From People Who                as designated by the President at the time of ap-
     Are Blind or Severely Disabled                         pointment.
(a) Establishment                                             (3) Any member appointed under paragraph (2)
                                                            of subsection (a) of this section to fill a vacancy
  There is established a committee to be known
                                                            occurring prior to the expiration of the term for
as the Committee for Purchase From People
                                                            which his predecessor was appointed shall be ap-
Who Are Blind or Severely Disabled (hereafter
                                                            pointed only for the remainder of such term. A
in sections 46 to 48c of this title referred to as
                                                            member appointed under such paragraph may
the ‘‘Committee’’). The Committee shall be
                                                            serve after the expiration of his term until his
composed of fifteen members appointed as fol-
                                                            successor has taken office.
lows:
                                                              (4) The member first appointed under para-
  (1) The President shall appoint as a member
                                                            graph (2)(B) of subsection (a) of this section
one officer or employee from each of the follow-
                                                            shall be appointed for a term of three years.
ing: The Department of Agriculture, the Depart-
ment of Defense, the Department of the Army,                (e) Pay and travel expenses
the Department of the Navy, the Department of                 (1) Except as provided in paragraph (2), mem-
the Air Force, the Department of Education, the             bers of the Committee shall each be entitled to
Department of Commerce, the Department of                   receive the daily equivalent of the annual rate
Veterans Affairs, the Department of Justice, the            of basic pay in effect for grade GS–18 of the Gen-
Department of Labor, and the General Services               eral Schedule for each day (including travel-
Administration. The head of each such depart-               time) during which they are engaged in the ac-
ment and agency shall nominate one officer or               tual performance of services for the Committee.
employee in his department or agency for ap-                  (2) Members of the Committee who are officers
pointment under this paragraph.                             or employees of the Government shall receive no
  (2)(A) The President shall appoint one member             additional pay on account of their service on the
from persons who are not officers or employees              Committee.
Page 23                                   TITLE 41—PUBLIC CONTRACTS                                                      § 46

   (3) While away from their homes or regular                  Stat. 85, and, as so amended, does not contain a subsec.
places of business in the performance of services              (b).
for the Committee, members of the Committee                                            AMENDMENTS
shall be allowed travel expenses, including per                   1993—Subsec. (a). Pub. L. 103–73 substituted ‘‘Blind or
diem in lieu of subsistence, in the same manner                Severely Disabled’’ for ‘‘Blind and Severely Disabled’’
as persons employed intermittently in the Gov-                 in introductory provisions.
ernment service are allowed expenses under sec-                   1992—Subsec. (a). Pub. L. 102–569 substituted ‘‘From
tion 5703(b) 1 of title 5.                                     People Who Are Blind and Severely Disabled’’ for
                                                               ‘‘from the Blind and Other Severely Handicapped’’ in
(f) Staff
                                                               introductory provisions.
   (1) Subject to such rules as may be adopted by                 1991—Subsec. (a)(1). Pub. L. 102–54 substituted ‘‘De-
the Committee, the Chairman may appoint and                    partment of Veterans Affairs’’ for ‘‘Veterans’ Adminis-
fix the pay of such personnel as the Committee                 tration’’.
                                                                  1976—Subsec. (i). Pub. L. 94–273 substituted ‘‘Decem-
determines are necessary to assist it in carrying              ber 31’’ for ‘‘September 30’’.
out its duties and powers under sections 46 to                    1974—Subsec. (a). Pub. L. 93–358, § 1(1)(A), (B), sub-
48c of this title.                                             stituted ‘‘Committee for Purchase from Blind and
   (2) Upon request of the Committee, the head of              Other Severely Handicapped’’ for ‘‘Committee for Pur-
any entity of the Government is authorized to                  chase of Products and Services of the Blind and Other
detail, on a reimbursable basis, any of the per-               Severely Handicapped’’ and ‘‘fifteen’’ for ‘‘fourteen’’ in
sonnel of such entity to the Committee to assist               provisions preceding par. (1).
                                                                  Subsec. (a)(2). Pub. L. 93–358, § 1(1)(C), (D), struck out
it in carrying out its duties and powers under                 ‘‘and other severely handicapped individuals’’ after
section 46 to 48c of this title.                               ‘‘employment of the blind’’ in subpar. (A), added sub-
   (3) The staff of the Committee appointed under              par. (B), and redesignated former subpars. (B) and (C) as
paragraph (1) shall be appointed subject to the                (C) and (D), respectively.
provisions of title 5 governing appointments in                   Subsec. (d)(1). Pub. L. 93–358, § 1(2)(A), substituted
the competitive service, and shall be paid in ac-              ‘‘paragraphs (2), (3), and (4)’’ for ‘‘paragraphs (2) and
cordance with the provisions of chapter 51 and                 (3)’’.
                                                                  Subsec. (d)(4). Pub. L. 93–358, § 1(2)(B), added par. (4).
subchapter III of chapter 53 of such title 5 relat-               1971—Pub. L. 92–28, in substituting subsecs. (a) to (i)
ing to classification and General Schedule pay                 for former paragraph, among other changes: renamed
rates.                                                         Committee on Purchases of Blind-made Products as
(g) Obtaining official data                                    Committee for Purchase of Products and Services of
                                                               the Blind and Other Severely Handicapped; increased
   The Committee may secure directly from any                  membership of Committee from seven to fourteen
entity of the Government information necessary                 members; provided for appointments from Departments
to enable it to carry out sections 46 to 48c of this           of Defense, Air Force, Health, Education, and Welfare,
title. Upon request of the Chairman of the Com-                Justice, and Labor and from Veterans’ Administration
mittee, the head of such Government entity                     and General Services Administration; eliminated ap-
shall furnish such information to the Commit-                  pointments from Treasury Department and Depart-
                                                               ment of Interior; substituted appointment from Depart-
tee.
                                                               ment of the Army for appointment from War Depart-
(h) Administrative support services                            ment; required one appointee to be also conversant
   The Administrator of General Services shall                 with problems incident to employment of other se-
                                                               verely handicapped individuals; substituted require-
provide to the Committee on a reimbursable
                                                               ment that such appointment be from persons not offi-
basis such administrative support services as                  cers or employees of the Government rather than that
the Committee may request.                                     he be a private citizen; reenacted provision for Presi-
(i) Annual report                                              dential appointment; substituted subsec. (e) pay and
                                                               travel expenses provisions for former requirement for
   The Committee shall, not later than December                service of Committee members without additional com-
31 of each year, transmit to the President and to              pensation; incorporated in subsec. (c) provision for se-
the Congress a report which shall include the                  lection of a Chairman, substituting ‘‘election’’ for ‘‘des-
names of the Committee members serving in the                  ignation’’; and inserted provisions incorporated in sub-
preceding fiscal year, the dates of Committee                  secs. (a)(1) (for nomination by head of each department
meetings in that year, a description of its ac-                and agency of one officer or employee of the depart-
tivities under sections 46 to 48c of this title in             ment or agency for appointment under par. (1)),
                                                               (a)(2)(B), (C), (b), (d), and (f) to (i).
that year, and any recommendations for
changes in sections 46 to 48c of this title which                        EFFECTIVE DATE OF 1971 AMENDMENT
it determines are necessary.                                     Section 2 of Pub. L. 92–28 provided that: ‘‘The amend-
(June 25, 1938, ch. 697, § 1, 52 Stat. 1196; Pub. L.           ment made by the first section of this Act [amending
                                                               this section and sections 47 and 48 and enacting sec-
92–28, § 1, June 23, 1971, 85 Stat. 77; Pub. L. 93–358,        tions 48a to 48c of this title] shall take effect on the
§ 1(1), (2), July 25, 1974, 88 Stat. 392, 393; Pub. L.         first day of the first month which begins more than
94–273, § 8(2), Apr. 21, 1976, 90 Stat. 378; Pub. L.           thirty days after the date of enactment of this Act
96–88, title V, § 509(b), Oct. 17, 1979, 93 Stat. 695;         [June 23, 1971].’’
Pub. L. 102–54, § 13(p), June 13, 1991, 105 Stat. 278;
                                                                                       SHORT TITLE
Pub. L. 102–569, title IX, § 911(a), Oct. 29, 1992, 106
Stat. 4486; Pub. L. 103–73, title III, § 301, Aug. 11,           Section 7 of act June 25, 1938, as added by Pub. L.
1993, 107 Stat. 736.)                                          103–355, title X, § 10005(f)(6), Oct. 13, 1994, 108 Stat. 3409,
                                                               provided that: ‘‘This Act [enacting this section and sec-
                     REFERENCES IN TEXT                        tions 47 to 48c of this title] may be cited as the ‘Javits-
                                                               Wagner-O’Day Act’.’’
 Section 5703 of title 5, referred to in subsec. (e)(3), was
amended generally by Pub. L. 94–22, § 4, May 19, 1975, 89             TERMINATION OF REPORTING REQUIREMENTS
                                                                 For termination, effective May 15, 2000, of provisions
 1 See   References in Text note below.                        in subsec. (i) of this section relating to the requirement
§ 47                                      TITLE 41—PUBLIC CONTRACTS                                             Page 24

that the Committee transmit a report to Congress each              ‘‘(b) STATEMENT OF POLICY.—The Secretary of De-
year, see section 3003 of Pub. L. 104–66, as amended, set        fense, the Secretary of Education, and the Chairman of
out as a note under section 1113 of Title 31, Money and          the Committee for Purchase From People Who Are
Finance, and page 199 of House Document No. 103–7.               Blind or Severely Disabled shall jointly issue a state-
                                                                 ment of policy related to the implementation of the
 REFERENCES IN OTHER LAWS TO GS–16, 17, OR 18 PAY                Randolph-Sheppard Act (20 U.S.C. 107 et seq.) and the
                     RATES                                       Javits-Wagner-O’Day Act (41 U.S.C. 48 [46 et seq.]) with-
  References in laws to the rates of pay for GS–16, 17,          in the Department of Defense and the Department of
or 18, or to maximum rates of pay under the General              Education. The joint statement of policy shall specifi-
Schedule, to be considered references to rates payable           cally address the application of those Acts to both op-
under specified sections of Title 5, Government Organi-          eration and management of all or any part of a mili-
zation and Employees, see section 529 [title I, § 101(c)(1)]     tary mess hall, military troop dining facility, or any
of Pub. L. 101–509, set out in a note under section 5376         similar dining facility operated for the purpose of pro-
of Title 5.                                                      viding meals to members of the Armed Forces, and
                                                                 shall take into account and address, to the extent prac-
                 TRANSFER OF FUNCTIONS
                                                                 ticable, the positions acceptable to persons represent-
  ‘‘Department of Education’’ substituted for ‘‘Depart-          ing programs implemented under each Act.
ment of Health, Education, and Welfare’’ in subsec.                ‘‘(c) REPORT.—Not later than April 1, 2006, the Sec-
(a)(1) pursuant to sections 301(a)(4)(A), (C), (b)(3) and 507    retary of Defense, the Secretary of Education, and the
of Pub. L. 96–88, which are classified to sections               Chairman of the Committee for Purchase From People
3441(a)(4)(A), (C), (b)(3) and 3507 of Title 20, Education,      Who Are Blind or Severely Disabled shall submit to the
and which transferred to the Department of Education             Committees on Armed Services of the Senate and the
the functions and offices of the Department of Health,           House of Representatives, the Committee on Health,
Education, and Welfare that had the major govern-                Education, Labor and Pensions of the Senate, and the
mental function in the field of vocational rehabilita-           Committee on Education and the Workforce [now Com-
tion for the blind and other severely handicapped and            mittee on Education and Labor] of the House of Rep-
administered related vocational rehabilitation pro-              resentatives a report describing the joint statement of
grams for individuals with disabilities.                         policy issued under subsection (b), with such findings
                                                                 and recommendations as the Secretaries consider ap-
   CONTRACTING WITH EMPLOYERS OF PERSONS WITH
                                                                 propriate.’’
                   DISABILITIES
  Pub. L. 109–364, div. A, title VIII, § 856(a), (d), Oct. 17,   § 47. Duties and powers of the Committee
2006, 120 Stat. 2347, 2349, provided that:
  ‘‘(a) INAPPLICABILITY OF CERTAIN LAWS.—                        (a) Procurement list: publication in Federal Reg-
     ‘‘(1) INAPPLICABILITY OF THE RANDOLPH-SHEPPARD                   ister; additions and removals
  ACT TO CONTRACTS AND SUBCONTRACTS FOR MILITARY                    (1) The Committee shall establish and publish
  DINING FACILITY SUPPORT SERVICES COVERED BY JAVITS-
                                                                 in the Federal Register a list (hereafter in sec-
  WAGNER-O’DAY ACT.—The Randolph-Sheppard Act (20
  U.S.C. 107 et seq.) does not apply to full food services,
                                                                 tions 46 to 48c of this title referred to as the
  mess attendant services, or services supporting the            ‘‘procurement list’’) of—
  operation of a military dining facility that, as of the             (A) the commodities produced by any quali-
  date of the enactment of this Act [Oct. 17, 2006], were           fied nonprofit agency for the blind or by any
  services on the procurement list established under                qualified nonprofit agency for other severely
  section 2 of the Javits-Wagner-O’Day Act (41 U.S.C.               handicapped, and
  47).                                                                (B) the services provided by any such agen-
    ‘‘(2) INAPPLICABILITY OF THE JAVITS-WAGNER-O’DAY                cy,
  ACT TO CONTRACTS FOR THE OPERATION OF A MILITARY
  DINING FACILITY.—(A) The Javits-Wagner-O’Day Act               which the Committee determines are suitable
  (41 U.S.C. 46 et seq.) does not apply at the prime con-        for procurement by the Government pursuant to
  tract level to any contract entered into by the De-            sections 46 to 48c of this title. Such list shall be
  partment of Defense as of the date of the enactment            established and published in the Federal Reg-
  of this Act [Oct. 17, 2006] with a State licensing agen-
  cy under the Randolph-Sheppard Act (20 U.S.C. 107 et
                                                                 ister before the expiration of the thirty-day pe-
  seq.) for the operation of a military dining facility.         riod beginning on Aug. 1, 1971, and shall initially
     ‘‘(B) The Javits-Wagner-O’Day Act shall apply to            consist of the commodities contained, on such
  any subcontract entered into by a Department of De-            date, in the schedule of blind-made products is-
  fense contractor for full food services, mess attendant        sued by the former Committee on Purchases of
  services, and other services supporting the operation          Blind-Made Products under its regulations.
  of a military dining facility.                                   (2) The Committee may, by rule made in ac-
     ‘‘(3) REPEAL OF SUPERSEDED LAW.—[Repealed section
  853(a), (b) of Pub. L. 108–375, 118 Stat. 2021.]
                                                                 cordance with the requirements of subsections
  ‘‘(d) DEFINITIONS.—In this section:                            (b), (c), (d), and (e) of section 553 of title 5, add
     ‘‘(1) The term ‘State licensing agency’ means any           to and remove from the procurement list com-
  agency designated by the Secretary of Education                modities so produced and services so provided.
  under section 2(a)(5) of the Randolph-Sheppard Act
                                                                 (b) Fair market price; price revisions
  (20 U.S.C. 107a(a)(5)).
     ‘‘(2) The term ‘military dining facility’ means a fa-         The Committee shall determine the fair mar-
  cility owned, operated, leased, or wholly controlled           ket price of commodities and services which are
  by the Department of Defense and used to provide               contained on the procurement list and which are
  dining services to members of the Armed Forces, in-            offered for sale to the Government by any quali-
  cluding a cafeteria, military mess hall, military
  troop dining facility, or any similar dining facility
                                                                 fied nonprofit agency for the blind or any such
  operated for the purpose of providing meals to mem-            agency for other severely handicapped. The
  bers of the Armed Forces.’’                                    Committee shall also revise from time to time
                                                                 in accordance with changing market conditions
STATEMENT OF POLICY AND REPORT CONCERNING THE
                                                                 its price determinations with respect to such
 OPERATION AND MANAGEMENT OF CERTAIN MILITARY
 FACILITIES REGARDING THE BLIND OR SEVERELY DIS-                 commodities and services.
  ABLED                                                          (c) Central nonprofit agency; designation
  Pub. L. 109–163, div. A, title VIII, § 848(b), (c), Jan. 6,      The Committee shall designate a central non-
2006, 119 Stat. 3395, provided that:                             profit agency or agencies to facilitate the dis-
Page 25                               TITLE 41—PUBLIC CONTRACTS                                                 § 48b

tribution (by direct allocation, subcontract, or            § 48. Procurement requirements for the Govern-
any other means) of orders of the Government                     ment; nonapplication to prison-made prod-
for commodities and services on the procure-                     ucts
ment list among qualified nonprofit agencies for
the blind or such agencies for other severely                 If any entity of the Government intends to
handicapped.                                                procure any commodity or service on the pro-
                                                            curement list, that entity shall, in accordance
(d) Rules and regulations; blind-made products,             with rules and regulations of the Committee,
    priority                                                procure such commodity or service, at the price
  (1) The Committee may make rules and regu-                established by the Committee, from a qualified
lations regarding (A) specifications for commod-            nonprofit agency for the blind or such an agency
ities and services on the procurement list, (B)             for other severely handicapped if the commodity
the time of their delivery, and (C) such other              or service is available within the period required
matters as may be necessary to carry out the                by that Government entity; except that this sec-
purposes of sections 46 to 48c of this title.               tion shall not apply with respect to the procure-
  (2) The Committee shall prescribe regulations             ment of any commodity which is available for
providing that—                                             procurement from an industry established under
    (A) in the purchase by the Government of                chapter 307 of title 18, and which, under section
  commodities produced and offered for sale by              4124 of such title 18, is required to be procured
  qualified nonprofit agencies for the blind or             from such industry.
  such agencies for other severely handicapped,             (June 25, 1938, ch. 697, § 3, 52 Stat. 1196; Pub. L.
  priority shall be accorded to commodities pro-            92–28, § 1, June 23, 1971, 85 Stat. 80.)
  duced and offered for sale by qualified non-
  profit agencies for the blind, and                                              AMENDMENTS
    (B) in the purchase by the Government of                  1971—Pub. L. 92–28 extended provisions to cover any
  services offered by nonprofit agencies for the            commodity or service on the procurement list for
  blind or such agencies for other severely                 former provision for brooms and mops and other suit-
  handicapped, priority shall, until the end of             able commodities, excepted section from application to
  the calendar year ending December 31, 1976, be            prison-made products, and deleted provision for nonap-
                                                            plicability of sections 46 to 58 of this title to cases
  accorded to services offered for sale by quali-
                                                            where brooms and mops were available for procurement
  fied nonprofit agencies for the blind.                    from and Federal department or agency and procure-
(e) Problems and production methods; study and              ment therefrom was required under provisions of any
    evaluation                                              law in effect on June 25, 1938, or to cases where brooms
                                                            and mops were procured outside continental United
  The Committee shall make a continuing study               States.
and evaluation of its activities under sections 46
to 48c of this title for the purpose of assuring ef-                 EFFECTIVE DATE OF 1971 AMENDMENT
fective and efficient administration of sections              Amendment by Pub. L. 92–28 effective Aug. 1, 1971, see
46 to 48c of this title. The Committee may study            section 2 of Pub. L. 92–28, set out as a note under sec-
(on its own or in cooperation with other public             tion 46 of this title.
or nonprofit private agencies) (1) problems relat-
                                                            § 48a. Audit
ed to the employment of the blind and of other
severely handicapped individuals, and (2) the de-             The Comptroller General of the United States,
velopment and adaptation of production meth-                or any of his duly authorized representatives,
ods which would enable a greater utilization of             shall have access, for the purpose of audit and
the blind and other severely handicapped indi-              examination, to any books, documents, papers,
viduals.                                                    and other records of the Committee and of each
(June 25, 1938, ch. 697, § 2, 52 Stat. 1196; Pub. L.        agency designated by the Committee under sec-
92–28, § 1, June 23, 1971, 85 Stat. 79.)                    tion 47(c) of this title. This section shall also
                                                            apply to any qualified nonprofit agency for the
                     AMENDMENTS                             blind and any such agency for other severely
  1971—Pub. L. 92–28, in substituting subsecs. (a) to (e)   handicapped which have sold commodities or
for former paragraph, among other changes: extended         services under sections 46 to 48c of this title but
provisions to cover commodities and services of agen-       only with respect to the books, documents, pa-
cies for the blind and other severely handicapped, pre-     pers, and other records of such agency which re-
viously limited to brooms and mops and other suitable       late to its activities in a fiscal year in which a
commodities manufactured by agencies for the blind;         sale was made under sections 46 to 48c of this
inserted provisions incorporated in subsecs. (a) and (e);   title.
incorporated in subsec. (b) provisions for determination
of fair market price and price revisions; incorporated in   (June 25, 1938, ch. 697, § 4, as added Pub. L. 92–28,
subsec. (c) provisions for designation of a central non-    § 1, June 23, 1971, 85 Stat. 81.)
profit agency, providing for distribution by direct allo-
cation, subcontract, or any other means; incorporated                            EFFECTIVE DATE
existing provisions in subsec. (d)(1), adding par. (2)        Section effective Aug. 1, 1971, see section 2 of Pub. L.
thereof; and struck out provision that no change in         92–28, set out as an Effective Date of 1971 Amendment
prices shall become effective prior to expiration of fif-   note under section 46 of this title.
teen days from date on which such change is made by
the Committee.                                              § 48b. Definitions
          EFFECTIVE DATE OF 1971 AMENDMENT                    For purposes of sections 46 to 48c of this title—
  Amendment by Pub. L. 92–28 effective Aug. 1, 1971, see      (1) The term ‘‘blind’’ refers to an individual or
section 2 of Pub. L. 92–28, set out as a note under sec-    class of individuals whose central visual acuity
tion 46 of this title.                                      does not exceed 20/200 in the better eye with cor-
§ 48c                             TITLE 41—PUBLIC CONTRACTS                                           Page 26

recting lenses or whose visual acuity, if better     States Postal Service, and any nonappropriated
than 20/200, is accompanied by a limit to the        fund instrumentality under the jurisdiction of
field of vision in the better eye to such a degree   the Armed Forces.
that its widest diameter subtends an angle of no       (8) The term ‘‘State’’ includes the District of
greater than 20 degrees.                             Columbia, the Commonwealth of Puerto Rico,
  (2) The terms ‘‘other severely handicapped’’       the Virgin Islands, Guam, American Samoa, and
and ‘‘severely handicapped individuals’’ mean an     the Trust Territory of the Pacific Islands.
individual or class of individuals under a phys-     (June 25, 1938, ch. 697, § 5, as added Pub. L. 92–28,
ical or mental disability, other than blindness,     § 1, June 23, 1971, 85 Stat. 81; amended Pub. L.
which (according to criteria established by the      93–358, § 1(3), July 25, 1974, 88 Stat. 393; Pub. L.
Committee after consultation with appropriate        94–273, § 3(22), Apr. 21, 1976, 90 Stat. 377.)
entities of the Government and taking into ac-
                                                                           AMENDMENTS
count the views of non-Government entities rep-
resenting the handicapped) constitutes a sub-          1976—Pub. L. 94–273 substituted ‘‘October’’ for ‘‘July’’
stantial handicap to employment and is of such       in par. (6).
                                                       1974—Pub. L. 93–358 added par. (5) defining ‘‘direct
a nature as to prevent the individual under such     labor’’, struck out former par. (6) which defined ‘‘direct
disability from currently engaging in normal         labor’’ without reference to work directly relating to
competitive employment.                              the performance of a service, and redesignated former
  (3) The term ‘‘qualified nonprofit agency for      pars. (7), (8), and (9) as (6), (7), and (8), respectively.
the blind’’ means an agency—                                             EFFECTIVE DATE
    (A) organized under the laws of the United
  States or of any State, operated in the inter-       Section effective Aug. 1, 1971, see section 2 of Pub. L.
                                                     92–28, set out as an Effective Date of 1971 Amendment
  est of blind individuals, and the net income of
                                                     note under section 46 of this title.
  which does not inure in whole or in part to the
  benefit of any shareholder or other individual;       TERMINATION OF TRUST TERRITORY OF THE PACIFIC
    (B) which complies with any applicable occu-                          ISLANDS
  pational health and safety standard prescribed       For termination of Trust Territory of the Pacific Is-
  by the Secretary of Labor; and                     lands, see note set out preceding section 1681 of Title
    (C) which in the production of commodities       48, Territories and Insular Possessions.
  and in the provision of services (whether or       § 48c. Authorization of appropriations
  not the commodities or services are procured
  under sections 46 to 48c of this title) during       There are authorized to be appropriated to the
  the fiscal year employs blind individuals for      Committee to carry out sections 46 to 48c of this
  not less than 75 per centum of the man-hours       title $240,000 for the fiscal year ending June 30,
  of direct labor required for the production or     1974, and such sums as may be necessary for the
  provision of the commodities or services.          succeeding fiscal years.
  (4) The term ‘‘qualified nonprofit agency for      (June 25, 1938, ch. 697, § 6, as added Pub. L. 92–28,
other severely handicapped’’ means an agency—        § 1, June 23, 1971, 85 Stat. 82; amended Pub. L.
    (A) organized under the laws of the United       93–76, July 30, 1973, 87 Stat. 176; Pub. L. 93–358,
  States or of any State, operated in the inter-     § 1(4), July 25, 1974, 88 Stat. 393.)
  est of severely handicapped individuals who                              AMENDMENTS
  are not blind, and the net income of which           1974—Pub. L. 93–358 substituted ‘‘$240,000 for the fiscal
  does not inure in whole or in part to the bene-    year ending June 30, 1974, and such sums as may be nec-
  fit of any shareholder or other individual;        essary for the succeeding fiscal years’’ for ‘‘$200,000
    (B) which complies with any applicable occu-     each for the fiscal year ending June 30, 1972, and the
  pational health and safety standard prescribed     next succeeding fiscal year, and $240,000 for the fiscal
  by the Secretary of Labor; and                     year ending June 30, 1974’’.
    (C) which in the production of commodities         1973—Pub. L. 93–76 increased authorization of appro-
                                                     priation to $240,000 for fiscal year ending June 30, 1974.
  and in the provision of services (whether or
  not the commodities or services are procured                           EFFECTIVE DATE
  under sections 46 to 48c of this title) during       Section effective Aug. 1, 1971, see section 2 of Pub. L.
  the fiscal year employs blind or other severely    92–28, set out as an Effective Date of 1971 Amendment
  handicapped individuals for not less than 75       note under section 46 of this title.
  per centum of the man-hours of direct labor
  required for the production or provision of the    § 49. Defense employment; honorable discharge
  commodities or services.                                from land and naval forces as equivalent to
                                                          birth certificate
  (5) The term ‘‘direct labor’’ includes all work
required for preparation, processing, and pack-        No defense contractor shall deny employment,
ing of a commodity, or work directly relating to     on account of failure to produce a birth certifi-
the performance of a service, but not super-         cate, to any person who submits, in lieu of a
vision, administration, inspection, or shipping.     birth certificate, an honorable discharge certifi-
  (6) The term ‘‘fiscal year’’ means the twelve-     cate or certificate issued in lieu thereof from
month period beginning on October 1 of each          the Army, Air Force, Navy, Marine Corps, or
year.                                                Coast Guard of the United States, unless such
  (7) The terms ‘‘Government’’ and ‘‘entity of       honorable discharge certificate shows on its face
the Government’’ include any entity of the leg-      that such person may have been an alien at the
islative branch or the judicial branch, any exec-    time of its issuance.
utive agency or military department (as such         (June 22, 1942, ch. 432, § 1, 56 Stat. 375; July 26,
agency and department are respectively defined       1947, ch. 343, title II, §§ 205(a), 207(a), (f), 61 Stat.
by sections 102 and 105 of title 5), the United      501–503.)
Page 27                                  TITLE 41—PUBLIC CONTRACTS                                                     § 52

                     CHANGE OF NAME                                                   AMENDMENTS
  Air Force inserted in text under authority of section            1986—Pub. L. 99–634 amended section generally, sub-
207(a), (f) of act July 26, 1947, ch. 343, title II, 61 Stat.   stituting short title provision for provisions relating to
502, 503. Department of War designated Department of            fees or kick-backs by subcontractors on negotiated
the Army and title of Secretary of War changed to Sec-          contracts, recovery thereof by the United States, con-
retary of the Army by section 205(a) of such act July 26,       clusive presumption that such payments by such sub-
1947. Sections 205(a) and 207(a), (f) of act July 26, 1947      contractors were included in the price of the sub-
were repealed by section 53 of act Aug. 10, 1956, ch. 1041,     contract or order and ultimately borne by the United
70A Stat. 641. Section 1 of act Aug. 10, 1956, enacted          States, and withholding by the prime contractor of
‘‘Title 10, Armed Forces’’, which in sections 3010 to 3013      such amounts from sums otherwise due a subcontrac-
and 8010 to 8013 continued Departments of the Army              tor.
and Air Force under administrative supervision of Sec-             1960—Pub. L. 86–695 inserted ‘‘negotiated’’ before
retary of the Army and Secretary of the Air Force, re-          ‘‘contract’’ and struck out ‘‘, on a cost-plus-a-fixed-fee
spectively.                                                     or other cost reimbursable basis’’ after ‘‘whatsoever’’
                 TRANSFER OF FUNCTIONS                          in cl. (1), and substituted ‘‘setoff’’ for ‘‘set-off’’ and
                                                                ‘‘contract’’ for ‘‘cost-plus-a-fixed-fee or cost reimburs-
  For transfer of authorities, functions, personnel, and        able contract,’’ before ‘‘or by an action’’.
assets of the Coast Guard, including the authorities
and functions of the Secretary of Transportation relat-                  EFFECTIVE DATE OF 1986 AMENDMENT
ing thereto, to the Department of Homeland Security,
and for treatment of related references, see sections             Section 3 of Pub. L. 99–634 provided that:
468(b), 551(d), 552(d), and 557 of Title 6, Domestic Secu-        ‘‘(a) Except as provided in subsection (b), the Anti-
rity, and the Department of Homeland Security Reor-             Kickback Act of 1986 (as set out in section 2(a)) [sec-
ganization Plan of November 25, 2002, as modified, set          tions 51 to 58 of this title] shall take effect with respect
out as a note under section 542 of Title 6.                     to conduct described in section 3 of such Act [section 53
                                                                of this title] which occurs on or after the date of the
§ 50. ‘‘Defense contractor’’ defined                            enactment of this Act [Nov. 7, 1986].
                                                                  ‘‘(b) Subsections (a) and (b) of section 7 of the Anti-
  As used in sections 49 and 50 of this title the               Kickback Act of 1986 (as set out in section 2(a)) [section
term ‘‘defense contractor’’ means an employer                   57(a) and (b) of this title] shall take effect with respect
engaged in—                                                     to contract solicitations issued by an agency, depart-
    (1) the production, maintenance, or storage                 ment, or other establishment of the Federal Govern-
  of arms, armament, ammunition, implements                     ment on or after the date which is 90 days after the
  of war, munitions, machinery, tools, clothing,                date of the enactment of this Act [Nov. 7, 1986].’’
  food, fuel, or any articles or supplies, or parts                        SHORT TITLE OF 1986 AMENDMENT
  or ingredients of any articles or supplies; or
    (2) the construction, reconstruction, repair,                 Section 1 of Pub. L. 99–634 provided: ‘‘That this Act
                                                                [enacting sections 55 to 58 of this title, amending this
  or installation of a building, plant, structure,
                                                                section and sections 52 to 54 of this title, and enacting
  or facility;                                                  provisions set out as a note above] may be cited as the
under a contract with the United States or                      ‘Anti-Kickback Enforcement Act of 1986’.’’
under any contract which the President, the
Secretary of the Army, the Secretary of the Air                 § 52. Definitions
Force, the Secretary of the Navy, or the Sec-                     As used in sections 51 to 58 of this title:
retary of Transportation certifies to such em-                      (1) The term ‘‘contracting agency’’, when
ployer to be necessary to the national defense.                   used with respect to a prime contractor,
(June 22, 1942, ch. 432, § 2, 56 Stat. 376; July 26,              means any department, agency, or establish-
1947, ch. 343, title II, §§ 205(a), 207(a), (f), 61 Stat.         ment of the United States which enters into a
501–503; Pub. L. 97–31, § 12(16), Aug. 6, 1981, 95                prime contract with a prime contractor.
Stat. 154.)                                                         (2) The term ‘‘kickback’’ means any money,
                                                                  fee, commission, credit, gift, gratuity, thing of
                       AMENDMENTS
                                                                  value, or compensation of any kind which is
  1981—Pub. L. 97–31 substituted reference to Secretary           provided, directly or indirectly, to any prime
of Transportation for reference to United States Mari-
                                                                  contractor, prime contractor employee, sub-
time Commission.
                                                                  contractor, or subcontractor employee for the
                     CHANGE OF NAME                               purpose of improperly obtaining or rewarding
  Secretary of the Air Force inserted in text under au-           favorable treatment in connection with a
thority of section 207(a), (f) of act July 26, 1947, ch. 343,     prime contract or in connection with a sub-
title II, 61 Stat. 501. Department of War designated De-          contract relating to a prime contract.
partment of the Army and title of Secretary of War                  (3) The term ‘‘person’’ means a corporation,
changed to Secretary of the Army by section 205(a) of
                                                                  partnership, business association of any kind,
such act July 26, 1947. Sections 205(a) and 207(a), (f) of
act July 26, 1947 were repealed by section 53 of act Aug.         trust, joint-stock company, or individual.
10, 1956, ch. 1041, 70A Stat. 641. Section 1 of act Aug. 10,        (4) The term ‘‘prime contract’’ means a con-
1956, enacted ‘‘Title 10, Armed Forces’’, which in sec-           tract or contractual action entered into by the
tions 3010 to 3013 and 8010 to 8013 continued Depart-             United States for the purpose of obtaining sup-
ments of the Army and Air Force under administrative              plies, materials, equipment, or services of any
supervision of Secretary of the Army and Secretary of             kind.
the Air Force, respectively.                                        (5) The term ‘‘prime contractor’’ means a
§ 51. Short title                                                 person who has entered into a prime contract
                                                                  with the United States.
  Sections 51 to 58 of this title may be cited as                   (6) The term ‘‘prime contractor employee’’
the ‘‘Anti-Kickback Act of 1986’’.                                means any officer, partner, employee, or agent
(Mar. 8, 1946, ch. 80, § 1, 60 Stat. 37; Pub. L. 86–695,          of a prime contractor.
Sept. 2, 1960, 74 Stat. 740; Pub. L. 99–634, § 2(a),                (7) The term ‘‘subcontract’’ means a con-
Nov. 7, 1986, 100 Stat. 3523.)                                    tract or contractual action entered into by a
§ 53                                   TITLE 41—PUBLIC CONTRACTS                                              Page 28

  prime contractor or subcontractor for the pur-             audit the books and records of any prime contractor or
  pose of obtaining supplies, materials, equip-              subcontractor engaged in the performance of a nego-
  ment, or services of any kind under a prime                tiated contract.’’
                                                               1960—Pub. L. 86–695 substituted ‘‘negotiated con-
  contract.                                                  tract’’ for ‘‘cost-plus-a-fixed-fee or cost reimbursable
    (8) The term ‘‘subcontractor’’—                          contract’’.
      (A) means any person, other than the
    prime contractor, who offers to furnish or                        EFFECTIVE DATE OF 1986 AMENDMENT
    furnishes any supplies, materials, equip-                  Amendment by Pub. L. 99–634 effective with respect
    ment, or services of any kind under a prime              to conduct described in this section which occurs on or
    contract or a subcontract entered into in                after Nov. 7, 1986, see section 3(a) of Pub. L. 99–634, set
    connection with such prime contract; and                 out as a note under section 51 of this title.
      (B) includes any person who offers to fur-             § 54. Criminal penalties
    nish or furnishes general supplies to the
    prime contractor or a higher tier sub-                     Any person who knowingly and willfully en-
    contractor.                                              gages in conduct prohibited by section 53 of this
                                                             title shall be imprisoned for not more than 10
    (9) The term ‘‘subcontractor employee’’                  years or shall be subject to a fine in accordance
  means any officer, partner, employee, or agent             with title 18, or both.
  of a subcontractor.
                                                             (Mar. 8, 1946, ch. 80, § 4, 60 Stat. 38; Pub. L. 86–695,
(Mar. 8, 1946, ch. 80, § 2, 60 Stat. 38; Pub. L. 86–695,     Sept. 2, 1960, 74 Stat. 741; Pub. L. 99–634, § 2(a),
Sept. 2, 1960, 74 Stat. 740; Pub. L. 99–634, § 2(a),         Nov. 7, 1986, 100 Stat. 3524.)
Nov. 7, 1986, 100 Stat. 3523.)
                                                                                    AMENDMENTS
                      AMENDMENTS
                                                               1986—Pub. L. 99–634 amended section generally. Prior
   1986—Pub. L. 99–634 amended section generally. Prior      to amendment, section read as follows: ‘‘Any person
to amendment, section read as follows: ‘‘For the pur-        who shall knowingly, directly or indirectly, make or
pose of sections 51 to 54 of this title, the term ‘sub-      receive any such prohibited payment shall be fined not
contractor’ is defined as any person, including a cor-       more than $10,000 or be imprisoned for not more than
poration, partnership, or business association of any        two years, or both.’’
kind, who holds an agreement or purchase order to per-         1960—Pub. L. 86–695 reenacted section without
form all or any part of the work or to make or to fur-       change.
nish any article or service required for the performance
                                                                      EFFECTIVE DATE OF 1986 AMENDMENT
of a negotiated contract or of a subcontract entered
into thereunder; the term ‘person’ shall include any           Amendment by Pub. L. 99–634 effective with respect
subcontractor, corporation, association, trust, joint-       to conduct described in section 53 of this title which oc-
stock company, partnership, or individual; and the           curs on or after Nov. 7, 1986, see section 3(a) of Pub. L.
term ‘negotiated contract’ means made without formal         99–634, set out as a note under section 51 of this title.
advertising.’’
   1960—Pub. L. 86–695 substituted ‘‘negotiated con-         § 55. Civil actions
tract’’ for ‘‘cost-plus-a-fixed-fee or cost reimbursable
                                                               (a)(1) The United States may, in a civil action,
contract’’ in definition of ‘‘subcontractor’’ and defined
‘‘negotiated contract’’.                                     recover a civil penalty from any person who
                                                             knowingly engages in conduct prohibited by sec-
         EFFECTIVE DATE OF 1986 AMENDMENT                    tion 53 of this title. The amount of such civil
  Amendment by Pub. L. 99–634 effective with respect         penalty shall be—
to conduct described in section 53 of this title which oc-       (A) twice the amount of each kickback in-
curs on or after Nov. 7, 1986, see section 3(a) of Pub. L.     volved in the violation; and
99–634, set out as a note under section 51 of this title.        (B) not more than $10,000 for each occurrence
                                                               of prohibited conduct.
§ 53. Prohibited conduct
                                                               (2) The United States may, in a civil action,
  It is prohibited for any person—                           recover a civil penalty from any person whose
    (1) to provide, attempt to provide, or offer to          employee, subcontractor or subcontractor em-
  provide any kickback;                                      ployee violates section 53 of this title by provid-
    (2) to solicit, accept, or attempt to accept             ing, accepting, or charging a kickback. The
  any kickback; or                                           amount of such civil penalty shall be the
    (3) to include, directly or indirectly, the              amount of that kickback.
  amount of any kickback prohibited by clause                  (b) A civil action under this section shall be
  (1) or (2) in the contract price charged by a              barred unless the action is commenced within 6
  subcontractor to a prime contractor or a high-             years after the later of (1) the date on which the
  er tier subcontractor or in the contract price             prohibited conduct establishing the cause of ac-
  charged by a prime contractor to the United                tion occurred, and (2) the date on which the
  States.                                                    United States first knew or should reasonably
(Mar. 8, 1946, ch. 80, § 3, 60 Stat. 38; Pub. L. 86–695,     have known that the prohibited conduct had oc-
Sept. 2, 1960, 74 Stat. 741; Pub. L. 99–634, § 2(a),         curred.
Nov. 7, 1986, 100 Stat. 3524.)                               (Mar. 8, 1946, ch. 80, § 5, as added Pub. L. 99–634,
                                                             § 2(a), Nov. 7, 1986, 100 Stat. 3524.)
                      AMENDMENTS
                                                                                   EFFECTIVE DATE
  1986—Pub. L. 99–634 amended section generally. Prior
to amendment, section read as follows: ‘‘For the pur-          Section effective with respect to conduct described in
pose of ascertaining whether such fees, commissions,         section 53 of this title which occurs on or after Nov. 7,
compensation, gifts, or gratuities have been paid or         1986, see section 3(a) of Pub. L. 99–634, set out as an Ef-
granted by a subcontractor, the General Accounting Of-       fective Date of 1986 Amendment note under section 51
fice shall have the power to inspect the plants and to       of this title.
Page 29                                 TITLE 41—PUBLIC CONTRACTS                                                      § 57

§ 56. Administrative offsets                                   quirement that the prime contractor shall co-
(a) Offset authority                                           operate fully with any Federal Government
                                                               agency investigating a violation of section 53 of
  A contracting officer of a contracting agency                this title.
may offset the amount of a kickback provided,
accepted, or charged in violation of section 53 of             (c) Reporting requirement; supplying informa-
this title against any moneys owed by the                          tion as favorable evidence of responsibility
United States to the prime contractor under the                  (1)(A) Whenever a prime contractor or sub-
prime contract to which such kickback relates.                 contractor has reasonable grounds to believe
(b) Duties of prime contractor                                 that a violation of section 53 of this title may
  (1) Upon direction of a contracting officer of a             have occurred, the prime contractor or sub-
contracting agency with respect to a prime con-                contractor shall promptly report the possible
tract, the prime contractor shall withhold from                violation in writing.
any sums owed to a subcontractor under a sub-                    (B) A contractor shall make the reports re-
contract of the prime contract the amount of                   quired by subparagraph (A) to the inspector gen-
any kickback which was or may be offset                        eral of the contracting agency, the head of the
against that prime contractor under subsection                 contracting agency if the agency does not have
(a) of this section.                                           an inspector general, or the Department of Jus-
  (2) Such contracting officer may order that                  tice.
sums withheld under paragraph (1)—                               (2) In the case of an administrative or contrac-
    (A) be paid over to the contracting agency;                tual action to suspend or debar any person who
  or                                                           is eligible to enter into contracts with the Fed-
    (B) if the United States has already offset                eral Government, evidence that such person has
  the amount of such sums against that prime                   supplied information to the United States pur-
  contractor, be retained by the prime contrac-                suant to paragraph (1) shall be favorable evi-
  tor.                                                         dence of such person’s responsibility for the pur-
  (3) The prime contractor shall notify the con-               poses of Federal procurement laws and regula-
tracting officer when an amount is withheld and                tions.
retained under paragraph (2)(B).                               (d) Partial inapplicability to small contracts
(c) Claim of Government                                          Subsections (a) and (b) of this section do not
  An offset under subsection (a) of this section               apply to a prime contract that is not greater
or a direction or order of a contracting officer               than $100,000 or to a prime contract for the ac-
under subsection (b) of this section is a claim by             quisition of commercial items (as defined in sec-
the Government for the purposes of the Contract                tion 403(12) of this title).
Disputes Act of 1978 [41 U.S.C. 601 et seq.].                  (e) Cooperation in investigations regardless of
(d) ‘‘Contracting officer’’ defined                                contract amount
  As used in this section, the term ‘‘contracting                Notwithstanding subsection (d) of this section,
officer’’ has the meaning given that term for the              a prime contractor shall cooperate fully with
purposes of the Contract Disputes Act of 1978 [41              any Federal Government agency investigating a
U.S.C. 601 et seq.].                                           violation of section 53 of this title.
(Mar. 8, 1946, ch. 80, § 6, as added Pub. L. 99–634,           (Mar. 8, 1946, ch. 80, § 7, as added Pub. L. 99–634,
§ 2(a), Nov. 7, 1986, 100 Stat. 3524.)                         § 2(a), Nov. 7, 1986, 100 Stat. 3525; amended Pub.
                  REFERENCES IN TEXT                           L. 103–355, title IV, § 4104(a), title VIII,
                                                               § 8301(c)(1), Oct. 13, 1994, 108 Stat. 3341, 3397; Pub.
  The Contract Disputes Act of 1978, referred to in sub-
secs. (c) and (d), is Pub. L. 95–563, Nov. 1, 1978, 92 Stat.   L. 104–106, div. D, title XLIII, § 4321(g), Feb. 10,
2383, as amended, which is classified principally to           1996, 110 Stat. 675.)
chapter 9 (§ 601 et seq.) of this title. For complete clas-                           AMENDMENTS
sification of this Act to the Code see Short Title note
set out under section 601 of this title and Tables.              1996—Subsec. (d). Pub. L. 104–106 made technical
                                                               amendment to reference in original act which appears
                     EFFECTIVE DATE                            in text as reference to section 403(12) of this title and
  Section effective with respect to conduct described in       struck out second period at end.
section 53 of this title which occurs on or after Nov. 7,        1994—Subsec. (d). Pub. L. 103–355, § 8301(c)(1), inserted
1986, see section 3(a) of Pub. L. 99–634, set out as an Ef-    before period at end ‘‘or to a prime contract for the ac-
fective Date of 1986 Amendment note under section 51           quisition of commercial items (as defined in section
of this title.                                                 403(12) of this title).’’
                                                                 Pub. L. 103–355, § 4104(a), added subsec. (d).
§ 57. Contractor responsibilities                                Subsec. (e). Pub. L. 103–355, § 4104(a), added subsec. (e).
(a) Procedural requirements for prevention and                           EFFECTIVE DATE OF 1996 AMENDMENT
    detection of violations
                                                                 For effective date and applicability of amendment by
  Each contracting agency shall include in each                Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
prime contract awarded by such agency a re-                    out as a note under section 251 of this title.
quirement that the prime contractor shall have
                                                                         EFFECTIVE DATE OF 1994 AMENDMENT
in place and follow reasonable procedures de-
signed to prevent and detect violations of sec-                  For effective date and applicability of amendment by
tion 53 of this title in its own operations and di-            Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set
rect business relationships.                                   out as a note under section 251 of this title.
(b) Cooperation in investigations requirement                                       EFFECTIVE DATE
  Each contracting agency shall include in each                  Subsecs. (a) and (b) effective with respect to contract
prime contract awarded by such agency a re-                    solicitations issued by an agency, department, or other
§ 58                                    TITLE 41—PUBLIC CONTRACTS                                              Page 30

establishment of the Federal Government on or after           Sec.
the date which is 90 days after Nov. 7, 1986, and subsec.     117.      Defective, informal, and quasi contracts.
(c) effective with respect to conduct described in sec-       118.      Administration.
tion 53 of this title which occurs on or after Nov. 7,        119.      Fraudulent claims, vouchers, statements,
1986, see section 3 of Pub. L. 99–634, set out as an Effec-               etc.; jurisdiction.
tive Date of 1986 Amendment note under section 51 of          120.      Powers and duties of contracting agencies.
this title.                                                   121.      Administrator of General Services; additional
                                                                          duties.
§ 58. Inspection authority                                    122.      Use of appropriated funds.
                                                              123.      Delegation of authority by Administrator of
  For the purpose of ascertaining whether there                           General Services.
has been a violation of section 53 of this title              124.      Effective date; applicability to lend lease con-
with respect to any prime contract, the Govern-                           tracts.
ment Accountability Office and the inspector                  125.      Exemption of certain contracts outside con-
general of the contracting agency, or a rep-                              tinental United States or in Alaska.
resentative of such contracting agency des-                   § 101. Declaration of policy
ignated by the head of such agency if the agency
does not have an inspector general, shall have                  The Congress declares that the objectives of
access to and may inspect the facilities and                  this chapter are—
audit the books and records, including any elec-                  (a) to facilitate maximum war production
tronic data or records, of any prime contractor                 during the war, and to expedite reconversion
or subcontractor under a prime contract award-                  from war production to civilian production as
ed by such agency. This section does not apply                  war conditions permit;
with respect to a prime contract for the acquisi-                 (b) to assure to prime contractors and sub-
tion of commercial items (as defined in section                 contractors, small and large, speedy and equi-
403(12) of this title).                                         table final settlement of claims under termi-
                                                                nated war contracts, and adequate interim fi-
(Mar. 8, 1946, ch. 80, § 8, as added Pub. L. 99–634,            nancing until such final settlement;
§ 2(a), Nov. 7, 1986, 100 Stat. 3525; amended Pub.                (c) to assure uniformity among Government
L. 103–355, title VIII, § 8301(c)(2), Oct. 13, 1994, 108        agencies in basic policies and administration
Stat. 3397; Pub. L. 108–271, § 8(b), July 7, 2004, 118          with respect to such termination settlements
Stat. 814.)                                                     and interim financing;
                      AMENDMENTS                                  (d) to facilitate the efficient use of mate-
                                                                rials, manpower, and facilities for war and ci-
  2004—Pub. L. 108–271 substituted ‘‘Government Ac-
countability Office’’ for ‘‘General Accounting Office’’.        vilian purposes by providing prime contractors
  1994—Pub. L. 103–355 inserted at end ‘‘This section           and subcontractors with notice of termination
does not apply with respect to a prime contract for the         of their war contracts as far in advance of the
acquisition of commercial items (as defined in section          cessation of work thereunder as is feasible and
403(12) of this title).’’                                       consistent with the national security;
                                                                  (e) to assure the expeditious removal from
         EFFECTIVE DATE OF 1994 AMENDMENT
                                                                the plants of prime contractors and sub-
  For effective date and applicability of amendment by          contractors of termination inventory not to be
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set      retained or sold by the contractor;
out as a note under section 251 of this title.                    (f) to use all practicable methods compatible
                    EFFECTIVE DATE                              with the foregoing objectives to prevent im-
                                                                proper payments and to detect and prosecute
  Section effective with respect to conduct described in
section 53 of this title which occurs on or after Nov. 7,
                                                                fraud.
1986, see section 3(a) of Pub. L. 99–634, set out as an Ef-   (July 1, 1944, ch. 358, § 1, 58 Stat. 649.)
fective Date of 1986 Amendment note under section 51
of this title.                                                                      SHORT TITLE
                                                                Section 27 of act July 1, 1944, provided that: ‘‘This
       CHAPTER 2—TERMINATION OF WAR                           Act [enacting this chapter] may be cited as the ‘Con-
                CONTRACTS                                     tract Settlement Act of 1944’.’’
Sec.                                                                                SEPARABILITY
101.      Declaration of policy.                                Section 26 of act July 1, 1944, provided: ‘‘If any provi-
102.      Surveillance by Congress.                           sion of this Act [enacting this chapter], or the applica-
103.      Definitions.                                        tion of such provision to any person or circumstance, is
104.      Administration of chapter.                          held invalid, the remainder of this Act or the applica-
105.      Contract Settlement Advisory Board; com-            tion of such provision to persons or circumstances
            position; duties.                                 other than those as to which it is held invalid, shall not
106.      Basis for settlement of termination claims.         be affected thereby.’’
107.      Settlement of subcontractors’ claims.
108.      Interim financing.                                  § 102. Surveillance by Congress
109.      Advance or partial payments to subcontrac-
            tors; excessive payments, interest, liability       (a) To assist the Congress in appraising the ad-
            of war contractor.                                ministration of this chapter and in developing
110.      Guarantee of loans, advances, etc.                  such amendments or related legislation as may
111.      Termination of contracts.                           further be necessary to accomplish the objec-
112.      Removal and storage of materials.
                                                              tives of this chapter, the appropriate commit-
113.      Appeals.
114.      Court of Federal Claims.                            tees of the Senate and the House of Representa-
115.      Personal financial liability of contracting of-     tives shall study each report submitted to the
            ficers.                                           Congress under this chapter and shall otherwise
116.      Repealed.                                           maintain continuous surveillance of the oper-
Page 31                                   TITLE 41—PUBLIC CONTRACTS                                                § 103

ations of the Government agencies under this                  (i) The term ‘‘interim financing’’ includes ad-
chapter.                                                    vance payments, partial payments, loans, dis-
  (b) Repealed. Oct. 31, 1951, ch. 654, § 1(110), 65        counts, advances, and commitments in connec-
Stat. 705.                                                  tion therewith, and guaranties of loans, dis-
(July 1, 1944, ch. 358, § 2, 58 Stat. 649; Oct. 31, 1951,   counts, advances, and commitments in connec-
ch. 654, § 1(110), 65 Stat. 705.)                           tion therewith and any other type of financing
                                                            made in contemplation of or related to termi-
                          AMENDMENTS                        nation of war contracts.
  1951—Subsec. (b). Act Oct. 31, 1949, repealed subsec.       (j) The term ‘‘Administrator’’ means the Ad-
(b) which related to reports to Congress.                   ministrator of General Services.
§ 103. Definitions                                            (k) The term ‘‘person’’ means any individual,
                                                            corporation, partnership, firm, association,
   As used in this chapter—                                 trust, estate, or other entity.
   (a) The term ‘‘prime contract’’ means any con-             (l) The term ‘‘termination inventory’’ means
tract, agreement, or purchase order heretofore              any materials (including a proper part of any
or hereafter entered into by a contracting agen-            common materials), properly allocable to the
cy and connected with or related to the prosecu-            terminated portion of a war contract, except
tion of the war; and the term ‘‘prime contrac-              any machinery or equipment subject to a sepa-
tor’’ means any holder of one or more prime                 rate contract specifically governing the use or
contracts.                                                  disposition thereof.
   (b) The term ‘‘subcontract’’ means any con-                (m) The term ‘‘final and conclusive’’, as ap-
tract, agreement, or purchase order heretofore              plied to any settlement, finding, or decision,
or hereafter entered into to perform any work,              means that such settlement, finding, or decision
or to make or furnish any material to the extent            shall not be reopened, annulled, modified, set
that such work or material is required for the              aside, or disregarded by any officer, employee,
performance of any one or more prime contracts              or agent of the United States or in any suit, ac-
or of any one or more other subcontracts; and               tion, or proceeding except as provided in this
the term ‘‘subcontractor’’ means any holder of              chapter.
one or more subcontracts.
   (c) The term ‘‘war contract’’ means a prime              (July 1, 1944, ch. 358, § 3, 58 Stat. 650; Ex. Ord. No.
contract or a subcontract; and the term ‘‘war               9638, § 1, eff. Oct. 4, 1945, 10 F.R. 12591; Ex. Ord.
contractor’’ means any holder of one or more                No. 9809, §§ 1, 8 eff. Dec. 12, 1946, 11 F.R. 14281; Ex.
war contracts.                                              Ord. No. 9841, §§ 101, 203, eff. Apr. 23, 1947, 12 F.R.
   (d) The terms ‘‘termination’’, ‘‘terminate’’ and         2645; June 30, 1947, ch. 166, title II, § 207, 61 Stat.
‘‘terminated’’ refer to the termination or can-             209; 1947 Reorg. Plan No. 1, § 201, eff. July 1, 1947,
cellation, in whole or in part, of work under a             12 F.R. 4534, 61 Stat. 951; June 30, 1949, ch. 288,
prime contract for the convenience or at the op-            title I, § 102(b), 63 Stat. 380.)
tion of the Government (except for default of                                 REFERENCES IN TEXT
the prime contractor) or of work under a sub-
                                                               Section 611 of Appendix to title 50, referred to in sub-
contract for any reason except the default of the
                                                            sec. (g), was repealed by Pub. L. 89–554, § 8(a), Sept. 6,
subcontractor.                                              1966, 80 Stat. 651. See section 1431 et seq. of Title 50,
   (e) The term ‘‘material’’ includes any article,          War and National Defense.
commodity, machinery, equipment, accessory,                    The Reconstruction Finance Corporation Act, re-
part, component, assembly, work in process,                 ferred to in subsec. (g), is act Jan. 22, 1932, ch. 8, 47
maintenance, repair, and operating supplies, and            Stat. 5, as amended, which was classified to chapter 14
any product of any kind.                                    (§ 601 et seq.) of Title 15, Commerce and Trade, and has
   (f) The term ‘‘Government agency’’ means any             been eliminated from the Code. For complete classi-
executive department of the Government, or any              fication of this Act to the Code prior to its elimination
                                                            from the Code, see Tables.
administrative unit or subdivision thereof, any
independent agency or any corporation owned or                                     CODIFICATION
controlled by the United States in the executive              In subsec. (g), the Smaller War Plants Corporation
branch of the Government, and includes any                  was omitted from the definition of the term ‘‘contract-
contracting agency.                                         ing agency,’’ in subsec. (g) on the authority of section
   (g) The term ‘‘contracting agency’’ means any            207 of Act June 30, 1947, which provided: ‘‘The liquida-
Government agency, which has been or hereafter              tion of the affairs of the Smaller War Plants Corpora-
may be authorized to make contracts pursuant                tion administered by the Reconstruction Finance Cor-
to section 611 1 of Appendix to title 50, and in-           poration pursuant to Executive Order 9665 shall be car-
cludes the Reconstruction Finance Corporation               ried out by the Reconstruction Finance Corporation,
                                                            notwithstanding the provisions of the last paragraph of
and any corporation organized pursuant to the               section 5 of the First War Powers Act, 1941 [section 605
Reconstruction Finance Corporation Act, and                 of Title 50, Appendix, War and National Defense]. The
the Secretary of Commerce.                                  Smaller War Plants Corporation is hereby abolished.’’
   (h) The term ‘‘termination claim’’ means any
claim or demand by a war contractor for fair                                 TRANSFER OF FUNCTIONS
compensation for the termination of any war                   In subsec. (g), ‘‘Secretary of Commerce’’ substituted
contract and any other claim under a termi-                 for ‘‘War Production Board’’ in view of transfer of War
nated war contract, which regulations pre-                  Production Board functions to Civilian Production Ad-
scribed under this chapter authorize to be as-              ministration, then to Office of Temporary Controls,
serted and settled in connection with any termi-            and then to Secretary of Commerce by Ex. Ord. Nos.
                                                            9638, 9809, and 9841.
nation settlement.                                            In subsec. (j), functions of Director of Contract Set-
                                                            tlement transferred to Secretary of the Treasury by
 1 See   References in Text note below.                     Ex. Ord. No. 9809, § 8, and Reorg. Plan No. 1 of 1947, § 201,
§ 104                                   TITLE 41—PUBLIC CONTRACTS                                                Page 32

were retransferred to Administrator of General Serv-          employ certified public accountants, qualified
ices by section 102(b) of act June 30, 1949, ch. 288, 63      cost accountants, industrial engineers, apprais-
Stat. 380, which was classified to section 752(b) of          ers, and other experts, and contract with cer-
former Title 40, Public Buildings, Property, and Works,       tified public accounting firms and qualified
and was repealed by Pub. L. 107–217, § 6(b), Aug. 21, 2002,
116 Stat. 1304.
                                                              firms of engineers in the discharge of the duties
                                                              imposed upon him and in furtherance of the ob-
        EFFECTIVE DATE OF TRANSFER OF FUNCTIONS               jectives and policies of this chapter. The Admin-
 Transfer of functions by act June 30, 1949, effective        istrator of General Services shall perform the
July 1, 1949, see section 605, formerly section 505, of act   duties imposed upon him through the personnel
June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act       and facilities of the contracting agencies and
Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.            other established Government agencies, to the
                                                              extent that this does not interfere with the
 ABOLITION OF RECONSTRUCTION FINANCE CORPORATION
                                                              function of the Administrator of General Serv-
  Reorg. Plan No. 1 of 1957, § 6(a), eff. June 30, 1957, 22   ices to insure uniform and efficient administra-
F.R. 4633, 71 Stat. 647, set out in the Appendix to Title     tion of the provisions of this chapter.
5, Government Organization and Employees, abolished
Reconstruction Finance Corporation.
                                                              (e) Publication in Federal Register
                                                                All orders and regulations prescribed by the
§ 104. Administration of chapter                              Administrator of General Services or any Gov-
(a) Repealed. Pub. L. 89–554, § 8(a), Sept. 6, 1966,          ernment agency under this chapter shall be pub-
    80 Stat. 652                                              lished in the Federal Register.
                                                              (July 1, 1944, ch. 358, § 4, 58 Stat. 651; Ex. Ord. No.
(b) Rules and regulations                                     9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
  In order to insure uniform and efficient ad-                Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
ministration of the provisions of this chapter,               4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
the Administrator of General Services, subject                § 102(b), 63 Stat. 380; Oct. 28, 1949, ch. 782, title XI,
to such provisions, by general orders or general              § 1106(a), 63 Stat. 972; Pub. L. 89–554, § 8(a), Sept.
regulations—                                                  6, 1966, 80 Stat. 652.)
    (1) shall prescribe policies, principles, meth-                             REFERENCES IN TEXT
  ods, procedures, and standards to govern the
                                                                 The civil-service laws, referred to in subsec. (d), are
  exercise of the authority and discretion and                set forth in Title 5, Government Organization and Em-
  the performance of the duties and functions of              ployees. See, particularly, section 3301 et seq. of Title
  all Government agencies under this chapter;                 5.
  and                                                                                CODIFICATION
    (2) may require or restrict the exercise of
  any such authority and discretion, or the per-                 In subsec. (d) of this section, ‘‘chapter 51 and sub-
                                                              chapter III of chapter 53’’ substituted for ‘‘the Classi-
  formance of any such duty or function, to such              fication Act of 1949’’ on authority of Pub. L. 89–554,
  extent as he deems necessary to carry out the               § 7(b), Sept. 6, 1966, 80 Stat. 631, the first section of
  provisions of this chapter.                                 which enacted Title 5, Government Organization and
(c) Compliance                                                Employees.
                                                                 In the second sentence of this section, provisions that
  The exercise of any authority or discretion                 authorized the appointment of a Deputy Director and
and the performance of any duty or function,                  that authorized the employment of certified public ac-
conferred or imposed on any Government agency                 countants, qualified cost accountants, industrial engi-
by this chapter, shall be subject to such orders              neers, appraisers, and other experts without regard to
                                                              ‘‘the Classification Act of 1923’’, were omitted as obso-
and regulations prescribed by the Administrator               lete. Sections 1202 and 1204 of the Classification Act of
of General Services pursuant to subsection (b) of             1949, 63 Stat. 972, 973, repealed the 1923 Act and all laws
this section. Each Government agency shall                    or parts of laws inconsistent with the 1949 Act. While
carry out such orders and regulations of the Ad-              section 1106(a) of the 1949 Act provided that references
ministrator of General Services expeditiously,                in other laws to the 1923 Act should be held and consid-
and shall issue such regulations with respect to              ered to mean the 1949 Act, it did not have the effect of
its operations and procedures as may be nec-                  continuing the exceptions contained in this sentence
                                                              because of section 1106(b) which provided that the ap-
essary to carry out the policies, principles,                 plication of the 1949 Act to any position, officer, or em-
methods, procedures, and standards prescribed                 ployee shall not be affected by section 1106(a). The
by the Administrator of General Services. Any                 Classification Act of 1949 was repealed by Pub. L.
Government agency may issue such further reg-                 89–554, Sept. 6, 1966, § 8(a), 80 Stat. 632 (of which section
ulations not inconsistent with the general or-                1 revised and enacted Title 5 into law). Section 5102 of
ders or regulations of the Administrator of Gen-              Title 5 contains the applicability provisions of the 1949
                                                              Act, and section 5103 of Title 5 authorizes the Office of
eral Services as it deems necessary or desirable              Personnel Management to determine the applicability
to carry out the provisions of this chapter.                  to specific positions and employees.
(d) Personnel; supplies, facilities, and services                                    AMENDMENTS
  The Administrator of General Services may,                    1966—Subsec. (a). Pub. L. 89–554 repealed subsec. (a)
within the limits of funds which may be made                  which provided for the appointment, pay, and term of
available, employ and fix the compensation of                 the Director of Contract Settlement. This office was
necessary personnel in accordance with the pro-               abolished previously by Reorg. Plan No. 1 of 1947.
visions of the civil-service laws and chapter 51                1949—Subsec. (d). Act Oct. 28, 1949, substituted ‘‘Clas-
and subchapter III of chapter 53 of title 5, and              sification Act of 1949’’ for ‘‘Classification Act of 1923’’.
make expenditures for supplies, facilities, and                                        REPEALS
services necessary for the performance of his                   Act Oct. 28, 1949, ch. 782, cited as a credit to this sec-
functions under this chapter. Without regard to               tion, was repealed (subject to a savings clause) by Pub.
the provisions of the civil-service laws, he may              L. 89–554, Sept. 6, 1966, § 8, 80 Stat. 632, 655.
Page 33                                 TITLE 41—PUBLIC CONTRACTS                                                      § 106

                 TRANSFER OF FUNCTIONS                         ministration, but with the functions of the Board to be
  Functions of Secretary of the Treasury transferred to        performed by the Board under conditions and limita-
Administrator of General Services by section 102(b) of         tions prescribed by law, by section 102(b) of act June 30,
act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-    1949, ch. 288, 63 Stat. 380, which was classified to section
fied to section 752(b) of former Title 40, Public Build-       752(b) of former Title 40, Public Buildings, Property,
ings, Property, and Works, and was repealed by Pub. L.         and Works, and was repealed by Pub. L. 107–217, § 6(b),
107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.                Aug. 21, 2002, 116 Stat. 1304.
  Subsec. (a), establishing the Office of Contract Set-           Functions of Secretary of the Treasury transferred to
tlement to be headed by the Director of Contract Set-          Administrator of General Services by section 102(b) of
tlement and providing for the appointment of the Di-           act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
rector by the President with the advice and consent of         fied to section 752(b) of former Title 40, and was re-
the Senate with compensation of $12,000 per year and a         pealed by Pub. L. 107–217, § 6(b), Aug. 21, 2002, 116 Stat.
term of two years, was repealed, and references in the         1304.
remainder of this section to ‘‘Director’’ were changed            Contract Settlement Advisory Board transferred to
to ‘‘Secretary’’ by section 8 of Ex. Ord. No. 9809 and sec-    Department of the Treasury by section 8 of Ex. Ord. No.
tion 201 of Reorg. Plan No. 1 of 1947. Reorg. Plan No. 1       9809 and section 201 of Reorg. Plan No. 1 of 1947. Reorg.
of 1947 is set out in the Appendix to Title 5, Govern-         Plan No. 1 of 1947 is set out in the Appendix to Title 5,
ment Organization and Employees.                               Government Organization and Employees.
                                                                  In text of this section, references to ‘‘Director’’
      EFFECTIVE DATE OF TRANSFER OF FUNCTIONS                  changed to ‘‘Secretary of the Treasury’’ and phrase
 Transfer of functions by act June 30, 1949, effective         ‘‘the Secretary of the Treasury’’ following reference to
July 1, 1949, see section 605, formerly section 505, of act    Secretary of the Navy was omitted by section 8 of Ex.
June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act        Ord. No. 9809, and section 201 of Reorg. Plan No. 1 of
Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.             1947.
                                                                  Administrator of Foreign Economic Administration
§ 105. Contract Settlement Advisory Board; com-                changed to Secretary of State in view of Ex. Ord. No.
    position; duties                                           9630, as amended by Ex. Ord. No. 9730.
                                                                  ‘‘Secretary of Commerce’’ substituted for references
  There is created a Contract Settlement Advi-                 to Chairman of War Production Board and chairman
sory Board, with which the Administrator of                    and board of directors of Smaller War Plants Corpora-
General Services shall advise and consult. The                 tion. War Production Board functions transferred to Ci-
Board shall be composed of the Administrator of                vilian Production Administration, to Office of Tem-
General Services who shall act as its Chairman,                porary Controls, and then to Secretary of Commerce by
and of the Secretary of the Army, the Secretary                Ex. Ord. Nos. 9638, 9809, and 9481, respectively. Func-
                                                               tions of chairman and Board of Directors of Smaller
of the Navy, the Secretary of Transportation,
                                                               War Plants Corporation transferred to Secretary of
the Secretary of State, the chairman of the                    Commerce by Ex. Ord. No. 9665.
board of directors of the Reconstruction Finance
Corporation, Secretary of Commerce, and the                          EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
Attorney General or any alternate or represent-                 Transfer of functions by act June 30, 1949, effective
ative designated by any of them. The Adminis-                  July 1, 1949, see section 605, formerly section 505, of act
trator of General Services shall request other                 June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
Government agencies to participate in the delib-               Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
erations of the Board whenever matters spe-                                  SECRETARY OF THE AIR FORCE
cially affecting them are under consideration.
                                                                 For transfer of certain procurement and related func-
(July 1, 1944, ch. 358, § 5, 58 Stat. 651; Ex. Ord. No.        tions and property, insofar as they pertain to the Air
9630, § 1, eff. Sept. 27, 1945, 10 F.R. 12245; Ex. Ord.        Force, from Secretary of the Army and Department of
No. 9638, § 1, eff. Oct. 4, 1945, 10 F.R. 12591; Ex.           the Army, to Secretary of the Air Force and Depart-
Ord. No. 9665, § 2, eff. Dec. 27, 1945, 10 F.R. 15365;         ment of the Air Force, see Secretary of Defense Trans-
Ex. Ord. No. 9730, § 1, eff. May 27, 1946, 11 F.R.             fer Order No. 6, eff. Jan. 15, 1948.
5777; Ex. Ord. No. 9809, § 8, eff. Dec. 12, 1946, 11            ABOLITION OF RECONSTRUCTION FINANCE CORPORATION
F.R. 14281; Ex. Ord. No. 9841, §§ 101, 203, eff. Apr.
23, 1947, 12 F.R. 2645; 1947 Reorg. Plan No. 1, § 201,           Reorg. Plan No. 1 of 1957, § 6(a), eff. June 30, 1957, 22
                                                               F.R. 4633, 71 Stat. 647, set out in the Appendix to Title
eff. July 1, 1947, 12 F.R. 4534, 61 Stat. 951; July 26,        5, Government Organization and Employees, abolished
1947, ch. 343, title II, § 205(a), 61 Stat. 501; June 30,      Reconstruction Finance Corporation.
1949, ch. 288, title I, § 102(b), 63 Stat. 380; Pub. L.
97–31, § 12(17), Aug. 6, 1981, 95 Stat. 154.)                             TERMINATION OF ADVISORY BOARDS
                      AMENDMENTS                                 Advisory boards in existence on Jan. 5, 1973, to termi-
                                                               nate not later than the expiration of the 2-year period
  1981—Pub. L. 97–31 substituted ‘‘Secretary of Trans-         following Jan. 5, 1973, unless, in the case of a board es-
portation’’ for ‘‘Chairman of the Maritime Commis-             tablished by the President or an officer of the Federal
sion’’.                                                        Government, such board is renewed by appropriate ac-
                    CHANGE OF NAME                             tion prior to the expiration of such 2-year period, or in
                                                               the case of a board established by the Congress, its du-
  Department of War designated Department of the               ration is otherwise provided by law. See sections 3(2)
Army and title of Secretary of War changed to Sec-             and 14 of Pub. L. 92–463, Oct. 6, 1972, 86 Stat. 770, 776, set
retary of the Army by section 205(a) of act July 26, 1947,     out in the Appendix to Title 5, Government Organiza-
ch. 343, title II, 61 Stat. 501. Section 205(a) of act July    tion and Employees.
26, 1947, was repealed by section 53 of act Aug. 10, 1956,
ch. 1041, 70A Stat. 641. Section 1 of act Aug. 10, 1956, en-   § 106. Basis for settlement of termination claims
acted ‘‘Title 10, Armed Forces’’ which in sections 3010
to 3013 continued Department of the Army under ad-             (a) Priority to private contractors
ministrative supervision of Secretary of the Army.
                                                                 It is the policy of the Government, and it shall
                 TRANSFER OF FUNCTIONS                         be the responsibility of the contracting agencies
  Contract Settlement Advisory Board and all its prop-         and the Administrator of General Services to
erty, records, etc., transferred to General Services Ad-       provide war contractors with speedy and fair
§ 106                             TITLE 41—PUBLIC CONTRACTS                                     Page 34

compensation for the termination of any war           duction shall be made on account of credits for
contract, in accordance with and subject to the       property chargeable to the Government or for
provisions of this chapter, giving priority to        advance or partial payments, but amounts pay-
contractors whose facilities are privately owned      able under such settlement agreement for com-
or privately operated. Such fair compensation         pleted articles or work at the contract price and
for the termination of subcontracts shall be          for the discharge of the termination claims of
based on the same principles as compensation          subcontractors shall be deducted.
for the termination of prime contracts.               (d) Allowable costs
(b) Establishment of methods and standards              Except as hereinafter provided, the methods
  Each contracting agency shall establish meth-       and standards established under subsection (b)
ods and standards, suitable to the conditions of      of this section for determining fair compensa-
various war contractors, for determining fair         tion for termination claims which are not set-
compensation for the termination of war con-          tled by agreement shall be designed to com-
tracts on the basis of actual, standard, average,     pensate the war contractor fairly for the termi-
or estimated costs, or of a percentage of the con-    nation of the war contract, taking into ac-
tract price based on the estimated percentage of      count—
completion of work under the terminated con-              (1) the direct and indirect manufacturing,
tract, or on any other equitable basis, as it           selling and distribution, administrative and
deems appropriate. To the extent that such              other costs and expenses incurred by the war
methods and standards require accounting, they          contractor which are reasonably necessary for
shall be adapted, so far as practicable, to the ac-     the performance of the war contract and prop-
counting systems used by war contractors, if            erly allocable to the terminated portion there-
consistent with recognized commercial account-          of under recognized commercial accounting
ing practice.                                           practices; and
(c) Conclusiveness of settlement                          (2) reasonable costs and expenses of settling
                                                        termination claims of subcontractors related
  Any contracting agency may settle all or any          to the terminated portion of the war contract;
part of any termination claim under any war             and
contract by agreement with the war contractor,            (3) reasonable accounting, legal, clerical,
or by determination of the amount due on the            and other costs and expenses incident to ter-
claim or part thereof without such agreement,           mination and settlement of the terminated
or by any combination of these methods. Where           war contract; and
any such settlement is made by agreement, the             (4) reasonable costs and expenses of remov-
settlement shall be final and conclusive, except        ing, preserving, storing and disposing of termi-
(1) to the extent otherwise agreed in the settle-       nation inventories; and
ment; (2) for fraud; (3) upon renegotiation to            (5) such allowance for profit on the prepara-
eliminate excessive profits under section 1191 of       tions made and work done for the terminated
Appendix to title 50, unless exempt or exempted         portion of the war contract as is reasonable
under such section; or (4) by mutual agreement          under the circumstances; and
before or after payment. Where any such settle-           (6) interest on the termination claim in ac-
ment is made by determination without agree-            cordance with subsection (f) of this section;
ment, it shall likewise be final and conclusive,        and
subject to the same exceptions as if made by              (7) the contract price and all amounts other-
agreement, unless the war contractor appeals or         wise paid or payable under the contract.
brings suit in accordance with section 113 of this     The following shall not be included as ele-
title: Provided, That no settlement agreement         ments of cost:
hereunder involving payment to a war contrac-             (i) Losses on other contracts, or from sales
tor of an amount in excess of $50,000 (or such         or exchanges of capital assets, fees and other
lesser amount as the Administrator of General          expenses in connection with reorganization or
Services may from time to time determine)              recapitalization, antitrust or Federal income-
shall become binding upon the Government               tax litigation, or prosecution of Federal in-
until the agreement has been reviewed and ap-          come-tax claims or other claims against the
proved by a settlement review board of three or        Government (except as provided in paragraph
more members established by the contracting            (3) of this subsection); losses on investments;
agency in the bureau, division, regional or dis-       provisions for contingencies; and premiums on
trict office, or other unit of the contracting         life insurance where the contractor is the ben-
agency authorized to make such settlement, or          eficiary.
in the event of disapproval by the settlement re-         (ii) The expense of conversion of the contrac-
view board, unless approved by the head of such        tor’s facilities to uses other than the perform-
bureau, division, regional or district office, or      ance of the contract.
other unit. Failure of the settlement review              (iii) Expenses due to the negligence or will-
board to act upon any settlement within thirty         ful failure of the contractor to discontinue
days after its submission to the board shall op-       with reasonable promptness the incurring of
erate as approval by the board. The sole func-         expenses after the effective date of the termi-
tion of settlement review boards shall be to de-       nation notice.
termine the over-all reasonableness of proposed           (iv) Costs incurred in respect to facilities,
settlement agreements from the point of view of        materials, or services purchased or work done
protecting the interests of the Government. In         in excess of the reasonable quantitative re-
determining, for purposes of this subsection,          quirements of the entire contract.
whether review of any settlement agreement is           The failure specifically to mention in this sub-
required because of the amounts involved, no de-      section any item of cost is not intended to imply
Page 35                           TITLE 41—PUBLIC CONTRACTS                                                  § 107

that it should be allowed or disallowed. The Ad-     its termination, the contracting agency, either
ministrator of General Services may interpret        before or after its termination, shall amend such
the provisions of this subsection and may pro-       war contract by agreement with the war con-
vide for the inclusion or exclusion of other costs   tractor, or shall authorize, approve, or ratify an
in accordance with recognized commercial ac-         amendment of such war contract by the parties
counting practice.                                   thereto, to provide for such fair compensation.
   Where the small size of claims or the nature of
production or performance or other factors           (July 1, 1944, ch. 358, § 6, 58 Stat. 652; Ex. Ord. No.
make it impracticable to apply the principles        9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
stated in this subsection to any class of settle-    Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
ments which are subject to this subsection, the      4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
contracting agencies may establish alternative       § 102(b), 63 Stat. 380.)
methods and standards for determining fair                              REFERENCES IN TEXT
compensation for that class of termination
                                                       Section 1191 of the Appendix to title 50, referred to in
claims. The aggregate amount of compensation         subsec. (c), was omitted from the Code. See note set out
allowed in accordance with this subsection (ex-      under section 1191 of Title 50, Appendix, War and Na-
cluding amounts allowed under paragraphs (3)         tional Defense.
and (4) of this subsection) shall not exceed the
total contract price reduced by the amount of                         TRANSFER OF FUNCTIONS
payments otherwise made or to be made under            Functions of Secretary of the Treasury transferred to
the contract.                                        Administrator of General Services by section 102(b) of
(e) Settlement by agreement                          act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
                                                     fied to section 752(b) of former Title 40, Public Build-
   In order to carry out the objectives of this      ings, Property, and Works, and was repealed by Pub. L.
chapter, termination claims shall be settled by      107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
agreement to the maximum extent feasible and           ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
the methods and standards established under          of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.
subsection (b) of this section shall be designed     1 of 1947. Reorg. Plan No. 1 of 1947 is set out in the Ap-
to facilitate such settlements. To the extent        pendix to Title 5, Government Organization and Em-
                                                     ployees.
that he deems it practicable to do so without
impeding expeditious settlements, the Adminis-             EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
trator of General Services shall require the con-
                                                      Transfer of functions by act June 30, 1949, effective
tracting agencies to take into account the fac-      July 1, 1949, see section 605, formerly section 505, of act
tors enumerated in subsection (d) of this section    June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
in establishing methods and standards for deter-     Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
mining fair compensation in the settlement of
termination claims by agreement.                          APPLICATION TO TERMINATED WAR CONTRACTS
(f) Interest                                           For application of this section to war contracts ter-
                                                     minated at or before July 21, 1944, see section 124 of this
   Each contracting agency shall allow and pay       title.
interest on the amount due and unpaid from
time to time on any termination claim under a        SETTLEMENT OF CLAIMS FOR WAR CONTRACT LOSSES
prime contract at the rate of 21⁄2 per centum per     INCURRED BETWEEN SEPTEMBER 16, 1940, AND AUGUST
annum for the period beginning thirty days after      14, 1945
the date fixed for termination and ending with          Act Aug. 7, 1946, ch. 864, 60 Stat. 902, as amended by
the date of final payment, except that (1) if the    June 25, 1948, ch. 646, § 37, 62 Stat. 992; Aug. 30, 1954, ch.
prime contractor unreasonably delays the set-        1076, § 1(2), 68 Stat. 966, provided that if work, supplies,
tlement of his claim, interest shall not accrue      or services were provided for any department or agency
for the period of such delay, (2) if interest for    of the Government, under a contract or subcontract,
                                                     between Sept. 16, 1940, and Aug. 14, 1945, and a loss was
the period after termination on any advance          incurred by the contractors or subcontractors without
payment or loan, made or guaranteed by the           fault or negligence on their part, then those depart-
Government, has been waived for the benefit of       ments or agencies were authorized to adjust and settle
the contractor, the amount of the interest so        these losses on a fair and equitable basis, if claims were
waived allocable to the terminated contract or       filed within six months after Aug. 7, 1946, and granted
the terminated part of the contract shall be de-     claimants dissatisfied with the settlement the right of
ducted from the interest otherwise payable here-     judicial review.
under, and (3) if after delivery of findings by a
contracting agency, the contractor appeals or        § 107. Settlement of subcontractors’ claims
sues as provided in section 113 of this title, in-   (a) Conclusiveness of settlement
terest shall not accrue after the thirtieth day        Where, in connection with the settlement of
following the delivery of the findings on any        any termination claim by a contracting agency,
amount allowed by such findings, unless such         any war contractor makes settlements of the
amount is increased upon such appeal or suit. In     termination claims of his subcontractors, the
approving, ratifying, authorizing, or making         contracting agency shall limit or omit its re-
termination settlements with subcontractors,         view of such settlements with subcontractors to
each contracting agency shall allow interest on      the maximum extent compatible with the public
the termination claim of the subcontractor on        interest. Any contracting agency (1) may ap-
the same basis and subject to the same condi-        prove, ratify, or authorize such settlements with
tions as are applicable to a prime contractor.       subcontractors upon such evidence, terms, and
(g) Amendment of contracts                           conditions as it deems proper; (2) shall vary the
   Where any war contract does not provide for       scope and intensity of its review of such settle-
or provides against such fair compensation for       ments according to the reliability of the war
§ 108                             TITLE 41—PUBLIC CONTRACTS                                            Page 36

contractor, the size, number, and complexity of       (e) Amount of settlement
such claims, and other relevant factors; and (3)         Any contracting agency may make settle-
shall authorize war contractors to make such          ments with subcontractors in accordance with
settlements with subcontractors without review        any of the provisions of this chapter without re-
by the contracting agency, whenever the reli-         gard to any limitation on the amount payable
ability of the war contractor, the amount or na-      by the Government to the prime contractor.
ture of the claims, or other reasons appear to
the contracting agency to justify such action.        (f) Equitable payments
Any such settlement of a subcontract approved,           If any contracting agency determines that in
ratified, or authorized by a contracting agency       the circumstances of a particular case equity
shall be final and conclusive as to the amount        and good conscience require fair compensation
due to the same extent as a settlement under          for the termination of a war contract to be paid
subsection (c) of section 106 of this title, and no   to a subcontractor who has been deprived of and
war contractor shall be liable to the United          cannot otherwise reasonably secure such fair
States on account of any amounts paid thereon         compensation, the contracting agency con-
except for his own fraud.                             cerned may pay such compensation to him al-
(b) Supervision of payments to war contractors        though such compensation already has been in-
  Whenever any contracting agency is satisfied        cluded and paid as part of a settlement with an-
of the inability of a war contractor to meet his      other war contractor.
obligations it shall exercise supervision or con-     (July 1, 1944, ch. 358, § 7, 58 Stat. 654; Ex. Ord. No.
trol over payments to the war contractor on ac-       9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
count of termination claims of subcontractors of      Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
such war contractor to such extent and in such        4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
manner as it deems necessary or desirable for         § 102(b), 63 Stat. 380.)
the purpose of assuring the receipt of the benefit
                                                                      TRANSFER OF FUNCTIONS
of such payments by the subcontractors.
(c) Group settlements                                   Functions of Secretary of the Treasury transferred to
                                                      Administrator of General Services by section 102(b) of
  The Administrator of General Services shall         act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
prescribe policies and methods for the settle-        fied to section 752(b) of former Title 40, Public Build-
ment as a group, or otherwise, by any contract-       ings, Property, and Works, and was repealed by Pub. L.
ing agency of some or all of the termination          107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
claims of a war contractor under war contracts          ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
with one or more (1) bureaus or divisions within      of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.
                                                      1 of 1947. Reorg. Plan No. 1 of 1947 is set out in the Ap-
a contracting agency, (2) contracting agencies,
                                                      pendix to Title 5, Government Organization and Em-
or (3) prime contractors and subcontractors, to       ployees.
the extent he deems such action necessary or de-
sirable for expeditious and equitable settlement            EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
of such claims. After consulting with the con-         Transfer of functions by act June 30, 1949, effective
tracting agencies concerned, the Administrator        July 1, 1949, see section 605, formerly section 505, of act
of General Services may provide for assigning         June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
any war contractor to a contracting agency for        Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
such settlement, and such agency shall have au-            APPLICATION TO TERMINATED WAR CONTRACTS
thority to settle, on behalf of any other con-
                                                        For application of this section to war contracts ter-
tracting agency, some or all of the termination
                                                      minated at or before July 21, 1944, see section 124 of this
claims of such war contractor.                        title.
(d) Direct settlement by contracting agency
  Any contracting agency may settle directly          § 108. Interim financing
termination claims of subcontractors to the ex-       (a) Prime contractors
tent that it deems such action necessary or de-         It is the policy of the Government, and it shall
sirable for the expeditious and equitable settle-     be the responsibility of the contracting agencies
ment of such claims. In making such termi-            and the Administrator of General Services, in
nation settlements any contracting agency may         accordance with and subject to the provisions of
discharge the claim of the subcontractor by pay-      this chapter, to provide war contractors having
ment or may purchase such claim, and may              any termination claim or claims, pending their
agree to assume, or indemnify the subcontractor       settlement, with adequate interim financing,
against, any claims by any person in connection       within thirty days after proper application
with such claim or the termination settlement.        therefor.
Any contracting agency undertaking to settle
the termination claim of any subcontractor            (b) Method of financing; amounts payable
shall deliver to the subcontractor and the war          Each contracting agency shall, to the greatest
contractor liable to him written notice stating       extent it deems practicable, make available in-
its acceptance of responsibility for settling his     terim financing through loans and discounts,
claim and the conditions applicable thereto,          and commitments and guaranties in connection
which may include the release, or assignment to       therewith, in contemplation of or related to ter-
the contracting agency, of his claim against the      mination of war contracts. Where interim fi-
war contractor liable to him; upon consent            nancing is made by advance payments or partial
thereto by the subcontractor, the Government          payments, it shall, insofar as practicable, con-
shall become liable for the settlement of his         sist of the following:
claims upon the conditions specified in the no-           (1) An amount equal to 100 per centum of the
tice.                                                   amount payable, at the contract price, on ac-
Page 37                           TITLE 41—PUBLIC CONTRACTS                                                  § 108

  count of acceptable items completed prior to        under this chapter shall constitute a debt due to
  the termination date under the terms of the         the United States within the meaning of section
  contract, or completed thereafter with the ap-      3713(a) of title 31.
  proval of the contracting agency; plus
    (2) An amount equal to 90 per centum of the       (e) Advance payments as part of termination set-
  cost of raw materials, purchased parts, sup-            tlement
  plies, direct labor, and manufacturing over-          Any contracting agency may allow any ad-
  head allocable to the terminated portion of         vance payments, previously made or authorized
  the war contract; plus                              by it in connection with the performance of a
    (3) A reasonable percentage of other allow-       war contract, to be used for payments and ex-
  able costs, including administrative overhead,      penses related to the termination settlement of
  allocable to the terminated portion of the war      such contract, upon such terms and conditions
  contract not included in the foregoing; plus        as it deems necessary or appropriate to protect
    (4) Such additional amounts, if any, as the       the interest of the Government.
  contracting agency deems necessary to pro-
  vide the war contractor with adequate interim       (f) Liquidation of loans, etc., prior to final settle-
  financing.                                               ment
    (5) In lieu of the costs referred to in clauses      No interim financing shall be made by any
  (2) and (3) of this subsection, where a detailed    contracting agency under this chapter unless
  ascertainment of such costs is not suitable to      the terms of such financing provide for the liq-
  the conditions of any war contractor and is         uidation by the war contractor of all loans, dis-
  apt to cause delay in the obtaining of interim      counts, advance payments, or partial payments
  financing by him, that portion of such interim      thereunder not later than the time of final pay-
  financing shall be equal to an amount not           ment of the amount due on the settlement of
  greater than 90 per centum of the estimated         the termination claim or claims of the war con-
  costs which are allocable to the terminated         tractor involved or such time thereafter as the
  part or parts of the war contract or group of       contracting agency deems necessary for the liq-
  war contracts, and are ascertained in accord-       uidation of such interim financing in an orderly
  ance with such methods and standards as the         manner.
  Administrator of General Services shall pre-
                                                      (g) Settlement of claims; validation of prior fi-
  scribe.
    (6) There shall be deducted from the amount           nancing
  of such interim financing any unliquidated            Any contracting agency may settle, upon such
  balances of advance and partial payments            terms and conditions as it deems proper, any
  theretofore made to such war contractor,            claim or obligation due by or to the Government
  which are allocable to the terminated war con-      arising from or related to any interim financing
  tract or the terminated part of the war con-        made, acquired, or authorized by it. Any interim
  tract.                                              financing made, acquired, or authorized by any
(c) Evidence to support financing                     contracting agency before July 21, 1944, shall be
                                                      valid to the extent it would be authorized under
  The Administrator of General Services shall
                                                      the provisions of this chapter if made after its
prescribe (1) the types of estimates, certificates,
                                                      effective date.
or other evidence to be required to support such
interim financing; (2) the terms and conditions       (July 1, 1944, ch. 358, § 8, 58 Stat. 655; Ex. Ord. No.
upon which such interim financing shall be            9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
made including the use of standard forms for          Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
agreements with respect to such interim financ-       4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
ing to the extent practicable; (3) the classes of     § 102(b), 63 Stat. 380.)
cases in which such interim financing shall be
refused; and (4) such methods of supervision and                             CODIFICATION
control over such interim financing as he deems         In subsec. (d), ‘‘section 3713(a) of title 31’’ substituted
necessary or desirable to assure adequate and         for ‘‘Revised Statutes, section 3466 (31 U.S.C., sec. 191)’’
speedy interim financing to subcontractors of         on authority of Pub. L. 97–258, § 4(b), Sept. 13, 1982, 96
the war contractor.                                   Stat. 1067, the first section of which enacted Title 31,
                                                      Money and Finance.
(d) Penalty for overstatement of claims
  In case of an overstatement by any war con-                          TRANSFER OF FUNCTIONS
tractor of the amount due on his termination            Functions of Secretary of the Treasury transferred to
claim or claims in connection with any interim        Administrator of General Services by section 102(b) of
financing under this chapter, such contractor         act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
shall pay to the United States, as a penalty, an      fied to section 752(b) of former Title 40, Public Build-
amount equal to 6 per centum of the amount of         ings, Property, and Works, and was repealed by Pub. L.
the overstatement, but the Administrator of           107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
                                                        ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
General Services may suspend or modify any
                                                      of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.
such penalty if in his opinion the imposition         1 of 1947, set out in the Appendix to Title 5, Govern-
thereof would be inequitable. Any penalty may         ment Organization and Employees.
be deducted from any amounts due the war con-
tractor upon such termination claim or claims,              EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
or otherwise, or may be collected from the war         Transfer of functions by act June 30, 1949, effective
contractor by suit. The obligation to pay any         July 1, 1949, see section 605, formerly section 505, of act
penalty imposed and to repay any interim fi-          June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
nancing made or assumed by the United States          Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
§ 109                                   TITLE 41—PUBLIC CONTRACTS                                              Page 38

     APPLICATION TO TERMINATED WAR CONTRACTS                    any Federal Reserve bank or public or private
  For application of this section to war contracts ter-         financing institution in making loans, dis-
minated at or before July 21, 1944, see section 124 of this     counts, or advances, or commitments in con-
title.                                                          nection therewith, for the purpose of financing
                                                                any such war contractor or other person in
§ 109. Advance or partial payments to sub-                      connection with or in contemplation of the
    contractors; excessive payments, interest, li-              termination of such war contracts or oper-
    ability of war contractor                                   ations.
  (a) Any contracting agency may make ad-                     (b) By assignment
vance or partial payments to any war contractor                 Any such loan, discount, advance, guaranty,
on account of any termination claim or claims,                or commitment in connection therewith may be
and may authorize, approve, or ratify any such                secured by assignment of, or covenants to as-
advance or partial payments by any war con-                   sign, some or all of the rights of such war con-
tractor to his subcontractors, upon such condi-               tractor or other person in connection with the
tions as it deems necessary to insure compliance              termination of such war contracts or operations,
with the provisions of subsection (b) of this sec-            or in such other manner as the contracting
tion. Each contracting agency shall make final                agency may prescribe.
payments from time to time on partial settle-
ments or on settlements fixing a minimum                      (c) Federal Reserve bank as fiscal agent
amount due before complete settlement, or as                    Subject to such regulations as the Board of
tentative payments before any settlement of the               Governors of the Federal Reserve System may
claim or claims.                                              prescribe with the approval of the Adminis-
  (b) Where any such advance or partial pay-                  trator of General Services, any Federal Reserve
ment is made to any war contractor by any con-                bank is authorized to act, on behalf of the con-
tracting agency or by another war contractor                  tracting agencies, as fiscal agent of the United
under this section, except a final payment on a               States in carrying out the purposes of this chap-
partial settlement, any amount in excess of the               ter.
amount finally determined to be due on the ter-               (d) Application of other laws
mination claim shall be treated as a loan from
                                                                This section shall not limit or affect any au-
the Government to the war contractor receiving
                                                              thority of any contracting agency, under any
it, and shall be payable upon demand together
                                                              other statute, to make loans, discounts, or ad-
with a penalty computed at the rate of 6 per
                                                              vances, or commitments in connection there-
centum per annum, for the period from the date
                                                              with or guaranties thereof.
such excess advance or partial payment is re-
ceived to the date on which such excess is repaid             (July 1, 1944, ch. 358, § 10, 58 Stat. 657; Ex. Ord.
or extinguished. Where the advance or partial                 No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
payment was made by a war contractor and au-                  Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
thorized, approved, or ratified by any contract-              4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
ing agency, the war contractor making it shall                § 102(b), 63 Stat. 380.)
not be liable for any such excess payment in the
                                                                              TRANSFER OF FUNCTIONS
absence of fraud on his part and shall receive
payment or credit from the Government for the                   Functions of Secretary of the Treasury transferred to
amount of such excess payment.                                Administrator of General Services by section 102(b) of
                                                              act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
(July 1, 1944, ch. 358, § 9, 58 Stat. 657.)                   fied to section 752(b) of former Title 40, Public Build-
                                                              ings, Property, and Works, and was repealed by Pub. L.
     APPLICATION TO TERMINATED WAR CONTRACTS                  107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
  For application of this section to war contracts ter-         ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
minated at or before July 21, 1944, see section 124 of this   of 1946 Ex. Ord. No. 9809 and section 201 of Reorg. Plan
title.                                                        No. 1 of 1947, set out in the Appendix to Title 5, Govern-
                                                              ment Organization and Employees.
§ 110. Guarantee of loans, advances, etc.
                                                                    EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
(a) By contract
                                                               Transfer of functions by act June 30, 1949, effective
  Any contracting agency is authorized—                       July 1, 1949, see section 605, formerly section 505, of act
    (1) to enter into contracts with any Federal              June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
  Reserve bank, or other public or private fi-                Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
  nancing institution, guaranteeing such financ-                   APPLICATION TO TERMINATED WAR CONTRACTS
  ing institution against loss of principal or in-
  terest on loans, discounts, or advances or on                 For application of this section to war contracts ter-
                                                              minated at or before July 21, 1944, see section 124 of this
  commitments in connection therewith, which
                                                              title.
  such financing institution may make to any
  war contractor or to any person who is or has               § 111. Termination of contracts
  been engaged in performing any operation
  deemed by such contracting agency to be con-                (a) Advance notice; prime contracts
  nected with or related to war production, for                 In order to facilitate the efficient use of mate-
  the purpose of financing such war contractor                rials, manpower, and facilities for war and civil-
  or other person in connection with or in con-               ian purposes, each contracting agency—
  templation of the termination of one or more                    (1) shall provide its prime contractors with
  such war contracts or operations; and                         notice of termination of their prime contracts
    (2) to make, enter into contracts to make, or               as far in advance of the cessation of work
  to participate with any Government agency,                    thereunder as is feasible and consistent with
Page 39                                 TITLE 41—PUBLIC CONTRACTS                                          § 112

  the national security without permitting un-                trator of General Services, one or more state-
  needed production or performance;                           ments showing the materials which such war
    (2) shall establish procedures whereby prime              contractor claims to be termination inventory
  contractors shall provide affected subcontrac-              under one or more war contracts and desires to
  tors with immediate notice of termination;                  have removed by the Government. Such state-
  and                                                         ments shall be prepared in such form and detail,
    (3) shall permit the continuation of some or              shall be submitted in such manner, through the
  all of the work under a terminated prime con-               prime contractor or otherwise, and shall be sup-
  tract whenever the agency deems that such                   ported by such certificates or other data, as may
  continuation will benefit the Government or is              be prescribed under this chapter.
  necessary to avoid substantial injury to the                (c) Removal and storage by Government agency
  plant or property.
                                                                Within sixty days after the submission of any
(b) Cessation of work without termination                     such statement by a war contractor, or such
  Whenever a contracting agency hereafter di-                 shorter period as may be prescribed under this
rects a prime contractor to cease or suspend all              chapter, or within such longer period as the war
or a substantial part of the work under a prime               contractor may agree, the Government agency
contract, without terminating the contract,                   concerned (1) shall arrange, upon such terms and
then, unless the contract provides otherwise, (1)             conditions as may be agreed, for the storage by
the contracting agency shall compensate the                   the war contractor on his own premises or else-
contractor for reasonable costs and expenses re-              where of all such claimed termination inventory
sulting from such cessation or suspension, and                which the war contractor does not retain or dis-
(2) if the cessation or suspension extends for                pose of, except any part which may be deter-
thirty days or more, the contractor may elect to              mined not to be allocable to the terminated war
treat it as a termination by delivering written               contract or contracts, or (2) shall remove from
notice of his election so to do to the contracting            the plant or plants of the war contractor all of
agency, at any time before the contracting                    such claimed termination inventory not re-
agency directs the prime contractor to resume                 tained, disposed of, or stored by the war contrac-
work under the contract.                                      tor or determined not to be allocable to the ter-
                                                              minated war contract or contracts.
(c) Authority of Administrator of General Serv-
    ices; classes of contracts                                (d) Removal and storage by war contractor
  The Administrator of General Services shall                   Upon the failure of the Government so to ar-
have no authority under this chapter to regulate              range for storage by the war contractor or to re-
or control the classes of contracts to be termi-              move any termination inventory within the pe-
nated by the contracting agencies.                            riod specified under subsection (c) of this sec-
                                                              tion, the war contractor, subject to regulations
(July 1, 1944, ch. 358, § 11, 58 Stat. 658; Ex. Ord.          prescribed under this chapter, may remove some
No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947        or all of such termination inventory from his
Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.          plant or plants and may store it on his own
4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,          premises or elsewhere for the account and at the
§ 102(b), 63 Stat. 380.)                                      risk and expense of the Government, using rea-
                TRANSFER OF FUNCTIONS                         sonable care for its transportation and preserva-
                                                              tion. If any war contractor intends so to remove
  Functions of Secretary of the Treasury transferred to       any claimed termination inventory, he shall de-
Administrator of General Services by section 102(b) of
act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
                                                              liver to the Government agency concerned writ-
fied to section 752(b) of former Title 40, Public Build-      ten notice of the date fixed for removal and a
ings, Property, and Works, and was repealed by Pub. L.        statement showing the quantities and condition
107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.               of the materials so to be removed, certified on
  ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8     behalf of the war contractor to have been pre-
of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.       pared in accordance with a concurrent physical
1 of 1947, set out in the Appendix to Title 5, Govern-        inventory of such materials. Such notice and
ment Organization and Employees.                              statement shall be delivered at least twenty
      EFFECTIVE DATE OF TRANSFER OF FUNCTIONS                 days in advance of the date fixed for removal
                                                              and may be delivered before or after the expira-
 Transfer of functions by act June 30, 1949, effective
July 1, 1949, see section 605, formerly section 505, of act
                                                              tion of the period specified under subsection (c)
June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act       of this section. If the Government agency fails
Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.            to check such materials, at or before the time of
                                                              their removal by the war contractor, a certifi-
§ 112. Removal and storage of materials                       cate of the war contractor specifying the mate-
                                                              rials shown on such statement which were so re-
(a) Termination inventory
                                                              moved, and filed with the Government agency
  It is the policy of the Government, upon the                concerned within thirty days after the date
termination of any war contract, to assure the                fixed for removal, shall constitute prima facie
expeditious removal from the plant of the war                 evidence against the United States as to the
contractor of the termination inventory not to                quantities and condition of the materials so re-
be retained or sold by the war contractor.                    moved, and the fact of their removal.
(b) Statement on material of inventory                        (e) Acquisition by Government agency of inven-
  Any war contractor may submit to the con-                       tory material; liability
tracting agency concerned or to any other Gov-                  Notwithstanding any other provisions of law,
ernment agency designated by the Adminis-                     but subject to subsection (h) of this section, the
§ 112                             TITLE 41—PUBLIC CONTRACTS                                              Page 40

contracting agency concerned or the Adminis-          store it on his own premises or elsewhere, for
trator of General Services, or any Government         the account and at the risk and expense of the
agency designated by him, on behalf of the            Government, using reasonable care for its trans-
United States, may, by the exercise of any con-       portation and preservation.
tract rights or otherwise, acquire and take pos-      (h) Limitation on Government acquisition of in-
session of any termination inventory of any war           ventories
contractor, and any materials removed by the             Nothing in this chapter shall limit or affect
Government or stored for its account under sub-       the authority of the Department of the Army,
sections (c) and (d) of this section, whether or      Department of the Air Force, Navy Department,
not such materials are finally determined not to      or the Department of Transportation, respec-
constitute termination inventory. With respect        tively, to take over any termination inventories
to any such materials, the Government shall be        and to retain them for their use for any purpose
liable to any war contractor concerned only for       or to dispose of such termination inventories for
their return to such war contractor or for their      the purpose of war production, or to authorize
disposal value at the time of their removal or        any war contractor to retain or dispose of such
for the proceeds realized by the Government           termination inventories for the purpose of war
from their disposal, at the election of the Gov-      production.
ernment agency concerned, unless the Govern-
ment agency and the war contractor agree or           (i) Removal and storage by war contractor at
have agreed on a different basis. Any amount so           own risk
paid or payable to a war contractor for mate-            Nothing in this section shall be construed to
rials allocable to a terminated war contract          prevent the removal and storage of any termi-
shall be credited against the termination claim       nation inventory by any war contractor, at his
under such contract but shall not otherwise af-       own risk, at any time after termination of any
fect the amount due on the claim, unless the          war contract to which it is allocable.
Government agency concerned and the war con-          (July 1, 1944, ch. 358, § 12, 58 Stat. 658; Ex. Ord.
tractor agree or have agreed otherwise. Any ma-       No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
terials to which the Administrator of General         Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
Services takes title under this section shall be      4534, 61 Stat. 951; July 26, 1947, ch. 343, title II,
delivered for disposal to any appropriate Gov-        §§ 205(a), 207(a), (f), 61 Stat. 501–503; June 30, 1949,
ernment agency authorized to make such dis-           ch. 288, title I, § 102(b), 63 Stat. 380; Pub. L. 97–31,
posal.                                                § 12(18), Aug. 6, 1981, 95 Stat. 154.)
(f) Postponement or delay of termination settle-                             AMENDMENTS
    ment
                                                        1981—Subsec. (h). Pub. L. 97–31 substituted ‘‘the De-
   No contracting agency shall postpone or delay      partment of Transportation’’ for ‘‘Maritime Commis-
any termination settlement beyond the period          sion’’.
specified in subsection (c) of this section for the
                                                                           CHANGE OF NAME
purpose of awaiting disposal by the war contrac-
tor or the Government of any termination in-            Department of the Air Force inserted under the au-
                                                      thority of section 207(a), (f) of act July 26, 1947, ch. 343,
ventory reported in accordance with subsection
                                                      title II, 61 Stat. 502, 503, and Secretary of Defense
(b) of this section.                                  Transfer Order No. 6, eff. Jan. 15, 1948. Department of
(g) Government-owned machinery                        War designated Department of the Army and title of
   Whenever any war contractor no longer re-          Secretary of War changed to Secretary of the Army by
                                                      section 205(a) of such act July 26, 1947. Sections 205(a)
quires, for the performance of any war contract,
                                                      and 207(a), (f) of act July 26, 1947, were repealed by sec-
any Government-owned machinery, tools, or             tion 53 of act Aug. 10, 1956, ch. 1041, 70A Stat. 641. Sec-
equipment installed in his plant for the perform-     tion 1 of act Aug. 10, 1956, enacted ‘‘Title 10, Armed
ance of one or more war contracts, the Govern-        Forces’’, which in sections 3010 to 3013 and 8010 to 8013
ment agency concerned, upon written demand            continued Departments of the Army and Air Force
by the war contractor, and within sixty days          under administrative supervision of Secretary of the
after such demand or such other period as may         Army and Secretary of the Air Force, respectively.
be prescribed under this chapter, and upon such                        TRANSFER OF FUNCTIONS
conditions as may be so prescribed, shall remove        Functions of Secretary of the Treasury transferred to
or provide for the removal of such machinery,         Administrator of General Services by section 102(b) of
tools, or equipment from such plant, unless the       act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
Government agency concerned and the war con-          fied to section 752(b) of former Title 40, Public Build-
tractor, by facilities contract or otherwise, have    ings, Property, and Works, and was repealed by Pub. L.
made or make other provisions for the reten-          107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
tion, storage, maintenance, or disposition of           ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
                                                      of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.
such machinery, tools or equipment. The Gov-          1 of 1947, set out in the Appendix to Title 5, Govern-
ernment agency concerned may waive or release         ment Organization and Employees.
on behalf of the United States any obligation of
the war contractor with respect to such machin-             EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
ery, tools, or equipment upon such terms and           Transfer of functions by act June 30, 1949, effective
conditions as the agency deems appropriate.           July 1, 1949, see section 605, formerly section 505, of act
Upon the failure of the Government so to re-          June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
                                                      Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
move or provide for removal of any such ma-
chinery, tools, or equipment, the war contrac-             APPLICATION TO TERMINATED WAR CONTRACTS
tor, subject to regulations prescribed under this       For application of subsecs. (b) to (e) of this section to
chapter, may remove all or part of such machin-       war contracts terminated at or before July 21, 1944, see
ery, tools, or equipment from his plant and may       section 124 of this title.
Page 41                            TITLE 41—PUBLIC CONTRACTS                                         § 113

§ 113. Appeals                                           upon protest or appeal within the agency,
(a) Failure to settle claims by agreement; prepa-        shall be treated as the findings of the agency
     ration of findings; notice to war contractor        for the purpose of appeal or suit under sub-
                                                         section (b) of this section. Notwithstanding
  Whenever the contracting agency responsible            any contrary provision in any war contract,
for settling any termination claim has not set-          no war contractor shall be required to protest
tled the claim by agreement or has so settled            or appeal from such findings within the con-
only a part of the claim, (1) the contracting            tracting agency except in accordance with this
agency at any time may determine the amount              paragraph.
due on such claim or such unsettled part, and              (2) A war contractor may initiate proceed-
prepare written findings indicating the basis of         ings in accordance with subsection (b) of this
the determination, and deliver a copy of such            section (i) within ninety days after delivery to
findings to the war contractor, or (2) if the ter-       him of the findings by the contracting agency,
mination claim has been submitted in the man-            or (ii) in case of protests or appeal within the
ner and substantially the form prescribed under          agency, within ninety days after the deter-
this chapter, the contracting agency, upon writ-         mination of such protest or appeal, or (iii) in
ten demand by the war contractor for such find-          case of failure to deliver such findings, within
ings, shall determine the amount due on the              one year after his demand therefor. If he does
claim or unsettled part and prepare and deliver          not initiate such proceedings within the time
such findings to the war contractor within nine-         specified, he shall be precluded thereafter
ty days after the receipt by the agency of such          from initiating any proceedings in accordance
demand. In preparing such findings, the con-             with subsection (b) of this section, and the
tracting agency may require the war contractor           findings of the contracting agency shall be
to furnish such information and to submit to             final and conclusive, or if no findings were
such audits as may be reasonably necessary for           made, he shall be deemed to have waived such
that purpose. Within thirty days after the deliv-        termination claim.
ery of any such findings, the contracting agency           (3) Notwithstanding any contrary provision
shall pay to the war contractor at least 90 per          in any war contract, the court shall not be
centum of the amount thereby determined to be            bound by the findings of the contracting agen-
due, after deducting the amount of any out-              cy, but shall treat such findings as prima facie
standing interim financing applicable thereto.           correct, and the burden shall be on the war
(b) Rights of war contractor                             contractor to establish that the amount due
                                                         on his claim or part thereof exceeds the
  Whenever any war contractor is aggrieved by
                                                         amount allowed by the findings of the con-
the findings of a contracting agency on his
                                                         tracting agency. Whenever the court finds
claim or part thereof or by its failure to make
                                                         that the war contractor failed to negotiate in
such findings in accordance with subsection (a)
                                                         good faith with the contracting agency for the
of this section, he may bring suit against the
                                                         settlement of his claim or part thereof before
United States for such claim or such part there-
                                                         appeal or suit thereon, or failed to furnish to
of, in the United States Court of Federal Claims
                                                         the agency any information reasonably re-
or in a United States district court, in accord-
                                                         quested by it regarding his termination claim
ance with sections 1346, 2401, and 2402 of title 28,
                                                         or part thereof, or failed to prosecute dili-
except that, if the contracting agency is the Re-
                                                         gently any protest or appeal required to be
construction Finance Corporation, or any cor-
                                                         taken under subsection (c)(1)(ii) of this sec-
poration organized pursuant to the Reconstruc-
                                                         tion, the court (i) may refuse to receive in evi-
tion Finance Corporation Act, or any corpora-
                                                         dence any information not submitted to the
tion owned or controlled by the United States,
                                                         contracting agency; (ii) may deny interest on
the suit shall be brought against such corpora-
                                                         the claim or part thereof for such period as it
tion in any court of competent jurisdiction in
                                                         deems proper; or (iii) may remand the case to
accordance with existing law.
                                                         the contracting agency for further proceedings
(c) Procedure                                            upon such terms as the court may prescribe.
  Any proceeding under subsection (b) of this            Unless the case is remanded, the court shall
section shall be governed by the following condi-        enter the appropriate award or judgment on
tions:                                                   the basis of the law and facts, and may in-
     (1) When any contracting agency provides a          crease or decrease the amount allowed by the
  procedure within the agency for protest                findings of the contracting agency.
  against such findings or for other appeal                (4) Any such proceedings shall not affect the
  therefrom by the war contractor, the war con-          authority of the contracting agency concerned
  tractor, before proceeding under subsection (b)        to make a settlement of the termination
  of this section, (i) in his discretion may resort      claim, or any part thereof, by agreement with
  to such procedure within the time specified in         the war contractor at any time before such
  his contract or, if no time is specified, within       proceedings are concluded.
  thirty days after the delivery to him of the         (d) Omitted
  findings; and (ii) shall resort to such procedure
  for protest or other appeal to the extent re-        (e) Arbitration
  quired by the Administrator of General Serv-           The contracting agency responsible for set-
  ices, but failure of the contracting agency to       tling any claim and the war contractor asserting
  act on any such required protest or appeal           the claim, by agreement, may submit all or any
  within thirty days shall operate as a refusal        part of the termination claim to arbitration,
  by the agency to modify its findings. Any revi-      without regard to the amount in dispute. Such
  sion of the findings by the contracting agency,      arbitration proceedings shall be governed by the
§ 113                                     TITLE 41—PUBLIC CONTRACTS                                                 Page 42

provisions of United States Arbitration Act to                             EFFECTIVE DATE OF 1982 AMENDMENT
the same extent as if authorized by an effective                    Amendment by Pub. L. 97–164 effective Oct. 1, 1982,
agreement in writing between the Government                       see section 402 of Pub. L. 97–164, set out as a note under
and the war contractor. Any such arbitration                      section 171 of Title 28, Judiciary and Judicial Proce-
award shall be final and conclusive upon the                      dure.
United States to the same extent as a settle-                                      TRANSFER OF FUNCTIONS
ment under subsection (c) of section 106 of this
title, but shall not be subject to approval by any                  Functions of Secretary of the Treasury transferred to
settlement review board.                                          Administrator of General Services by section 102(b) of
                                                                  act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
(f) Conclusiveness of decisions                                   fied to section 752(b) of former Title 40, Public Build-
   Whenever any dispute exists between any war                    ings, Property, and Works, and was repealed by Pub. L.
contractor and a subcontractor regarding any                      107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
                                                                    ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
termination claim, either of them, by agreement                   of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.
with the other, may submit the dispute to a con-                  1 of 1947, set out in the Appendix to Title 5, Govern-
tracting agency for mediation or arbitration                      ment Organization and Employees.
whenever authorized by the agency or required
by the Administrator of General Services.                               EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
   Any award or decision in such proceedings                       Transfer of functions by act June 30, 1949, effective
shall be final and conclusive as to the parties so                July 1, 1949, see section 605, formerly section 505, of act
submitting any such dispute and shall not be                      June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
questioned by the United States in settling any                   Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
related claim, in the absence of fraud or collu-                   ABOLITION OF RECONSTRUCTION FINANCE CORPORATION
sion.
                                                                    Reorg. Plan No. 1 of 1957, § 6(a), eff. June 30, 1957, 22
(July 1, 1944, ch. 358, § 13, 58 Stat. 660; Ex. Ord.              F.R. 4633, 71 Stat. 647, set out in the Appendix to Title
No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947            5, Government Organization and Employees, abolished
Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.              Reconstruction Finance Corporation.
4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,              ABOLITION OF APPEALS BOARD; TERMINATION OF AP-
§ 102(b), 63 Stat. 380; July 14, 1952, ch. 739, 66 Stat.           PEALS; NO FURTHER APPEALS ACCEPTED; RETURN OF
627; Pub. L. 97–164, title I, § 160(a)(14), Apr. 2, 1982,          ERRONEOUS FILED APPEALS
96 Stat. 48; Pub. L. 102–572, title IX, § 902(b)(1),
                                                                    Act July 14, 1952, ch. 739, 66 Stat. 627, provided: ‘‘That
Oct. 29, 1992, 106 Stat. 4516.)                                   the Appeal Board established under section 13(d) of the
                   REFERENCES IN TEXT                             Contract Settlement Act of 1944 [41 U.S.C. 113(d)] is
                                                                  hereby abolished: Provided, however, That said abolition
   The Reconstruction Finance Corporation Act, re-                shall not become effective until six months after the
ferred to in subsec. (b), is act Jan. 22, 1932, ch. 8, 47         enactment of this Act [July 14, 1952] or such later date,
Stat. 5, as amended, which was classified to chapter 14           nor more than nine months after the enactment of this
(§ 601 et seq.) of Title 15, Commerce and Trade, and has          Act, as may be fixed by written order of the Director
been eliminated from the Code. For complete classi-               of Contract Settlement published in the Federal Reg-
fication of this Act prior to its elimination from the            ister. Such an order shall be made only in case the Di-
Code, see Tables.                                                 rector finds that it is impracticable for the Appeal
   United States Arbitration Act, referred to in subsec.          Board to dispose of its pending business before the date
(e), is classified generally to Title 9, Arbitration.             fixed for abolition of the Board by this Act or a pre-
                        CODIFICATION                              vious order of the Director. No such order shall be
                                                                  made less than thirty days prior to the date theretofore
  In subsec. (b), ‘‘sections 1346, 2401, and 2402 of title 28’’   fixed for abolition of the Appeal Board.
substituted for ‘‘subsection (20) of section 41 of title 28’’       ‘‘SEC. 2. (a) Upon the effective date of the abolition of
on authority of act June 25, 1948, ch. 646, 62 Stat. 869,         the Appeal Board all appeals and disputes pending
the first section of which enacted Title 28, Judiciary            therein shall be terminated without prejudice and the
and Judicial Procedure.                                           right of the parties to pursue such other remedies as
  Subsec. (d), which provided for appointment and du-             are provided by law shall not be affected thereby.
ties of an Appeal Board, was omitted on authority of                ‘‘(b) In any such terminated appeal, timely initiated
act July 14, 1952, ch. 739, 66 Stat. 627, set out as a note       in the Appeal Board, where the period for pursuit of
below, which abolished the Appeal Board and termi-                any other remedy pursuant to section 13(b)(2) of the
nated all appeals, effective nine months after July 14,           Contract Settlement Act of 1944 [41 U.S.C. 113(b)(2)]
1952. References in other subsections of this section to          shall have expired or would expire within sixty days
the Appeal Board were omitted in view of act July 14,             after the effective date of the abolition of the Appeal
1952. As a result of these omissions, cl. (1) of subsec. (b),     Board, the period within which proceedings may be ini-
which authorized a war contractor to appeal to the Ap-            tiated in accordance with the said section shall be ex-
peal Board, was deleted, and cl. (2), which permitted             tended to sixty days after said effective date.
suits against the United States, became a part of sub-              ‘‘(c) Effective thirty days after the enactment of this
sec. (b) without numerical designation.                           Act [July 14, 1952] no further appeals or submitted dis-
                        AMENDMENTS                                putes shall be accepted for determination by said Ap-
                                                                  peal Board.
  1992—Subsec. (b). Pub. L. 102–572 substituted ‘‘United            ‘‘(d) Where an attempt is erroneously made to file an
States Court of Federal Claims’’ for ‘‘United States              appeal with the Appeal Board after the time limited
Claims Court’’.                                                   therefor by section 1(c) of this Act but prior to the ef-
  1982—Subsec. (b). Pub. L. 97–164 substituted ‘‘United           fective date of the abolition of the Appeal Board, said
States Claims Court’’ for ‘‘Court of Claims’’.                    Board shall forthwith return the papers to the person
                                                                  therein named as appellant together with a notice in
          EFFECTIVE DATE OF 1992 AMENDMENT
                                                                  writing that, pursuant to the terms of section 1(c) of
  Amendment by Pub. L. 102–572 effective Oct. 29, 1992,           this Act, it can no longer accept such an appeal. Where
see section 911 of Pub. L. 102–572, set out as a note             such an attempt is made in good faith and the appeal
under section 171 of Title 28, Judiciary and Judicial             would, except for the provisions of section 1(c) of this
Procedure.                                                        Act, have been timely and the period for pursuit of any
Page 43                                 TITLE 41—PUBLIC CONTRACTS                                                    § 115

other remedy pursuant to section 13(b)(2) of the Con-         damages or other demands whatsoever against
tract Settlement Act of 1944 [41 U.S.C. 113(b)(2)] expires    such person, other than claims and contingent
or would expire prior to the expiration of sixty days         claims for the recovery of money hereafter paid
after the receipt of such notice, the period within           by the United States in respect of the trans-
which proper proceedings may be initiated in accord-
ance with said section 13(b)(2) shall be extended to
                                                              action or matter which constitutes the subject
sixty days after the receipt of such notice.’’                matter of such case, unless and until such per-
                                                              son shall assert therein a claim, or an interest
     APPLICATION TO TERMINATED WAR CONTRACTS                  in a claim, against the United States, and the
  For application of this section to war contracts ter-       United States Court of Federal Claims shall
minated at or before July 21, 1944, see section 124 of this   have jurisdiction to adjudicate, as between any
title.                                                        and all adverse claimants, their respective sev-
                                                              eral interests in any matter in suit and to award
§ 114. Court of Federal Claims                                several judgments in accordance therewith.
(a) Appointment of auditors                                   (c) Jurisdiction
  For the purpose of expediting the adjudication                The jurisdiction of the United States Court of
of termination claims, the United States Court                Federal Claims shall not be affected by this
of Federal Claims is authorized to appoint not                chapter except to the extent necessary to give
more than ten auditors.                                       effect to this chapter, and no person shall re-
(b) Procedure                                                 cover judgment on any claim, or on any interest
                                                              in any claim, in said court which such person
  The United States Court of Federal Claims, on               would not have had a right to assert in said
motion of either of the parties, or on its own                court if this section had not been enacted.
motion, may summon any and all persons with
legal capacity to be sued to appear as a party or             (July 1, 1944, ch. 358, § 14, 58 Stat. 663; July 28,
parties in any suit or proceeding of any nature               1953, ch. 253, § 5, 67 Stat. 226; Pub. L. 97–164, title
whatsoever pending in said court to assert and                I, § 160(a)(14), Apr. 2, 1982, 96 Stat. 48; Pub. L.
defend their interests, if any, in such suits or              102–572, title IX, § 902(b)(1), Oct. 29, 1992, 106 Stat.
proceedings, within such period of time prior to              4516.)
judgment as the United States Court of Federal                                       CODIFICATION
Claims shall prescribe. If the name and address                 In subsec. (b), ‘‘sections 1491, 1496, 1501, 1503, and 2501
of any such person is known or can be ascer-                  of title 28’’ substituted for ‘‘section 250 of title 28’’ on
tained by reasonable diligence, and if he resides             authority of act June 25, 1948, ch. 646, 62 Stat. 869, the
within the jurisdiction of the United States, he              first section of which enacted Title 28, Judiciary and
shall be summoned to appear by personal serv-                 Judicial Procedure.
ice; but if any such person resides outside of the                                   AMENDMENTS
jurisdiction of the United States, or is unknown,               1992—Pub. L. 102–572 substituted ‘‘United States
or if for any other good and sufficient reason ap-            Court of Federal Claims’’ for ‘‘United States Claims
pearing to the court personal service cannot be               Court’’ wherever appearing.
had, he may be summoned by publication, under                   1982—Pub. L. 97–164 substituted ‘‘United States
such rules as the court may adopt, together with              Claims Court’’ for ‘‘Court of Claims’’ wherever appear-
a copy of the summons mailed by registered                    ing.
                                                                1953—Subsec. (a). Act July 28, 1953, struck out provi-
mail to such person’s last known address. The                 sions relating to the appointment of a maximum of
United States Court of Federal Claims may,                    twenty commissioners for the purpose of expediting the
upon motion of the Attorney General, in any                   adjudication of termination claims.
suit or proceeding where there may be any num-
                                                                        EFFECTIVE DATE OF 1992 AMENDMENT
ber of persons having possible interests therein,
notify such persons to appear to assert and de-                 Amendment by Pub. L. 102–572 effective Oct. 29, 1992,
                                                              see section 911 of Pub. L. 102–572, set out as a note
fend such interests. Upon failure so to appear,               under section 171 of Title 28, Judiciary and Judicial
any and all claims or interests in claims of any              Procedure.
such person against the United States, in re-
spect of the subject matter of such suit or pro-                        EFFECTIVE DATE OF 1982 AMENDMENT
ceeding, shall forever be barred and the court                  Amendment by Pub. L. 97–164 effective Oct. 1, 1982,
shall have jurisdiction to enter judgment pro                 see section 402 of Pub. L. 97–164, set out as a note under
confesso upon any claim or contingent claim as-               section 171 of Title 28, Judiciary and Judicial Proce-
                                                              dure.
serted on behalf of the United States against
any person who, having been duly served with                       COMMISSIONERS; TERMINATION OF APPOINTING
summons, fails to respond thereto, to the same                                    AUTHORITY
extent and with like effect as if such person had               Section 4(b) of act July 28, 1953, provided that the au-
appeared and had admitted the truth of all alle-              thority contained in subsec. (a) of this section respect-
gations made on behalf of the United States.                  ing the appointment of commissioners ‘‘is hereby ter-
Upon appearance by any person pursuant to any                 minated’’.
such summons or notice, the case as to such per-                    SECTION UNAFFECTED BY REVISED TITLE 28
son shall, for all purposes, be treated as if an                Act June 25, 1948, ch. 646, § 2(d), 62 Stat. 985, provided
independent proceeding has been instituted by                 that nothing in Title 28, Judiciary and Judicial Proce-
such person pursuant to sections 1491, 1496, 1501,            dure, should be construed as repealing any of the provi-
1503, and 2501 of title 28, and as if such independ-          sions of this section.
ent proceeding had then been consolidated, for
purposes of trial and determination, with the                 § 115. Personal financial liability of contracting
                                                                  officers
case in respect of which the summons or notice
was issued, except that the United States shall                 (a) Whenever any payment is made from Gov-
not be heard upon any counterclaims, claims for               ernment funds to any war contractor or other
§ 116                                     TITLE 41—PUBLIC CONTRACTS                                               Page 44

person as an advance, partial or final payment                   (c) Failure to settle
on any termination claim, or pursuant to any                       Where a contracting agency fails to settle by
loan, guaranty, or agreement for the purchase of                 agreement any claim asserted under this sec-
any loan, or any commitment in connection                        tion, the dispute shall be subject to the provi-
therewith, entered into by the Government, no                    sions of section 113 of this title.
officer or other Government agent authorizing
or approving such payment or settlement, or                      (d) Formalization of obligations; termination
certifying the voucher for such payment, or                          date for filing claims
making the payment in accordance with a duly                       The Administrator of General Services shall
certified voucher, shall be personally liable for                require each contracting agency to formalize all
such payment, in the absence of fraud on his                     such obligations and commitments within such
part. In settling the accounts of any disbursing                 period as the Administrator of General Services
officer the Government Accountability Office                     deems appropriate. No person shall be entitled
shall allow any such disbursements made by him                   to recover compensation, to receive a settle-
notwithstanding any other provisions of law.                     ment of any alleged obligation, or to obtain the
  (b) For the purpose of making termination set-                 benefit of any amendment, confirmation, ratifi-
tlements or interim financing any Government                     cation, or formalization of any alleged contract
agency is authorized to rely upon such certifi-                  or commitment under the provisions of sub-
cates of war contractors as it deems proper and                  sections (a), (b), (c), or (d) of this section, unless
to permit war contractors and other persons to                   such person shall, on or before one hundred and
rely upon such certificates without financial li-                eighty days after June 28, 1954, have filed a
ability in the absence of fraud on their part.                   claim therefor with the contracting agency.
(July 1, 1944, ch. 358, § 15, 58 Stat. 664; Pub. L.              (July 1, 1944, ch. 358, § 17, 58 Stat. 665; Ex. Ord.
108–271, § 8(b), July 7, 2004, 118 Stat. 814.)                   No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
                       AMENDMENTS                                Reorg. Plan. No. 1, § 201, eff. July 1, 1947, 12 F.R.
                                                                 4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
  2004—Subsec. (a). Pub. L. 108–271 substituted ‘‘Govern-        § 102(b), 63 Stat. 380; June 28, 1954, ch. 403, § 1, 68
ment Accountability Office’’ for ‘‘General Accounting
Office’’.
                                                                 Stat. 300.)
                                                                                       AMENDMENTS
§ 116. Repealed. Pub. L. 104–316, title I, § 121(a),
    Oct. 19, 1996, 110 Stat. 3836                                  1954—Subsec. (d). Act June 28, 1954, inserted sentence
                                                                 providing a termination date for filing claims.
  Section, acts July 1, 1944, ch. 358, § 16, 58 Stat. 664; Ex.
Ord. No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947                      TRANSFER OF FUNCTIONS
Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R. 4534, 61      Functions of Secretary of the Treasury transferred to
Stat. 951; June 30, 1949, ch. 288, title I, § 102(b), 63 Stat.   Administrator of General Services by section 102(b) of
380, related to functions and jurisdiction of General Ac-        act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
counting Office in reviewing final settlements made by           fied to section 752(b) of former Title 40, Public Build-
contracting agency, in certifying settlements suspected          ings, Property, and Works, and was repealed by Pub. L.
of being fraudulent to Department of Justice, Adminis-           107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
trator of General Services, and contracting agency, and            ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
in reporting on efficacy of settlement methods and pro-          of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.
cedures to Congress.                                             1 of 1947, set out in the Appendix to Title 5, Govern-
                                                                 ment Organization and Employees.
§ 117. Defective, informal, and quasi contracts
(a) Lack of formalized contract                                        EFFECTIVE DATE OF TRANSFER OF FUNCTIONS

  Where any person has arranged to furnish or                     Transfer of functions by act June 30, 1949, effective
                                                                 July 1, 1949, see section 605, formerly section 505, of act
furnished to a contracting agency or to a war
                                                                 June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
contractor any materials, services, or facilities                Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
related to the prosecution of the war, without a
formal contract, relying in good faith upon the                                 NONACCRUAL OF LIABILITY
apparent authority of an officer or agent of a                     Section 2 of act June 28, 1954, provided that no liabil-
contracting agency, written or oral instructions,                ity should accrue by reason of the enactment of section
or any other request to proceed from a contract-                 1 of that act [amending this section] which would not
ing agency, the contracting agency shall pay                     otherwise have accrued.
such person fair compensation therefor.
                                                                 § 118. Administration
(b) Technical defects or omissions
  Whenever any formal or technical defect or                     (a) Records and forms
omission in any prime contract, or in any grant                    The Administrator of General Services shall
of authority to an officer or agent of a contract-               establish policies for such supervision and re-
ing agency who ordered any materials, services,                  view within the contracting agencies of termi-
and facilities might invalidate the contract or                  nation settlements and interim financing as he
commitment, the contracting agency (1) shall                     deems necessary and appropriate to prevent and
not take advantage of such defect or omission;                   detect fraud and to assure uniformity in admin-
(2) shall amend, confirm, or ratify such contract                istration and to provide for expeditious settle-
or commitment without consideration in order                     ments. For this purpose he shall prescribe such
to cure such defect or omission; and (3) shall                   records to be prepared by the contracting agen-
make a fair settlement of any obligation there-                  cies and by war contractors as he deems nec-
by created or incurred by such agency, whether                   essary in connection with such settlements and
expressed or implied, in fact or in law, or in the               interim financing. He shall seek to reduce the
nature of an implied or quasi contract.                          amount of record keeping, reporting, and ac-
Page 45                                TITLE 41—PUBLIC CONTRACTS                                                  § 119

counting in connection with the settlement of                  1951—Subsec. (b). Act Oct. 31, 1951, struck out provi-
termination claims and interim financing to the              sions which related to preparation of information and
minimum compatible with the reasonable pro-                  reports regarding termination of war contracts, settle-
                                                             ments of termination claims, interim financing, etc.
tection of the public interest. Each contracting
agency shall prescribe forms for use by war con-                             TRANSFER OF FUNCTIONS
tractors in connection with termination settle-                Functions of Secretary of the Treasury transferred to
ments and interim financing to the extent it                 Administrator of General Services by section 102(b) of
deems necessary and feasible.                                act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
(b) Repealed. Oct. 31, 1951, ch. 654, § 1(111), 65           fied to section 752(b) of former Title 40, Public Build-
                                                             ings, Property, and Works, and was repealed by Pub. L.
    Stat. 705                                                107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
                                                               ‘‘Department of the Treasury’’ substituted for ‘‘Office
(c) Advance notice on cut-backs
                                                             of Contract Settlement’’ in subsec. (d) and references
  The Administrator of General Services, by                  to ‘‘Director’’ changed to ‘‘Secretary’’ throughout this
regulation, shall provide for making available to            section by section 8 of Ex. Ord. No. 9809 and section 201
any interested Government agency such advance                of Reorg. Plan No. 1 of 1947, set out in the Appendix to
notice and other information on cut-backs in                 Title 5, Government Organization and Employees.
war production resulting from terminations or                      EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
failures to renew or extend war contracts, as he              Transfer of functions by act June 30, 1949, effective
deems necessary and appropriate.                             July 1, 1949, see section 605, formerly section 505, of act
(d) Investigations                                           June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
                                                             Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
  The Administrator of General Services shall
make such investigations as he deems necessary               § 119. Fraudulent claims, vouchers, statements,
or desirable in connection with termination set-                 etc.; jurisdiction
tlements and interim financing. For this pur-
                                                               Every person who makes or causes to be made,
pose he may utilize the facilities of any existing
                                                             or presents or causes to be presented to any offi-
agencies and if he determines that the facilities
                                                             cer, agent, or employee of any Government
of existing agencies are inadequate, he may es-
                                                             agency any claim, bill, receipt, voucher, state-
tablish a unit in the General Services Adminis-
                                                             ment, account, certificate, affidavit, or deposi-
tration to supplement and facilitate the work of
                                                             tion, knowing the same to be false, fraudulent,
existing agencies. He shall report to the Depart-
                                                             or fictitious or knowing the same to contain or
ment of Justice any information received by
                                                             to be based on any false, fraudulent, or fictitious
him indicating any fraudulent practices, for ap-
                                                             statement or entry, or who shall cover up or
propriate action.
                                                             conceal any material fact, or who shall use or
(e) Certification of fraudulent settlements to De-           engage in any other fraudulent trick, scheme, or
     partment of Justice                                     device, for the purpose of securing or obtaining,
  Whenever any contracting agency or the Ad-                 or aiding to secure or obtain, for any person any
ministrator of General Services believes that                benefit, payment, compensation, allowance,
any settlement was induced by fraud, the agency              loan, advance, or emolument from the United
or Administrator of General Services shall re-               States or any Government agency in connection
port the facts to the Department of Justice.                 with the termination, cancelation, settlement,
Thereupon, (1) the Department of Justice shall               payment, negotiation, renegotiation, perform-
make an investigation to determine whether                   ance, procurement, or award of a contract with
such settlement was induced by fraud, and (2)                the United States or with any other person, and
until the Department of Justice notifies the                 every person who enters into an agreement,
contracting agency that in its opinion the facts             combination, or conspiracy so to do, (1) shall
do not support the belief that the settlement                pay to the United States an amount equal to 25
was induced by fraud, the contracting agency,                per centum of any amount thereby sought to be
by set-off or otherwise, may withhold, from                  wrongfully secured or obtained but not actually
amounts owing to the war contractor by the                   received, and (2) shall forfeit and refund any
United States under such settlement or other-                such benefit, payment, compensation, allow-
wise, the amount of the settlement, or the por-              ance, loan, advance, and emolument received as
tion thereof, which, in its opinion, was affected            a result thereof and (3) shall in addition pay to
by the fraud. In any such case the Department                the United States the sum of $2,000 for each such
of Justice shall take such action as it deems ap-            act, and double the amount of any damage
propriate to recover payments made to such war               which the United States may have sustained by
contractor.                                                  reason thereof, together with the costs of suit.
                                                               The several district courts of the United
(July 1, 1944, ch. 358, § 18, 58 Stat. 666; Ex. Ord.         States, the several district courts of the Terri-
No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947       tories of the United States, within whose juris-
Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.         dictional limits the person, or persons, doing or
4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,         committing such act, or any one of them, re-
§ 102(b), 63 Stat. 380; Oct. 31, 1951, ch. 654, § 1(111),    sides or shall be found, shall, wheresoever such
65 Stat. 705; Pub. L. 104–316, title I, § 121(b), Oct.       act may have been done or committed, have full
19, 1996, 110 Stat. 3836.)                                   power and jurisdiction to hear, try, and deter-
                      AMENDMENTS                             mine such suit, and such person or persons as
  1996—Subsec. (a). Pub. L. 104–316, in second sentence,
                                                             are not inhabitants of or found within the dis-
struck out ‘‘(1)’’ after ‘‘he shall prescribe’’ and struck   trict in which suit is brought may be brought in
out ‘‘; and (2) the records in connection therewith to be    by order of the court to be served personally or
transmitted to the General Accounting Office’’ before        by publication or in such other reasonable man-
period at end.                                               ner as the court may direct.
§ 120                                   TITLE 41—PUBLIC CONTRACTS                                                  Page 46

(July 1, 1944, ch. 358, § 19(a), (c)–(e), 58 Stat. 667;        ments, and interim financing, prescribed by the
June 25, 1948, ch. 645, § 21, 62 Stat. 862.)                   Secretary of the Treasury or any contracting
                      CODIFICATION                             agency, in effect on July 21, 1944, and not incon-
                                                               sistent with this chapter, shall remain in full
  As originally enacted, the second undesignated para-
                                                               force and effect unless and until superseded by
graph of this section contained the words, ‘‘, the Dis-
trict of Columbia’’ after ‘‘The several district courts of     the Administrator of General Services in accord-
the United States’’. The words ‘‘District of Columbia’’        ance with this chapter, or by regulations of the
have been deleted entirely as superfluous in view of           contracting agency not inconsistent with this
section 132(a) of Title 28, Judiciary and Judicial Proce-      chapter or the policies prescribed by the Admin-
dure, which states that ‘‘There shall be in each judicial      istrator of General Services.
district a district court which shall be a court of record
known as the United States District Court for the dis-         (e) Impairment of contract
trict’’, and section 88 of Title 28 which states that ‘‘the       Nothing in this chapter shall be deemed to im-
District of Columbia constitutes one judicial district’’.
  Section was comprised of subsecs. (a) and (c) to (e) of
                                                               pair or modify any war contract or any term or
section 19 of act July 1, 1944. Subsec. (b) of section 19      provision of any war contract or any assignment
was classified to section 590a of Title 18, Criminal Code      of any claim under a war contract, without the
and Criminal Procedure, prior to the general revision          consent of the parties thereto, if the war con-
and enactment of Title 18, Crimes and Criminal Proce-          tract, or the term, provision, or assignment
dure, by act June 25, 1948, ch. 645, 62 Stat. 683. Subsecs.    thereof, is otherwise valid.
(a), (d), and (e) of section 19 were repealed by act June
25, 1948, leaving only subsec. (c) of section 19, which        (f) Aid to war contractors
comprises this section. Subject matter of former sub-             Any contracting agency may authorize or di-
secs. (a), (d), and (e) of section 19 is covered by sections
201, 287, 443, and 1001 of Title 18.
                                                               rect its officers and employees, as a part of their
                                                               official duties, to advise, aid, and assist war con-
                      AMENDMENTS                               tractors in preparing and presenting termi-
  1948—Act June 25, 1948, repealed first, second, fifth,       nation claims, in obtaining interim financing,
and sixth undesignated pars. See Codification note             and in related matters, to such extent as it
above.                                                         deems desirable. Such advice, aid, or assistance
            EFFECTIVE DATE OF 1948 REPEAL                      shall not constitute a violation of section 205 of
  Amendment by act June 25, 1948, effective Sept. 1,           title 18 or of any other law, provided the officer
1948, see section 20 of that act.                              or employee does not receive therefor benefit or
                                                               compensation of any kind, directly or indi-
§ 120. Powers and duties of contracting agencies               rectly, from any war contractor.
(a) Limitation                                                 (July 1, 1944, ch. 358 § 20, 58 Stat. 668; Ex. Ord. No.
  Each contracting agency shall have authority,                9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; June 30,
notwithstanding any provisions of law other                    1947, ch. 166, title II, § 207, 61 Stat. 209; 1947
than contained in this chapter, (1) to make any                Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
contract necessary and appropriate to carry out                4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
the provisions of this chapter; (2) to amend by                § 102(b), 63 Stat. 380.)
agreement any existing contract, either before
or after notice of its termination, on such terms                                 REFERENCES IN TEXT
and to such extent as it deems necessary and ap-                 The First War Powers Act, 1941, referred to in subsec.
propriate to carry out the provisions of this                  (a), is act Dec. 18, 1941, ch. 593, 55 Stat. 838, which en-
chapter; and (3) in settling any termination                   acted sections 32 to 37 and 601 to 605, 611, and 616 to 622
claim, to agree to assume, or indemnify the war                of Title 50, Appendix, War and National Defense, and
contractor against, any claims by any person in                amended section 95a of Title 12, Banks and Banking,
                                                               and section 5 of Title 50, Appendix. The First War Pow-
connection with such termination claims or set-
                                                               ers Act, 1941, was substantially repealed, with certain
tlement. This subsection shall not limit or af-                exceptions, by Pub. L. 89–554, § 8(a), Sept. 6, 1966, 80
fect in any way any authority of any contract-                 Stat. 651. For complete classification of this Act to the
ing agency under the First War Powers Act,                     Code, see Tables.
1941, or under any other statute.
                                                                                      CODIFICATION
(b) Evidence required; conclusiveness of deter-
    minations                                                     In subsec. (f), ‘‘section 205 of title 18’’ substituted for
                                                               ‘‘section 109 of the Criminal Code (18 U.S.C. 198)’’ on au-
  Any contracting agency may prescribe the
                                                               thority of act June 25, 1948, ch. 645, 62 Stat. 683, the
amount and kind of evidence required to iden-                  first section of which enacted Title 18, Crimes and
tify any person as a war contractor, or any con-               Criminal Procedure, and on authority of Pub. L. 87–849,
tract, agreement, or purchase order as a war                   § 2, Oct. 23, 1962, 76 Stat. 1126.
contract for any of the purposes of this chapter.                 Subsec. (g), relating to the duties of Smaller War
Any determination so made that any person is a                 Plants Corporation, omitted on authority of section 207
war contractor, or that any contract, agree-                   of act June 30, 1947, which provided: ‘‘The liquidation of
ment, or purchase order is a war contract, shall               the affairs of the Smaller War Plants Corporation ad-
be final and conclusive for any of the purposes of             ministered by the Reconstruction Finance Corporation
                                                               pursuant to Executive Order 9665 shall be carried out
this chapter.                                                  by the Reconstruction Finance Corporation, notwith-
(c) Appropriations                                             standing the provisions of the last paragraph of section
  There are authorized to be appropriated such                 5 of the First War Powers Act, 1941 [section 605 of Title
sums as may be necessary for administering the                 50, Appendix, War and National Defense]. The Smaller
provisions of this chapter.                                    War Plants Corporation is hereby abolished.’’
(d) Validation of prior settlements                                             TRANSFER OF FUNCTIONS
  All policies and procedures relating to termi-                Functions of Secretary of the Treasury transferred to
nation of war contracts, termination settle-                   Administrator of General Services by section 102(b) of
Page 47                                 TITLE 41—PUBLIC CONTRACTS                                                  § 123

act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-   period following Jan. 5, 1973, unless, in the case of a
fied to section 752(b) of former Title 40, Public Build-      committee established by the President or an officer of
ings, Property, and Works, and was repealed by Pub. L.        the Federal Government, such committee is renewed by
107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.               appropriate action prior to the expiration of such 2-
  ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8     year period, or in the case of a committee established
of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.       by the Congress, its duration is otherwise provided by
1 of 1947, set out in the Appendix to Title 5, Govern-        law. Advisory committees established after Jan. 5, 1973,
ment Organization and Employees.                              to terminate not later than the expiration of the 2-year
                                                              period beginning on the date of their establishment,
      EFFECTIVE DATE OF TRANSFER OF FUNCTIONS                 unless, in the case of a committee established by the
 Transfer of functions by act June 30, 1949, effective        President or an officer of the Federal Government, such
July 1, 1949, see section 605, formerly section 505, of act   committee is renewed by appropriate action prior to
June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act       the expiration of such 2-year period, or in the case of
Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.            a committee established by the Congress, its duration
                                                              is otherwise provided by law. See section 14 of Pub. L.
§ 121. Administrator of General Services; addi-               92–463, Oct. 6, 1972, 86 Stat. 776, set out in the Appendix
    tional duties                                             to Title 5, Government Organization and Employees.
  In addition to his other functions under this               § 122. Use of appropriated funds
chapter, the Administrator of General Services
shall—                                                          Any contracting agency is authorized—
    (a) promote the training of personnel for ter-                (a) to use for interim financing, the payment
  mination settlement and interim financing by                  of claims, and for any other purposes author-
  contracting agencies, war contractors, and fi-                ized in this chapter any funds which have
  nancing institutions;                                         heretofore been appropriated or allocated or
    (b) Omitted                                                 which may hereafter be appropriated or allo-
    (c) promote decentralization of the adminis-                cated to it, or which are or may become avail-
  tration of termination settlements and in-                    able to it, for such purposes or for the pur-
  terim financing by fostering delegation of au-                poses of war production or war procurement;
  thority within contracting agencies and to                      (b) to use any such funds appropriated, allo-
  war contractors, to the extent he deems nec-                  cated, or available to it for expenditures for or
  essary and feasible; and                                      in behalf of any other contracting agency for
    (d) consult with war contractors through ad-                the purposes authorized in this chapter; and
  visory committees or such other methods as                      (c) to determine by agreement, joint esti-
  he deems appropriate.                                         mate, or any other method authorized by the
                                                                Administrator of General Services, the part of
(July 1, 1944, ch. 358, § 21, 58 Stat. 669; Ex. Ord.            any expenditure made pursuant to subsection
No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; June          (b) of this section to be paid by each contract-
30, 1947, ch. 166, title II, § 207, 61 Stat. 209; 1947          ing agency concerned and to make transfers of
Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.            funds between such contracting agencies ac-
4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,            cordingly. Transfers of funds between appro-
§ 102(b), 63 Stat. 380.)                                        priations carried upon the books of the Treas-
                      CODIFICATION                              ury shall be made by the Administrator of
  Subsec. (b), providing for Administrators’ collabora-         General Services in accordance with joint re-
tion with Smaller War Plants Corporation in protect-            quests of the contracting agencies involved.
ing interests of smaller war contractors, was omitted         (July 1, 1944, ch. 358, § 22, 58 Stat. 670; Ex. Ord.
on authority of section 207 of act June 30, 1947, which       No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
provided: ‘‘The liquidation of the affairs of the Smaller
War Plants Corporation administered by the Recon-
                                                              Reorg. Plan No. 1, § 201, eff. July 1, 1949, 12 F.R.
struction Finance Corporation pursuant to Executive           4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
Order 9665 shall be carried out by the Reconstruction         § 102(b), 63 Stat. 380.)
Finance Corporation, notwithstanding the provisions of                        TRANSFER OF FUNCTIONS
the last paragraph of section 5 of the First War Powers
Act, 1941 [section 605 of Title 50, Appendix, War and Na-       Functions of Secretary of the Treasury transferred to
tional Defense]. The Smaller War Plants Corporation is        Administrator of General Services by section 102(b) of
hereby abolished.’’                                           act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
                                                              fied to section 752(b) of former Title 40, Public Build-
                TRANSFER OF FUNCTIONS                         ings, Property, and Works, and was repealed by Pub. L.
  Functions of Secretary of the Treasury transferred to       107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
Administrator of General Services by section 102(b) of          ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-   of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.
fied to section 752(b) of former Title 40, Public Build-      1 of 1947, set out in the Appendix to Title 5, Govern-
ings, Property, and Works, and was repealed by Pub. L.        ment Organization and Employees.
107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.                     EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
  ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.        Transfer of functions by act June 30, 1949, effective
1 of 1947, set out in the Appendix to Title 5, Govern-        July 1, 1949, see section 605, formerly section 505, of act
ment Organization and Employees.                              June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
                                                              Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
      EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
 Transfer of functions by act June 30, 1949, effective
                                                              § 123. Delegation of authority by Administrator
July 1, 1949, see section 605, formerly section 505, of act       of General Services
June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act       (a) Officers and agencies of General Service Ad-
Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.                ministration and other governmental agen-
        TERMINATION OF ADVISORY COMMITTEES                        cies
  Advisory committees in existence on Jan. 5, 1973, to          The Administrator of General Services may
terminate not later than the expiration of the 2-year         delegate any authority and discretion conferred
§ 124                                   TITLE 41—PUBLIC CONTRACTS                                                  Page 48

upon him by this chapter to such officers and                   (b) Nothing in this chapter shall limit or af-
agencies of the General Services Administration               fect any authority conferred by sections 411 to
as he may designate, and may delegate such au-                419 of title 22, or Acts supplemental thereto.
thority and discretion, upon such terms and con-              (July 1, 1944, ch. 358, § 24, 58 Stat. 670.)
ditions as he may prescribe, to the head of any
Government agency to the extent necessary to                                     REFERENCES IN TEXT
the handling and solution of problems peculiar                  Sections 411 to 419 of title 22, referred to in subsec.
to that agency.                                               (b), have been omitted from the Code.
(b) Authority delegated to other governmental                 § 125. Exemption of certain contracts outside
     agencies                                                     continental United States or in Alaska
  The head of any Government agency may dele-                   Subject to policies prescribed by the Adminis-
gate any authority and discretion conferred                   trator of General Services, any contracting
upon him or his agency by or pursuant to this                 agency may exempt from some or all of the pro-
chapter to any officer, agent, or employee of                 visions of this chapter (a) any war contract
such agency or to any other Government agen-                  made or to be performed outside the continental
cy, and may authorize successive redelegations                limits of the United States or in Alaska, or (b)
of such authority and discretion.                             any termination inventory situated outside of
(c) Joint exercise of delegated authority                     the continental limits of the United States or in
  Any two or more Government agencies may                     Alaska, or (c) any modification of a war con-
exercise jointly any authority and discretion                 tract pursuant to its terms for the purpose of
conferred upon each of them individually by or                changing plans or specifications applicable to
pursuant to this chapter.                                     the work without substantially reducing its ex-
                                                              tent.
(d) Application to other laws
                                                              (July 1, 1944, ch. 358, § 25, 58 Stat. 670; Ex. Ord.
  Nothing in this chapter shall prevent the Ad-               No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
ministrator of General Services from exercising               Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
any authority conferred upon him by any other                 4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,
statute.                                                      § 102(b), 63 Stat. 380.)
(July 1, 1944, ch. 358, § 23, 58 Stat. 670; Ex. Ord.                            TRANSFER OF FUNCTIONS
No. 9809, § 8, eff. Dec. 12, 1946, 11 F.R. 14281; 1947
                                                                Functions of Secretary of the Treasury transferred to
Reorg. Plan No. 1, § 201, eff. July 1, 1947, 12 F.R.
                                                              Administrator of General Services by section 102(b) of
4534, 61 Stat. 951; June 30, 1949, ch. 288, title I,          act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-
§ 102(b), 63 Stat. 380.)                                      fied to section 752(b) of former Title 40, Public Build-
                      CODIFICATION                            ings, Property, and Works, and was repealed by Pub. L.
                                                              107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
  In subsec. (a), the phrase ‘‘such officers and agencies       ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8
of the General Services Administration as he may des-         of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.
ignate’’ substituted for ‘‘any Deputy Director’’ on au-       1 of 1947, set out in the Appendix to Title 5, Govern-
thority of section 102(b) of act June 30, 1949, ch. 288, 63   ment Organization and Employees.
Stat. 380, which was classified to section 752(b) of
                                                                    EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
former Title 40, Public Buildings, Property, and Works,
and was repealed by Pub. L. 107–217, § 6(b), Aug. 21, 2002,    Transfer of functions by act June 30, 1949, effective
116 Stat. 1304.                                               July 1, 1949, see section 605, formerly section 505, of act
                                                              June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
                TRANSFER OF FUNCTIONS                         Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.
  Functions of Secretary of the Treasury transferred to
Administrator of General Services by section 102(b) of
                                                               CHAPTER 3—PROCUREMENT OF SUPPLIES
act June 30, 1949, ch. 288, 63 Stat. 380, which was classi-      AND SERVICES BY ARMED SERVICES
fied to section 752(b) of former Title 40, Public Build-
                                                              §§ 151 to 162. Repealed. Aug. 10, 1956, ch. 1041,
ings, Property, and Works, and was repealed by Pub. L.
107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.                   § 53, 70A Stat. 641
  ‘‘Secretary’’ substituted for ‘‘Director’’ by section 8        Section 151, act Feb. 19, 1948, ch. 65, § 2, 62 Stat. 21, re-
of Ex. Ord. No. 9809 and section 201 of Reorg. Plan No.       lated to purchases and contracts for supplies and serv-
1 of 1947, set out in the Appendix to Title 5, Govern-        ices for the Armed Services, stated the Congressional
ment Organization and Employees.                              declaration of policy, provided for advertising require-
                                                              ments, excepted certain purchases and contracts, au-
        EFFECTIVE DATE OF TRANSFER OF FUNCTIONS
                                                              thorized reference to Attorney General where there is
 Transfer of functions by act June 30, 1949, effective        any evidence of violation of antitrust laws, excluded
July 1, 1949, see section 605, formerly section 505, of act   certain authorizations and contracts. See sections 2303
June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act       to 2305 of Title 10, Armed Forces.
Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat. 583.               Section 152, acts Feb. 19, 1948, ch. 65, § 3, 62 Stat. 22;
                                                              Aug. 9, 1955, ch. 628, § 15, 69 Stat. 551, related to adver-
§ 124. Effective date; applicability to lend lease            tisements for bids, opening of bids and award or rejec-
    contracts                                                 tion of bids. See section 2305 of Title 10. Act Aug. 9,
                                                              1955, ch. 628, § 15, 69 Stat. 551, which amended section 152
  (a) This chapter shall become effective twenty              of this title, was repealed by Pub. L. 85–861, § 36A, Sept.
days after July 1, 1944. With the exception of the            2, 1958, 72 Stat. 1569.
provisions of paragraphs (b), (c), (d), and (e) of               Section 153, acts Feb. 19, 1948, ch. 65, § 4, 62 Stat. 23;
section 112 of this title, and sections 106 to 110,           Oct. 31, 1951, ch. 652, 65 Stat. 700, provided for types of
                                                              contracts and examination of books, records, etc., of
and 113 of this title, this chapter shall be appli-           contractors. See sections 2306 and 2313 of Title 10.
cable in the case of any terminated war contract                 Section 154, act Feb. 19, 1948, ch. 65, § 5, 62 Stat. 24, au-
which has been finally settled at or before the               thorized advance payments under negotiated contracts.
effective date of this chapter.                               See section 2307 of Title 10.
Page 49                                   TITLE 41—PUBLIC CONTRACTS                                               §§ 201 to 205

  Section 155, act Feb. 19, 1948, ch. 65, § 6, 62 Stat. 24,       Sec.
provided for remission of liquidated damages. See sec-            253l–8.    Contract authority of Secretary of Smith-
tion 2312 of Title 10.                                                        sonian Institution.
  Section 156, act Feb. 19, 1948, ch. 65, § 7, 62 Stat. 24,       253m.      Design-build selection procedures.
provided for determinations and decisions, powers of              254.       Contract requirements.
agency head, finality of decisions, delegations of pow-           254a.      Cost-type research and development con-
ers, non-delegable powers, written decisions, preserva-                       tracts with educational institutions.
tion of data. See sections 2304, 2310, and 2311 of Title 10.      254b.      Cost or pricing data: truth in negotiations.
  Section 157, act Feb. 19, 1948, ch. 65, § 8, 62 Stat. 24, re-   254c.      Multiyear contracts.
lated to exemption of purchases or contracts from cer-            254d.      Examination of records of contractor.
tain other provisions of law. See section 2304 of Title 10.       255.       Contract financing.
  Section 158, act Feb. 19, 1948, ch. 65, § 9, 62 Stat. 24, de-   256.       Allowable costs.
fined ‘‘agency head’’ and ‘‘supplies’’. See sections 2302         256a.      Waiver of liquidated damages.
and 2303 of Title 10.                                             257.       Administrative determinations.
  Section 159, act Feb. 19, 1948, ch. 65, § 10, 62 Stat. 25,      258.       Repealed.
related to assignment and delegation of joint procure-            259.       Definitions.
ment responsibilities by agency head, and allocation of           260.       Laws not applicable to contracts.
appropriations. See section 2309 of Title 10.                     261.       Assignment and delegation of procurement
  Section 160, act Feb. 19, 1948, ch. 65, § 11(b), 62 Stat. 25,               functions and responsibilities.
provided that sections 5, 6, 6a, and 13 of this title             262.       Determinations and decisions.
should be inapplicable to procurement of supplies and             263.       Performance based management: acquisition
services. See section 2314 of Title 10.                                       programs.
  Section 161, act Feb. 19, 1948, ch. 65, § 12, 62 Stat. 26,      264.       Relationship of commercial item provisions
related to concurrent authority of Secretaries of Army,                       to other provisions of law.
Navy and Air Force. See section 2381 of Title 10.                 264a.      Definitions relating to procurement of com-
  Section 162, act July 10, 1952, ch. 630, title VI, § 638, 66                mercial items.
Stat. 537, related to obligation of funds by Department           264b.      Preference for acquisition of commercial
of Defense for procurement and distribution of supplies                       items.
or equipment. See section 2202 of Title 10.                       265.       Contractor employees: protection from re-
                                                                              prisal for disclosure of certain information.
 CHAPTER 4—PROCUREMENT PROCEDURES                                 266.       Merit-based award of grants for research and
                                                                              development.
          SUBCHAPTER I—GENERAL PROVISIONS
                                                                  266a.      Share-in-savings contracts.
Sec.                                                                SUBCHAPTER V—FOREIGN EXCESS PROPERTY
201 to 205. Transferred.
                                                                  271 to 274. Transferred.
          SUBCHAPTER II—GENERAL SERVICES
                  ADMINISTRATION                                            SUBCHAPTER VI—FEDERAL RECORD
                                                                                    MANAGEMENT
211 to 219. Transferred.
                                                                  281 to 291. Transferred.
   SUBCHAPTER III—PROPERTY MANAGEMENT
231 to 240. Transferred.                                             SUBCHAPTER I—GENERAL PROVISIONS
  SUBCHAPTER IV—PROCUREMENT PROVISIONS                            §§ 201 to 205. Transferred
251.        Declaration of purpose of this subchapter.
                                                                                          CODIFICATION
252.        Purchases and contracts for property.
252a.       Simplified acquisition threshold.                        Section 201, act June 30, 1949, ch. 288, § 2, 63 Stat. 378,
252b.       Implementation of simplified acquisition pro-         which related to Congressional declaration of policy,
              cedures.                                            was transferred to section 471 of former Title 40, Public
252c.       Implementation of electronic commerce capa-           Buildings, Property, and Works, and was repealed and
              bility.                                             reenacted as section 101 of Title 40, Public Buildings,
253.        Competition requirements.                             Property, and Works, by Pub. L. 107–217, §§ 1, 6(b), Aug.
253a.       Planning and solicitation requirements.               21, 2002, 116 Stat. 1062, 1304.
253b.       Evaluation and award.                                    Section 202, acts June 30, 1949, ch. 288, § 3, 63 Stat. 378;
253c.       Encouragement of new competition.                     Sept. 5, 1950, ch. 849, §§ 7(a), 8(a), 64 Stat. 590, 591, which
253d.       Validation of proprietary data restrictions.          related to definitions, was transferred to section 472 of
253e.       Repealed.                                             former Title 40, and was repealed and reenacted as sec-
253f.       Economic order quantities.                            tion 102 of Title 40, Public Buildings, Property, and
253g.       Prohibition of contractors limiting sub-              Works, by Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116
              contractor sales directly to United States.         Stat. 1062, 1304.
253h.       Task and delivery order contracts: general               Section 203, act June 30, 1949, ch. 288, title VI, § 601,
              authority.                                          formerly title V, § 501, 63 Stat. 399; renumbered Sept. 5,
253i.       Task order contracts: advisory and assistance         1950, ch. 849, § 6(a), (b), 64 Stat. 583, which related to ap-
              services.                                           plicability of existing provisions, was transferred to
253j.       Task and delivery order contracts: orders.            section 473 of former Title 40, and was repealed and re-
253k.       Task and delivery order contracts: defini-            enacted as section 112 of Title 40, Public Buildings,
              tions.                                              Property, and Works, by Pub. L. 107–217, §§ 1, 6(b), Aug.
253l.       Severable services contracts for periods cross-       21, 2002, 116 Stat. 1062, 1304.
              ing fiscal years.                                      Section 204, act June 30, 1949, ch. 288, title VI,
253l–1.     Contract authority of Comptroller General.            § 602(c)–(e), formerly title V, § 502(c), (d), 63 Stat. 401; re-
253l–2.     Contract authority of Library of Congress.            numbered and amended (including amendment to add
253l–3.     Contract authority of Chief Administrative            subsec. (e)), Sept. 5, 1950, ch. 849, §§ 6(a), (b), 7(e), (f),
              Officer of the House of Representatives.            8(c), 64 Stat. 583, 590, which related to exemptions for
253l–4.     Contract authority of Congressional Budget            Congress, departments, agencies, corporations, and per-
              Office.                                             sons, was transferred to section 474 of former Title 40,
253l–5.     Contract authority of Secretary and Sergeant          and was repealed and reenacted as section 113 of Title
              at Arms and Doorkeeper of the Senate.               40, Public Buildings, Property, and Works, by Pub. L.
253l–6.     Contract authority of Capitol Police.                 107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.
253l–7.     Contract authority of Architect of the Cap-              Section 205, act June 30, 1949, ch. 288, title VI, § 603,
              itol.                                               formerly title V, § 503, 63 Stat. 403; renumbered and
§§ 211 to 219                             TITLE 41—PUBLIC CONTRACTS                                                   Page 50

amended Sept. 5, 1950, ch. 849, §§ 6(a), (b), 7(g), 64 Stat.     40, and repealed by Pub. L. 107–217, § 6(b), Aug. 21, 2002,
583, 590, which related to authorization of appropria-           116 Stat. 1304.
tions and fund transfer authority, was transferred to              Section 218, act June 30, 1949, ch. 288, title I, § 108, 63
section 475 of former Title 40, and was repealed and re-         Stat. 382, which related to status of transferred em-
enacted as sections 124 and 125 of Title 40, Public Build-       ployees, was transferred to section 630f of former Title
ings, Property, and Works, by Pub. L. 107–217, §§ 1, 6(b),       5, Executive Departments and Government Officers and
Aug. 21, 2002, 116 Stat. 1062, 1304.                             Employees, and was subsequently repealed by section
                                                                 8(a) of Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 632.
    SUBCHAPTER II—GENERAL SERVICES                                 Section 219, acts June 30, 1949, ch. 288, title I, § 109, 63
            ADMINISTRATION                                       Stat 382; Sept. 5, 1950, ch. 849, §§ 1, 2(a), (b), 3, 64 Stat.
                                                                 578, which related to the General Supply Fund, was
§§ 211 to 219. Transferred                                       transferred to section 630g of former Title 5, Executive
                                                                 Departments and Government Officers and Employees,
                       CODIFICATION                              subsequently transferred to section 756 of former Title
                                                                 40, Public Buildings, Property, and Works, and repealed
  Section 211, act June 30, 1949, ch. 288, title I, § 101, 63
                                                                 and reenacted as sections 313 and 321(a)–(d), (f)(1), (g) of
Stat. 379, which related to General Services Adminis-
                                                                 Title 40, Public Buildings, Property, and Works, by
tration, was transferred to section 630 of former Title
                                                                 Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062,
5, Executive Departments and Government Officers and
                                                                 1304.
Employees, subsequently transferred to section 751 of
former Title 40, Public Buildings, Property, and Works,                    SUBCHAPTER III—PROPERTY
and repealed and reenacted as sections 121(c)(1), 301,
                                                                                MANAGEMENT
and 302 of Title 40, Public Buildings, Property, and
Works, by Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116        §§ 231 to 240. Transferred
Stat. 1062, 1304.
  Section 212, act June 30, 1949, ch. 288, title I, § 102, 63                            CODIFICATION
Stat. 380, which related to transfer of functions, was              Section 231, acts June 30, 1949, ch. 288, title II, § 201,
transferred to section 630a of former Title 5, Executive         63 Stat. 383; Aug. 10, 1949, ch. 412, § 12(a), 63 Stat. 591;
Departments and Government Officers and Employees,               Sept. 5, 1950, ch. 849, § 8(b), 64 Stat. 591, which related to
subsequently transferred to section 752 of former Title          procurement, warehousing, and related activities, was
40, and repealed and reenacted as section 303(a) of Title        transferred to section 481 of former Title 40, Public
40, Public Buildings, Property, and Works, by Pub. L.            Building, Property, and Works, and was repealed and
107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062, 1304. Sec-   reenacted as sections 501 to 505 of Title 40, Public
tion 303(a) of Title 40 was amended generally by Pub. L.         Buildings, Property, and Works, by Pub. L. 107–217, §§ 1,
109–313, § 2(a)(1), Oct. 6, 2006, 120 Stat. 1734, and, as so     6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.
amended, no longer relates to the Bureau of Federal                 Section 231a, act Oct. 26, 1949, ch. 737, 63 Stat. 920,
Supply. See Historical and Revision Notes and 2006               which related to clarification of status of Architect of
Amendment note under section 303 of Title 40.                    the Capitol under this chapter, was transferred to sec-
  Section 213, act June 30, 1949, ch. 288, title I, § 103, 63    tion 482 of former Title 40, and was repealed by Pub. L.
Stat. 380, which related to transfer of affairs of Federal       107–217, § 6(b), Aug. 21, 2002, 116 Stat. 1304.
Works Agency, was transferred to section 630b of                    Section 232, acts June 30, 1949, ch. 288, title II, § 202,
former Title 5, Executive Departments and Govern-                63 Stat. 384; Aug. 10, 1949, ch. 412, § 12(a), 63 Stat. 591,
ment Officers and Employees, subsequently transferred            which related to property utilization, was transferred
to section 753 of former Title 40, and repealed and reen-        to section 483 of former Title 40, and was repealed and
acted as section 303(b) of Title 40, Public Buildings,           reenacted as sections 521 to 527 and 529 of Title 40, Pub-
Property, and Works, by Pub. L. 107–217, §§ 1, 6(b), Aug.        lic Buildings, Property, and Works, by Pub. L. 107–217,
21, 2002, 116 Stat. 1062, 1304. Section 303(b) of Title 40       §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.
was amended generally by Pub. L. 109–313, § 2(a)(1), Oct.           Section 233, acts June 30, 1949, ch. 288, title II, § 203,
6, 2006, 120 Stat. 1734, and, as so amended, no longer re-       63 Stat. 385; Aug. 10, 1949, ch. 412, § 12(a), 63 Stat. 591;
lates to the Federal Works Agency and Commissioner               Sept. 5, 1950, ch. 849, § 4, 64 Stat. 579, which related to
of Public Buildings. See Historical and Revision Notes           disposal or surplus property, was transferred to section
and 2006 Amendment note under section 303 of Title 40.           484 of former Title 40, and was repealed and reenacted
  Section 214, act June 30, 1949, ch. 288, title I, § 104, 63    as sections 541 to 555 of Title 40, Public Buildings, Prop-
Stat. 381, which related to records management, was              erty, and Works, by Pub. L. 107–217, §§ 1, 6(b), Aug. 21,
transferred to section 391 of former Title 44, Public            2002, 116 Stat. 1062, 1304.
Printing and Documents. See sections 1506, 2102, 2301,              Section 234, act June 30, 1949, ch. 288, title I, § 204, 63
2501, and 2902 of Title 44, Public Printing and Docu-            Stat. 388, which related to proceeds from transfer, sale,
ments.                                                           etc., of property, was transferred to section 485 of
  Section 215, act June 30, 1949, ch. 288, title I, § 105, 63    former Title 40, and was repealed and reenacted as sec-
Stat. 381, which related to transfer and liquidation of          tions 571(a), 572 to 574 of Title 40, Public Buildings,
War Assets Administration, was transferred to section            Property, and Works, by Pub. L. 107–217, §§ 1, 6(b), Aug.
630c of former Title 5, Executive Departments and Gov-           21, 2002, 116 Stat. 1062, 1304.
ernment Officers and Employees, and was subsequently                Section 235, acts June 30, 1949, ch. 288, title II, § 205,
repealed by section 8(a) of Pub. L. 89–554, Sept. 6, 1966,       63 Stat. 389; Sept. 5, 1950, ch. 849, § 9, 64 Stat. 591, which
80 Stat. 632.                                                    related to policies, regulations, and delegations, was
  Section 216, act June 30, 1949, ch. 288, title I, § 106, 63    transferred to section 486 of former Title 40, and was re-
Stat. 381, which related to redistribution of Adminis-           pealed and reenacted as section 121(a), (b), (c)(2), (d)(1),
trator’s functions, was transferred to section 630d of           (2), (e)(1)(A), (B), (D)–(F), (2)(B), (f)–(h) of Title 40, Pub-
former Title 5, Executive Departments and Govern-                lic Buildings, Property, and Works, by Pub. L. 107–217,
ment Officers and Employees, subsequently transferred            §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.
to section 754 of former Title 40, Public Buildings,                Section 236, acts June 30, 1949, ch. 288, title II, § 206,
Property, and Works, and repealed and reenacted as               63 Stat. 390; Aug. 10, 1949, ch. 412, § 12(a), 63 Stat. 591,
section 121(e)(1)(C), (2)(A) of Title 40, Public Buildings,      which related to surveys of government property and
Property, and Works, by Pub. L. 107–217, §§ 1, 6(b), Aug.        property management practices, was transferred to sec-
21, 2002, 116 Stat. 1062, 1304.                                  tion 487 of former Title 40, and was repealed and reen-
  Section 217, act June 30, 1949, ch. 288, title I, § 107, 63    acted as section 506 of Title 40, Public Buildings, Prop-
Stat. 382, which related to transfer of funds, was trans-        erty, and Works, by Pub. L. 107–217, §§ 1, 6(b), Aug. 21,
ferred to section 630e of former Title 5, Executive De-          2002, 116 Stat. 1062, 1304.
partments and Government Officers and Employees,                    Section 237, act June 30, 1949, ch. 288, title II, § 207, 63
subsequently transferred to section 755 of former Title          Stat. 391, which related to applicability of antitrust
Page 51                                     TITLE 41—PUBLIC CONTRACTS                                                         § 251

laws to property disposal, was transferred to section 488               ‘‘(2) OTHER MATTERS.—An amendment made by this
of former Title 40, and was repealed and reenacted as                 division shall also apply, to the extent and in the
section 559 of Title 40, Public Buildings, Property, and              manner prescribed in the final regulations promul-
Works, by Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116             gated pursuant to section 4402 to implement such
Stat. 1062, 1304.                                                     amendment, with respect to any matter related to—
  Section 238, acts June 30, 1949, ch. 288, title II, § 208,               ‘‘(A) a contract that is in effect on the date de-
63 Stat. 391; Sept. 5, 1950, ch. 849, § 7(b), (c), 64 Stat. 590,        scribed in paragraph (3);
which related to appointment and compensation of per-                      ‘‘(B) an offer under consideration on the date de-
sonnel, was transferred to section 630h of former Title                 scribed in paragraph (3); or
                                                                           ‘‘(C) any other proceeding or action that is on-
5, Executive Departments and Government Officers and
                                                                        going on the date described in paragraph (3).
Employees, subsequently transferred to section 758 of                   ‘‘(3) DEMARCATION DATE.—The date referred to in
former Title 40, and repealed and reenacted as section                paragraphs (1) and (2) is the date specified in such
311(a)–(c) of Title 40, Public Buildings, Property, and               final regulations. The date so specified shall be Janu-
Works, by Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116             ary 1, 1997, or any earlier date that is not within 30
Stat. 1062, 1304.                                                     days after the date on which such final regulations
  Section 239, act June 30, 1949, ch. 288, title II, § 209, 63        are published.’’
Stat. 392, which related to civil remedies and penalties,
was transferred to section 489 of former Title 40, and                        EFFECTIVE DATE OF 1994 AMENDMENT
was repealed and reenacted as section 123 of Title 40,                Pub. L. 103–355, title X, § 10001, Oct. 13, 1994, 108 Stat.
Public Buildings, Property, and Works, by Pub. L.                   3404, provided that:
107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.             ‘‘(a) EFFECTIVE DATE.—Except as otherwise provided
  Section 239a, act June 30, 1949, ch. 288, title II, § 210,        in this Act, this Act [see Short Title of 1994 Amend-
as added Sept. 5, 1950, ch. 849, § 5(c), 64 Stat. 580, which        ment note below] and the amendments made by this
related to operation of buildings and related activities            Act shall take effect on the date of the enactment of
by the Administrator, was transferred to section 490 of             this Act [Oct. 13, 1994].
former Title 40, and was repealed and reenacted as sec-               ‘‘(b) APPLICABILITY OF AMENDMENTS.—(1) An amend-
tions 581 to 585(a)(1), (2) (1st sentence, last sentence            ment made by this Act shall apply, in the manner pre-
(words before ‘‘and the obligation’’)), (b), 586(a)–(c),            scribed in the final regulations promulgated pursuant
587(a)–(b)(4)(A), (c), 588, 589, 592(a)–(c)(1), (d), (e) of Title   to section 10002 to implement such amendment [set out
40, Public Buildings, Property, and Works, by Pub. L.               below], with respect to any solicitation that is issued,
107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.           any unsolicited proposal that is received, and any con-
  Section 239b, act June 30, 1949, ch. 288, title II, § 211,        tract entered into pursuant to such a solicitation or
as added Sept. 5, 1950, ch. 849, § 5(c), 64 Stat. 580, which        proposal, on or after the date described in paragraph
related to motor vehicle identification, was transferred            (3).
to section 491 of former Title 40, and was repealed and               ‘‘(2) An amendment made by this Act shall also
reenacted as sections 601 to 611 of Title 40, Public                apply, to the extent and in the manner prescribed in
Buildings, Property, and Works, by Pub. L. 107–217, §§ 1,           the final regulations promulgated pursuant to section
6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.                          10002 to implement such amendment, with respect to
  Section 240, act June 30, 1949, ch. 288, title II, § 212,         any matter related to—
                                                                         ‘‘(A) a contract that is in effect on the date de-
formerly § 210, 63 Stat. 393; renumbered Sept. 5, 1950, ch.
                                                                      scribed in paragraph (3);
849, § 5(a), 64 Stat. 580, which related to reports to Con-              ‘‘(B) an offer under consideration on the date de-
gress, was transferred to section 492 of former Title 40,             scribed in paragraph (3); or
and was repealed and reenacted as section 126 of Title                   ‘‘(C) any other proceeding or action that is ongoing
40, Public Buildings, Property, and Works, by Pub. L.                 on the date described in paragraph (3).
107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.             ‘‘(3) The date referred to in paragraphs (1) and (2) is
                                                                    the date specified in such final regulations [Oct. 1, 1995,
       SUBCHAPTER IV—PROCUREMENT                                    see 60 F.R. 48231, Sept. 18, 1995]. The date so specified
               PROVISIONS                                           shall be October 1, 1995, or any earlier date that is not
                                                                    within 30 days after the date on which such final regu-
§ 251. Declaration of purpose of this subchapter                    lations are published.
                                                                      ‘‘(c) IMMEDIATE APPLICABILITY OF CERTAIN AMEND-
  The purpose of this subchapter is to facilitate
                                                                    MENTS.—Notwithstanding subsection (b), the amend-
the procurement of property and services.                           ments made by the following provisions of this Act
(June 30, 1949, ch. 288, title III, § 301, 63 Stat. 393;            apply on and after the date of the enactment of this
July 12, 1952, ch. 703, § 1(m), 66 Stat. 594.)                      Act [Oct. 13, 1994]: sections 1001, 1021, 1031, 1051, 1071,
                                                                    1092, 1201, 1506(a), 1507, 1554, 2002(a), 2191, 3062(a), 3063,
                        AMENDMENTS                                  3064, 3065(a)(1), 3065(b), 3066, 3067, 6001(a), 7101, 7103, 7205,
                                                                    and 7206, the provisions of subtitles A, B, and C of title
   1952—Act July 12, 1952, substituted ‘‘property’’ for
                                                                    III [§§ 3001–3025], and the provisions of title V [see
‘‘supplies’’.
                                                                    Tables for classification].’’
          EFFECTIVE DATE OF 1996 AMENDMENT
                                                                              EFFECTIVE DATE OF 1984 AMENDMENT
  Pub. L. 104–106, div. D, title XLIV, § 4401, Feb. 10, 1996,         Pub. L. 98–369, div. B, title VII, § 2751, July 18, 1984, 98
110 Stat. 678, provided that:                                       Stat. 1203, provided that:
  ‘‘(a) EFFECTIVE DATE.—Except as otherwise provided                  ‘‘(a) Except as provided in subsection (b), the amend-
in this division [div. D (§§ 4001–4402) of Pub. L. 104–106,         ments made by this title [see Short Title of 1984
see Short Title of 1996 Amendment note below], this di-             Amendments note below] shall apply with respect to
vision and the amendments made by this division shall               any solicitation for bids or proposals issued after
take effect on the date of the enactment of this Act                March 31, 1985.
[Feb. 10, 1996].                                                      ‘‘(b) The amendments made by section 2713 [amending
  ‘‘(b) APPLICABILITY OF AMENDMENTS.—                               section 759 of former Title 40, Public Buildings, Prop-
     ‘‘(1) SOLICITATIONS, UNSOLICITED PROPOSALS, AND RE-            erty, and Works, and enacting provisions set out as a
  LATED CONTRACTS.—An amendment made by this divi-                  note under section 759 of former Title 40] and subtitle
  sion shall apply, in the manner prescribed in the final           D [enacting sections 3551 to 3556 of Title 31, Money and
  regulations promulgated pursuant to section 4402 [set             Finance] shall apply with respect to any protest filed
  out below] to implement such amendment, with re-                  after January 14, 1985.’’
  spect to any solicitation that is issued, any unsolic-
  ited proposal that is received, and any contract en-                                    EFFECTIVE DATE
  tered into pursuant to such a solicitation or proposal,            Section effective July 1, 1949, see section 605, for-
  on or after the date described in paragraph (3).                  merly section 505, of act June 30, 1949, ch. 288, 63 Stat.
§ 251                                     TITLE 41—PUBLIC CONTRACTS                                                 Page 52

403; renumbered by act Sept. 5, 1950, ch. 849, § 6(a), (b),        ‘‘(a) PROPOSED REVISIONS.—Proposed revisions to the
64 Stat. 583.                                                    Federal Acquisition Regulation and such other pro-
                                                                 posed regulations (or revisions to existing regulations)
            SHORT TITLE OF 2008 AMENDMENT
                                                                 as may be necessary to implement this Act [see Tables
  Pub. L. 110–417, [div. A], title VIII, § 861, Oct. 14, 2008,   for classification] shall be published in the Federal
122 Stat. 4546, provided that: ‘‘This subtitle [subtitle G       Register not later than 210 days after the date of the
(§§ 861–874) of title VIII of Pub. L. 110–417, enacting sec-     enactment of this Act [Feb. 10, 1996].
tions 417b and 440 of this title, amending sections 253,           ‘‘(b) PUBLIC COMMENT.—The proposed regulations de-
254d, and 417 of this title and sections 2304 and 2313 of        scribed in subsection (a) shall be made available for
Title 10, Armed Forces, enacting provisions set out as           public comment for a period of not less than 60 days.
notes under this section, sections 253h, 254, 254b, 405,           ‘‘(c) FINAL REGULATIONS.—Final regulations shall be
and 433a of this title, and sections 1535 and 6101 of Title      published in the Federal Register not later than 330
31, Money and Finance, and repealing provisions set out          days after the date of enactment of this Act [Feb. 10,
as a note under section 2304 of Title 10] may be cited as        1996].
the ‘Clean Contracting Act of 2008’.’’                             ‘‘(d) MODIFICATIONS.—Final regulations promulgated
                                                                 pursuant to this section to implement an amendment
            SHORT TITLE OF 1996 AMENDMENT                        made by this Act may provide for modification of an
  Pub. L. 104–106, div. D, § 4001, Feb. 10, 1996, 110 Stat.      existing contract without consideration upon the re-
642, as amended by Pub. L. 104–208, div. A, title I, § 101(f)    quest of the contractor.
[title VIII, § 808(a)], Sept. 30, 1996, 110 Stat. 3009–314,        ‘‘(e) SAVINGS PROVISIONS.—
3009–393, provided that: ‘‘This division [div. D                      ‘‘(1) VALIDITY OF PRIOR ACTIONS.—Nothing in this di-
(§§ 4001–4402) of Pub. L. 104–106, see Tables for classifica-      vision [div. D (§§ 4001–4402) of Pub. L. 104–106, see
tion] and division E [§§ 5001–5703 of Pub. L. 104–106, re-         Short Title of 1996 Amendment note above] shall be
pealed and reenacted, generally, as subtitle III (§ 11101          construed to affect the validity of any action taken
et seq.) of Title 40, Public Buildings, Property, and              or any contract entered into before the date specified
Works, by Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116          in the regulations pursuant to section 4401(b)(3) [set
Stat. 1062, 1304, see Tables for complete classification]          out as an Effective Date of 1996 Amendment note
may be cited as the ‘Clinger-Cohen Act of 1996’.’’                 above] except to the extent and in the manner pre-
                                                                   scribed in such regulations.
            SHORT TITLE OF 1994 AMENDMENT                             ‘‘(2) RENEGOTIATION AND MODIFICATION OF PREEXIST-
                                                                   ING CONTRACTS.—Except as specifically provided in
  Pub. L. 103–355, § 1, Oct. 13, 1994, 108 Stat. 3243, pro-
                                                                   this division, nothing in this division shall be con-
vided that: ‘‘This Act [see Tables for classification]
                                                                   strued to require the renegotiation or modification of
may be cited as the ‘Federal Acquisition Streamlining
                                                                   contracts in existence on the date of the enactment
Act of 1994’.’’
                                                                   of this Act [Feb. 10, 1996].
           SHORT TITLE OF 1984 AMENDMENTS                             ‘‘(3) CONTINUED APPLICABILITY OF PREEXISTING
                                                                   LAW.—Except as otherwise provided in this division, a
  Pub. L. 98–577, § 1, Oct. 30, 1984, 98 Stat. 3066, provided
                                                                   law amended by this division shall continue to be ap-
that this Act [enacting sections 253c to 253h, 414a, 418a,
                                                                   plied according to the provisions thereof as such law
and 418b of this title, repealing section 2303a of Title 10,
                                                                   was in effect on the day before the date of the enact-
Armed Forces, amending sections 253, 253b, 259, 403, and
                                                                   ment of this Act until—
416 of this title, sections 2302, 2304, 2311, and 2320 of                ‘‘(A) the date specified in final regulations imple-
Title 10, and sections 637 and 644 of Title 15, Commerce              menting the amendment of that law (as promul-
and Trade, and enacting provisions set out as notes                   gated pursuant to this section); or
under this section, section 416 of this title, and sections              ‘‘(B) if no such date is specified in regulations,
637 and 644 of Title 15] may be cited as the ‘‘Small Busi-            January 1, 1997.’’
ness and Federal Procurement Competition Enhance-                  Pub. L. 103–355, title X, § 10002, Oct. 13, 1994, 108 Stat.
ment Act of 1984’’.                                              3404, provided that:
  Pub. L. 98–369, div. B, title VII, § 2701, July 18, 1984, 98     ‘‘(a) PROPOSED REVISIONS.—Proposed revisions to the
Stat. 1175, provided that: ‘‘This title [enacting sections       Federal Acquisition Regulation and such other pro-
253a, 253b, 416 to 419 of this title and sections 3551 to        posed regulations (or revisions to existing regulations)
3556 of Title 31, Money and Finance, amending sections           as may be necessary to implement this Act [see Short
252, 253, 254, 257, 258, 259, 260, 403, 405, and 414 of this     Title of 1994 Amendment note above] shall be published
title, sections 2301 to 2306, 2310, 2311, 2313, and 2356 of      in the Federal Register not later than 210 days after the
Title 10, Armed Forces, and section 759 of former Title          date of the enactment of this Act [Oct. 13, 1994].
40, Public Buildings, Property, and Works, and enacting            ‘‘(b) PUBLIC COMMENT.—The proposed regulations de-
provisions set out as notes under this section, sections         scribed in subsection (a) shall be made available for
253, 403, and 407 of this title, section 2304 of Title 10, and   public comment for a period of not less than 60 days.
section 759 of former Title 40] may be cited as the ‘Com-          ‘‘(c) FINAL REGULATIONS.—Final regulations shall be
petition in Contracting Act of 1984’.’’                          published in the Federal Register not later than 330
                       SHORT TITLE                               days after the date of enactment of this Act.
                                                                   ‘‘(d) MODIFICATIONS.—Final regulations promulgated
  Act June 30, 1949, ch. 288, § 1(a), 63 Stat. 377, as amend-    pursuant to this section to implement an amendment
ed by Pub. L. 103–355, title X, § 10005(a)(2), Oct. 13, 1994,    made by this Act may provide for modification of an
108 Stat. 3406; Pub. L. 107–217, § 6(b), Aug. 21, 2002, 116      existing contract without consideration upon the re-
Stat. 1304; Pub. L. 108–178, § 2(b)(1), Dec. 15, 2003, 117       quest of the contractor.
Stat. 2640, provided that: ‘‘This Act [see Tables for clas-        ‘‘(e) REQUIREMENT FOR CLARITY.—Officers and em-
sification] may be cited as the ‘Federal Property and            ployees of the Federal Government who prescribe regu-
Administrative Services Act of 1949’.’’                          lations to implement this Act and the amendments
  [Pub. L. 107–217, § 6(b), which had repealed section 1(a)      made by this Act shall make every effort practicable to
of act June 30, 1949, set out above, was itself repealed         ensure that the regulations are concise and are easily
effective Aug. 21, 2002, by Pub. L. 108–178, § 2(b)(1), inso-    understandable by potential offerors as well as by Gov-
far as it related to section 1(a) of act June 30, 1949, and      ernment officials.
Pub. L. 108–178, § 2(b)(1), further provided that section          ‘‘(f) SAVINGS PROVISIONS.—(1) Nothing in this Act
1(a) of act June 30, 1949, was revived to read as if Pub.        shall be construed to affect the validity of any action
L. 107–217, § 6(b), had not been enacted.]                       taken or any contract entered into before the date
                                                                 specified in the regulations pursuant to section
                       REGULATIONS
                                                                 10001(b)(3) [see Effective Date of 1994 Amendment note
  Pub. L. 104–106, div. D, title XLIV, § 4402, Feb. 10, 1996,    above] except to the extent and in the manner pre-
110 Stat. 678, provided that:                                    scribed in such regulations.
Page 53                                   TITLE 41—PUBLIC CONTRACTS                                                       § 251

  ‘‘(2) Except as specifically provided in this Act, noth-         products and services among contracting and pro-
ing in this Act shall be construed to require the renego-          gram management officials.
tiation or modification of contracts in existence on the           ‘‘(c) GUIDANCE FOR DEPARTMENT OF DEFENSE.—The
date of the enactment of this Act [Oct. 13, 1994].               Department of Defense shall continue to be subject to
  ‘‘(3) Except as otherwise provided in this Act, a law          guidance on award and incentive fees issued by the Sec-
amended by this Act shall continue to be applied ac-             retary of Defense pursuant to section 814 of the John
cording to the provisions thereof as such law was in ef-         Warner National Defense Authorization Act for Fiscal
fect on the day before the date of the enactment of this         Year 2007 (Public Law 109–364; 120 Stat. 2321 [10 U.S.C.
Act until—                                                       2302 note]).
     ‘‘(A) the date specified in final regulations imple-          ‘‘(d) EXECUTIVE AGENCY DEFINED.—In this section, the
  menting the amendment of that law (as promulgated              term ‘executive agency’ has the meaning given such
  pursuant to this section); or                                  term in section 4(1) of the Office of Federal Procure-
     ‘‘(B) if no such date is specified in regulations, Oc-      ment Policy Act (41 U.S.C. 403(1)).’’
  tober 1, 1995.’’
                                                                        CLOSE THE CONTRACTOR FRAUD LOOPHOLE
                       SEPARABILITY
                                                                   Pub. L. 110–252, title VI, ch. 1, June 30, 2008, 122 Stat.
  Section 604, formerly § 504, of act June 30, 1949, re-         2386, provided that:
numbered by act Sept. 5, 1950, ch. 849, § 6(a), (b), 64 Stat.
583, provided that: ‘‘If any provision of this Act [see                                 ‘‘SHORT TITLE
Tables for classification], or the application thereof to          ‘‘SEC. 6101. This chapter may be cited as the ‘Close
any person or circumstances, is held invalid, the re-            the Contractor Fraud Loophole Act’.
mainder of this Act, and the application of such provi-
sion to other persons or circumstances, shall not be af-           ‘‘REVISION OF THE FEDERAL ACQUISITION REGULATION
fected thereby.’’                                                  ‘‘SEC. 6102. The Federal Acquisition Regulation shall
      LINKING OF AWARD AND INCENTIVE FEES TO                     be amended within 180 days after the date of the enact-
               ACQUISITION OUTCOMES                              ment of this Act [June 30, 2008] pursuant to FAR Case
                                                                 2007–006 (as published at 72 Fed Reg. 64019, November 14,
  Pub. L. 110–417, [div. A], title VIII, § 867, Oct. 14, 2008,   2007) or any follow-on FAR case to include provisions
122 Stat. 4551, provided that:                                   that require timely notification by Federal contractors
  ‘‘(a) GUIDANCE FOR EXECUTIVE AGENCIES ON LINKING               of violations of Federal criminal law or overpayments
OF AWARD AND INCENTIVE FEES TO ACQUISITION OUT-                  in connection with the award or performance of covered
COMES.—Not later than 1 year after the date of the en-           contracts or subcontracts, including those performed
actment of this Act [Oct. 14, 2008], the Federal Acquisi-        outside the United States and those for commercial
tion Regulation shall be amended to provide executive            items.
agencies other than the Department of Defense with in-
structions, including definitions, on the appropriate                                    ‘‘DEFINITION
use of award and incentive fees in Federal acquisition             ‘‘SEC. 6103. In this chapter, the term ‘covered con-
programs.                                                        tract’ means any contract in an amount greater than
  ‘‘(b) ELEMENTS.—The regulations under subsection (a)           $5,000,000 and more than 120 days in duration.’’
shall—
     ‘‘(1) ensure that all new contracts using award fees                 EVALUATION BY COMPTROLLER GENERAL
  link such fees to acquisition outcomes (which shall be
  defined in terms of program cost, schedule, and per-             Pub. L. 103–355, title X, § 10003, Oct. 13, 1994, 108 Stat.
  formance);                                                     3405, provided that not later than 180 days after the is-
     ‘‘(2) establish standards for identifying the appro-        suance in final form of revisions to the Federal Acqui-
  priate level of officials authorized to approve the use        sition Regulation pursuant to section 10002 of Pub. L.
  of award and incentive fees in new contracts;                  103–355, set out as a note above, the Comptroller Gen-
     ‘‘(3) provide guidance on the circumstances in              eral was to submit to Congress a report evaluating
  which contractor performance may be judged to be               compliance with such section.
  ‘excellent’ or ‘superior’ and the percentage of the                    CONGRESSIONAL STATEMENT OF PURPOSE
  available award fee which contractors should be paid
  for such performance;                                            Pub. L. 98–577, title I, § 101, Oct. 30, 1984, 98 Stat. 3066,
     ‘‘(4) establish standards for determining the per-          provided that: ‘‘The purposes of this Act are to—
  centage of the available award fee, if any, which con-             ‘‘(1) eliminate procurement procedures and prac-
  tractors should be paid for performance that is judged           tices that unnecessarily inhibit full and open com-
  to be ‘acceptable’, ‘average’, ‘expected’, ‘good’, or            petition for contracts;
  ‘satisfactory’;                                                    ‘‘(2) promote the use of contracting opportunities
     ‘‘(5) ensure that no award fee may be paid for con-           as a means to expand the industrial base of the
  tractor performance that is judged to be below satis-            United States in order to ensure adequate responsive
  factory performance or performance that does not                 capability of the economy to the increased demands
  meet the basic requirements of the contract;                     of the Government in times of national emergency;
     ‘‘(6) provide specific direction on the circum-               and
  stances, if any, in which it may be appropriate to roll            ‘‘(3) foster opportunities for the increased partici-
  over award fees that are not earned in one award fee             pation in the competitive procurement process of
  period to a subsequent award fee period or periods;              small business concerns and small business concerns
     ‘‘(7) ensure consistent use of guidelines and defini-         owned and controlled by socially and economically
  tions relating to award and incentive fees across the            disadvantaged individuals.’’
  Federal Government;
                                                                       COMMISSION ON GOVERNMENT PROCUREMENT
     ‘‘(8) ensure that each executive agency—
        ‘‘(A) collects relevant data on award and incen-           Pub. L. 91–129, Nov. 26, 1969, 83 Stat. 269, as amended
     tive fees paid to contractors; and                          by Pub. L. 92–47, July 9, 1971, 85 Stat. 102, established
        ‘‘(B) has mechanisms in place to evaluate such           the Commission on Government Procurement, which
     data on a regular basis;                                    was to study and investigate statutes, rules, regula-
     ‘‘(9) include performance measures to evaluate the          tions, procedures, and practices affecting Government
  effectiveness of award and incentive fees as a tool for        procurement and to submit a final report to Congress
  improving contractor performance and achieving de-             on or before Dec. 31, 1972, on the results of this study,
  sired program outcomes; and                                    including recommendations for changes designed to
     ‘‘(10) provide mechanisms for sharing proven incen-         promote economy, efficiency, and effectiveness in the
  tive strategies for the acquisition of different types of      procurement of goods, services, and facilities by and for
§ 251                                  TITLE 41—PUBLIC CONTRACTS                                              Page 54

the executive branch of the Government. The Commis-            SEC. 5. Definitions. For purposes of this Executive
sion terminated 120 days after submission of the final       order:
report.                                                        (a) ‘‘Agency’’ means any authority of the United
                                                             States that is an ‘‘agency’’ under 44 U.S.C. 3502(1),
    EX. ORD. NO. 13005. EMPOWERMENT CONTRACTING
                                                             other than those considered to be independent regu-
  Ex. Ord. No. 13005, May 21, 1996, 61 F.R. 26069, pro-      latory agencies, as defined in 44 U.S.C. 3502(10).
vided:                                                         (b) ‘‘Area of general economic distress’’ shall be de-
  In order to promote economy and efficiency in Fed-         fined, for all urban and rural communities, as any cen-
eral procurement, it is necessary to secure broad-based      sus tract that has a poverty rate of at least 20 percent
competition for Federal contracts. This broad competi-       or any designated Federal Empowerment Zone, Supple-
tion is best achieved where there is an expansive pool       mental Empowerment Zone, Enhanced Enterprise Com-
of potential contractors capable of producing quality        munity, or Enterprise Community. In addition, the
goods and services at competitive prices. A great and        Secretary may designate as an area of general eco-
largely untapped opportunity for expanding the pool of       nomic distress any additional rural or Indian reserva-
such contractors can be found in this Nation’s economi-      tion area after considering the following factors:
cally distressed communities.                                  (1) Unemployment rate;
  Fostering growth of Federal contractors in economi-          (2) Degree of poverty;
cally distressed communities and ensuring that those           (3) Extent of outmigration; and
contractors become viable businesses for the long term         (4) Rate of business formation and rate of business
will promote economy and efficiency in Federal pro-          growth.
curement and help to empower those communities.                (c) ‘‘Qualified large business’’ means a large for-profit
Fostering growth of long-term viable contractors will        or not-for-profit trade or business that (1) employs a
be promoted by offering appropriate incentives to            significant number of residents from the area of gen-
qualified businesses.                                        eral economic distress; and (2) either has a significant
  Accordingly, by the authority vested in me as Presi-
                                                             physical presence in the area of general economic dis-
dent by the Constitution and the laws of the United
                                                             tress or has a direct impact on generating significant
States, including section 486(a) [now 121(a)] of title 40,
                                                             economic activity in the area of general economic dis-
United States Code, and section 301 of title 3, United
                                                             tress.
States Code, it is hereby ordered as follows:
  SECTION 1. Policy. The purpose of this order is to           (d) ‘‘Qualified small business’’ means a small for-prof-
strengthen the economy and to improve the efficiency         it or not-for-profit trade or business that (1) employs a
of the Federal procurement system by encouraging             significant number of residents from the area of gen-
business development that expands the industrial base        eral economic distress; (2) has a significant physical
and increases competition.                                   presence in the area of general economic distress; or (3)
  SEC. 2. Empowerment Contracting Program. In consulta-      has a direct impact on generating significant economic
tion with the Secretaries of the Departments of Hous-        activity in the area of general economic distress.
ing and Urban Development, Labor, and Defense; the             (e) ‘‘Secretary’’ means the Secretary of Commerce.
Administrator of General Services; the Administrator           SEC. 6. Agency Authority. Nothing in this Executive
of the National Aeronautics and Space Administration;        order shall be construed as displacing the agencies’ au-
the Administrator of the Small Business Administra-          thority or responsibilities, as authorized by law, in-
tion; and the Administrator for Federal Procurement          cluding specifically other programs designed to pro-
Policy, the Secretary of the Department of Commerce          mote the development of small or disadvantaged busi-
shall develop policies and procedures to ensure that         nesses.
agencies, to the extent permitted by law, grant quali-         SEC. 7. Judicial Review. This Executive order does not
fied large businesses and qualified small businesses ap-     create any right or benefit, substantive or procedural,
propriate incentives to encourage business activity in       enforceable at law or equity by a party against the
areas of general economic distress, including a price or     United States, its agencies or instrumentalities, its of-
an evaluation credit, when assessing offers for govern-      ficers or employees, or any other person.
ment contracts in unrestricted competitions, where the                                           WILLIAM J. CLINTON.
incentives would promote the policy set forth in this
                                                                            EXECUTIVE ORDER NO. 13202
order. In developing such policies and procedures, the
Secretary shall consider the size of the qualified busi-       Ex. Ord. No. 13202, Feb. 17, 2001, 66 F.R. 11225, as
nesses.                                                      amended by Ex. Ord. No. 13208, Apr. 6, 2001, 66 F.R.
  SEC. 3. Monitoring and Evaluation. The Secretary           18717, which promoted preservation of open competition
shall:                                                       and Government neutrality towards Government con-
  (a) monitor the implementation and operation of the        tractors’ labor relations on Federal and Federally fund-
policies and procedures developed in accordance with         ed construction projects, was revoked by Ex. Ord. No.
this order;                                                  13502, § 8, Feb. 6, 2009, 74 F.R. 6986, set out below.
  (b) develop a process to ensure the proper administra-
tion of the program and to reduce the potential for          EX. ORD. NO. 13502. USE OF PROJECT LABOR AGREEMENTS
fraud by the intended beneficiaries of the program;                  FOR FEDERAL CONSTRUCTION PROJECTS
  (c) develop principles and a process to evaluate the
                                                               Ex. Ord. No. 13502, Feb. 6, 2009, 74 F.R. 6985, provided:
effectiveness of the policies and procedures developed
                                                               By the authority vested in me as President by the
in accordance with this order; and
  (d) by December 1 of each year, issue a report to the      Constitution and the laws of the United States of
President on the status and effectiveness of the pro-        America, including the Federal Property and Adminis-
gram.                                                        trative Services Act, 40 U.S.C. 101 et seq., and in order
  SEC. 4. Implementation Guidelines. In implementing         to promote the efficient administration and completion
this order, the Secretary shall:                             of Federal construction projects, it is hereby ordered
  (a) issue rules, regulations, and guidelines necessary     that:
to implement this order, including a requirement for           SECTION 1. Policy. (a) Large-scale construction
the periodic review of the eligibility of qualified busi-    projects pose special challenges to efficient and timely
nesses and distressed areas;                                 procurement by the Federal Government. Construction
  (b) draft all rules, regulations, and guidelines nec-      employers typically do not have a permanent work-
essary to implement this order within 90 days of the         force, which makes it difficult for them to predict labor
date of this order; and                                      costs when bidding on contracts and to ensure a steady
  (c) ensure that all policies and procedures and all        supply of labor on contracts being performed. Chal-
rules, regulations, and guidelines adopted and imple-        lenges also arise due to the fact that construction
mented in accordance with this order minimize the ad-        projects typically involve multiple employers at a sin-
ministrative burden on affected agencies and the pro-        gle location. A labor dispute involving one employer
curement process.                                            can delay the entire project. A lack of coordination
Page 55                               TITLE 41—PUBLIC CONTRACTS                                                 § 251

among various employers, or uncertainty about the             SEC. 5. This order does not require an executive agen-
terms and conditions of employment of various groups        cy to use a project labor agreement on any construc-
of workers, can create frictions and disputes in the ab-    tion project, nor does it preclude the use of a project
sence of an agreed-upon resolution mechanism. These         labor agreement in circumstances not covered by this
problems threaten the efficient and timely completion       order, including leasehold arrangements and projects
of construction projects undertaken by Federal con-         receiving Federal financial assistance. This order also
tractors. On larger projects, which are generally more      does not require contractors or subcontractors to enter
complex and of longer duration, these problems tend to      into a project labor agreement with any particular
be more pronounced.                                         labor organization.
  (b) The use of a project labor agreement may prevent        SEC. 6. Within 120 days of the date of this order, the
these problems from developing by providing structure       Federal Acquisition Regulatory Council (FAR Council),
and stability to large-scale construction projects,         to the extent permitted by law, shall take whatever ac-
thereby promoting the efficient and expeditious com-        tion is required to amend the Federal Acquisition Reg-
pletion of Federal construction contracts. Accordingly,     ulation to implement the provisions of this order.
it is the policy of the Federal Government to encourage       SEC. 7. The Director of OMB, in consultation with the
executive agencies to consider requiring the use of         Secretary of Labor and with other officials as appro-
project labor agreements in connection with large-scale     priate, shall provide the President within 180 days of
construction projects in order to promote economy and       this order, recommendations about whether broader
efficiency in Federal procurement.                          use of project labor agreements, with respect to both
  SEC. 2. Definitions.                                      construction projects undertaken under Federal con-
  (a) The term ‘‘labor organization’’ as used in this       tracts and construction projects receiving Federal fi-
order means a labor organization as defined in 29 U.S.C.    nancial assistance, would help to promote the economi-
152(5).                                                     cal, efficient, and timely completion of such projects.
  (b) The term ‘‘construction’’ as used in this order         SEC. 8. Revocation of Prior Orders, Rules, and Regula-
means construction, rehabilitation, alteration, conver-     tions. Executive Order 13202 of February 17, 2001, and
sion, extension, repair, or improvement of buildings,       Executive Order 13208 of April 6, 2001, are revoked. The
highways, or other real property.                           heads of executive agencies shall, to the extent per-
  (c) The term ‘‘large-scale construction project’’ as      mitted by law, revoke expeditiously any orders, rules,
used in this order means a construction project where       or regulations implementing Executive Orders 13202
the total cost to the Federal Government is $25 million     and 13208.
or more.                                                      SEC. 9. Severability. If any provision of this order, or
  (d) The term ‘‘executive agency’’ as used in this order   the application of such provision to any person or cir-
has the same meaning as in 5 U.S.C. 105, but excludes       cumstance, is held to be invalid, the remainder of this
the Government Accountability Office.                       order and the application of the provisions of such to
  (e) The term ‘‘project labor agreement’’ as used in
                                                            any person or circumstance shall not be affected there-
this order means a pre-hire collective bargaining agree-
                                                            by.
ment with one or more labor organizations that estab-         SEC. 10. General. (a) Nothing in this order shall be
lishes the terms and conditions of employment for a         construed to impair or otherwise affect:
specific construction project and is an agreement de-           (i) authority granted by law to an executive depart-
scribed in 29 U.S.C. 158(f).                                  ment, agency, or the head thereof; or
  SEC. 3. (a) In awarding any contract in connection            (ii) functions of the Director of the Office of Man-
with a large-scale construction project, or obligating        agement and Budget relating to budgetary, adminis-
funds pursuant to such a contract, executive agencies         trative, or legislative proposals.
may, on a project-by-project basis, require the use of a      (b) This order shall be implemented consistent with
project labor agreement by a contractor where use of        applicable law and subject to the availability of appro-
such an agreement will (i) advance the Federal Govern-      priations.
ment’s interest in achieving economy and efficiency in        (c) This order is not intended to, and does not, create
Federal procurement, producing labor-management             any right or benefit, substantive or procedural, enforce-
stability, and ensuring compliance with laws and regu-      able at law or in equity by any party against the
lations governing safety and health, equal employment       United States, its departments, agencies, or entities,
opportunity, labor and employment standards, and            its officers, employees, or agents, or any other person.
other matters, and (ii) be consistent with law.               SEC. 11. Effective Date. This order shall be effective
  (b) If an executive agency determines under sub-          immediately and shall apply to all solicitations for
section (a) that the use of a project labor agreement       contracts issued on or after the effective date of the ac-
will satisfy the criteria in clauses (i) and (ii) of that   tion taken by the FAR Council under section 6 of this
subsection, the agency may, if appropriate, require         order.
that every contractor or subcontractor on the project
                                                                                                    BARACK OBAMA.
agree, for that project, to negotiate or become a party
to a project labor agreement with one or more appro-                       GOVERNMENT CONTRACTING
priate labor organizations.
  SEC. 4. Any project labor agreement reached pursuant         Memorandum of President of the United States, Mar.
to this order shall:                                        4, 2009, 74 F.R. 9755, provided:
  (a) bind all contractors and subcontractors on the           Memorandum for the Heads of Executive Depart-
Construction project through the inclusion of appro-        ments and Agencies
                                                               The Federal Government has an overriding obligation
priate specifications in all relevant solicitation provi-
                                                            to American taxpayers. It should perform its functions
sions and contract documents;
  (b) allow all contractors and subcontractors to com-      efficiently and effectively while ensuring that its ac-
pete for contracts and subcontracts without regard to       tions result in the best value for the taxpayers.
whether they are otherwise parties to collective bar-          Since 2001, spending on Government contracts has
gaining agreements;                                         more than doubled, reaching over $500 billion in 2008.
  (c) contain guarantees against strikes, lockouts, and     During this same period, there has been a significant
similar job disruptions;                                    increase in the dollars awarded without full and open
  (d) set forth effective, prompt, and mutually binding     competition and an increase in the dollars obligated
procedures for resolving labor disputes arising during      through cost-reimbursement contracts. Between fiscal
the project labor agreement;                                years 2000 and 2008, for example, dollars obligated under
  (e) provide other mechanisms for labor-management         cost-reimbursement contracts nearly doubled, from $71
cooperation on matters of mutual interest and concern,      billion in 2000 to $135 billion in 2008. Reversing these
including productivity, quality of work, safety, and        trends away from full and open competition and toward
health; and                                                 cost-reimbursement contracts could result in savings
  (f) fully conform to all statutes, regulations, and Ex-   of billions of dollars each year for the American tax-
ecutive Orders.                                             payer.
§ 252                                  TITLE 41—PUBLIC CONTRACTS                                            Page 56

  Excessive reliance by executive agencies on sole-          Personnel Management, and the heads of such other
source contracts (or contracts with a limited number of      agencies as the Director of OMB determines to be ap-
sources) and cost-reimbursement contracts creates a          propriate, and with the participation of appropriate
risk that taxpayer funds will be spent on contracts that     management councils and program management offi-
are wasteful, inefficient, subject to misuse, or other-      cials, to develop and issue by July 1, 2009, Government-
wise not well designed to serve the needs of the Federal     wide guidance to assist agencies in reviewing, and cre-
Government or the interests of the American taxpayer.        ating processes for ongoing review of, existing con-
Reports by agency Inspectors General, the Government         tracts in order to identify contracts that are wasteful,
Accountability Office (GAO), and other independent re-       inefficient, or not otherwise likely to meet the agen-
viewing bodies have shown that noncompetitive and            cy’s needs, and to formulate appropriate corrective ac-
cost-reimbursement contracts have been misused, re-          tion in a timely manner. Such corrective action may
sulting in wasted taxpayer resources, poor contractor        include modifying or canceling such contracts in a
performance, and inadequate accountability for results.      manner and to the extent consistent with applicable
  When awarding Government contracts, the Federal            laws, regulations, and policy.
Government must strive for an open and competitive             I further direct the Director of OMB, in collaboration
process. However, executive agencies must have the           with the aforementioned officials and councils, and
flexibility to tailor contracts to carry out their mis-      with input from the public, to develop and issue by Sep-
sions and achieve the policy goals of the Government.        tember 30, 2009, Government-wide guidance to:
In certain exigent circumstances, agencies may need to         (1) govern the appropriate use and oversight of sole-
consider whether a competitive process will not accom-       source and other types of noncompetitive contracts and
plish the agency’s mission. In such cases, the agency        to maximize the use of full and open competition and
must ensure that the risks associated with noncompeti-       other competitive procurement processes;
tive contracts are minimized.                                  (2) govern the appropriate use and oversight of all
  Moreover, it is essential that the Federal Govern-         contract types, in full consideration of the agency’s
ment have the capacity to carry out robust and thor-         needs, and to minimize risk and maximize the value of
ough management and oversight of its contracts in            Government contracts generally, consistent with the
order to achieve programmatic goals, avoid significant       regulations to be promulgated pursuant to section 864
overcharges, and curb wasteful spending. A GAO study         of Public Law 110–417;
last year of 95 major defense acquisitions projects            (3) assist agencies in assessing the capacity and abil-
found cost overruns of 26 percent, totaling $295 billion     ity of the Federal acquisition workforce to develop,
over the life of the projects. Improved contract over-       manage, and oversee acquisitions appropriately; and
sight could reduce such sums significantly.                    (4) clarify when governmental outsourcing for serv-
  Government outsourcing for services also raises spe-       ices is and is not appropriate, consistent with section
cial concerns. For decades, the Federal Government has       321 of Public Law 110–417 (31 U.S.C. 501 note).
relied on the private sector for necessary commercial          Executive departments and agencies shall carry out
services used by the Government, such as transpor-           the provisions of this memorandum to the extent per-
tation, food, and maintenance. Office of Management          mitted by law. This memorandum is not intended to,
and Budget Circular A–76, first issued in 1966, was based    and does not, create any right or benefit, substantive
on the reasonable premise that while inherently gov-         or procedural, enforceable at law or in equity by any
ernmental activities should be performed by Govern-          party against the United States, its departments, agen-
ment employees, taxpayers may receive more value for         cies, or entities, its officers, employees, or agents, or
their dollars if non-inherently governmental activities      any other person.
that can be provided commercially are subject to the           The Director of OMB is hereby authorized and di-
forces of competition.                                       rected to publish this memorandum in the Federal Reg-
  However, the line between inherently governmental          ister.
activities that should not be outsourced and commer-
cial activities that may be subject to private sector                                                 BARACK OBAMA.
competition has been blurred and inadequately defined.                             DEFINITIONS
As a result, contractors may be performing inherently
governmental functions. Agencies and departments               The definitions in section 102 of Title 40, Public
must operate under clear rules prescribing when              Buildings, Property, and Works, apply to this sub-
outsourcing is and is not appropriate.                       chapter.
  It is the policy of the Federal Government that exec-
utive agencies shall not engage in noncompetitive con-       § 252. Purchases and contracts for property
tracts except in those circumstances where their use         (a) Applicability of subchapter; delegation of au-
can be fully justified and where appropriate safeguards          thority
have been put in place to protect the taxpayer. In addi-
tion, there shall be a preference for fixed-price type         Executive agencies shall make purchases and
contracts. Cost-reimbursement contracts shall be used        contracts for property and services in accord-
only when circumstances do not allow the agency to           ance with the provisions of this subchapter and
define its requirements sufficiently to allow for a fixed-   implementing regulations of the Administrator;
price type contract. Moreover, the Federal Government        but this subchapter does not apply—
shall ensure that taxpayer dollars are not spent on con-
tracts that are wasteful, inefficient, subject to misuse,
                                                                 (1) to the Department of Defense, the Coast
or otherwise not well designed to serve the Federal            Guard, and the National Aeronautics and
Government’s needs and to manage the risk associated           Space Administration; or
with the goods and services being procured. The Fed-             (2) when this subchapter is made inapplica-
eral Government must have sufficient capacity to man-          ble pursuant to section 113(e) of title 40 or any
age and oversee the contracting process from start to          other law, but when this subchapter is made
finish, so as to ensure that taxpayer funds are spent          inapplicable by any such provision of law, sec-
wisely and are not subject to excessive risk. Finally,         tions 5 and 8 of this title shall be applicable in
the Federal Government must ensure that those func-
tions that are inherently governmental in nature are
                                                               the absence of authority conferred by statute
performed by executive agencies and are not                    to procure without advertising or without re-
outsourced.                                                    gard to said section 5 of this title.
  I hereby direct the Director of the Office of Manage-      (b) Small business concerns; share of business
ment and Budget (OMB), in collaboration with the Sec-
retary of Defense, the Administrator of the National           It is the declared policy of the Congress that
Aeronautics and Space Administration, the Adminis-           a fair proportion of the total purchases and con-
trator of General Services, the Director of the Office of    tracts for property and services for the Govern-
Page 57                                   TITLE 41—PUBLIC CONTRACTS                                                    § 252

ment shall be placed with small business con-                    erty in other than Government-owned cargo contain-
cerns.                                                           ers.
                                                                    1983—Subsec. (c)(3). Pub. L. 98–191 substituted
(c) Authorization of erection, repair, or furnish-               ‘‘$25,000’’ for ‘‘$10,000’’.
    ing of public buildings or improvements; con-                   1974—Subsec. (c)(3). Pub. L. 93–356 substituted
    tracts for construction or repair of buildings,              ‘‘$10,000’’ for ‘‘$2,500’’.
    roads, sidewalks, sewers, mains, etc.; Federal                  1968—Subsec. (f). Pub. L. 90–268 added subsec. (f).
    Highway Lands Program                                           1965—Subsec. (a). Pub. L. 89–343, § 1, substituted provi-
                                                                 sions requiring executive agencies to make purchases
  (1) This subchapter does not (A) authorize the                 and contracts for property and services in accordance
erection, repair, or furnishing of any public                    with the provisions of this subchapter and implement-
building or public improvement, but such au-                     ing regulations of the Administrator, exempting the
thorization shall be required in the same man-                   Department of Defense, the Coast Guard, and the Na-
ner as heretofore, or (B) permit any contract for                tional Aeronautics and Space Administration from the
the construction or repair of buildings, roads,                  application of this subchapter, and making this sub-
sidewalks, sewers, mains, or similar items using                 chapter inapplicable when it is so made by law, for pro-
                                                                 visions which made this subchapter applicable to pur-
procedures other than sealed-bid procedures
                                                                 chases and contracts for property or services made by
under section 253(a)(2)(A) of this title, if the con-            the General Services Administration for the use of such
ditions set forth in section 253(a)(2)(A) of this                agency or otherwise, or by any other executive agency
title apply or the contract is to be performed                   (except the departments and activities specified in sec-
outside the United States.                                       tion 2303(a) of Title 10) in conformity with authority to
  (2) Section 253(a)(2)(A) of this title does not re-            apply such provisions delegated by the Administrator
quire the use of sealed-bid procedures in cases in               in his discretion.
which section 204(e) of title 23 applies.                           Subsec. (c)(11). Pub. L. 89–348 struck out proviso
                                                                 which required a semiannual report to be furnished to
(June 30, 1949, ch. 288, title III, § 302, 63 Stat. 393;         the Congress setting forth the name of each contractor
July 12, 1952, ch. 703, § 1(m), 66 Stat. 594; Pub. L.            with whom a contract has been entered into pursuant
85–800, §§ 1–3, Aug. 28, 1958, 72 Stat. 966; Pub. L.             to this paragraph, the amount of the contract, and,
89–343, §§ 1, 2, Nov. 8, 1965, 79 Stat. 1303; Pub. L.            with due consideration given to the national security,
                                                                 a description of the work required to be performed
89–348, § 1(2), Nov. 8, 1965, 79 Stat. 1310; Pub. L.
                                                                 thereunder.
90–268, § 4, Mar. 16, 1968, 82 Stat. 50; Pub. L.                    Subsec. (c)(15). Pub. L. 89–343, § 2, inserted ‘‘except
93–356, § 3, July 25, 1974, 88 Stat. 390; Pub. L.                that section 254 of this title shall apply to purchases
98–191, § 9(a)(1), Dec. 1, 1983, 97 Stat. 1331; Pub. L.          and contracts made without advertising under this
98–369, div. B, title VII, § 2714(a)(1), July 18, 1984,          paragraph’’.
98 Stat. 1184.)                                                     1958—Subsec. (a). Pub. L. 85–800, § 1, among other
                                                                 changes, substituted ‘‘or’’ for ‘‘and’’ in par. (1), sub-
                       CODIFICATION                              stituted provisions excepting application of subchapter
  ‘‘Section 113(e) of title 40’’ substituted in subsec.          to departments and activities in section 2303(a) of title
(a)(2) for ‘‘section 602(d) of this Act’’, meaning section       10 for provisions which excepted agencies named in sec-
602(d) of the Federal Property and Administrative Serv-          tion 151(a) of this title, substituted provisions applying
ices Act of 1949, on authority of Pub. L. 107–217, § 5(c),       subchapter to agencies in conformity with authority
Aug. 21, 2002, 116 Stat. 1303, the first section of which        delegated by Administrator in his discretion for provi-
enacted Title 40, Public Buildings, Property, and                sions which applied chapter in conformity with author-
Works.                                                           ity delegated him pursuant to this subsection, and
                                                                 eliminated provisions authorizing Administrator to
                       AMENDMENTS                                delegate authority for use of two or more agencies, and
   1984—Subsec. (b). Pub. L. 98–369, § 2714(a)(1)(A), struck     other cases where delegation is advantageous to Gov-
out provisions that whenever it was proposed to make             ernment in par. (2).
a contract or purchase in excess of $10,000 by negotia-             Subsec. (c). Pub. L. 85–800, § 2, substituted in par. (3)
tion and without advertising, pursuant to the authority          ‘‘$2,500’’ for ‘‘$1,000’’, struck out proviso barring agen-
of subsec. (c)(7) of this section, suitable advance public-      cies other than General Services Administration from
ity, as determined by the agency head with due regard            making purchases in excess of $500 except under au-
to the type of property involved and other relevant              thority to procure for two or more agencies, added par.
considerations, had to be given for a period of at least         (9), and renumbered former pars. (9) to (14) as pars. (10)
fifteen days, wherever practicable, as determined by             to (15).
the agency head.                                                    Subsec. (e). Pub. L. 85–800, § 3, substituted ‘‘(10) to
   Subsec. (c)(1). Pub. L. 98–369, § 2714(a)(1)(B), redesig-     (12), or (14)’’ for ‘‘(9) to (11), or (13)’’.
nated subsec. (e) as (c)(1), substituted reference to this          1952—Subsecs. (a) to (c). Act July 12, 1952, substituted
subchapter for reference to this section in provisions           ‘‘property’’ for ‘‘supplies’’ wherever appearing.
preceding subpar. (A), in subpar. (B), substituted provi-                 EFFECTIVE DATE OF 1984 AMENDMENT
sions relating to contracts using procedures other than
sealed-bid procedures under section 253(a)(2)(A) of this           Amendment by Pub. L. 98–369 applicable with respect
title for provisions relating to contracts negotiated            to any solicitation for bids or proposals issued after
without advertising as required by section 253 of this           Mar. 31, 1985, see section 2751 of Pub. L. 98–369, set out
title. Former subsec. (c), which related to conditions           as a note under section 251 of this title.
for negotiated purchases and contracts for property,                                  EFFECTIVE DATE
was struck out.
   Subsec. (c)(2). Pub. L. 98–369, § 2714(a)(1)(B), added par.     Section effective July 1, 1949, see section 605, for-
(2).                                                             merly section 505, of act June 30, 1949, ch. 288, 63 Stat.
   Subsec. (d). Pub. L. 98–369, § 2714(a)(1)(B), struck out      403; renumbered by act Sept. 5, 1950, ch. 849, § 6(a), (b),
subsec. (d) which related to bids in violation of the            64 Stat. 583.
antitrust laws.
                                                                                  TRANSFER OF FUNCTIONS
   Subsec. (e). Pub. L. 98–369, § 2714(a)(1)(B), redesignated
subsec. (e) as (c)(1).                                             For transfer of authorities, functions, personnel, and
   Subsec. (f). Pub. L. 98–369, § 2714(a)(1)(B), struck out      assets of the Coast Guard, including the authorities
subsec. (f) which related to specification of container          and functions of the Secretary of Transportation relat-
size in contracts for the carriage of Government prop-           ing thereto, to the Department of Homeland Security,
§ 252                                   TITLE 41—PUBLIC CONTRACTS                                               Page 58

and for treatment of related references, see sections          products or components manufactured or derived there-
468(b), 551(d), 552(d), and 557 of Title 6, Domestic Secu-     from or impacted thereby, and such shortages result in
rity, and the Department of Homeland Security Reor-            a delay in the performance of a contract, the head of
ganization Plan of November 25, 2002, as modified, set         the agency, or his designee, shall provide by modifica-
out as a note under section 542 of Title 6.                    tion to the contract for an appropriate extension of the
                                                               contract delivery date or period of performance.
 EMERGENCY RELIEF FOR SMALL BUSINESS CONCERNS                    ‘‘(d) A small business concern requesting relief under
         WITH GOVERNMENT CONTRACTS                             subsection (a) shall support that request with the fol-
 Pub. L. 94–190, Dec. 31, 1975, 89 Stat. 1095, provided:       lowing documentation and certification:
                                                                    ‘‘(1) a brief description of the contract, indicating
                      ‘‘SHORT TITLE                              the date of execution and of any amendment thereto,
                                                                 the items being procured, the price and delivery
  ‘‘SECTION 1. This Act may be cited as the ‘Small Busi-         schedule, and any revision thereof, and any other spe-
ness Emergency Relief Act’.                                      cial contractual provision as may be relevant to the
                         ‘‘POLICY                                request;
                                                                    ‘‘(2) a history of performance indicating when work
  ‘‘SEC. 2. It is the policy of Congress to provide relief       under the contract or commitment was begun, the
to small business concerns which have fixed-price Gov-           progress made as of the date of the application, an
ernment contracts in cases where such concerns have              exact statement of the contractor’s remaining obliga-
suffered or can be expected to suffer serious financial          tions, and the contractor’s expectations regarding
loss because of significant and unavoidable difficulties         completion thereof;
during performance because of the energy crisis or                  ‘‘(3) a statement of the factors which have caused
rapid and unexpected escalations of contract costs.              the loss under the contract;
                                                                    ‘‘(4) a statement as to the course of events antici-
                      ‘‘DEFINITIONS                              pated if the request is denied;
 ‘‘SEC. 3. As used in this Act—                                     ‘‘(5) a statement of payments received, payments
   ‘‘(1) the term ‘executive agency’ means an execu-             due and payments yet to be received or to become
 tive department, a military department, and an inde-            due, including advance and progress payments, and
                                                                 amounts withheld by the Government, and informa-
 pendent establishment within the meaning of sec-
                                                                 tion as to other obligations of the Government, if
 tions 101, 102, and 104(1) respectively, of title 5, United
                                                                 any, which are yet to be performed under the con-
 States Code, and also a wholly owned Government
                                                                 tract;
 corporation within the meaning of section 101 of the               ‘‘(6) a statement and evidence of the contractor’s
 Government Corporation Control Act [section 9101(3)             original breakdown of estimated costs, including con-
 of Title 31, Money and Finance]; and                            tingency allowances and profit;
   ‘‘(2) the term ‘small business concern’ means any                ‘‘(7) a statement and evidence of the contractor’s
 concern which falls under the size limitations of the           present estimate of total costs under the contract if
 ‘Small Business Administrator’s Definitions of Small            enabled to complete, broken down between costs ac-
 Business for Government Procurement’.                           crued to date of request, and runout costs, and as be-
                       ‘‘AUTHORITY                               tween costs for which the contractor has made pay-
                                                                 ment and those for which he is indebted at the time
  ‘‘SEC. 4. (a) Pursuant to an application by a small            of the request;
business concern, the head of any executive agency                  ‘‘(8) a statement and evidence of the contractor’s
may terminate for the convenience of the Government              estimate of the final price of the contract, giving ef-
any fixed-price contract between that agency and such            fect to all escalation, changes, extras, and other com-
small business concern, upon a finding that—                     parable factors known or contemplated by the con-
     ‘‘(1) during the performance of the contract, the           tractor;
  concern has suffered or can be expected to suffer seri-           ‘‘(9) a statement of any claims known or con-
  ous financial loss due to significant unanticipated            templated by the contractor against the Government
  cost increases directly affecting the cost of contract         involving the contract in question, other than those
  compliance; and                                                referred to under (8) above;
     ‘‘(2) the conditions which have caused or are caus-            ‘‘(10) an estimate of the contractor’s total profit or
  ing such cost increases were, or are being, experi-            loss under the contract if required to complete at the
  enced generally by other small business concerns in            original contract price;
                                                                    ‘‘(11) an estimate of the total profits from other
  the market at the same time and are not caused by
                                                                 Government business, and all other sources, during
  negligence, underbidding, or other special manage-
                                                                 the period from the date of the first contract involved
  ment factors peculiar to that small business concern.
                                                                 to the latest estimated date of completion of any
  ‘‘(b) Upon application under subsection (a) by a small
                                                                 other contracts involved;
business concern to terminate a fixed-price contract                ‘‘(12) balance sheets, certified by a certified public
between an executive agency and such small business              accountant, as of the end of the contractor’s fiscal
concern, the head of the executive agency may modify             year first preceding the date of the first contract, as
the terms of the contract in lieu of termination for the         of the end of each subsequent fiscal year, and as of
convenience of the Government only if he finds after             the date of the request together with income state-
review of the application that—                                  ments for annual periods subsequent to the date of
     ‘‘(1)(a) the agency would reprocure the supplies or         the first balance sheet; and
  services in the event that the contract was termi-                ‘‘(13) a list of all salaries, bonuses, and all other
  nated for the convenience of the Government; and               forms of compensation of the principal officers or
     ‘‘(b) the cost of terminating the contract for the          partners and of all dividends and other withdrawals,
  convenience of the Government plus the cost of re-             and all payments to stockholders in any form since
  procurement would exceed the amount of the con-                the date of the first contract involved.
  tract as modified; and
     ‘‘(2) Any such modification shall be made in compli-                            ‘‘DELEGATION
  ance with cost comparison and compensation guide-              ‘‘SEC. 5. The head of each executive agency shall dele-
  lines to be issued by the Administrator of the Office        gate authority conferred by this Act, to the extent
  of Federal Procurement Policy. Such cost compari-            practicable, to an appropriate level that will permit
  son and compensation guidelines shall be promul-             the expeditious processing of applications under this
  gated by the Administrator not later than 10 days            Act and to insure the uniformity of its application.
  after enactment of this Act [Dec. 31, 1975].
  ‘‘(c) If a small business concern in performance of a                              ‘‘LIMITATIONS
fixed-price Government contract experiences or has ex-           ‘‘SEC. 6. (a) The authority prescribed in section 4(a)
perienced shortages of energy, petroleum products, or          shall apply only to contracts which have not been com-
Page 59                                 TITLE 41—PUBLIC CONTRACTS                                                    § 253

pletely performed or otherwise terminated and which             (2) In implementing the electronic commerce
were entered into during the period from August 15,           capability pursuant to paragraph (1), the head of
1971, through October 31, 1974.                               an executive agency shall consult with the Ad-
  ‘‘(b) The authority conferred by section 4(a) of this
Act shall terminate September 30, 1976.’’                     ministrator for Federal Procurement Policy.
                                                              (b) Designation of agency official
  NON-APPLICABILITY OF NATIONAL EMERGENCIES ACT
  The provisions of the National Emergencies Act (Pub.
                                                                The head of each executive agency shall des-
L. 94–412, Sept. 14, 1976, 90 Stat. 1255) not applicable to   ignate a program manager to implement the
the powers and authorities conferred by this section          electronic commerce capability for that agency.
and actions taken hereunder, see section 1651 of Title        The program manager shall report directly to an
50, War and National Defense.                                 official at a level not lower than the senior pro-
               EXECUTIVE ORDER NO. 10936                      curement executive designated for the executive
                                                              agency under section 414(3) 1 of this title.
  Ex. Ord. No. 10936, Apr. 24, 1961, 26 F.R. 3555, which
provided for the reporting and investigation of iden-         (June 30, 1949, ch. 288, title III, § 302C, as added
tical bids in connection with the procurement of goods        Pub. L. 103–355, title IX, § 9003, Oct. 13, 1994, 108
or services, was revoked by Ex. Ord. No. 12430, July 6,       Stat. 3403; amended Pub. L. 105–85, div. A, title
1983, 48 F.R. 31371.                                          VIII, § 850(f)(4)(A), Nov. 18, 1997, 111 Stat. 1850.)
                       DEFINITIONS
                                                                                   REFERENCES IN TEXT
  The definitions in section 102 of Title 40, Public
Buildings, Property, and Works, apply to this sub-               Section 414 of this title, referred to in subsec. (b), was
chapter.                                                      amended generally by Pub. L. 108–136, div. A, title XIV,
                                                              § 1421(a)(1), Nov. 24, 2003, 117 Stat. 1666, and, as so
§ 252a. Simplified acquisition threshold                      amended, no longer contains a par. (3). See section
                                                              414(c)(1) of this title.
(a) Simplified acquisition threshold
                                                                                        AMENDMENTS
  For purposes of acquisitions by executive
agencies, the simplified acquisition threshold is               1997—Pub. L. 105–85 amended section catchline and
as specified in section 403(11) of this title.                text generally. Prior to amendment, text read as fol-
                                                              lows:
(b) Inapplicable laws                                           ‘‘(a) IMPLEMENTATION OF FACNET CAPABILITY.—(1)
  No law properly listed in the Federal Acquisi-              The head of each executive agency shall implement the
tion Regulation pursuant to section 429 of this               Federal acquisition computer network (‘FACNET’) ca-
title shall apply to or with respect to a contract            pability required by section 426 of this title.
or subcontract that is not greater than the sim-                ‘‘(2) In implementing the FACNET capability pursu-
plified acquisition threshold.                                ant to paragraph (1), the head of an executive agency
                                                              shall consult with the Administrator for Federal Pro-
(June 30, 1949, ch. 288, title III, § 302A, as added          curement Policy.
and amended Pub. L. 103–355, title IV, §§ 4003,                 ‘‘(b) DESIGNATION OF AGENCY OFFICIAL.—The head of
4103(a), Oct. 13, 1994, 108 Stat. 3338, 3341.)                each executive agency shall designate a program man-
                                                              ager to have responsibility for implementation of
                      AMENDMENTS                              FACNET capability for that agency and otherwise to
  1994—Subsec. (b). Pub. L. 103–355, § 4103(a), added sub-    implement this section. Such program manager shall
sec. (b).                                                     report directly to the senior procurement executive
                                                              designated for the executive agency under section 414(3)
                    EFFECTIVE DATE                            of this title.’’
  For effective date and applicability of section, see
                                                                          EFFECTIVE DATE OF 1997 AMENDMENT
section 10001 of Pub. L. 103–355, set out as an Effective
Date of 1994 Amendment note under section 251 of this           Amendment by Pub. L. 105–85 effective 180 days after
title.                                                        Nov. 18, 1997, see section 850(g) of Pub. L. 105–85, set out
                                                              as a note under section 2302c of Title 10, Armed Forces.
§ 252b. Implementation of simplified acquisition
    procedures                                                                        EFFECTIVE DATE

  The simplified acquisition procedures con-                    For effective date and applicability of section, see
                                                              section 10001 of Pub. L. 103–355, set out as an Effective
tained in the Federal Acquisition Regulation                  Date of 1994 Amendment note under section 251 of this
pursuant to section 427 of this title shall apply             title.
in executive agencies as provided in such sec-
tion.                                                         § 253. Competition requirements
(June 30, 1949, ch. 288, title III, § 302B, as added          (a) Procurement through full and open competi-
Pub. L. 103–355, title IV, § 4203(b), Oct. 13, 1994,              tion; competitive procedures
108 Stat. 3346.)                                                (1) Except as provided in subsections (b), (c),
                    EFFECTIVE DATE                            and (g) of this section and except in the case of
  For effective date and applicability of section, see        procurement procedures otherwise expressly au-
section 10001 of Pub. L. 103–355, set out as an Effective     thorized by statute, an executive agency in con-
Date of 1994 Amendment note under section 251 of this         ducting a procurement for property or services—
title.                                                            (A) shall obtain full and open competition
                                                                through the use of competitive procedures in
§ 252c. Implementation of electronic commerce
                                                                accordance with the requirements of this sub-
    capability
                                                                chapter and the Federal Acquisition Regula-
(a) Implementation of electronic commerce capa-                 tion; and
     bility                                                       (B) shall use the competitive procedure or
  (1) The head of each executive agency shall                   combination of competitive procedures that is
implement the electronic commerce capability
required by section 426 of this title.                         1 See   References in Text note below.
§ 253                              TITLE 41—PUBLIC CONTRACTS                                      Page 60

  best suited under the circumstances of the               (1) the property or services needed by the ex-
  procurement.                                           ecutive agency are available from only one re-
  (2) In determining the competitive procedures          sponsible source and no other type of property
appropriate under the circumstance, an execu-            or services will satisfy the needs of the execu-
tive agency—                                             tive agency;
    (A) shall solicit sealed bids if—                      (2) the executive agency’s need for the prop-
       (i) time permits the solicitation, submis-        erty or services is of such an unusual and com-
    sion, and evaluation of sealed bids;                 pelling urgency that the Government would be
       (ii) the award will be made on the basis of       seriously injured unless the executive agency
    price and other price-related factors;               is permitted to limit the number of sources
       (iii) it is not necessary to conduct discus-      from which it solicits bids or proposals;
    sions with the responding sources about                (3) it is necessary to award the contract to a
    their bids; and                                      particular source or sources in order (A) to
       (iv) there is a reasonable expectation of re-     maintain a facility, producer, manufacturer,
    ceiving more than one sealed bid; and                or other supplier available for furnishing prop-
                                                         erty or services in case of a national emer-
    (B) shall request competitive proposals if           gency or to achieve industrial mobilization,
  sealed bids are not appropriate under clause           (B) to establish or maintain an essential engi-
  (A).                                                   neering, research, or development capability
(b) Exclusion of particular source; restriction of       to be provided by an educational or other non-
    solicitation to small business concerns              profit institution or a federally funded re-
  (1) An executive agency may provide for the            search and development center, or (C) to pro-
procurement of property or services covered by           cure the services of an expert for use, in any
this section using competitive procedures but            litigation or dispute (including any reasonably
excluding a particular source in order to estab-         foreseeable litigation or dispute) involving the
lish or maintain any alternative source or               Federal Government, in any trial, hearing, or
sources of supply for that property or service if        proceeding before any court, administrative
the agency head determines that to do so—                tribunal, or agency, or to procure the services
    (A) would increase or maintain competition           of an expert or neutral for use in any part of
  and would likely result in reduced overall             an alternative dispute resolution or nego-
  costs for such procurement, or for any antici-         tiated rulemaking process, whether or not the
  pated procurement, of such property or serv-           expert is expected to testify;
  ices;                                                    (4) the terms of an international agreement
    (B) would be in the interest of national de-         or treaty between the United States Govern-
  fense in having a facility (or a producer, man-        ment and a foreign government or inter-
  ufacturer, or other supplier) available for fur-       national organization, or the written direc-
  nishing the property or service in case of a na-       tions of a foreign government reimbursing the
  tional emergency or industrial mobilization;           executive agency for the cost of the procure-
    (C) would be in the interest of national de-         ment of the property or services for such gov-
  fense in establishing or maintaining an essen-         ernment, have the effect of requiring the use
  tial engineering, research, or development ca-         of procedures other than competitive proce-
  pability to be provided by an educational or           dures;
  other nonprofit institution or a federally fund-         (5) subject to subsection (h) 1 of this section,
  ed research and development center;                    a statute expressly authorizes or requires that
    (D) would ensure the continuous availability         the procurement be made through another ex-
  of a reliable source of supply of such property        ecutive agency or from a specified source, or
  or service;                                            the agency’s need is for a brand-name com-
    (E) would satisfy projected needs for such           mercial item for authorized resale;
  property or service determined on the basis of           (6) the disclosure of the executive agency’s
  a history of high demand for the property or           needs would compromise the national security
  service; or                                            unless the agency is permitted to limit the
    (F) in the case of medical supplies, safety          number of sources from which it solicits bids
  supplies, or emergency supplies, would satisfy         or proposals; or
  a critical need for such supplies.                       (7) the head of the executive agency—
  (2) An executive agency may provide for the                 (A) determines that it is necessary in the
procurement of property or services covered by             public interest to use procedures other than
this section using competitive procedures, but             competitive procedures in the particular
excluding other than small business concerns in            procurement concerned, and
furtherance of sections 638 and 644 of title 15.              (B) notifies the Congress in writing of such
  (3) A contract awarded pursuant to the com-              determination not less than 30 days before
petitive procedures referred to in paragraphs (1)          the award of the contract.
and (2) shall not be subject to the justification      (d) Property or services deemed available from
and approval required by subsection (f)(1) of this         only one source; nondelegable authority
section.                                                 (1) For the purposes of applying subsection
  (4) A determination under paragraph (1) may          (c)(1) of this section—
not be made for a class of purchases or con-               (A) in the case of a contract for property or
tracts.                                                  services to be awarded on the basis of accept-
(c) Use of noncompetitive procedures                     ance of an unsolicited research proposal, the
  An executive agency may use procedures other
than competitive procedures only when—                  1 See   References in Text note below.
Page 61                            TITLE 41—PUBLIC CONTRACTS                                           § 253

  property or services shall be considered to be           than $50,000,000), by the head of the procur-
  available from only one source if the source             ing activity or a delegate who, if a member
  has submitted an unsolicited research pro-               of the armed forces, is a general or flag offi-
  posal that demonstrates a unique and innova-             cer or, if a civilian, is serving in a position
  tive concept the substance of which is not               in grade GS–16 or above under the General
  otherwise available to the United States and             Schedule (or in a comparable or higher posi-
  does not resemble the substance of a pending             tion under another schedule); or
  competitive procurement; and                               (iii) in the case of a contract for an
    (B) in the case of a follow-on contract for            amount exceeding $50,000,000, by the senior
  the continued development or production of a             procurement executive of the agency des-
  major system or highly specialized equipment             ignated pursuant to section 414(3) 1 of this
  when it is likely that award to a source other           title (without further delegation); and
  than the original source would result in (i)             (C) any required notice has been published
  substantial duplication of cost to the Govern-         with respect to such contract pursuant to sec-
  ment which is not expected to be recovered             tion 416 of this title and all bids or proposals
  through competition, or (ii) unacceptable              received in response to such notice have been
  delays in fulfilling the executive agency’s            considered by such executive agency.
  needs, such property may be deemed to be
  available only from the original source and            (2) In the case of a procurement permitted by
  may be procured through procedures other             subsection (c)(2), the justification and approval
  than competitive procedures.                         required by paragraph (1) may be made after the
                                                       contract is awarded. The justification and ap-
  (2) The authority of the head of an executive        proval required by paragraph (1) is not re-
agency under subsection (c)(7) of this section         quired—
may not be delegated.                                      (A) when a statute expressly requires that
  (3)(A) The contract period of a contract de-           the procurement be made from a specified
scribed in subparagraph (B) that is entered into         source;
by an executive agency pursuant to the author-             (B) when the agency’s need is for a brand-
ity provided under subsection (c)(2)—                    name commercial item for authorized resale;
    (i) may not exceed the time necessary—                 (C) in the case of a procurement permitted
       (I) to meet the unusual and compelling re-        by subsection (c)(7) of this section; or
    quirements of the work to be performed                 (D) in the case of a procurement conducted
    under the contract; and                              under (i) the Javits-Wagner-O’Day Act (41
       (II) for the executive agency to enter into       U.S.C. 46 et seq.), or (ii) section 637(a) of title
    another contract for the required goods or           15.
    services through the use of competitive pro-
                                                         (3) The justification required by paragraph
    cedures; and
                                                       (1)(A) shall include—
    (ii) may not exceed one year unless the head           (A) a description of the agency’s needs;
  of the executive agency entering into such               (B) an identification of the statutory excep-
  contract determines that exceptional circum-           tion from the requirement to use competitive
  stances apply.                                         procedures and a demonstration, based on the
                                                         proposed contractor’s qualifications or the na-
   (B) This paragraph applies to any contract in
                                                         ture of the procurement, of the reasons for
an amount greater than the simplified acquisi-
                                                         using that exception;
tion threshold.                                            (C) a determination that the anticipated
(e) Offer requests to potential sources                  cost will be fair and reasonable;
   An executive agency using procedures other              (D) a description of the market survey con-
than competitive procedures to procure property          ducted or a statement of the reasons a market
or services by reason of the application of sub-         survey was not conducted;
section (c)(2) or (c)(6) of this section shall re-         (E) a listing of the sources, if any, that ex-
quest offers from as many potential sources as is        pressed in writing an interest in the procure-
practicable under the circumstances.                     ment; and
                                                           (F) a statement of the actions, if any, the
(f) Justification for use of noncompetitive proce-
                                                         agency may take to remove or overcome a
     dures
                                                         barrier to competition before a subsequent
   (1) Except as provided in paragraph (2), an ex-       procurement for such needs.
ecutive agency may not award a contract using
procedures other than competitive procedures             (4) In no case may an executive agency—
                                                           (A) enter into a contract for property or
unless—
     (A) the contracting officer for the contract        services using procedures other than competi-
   justifies the use of such procedures in writing       tive procedures on the basis of the lack of ad-
   and certifies the accuracy and completeness of        vance planning or concerns related to the
   the justification;                                    amount of funds available to the agency for
     (B) the justification is approved—                  procurement functions; or
        (i) in the case of a contract for an amount        (B) procure property or services from an-
     exceeding $500,000 (but equal to or less than       other executive agency unless such other exec-
     $10,000,000), by the competition advocate for       utive agency complies fully with the require-
     the procuring activity (without further dele-       ments of this subchapter in its procurement of
     gation) or by an official referred to in clause     such property or services.
     (ii) or (iii); and                                The restriction set out in clause (B) is in addi-
        (ii) in the case of a contract for an amount   tion to, and not in lieu of, any other restriction
     exceeding $10,000,000 (but equal to or less       provided by law.
§ 253                              TITLE 41—PUBLIC CONTRACTS                                                Page 62

(g) Simplified procedures for small purchases          formed by the specified entity under a preceding
  (1) In order to promote efficiency and economy       contract.
in contracting and to avoid unnecessary burdens          (4) This subsection shall not apply with re-
for agencies and contractors, the Federal Acqui-       spect to any contract that calls upon the Na-
                                                       tional Academy of Sciences to investigate, ex-
sition Regulation shall provide for—
                                                       amine, or experiment upon any subject of
    (A) special simplified procedures for pur-
                                                       science or art of significance to an executive
  chases of property and services for amounts
                                                       agency and to report on such matters to the
  not greater than the simplified acquisition
                                                       Congress or any agency of the Federal Govern-
  threshold; and
                                                       ment.
    (B) special simplified procedures for pur-           (j)(1)(A) Except as provided in subparagraph
  chases of property and services for amounts          (B), in the case of a procurement permitted by
  greater than the simplified acquisition thresh-      subsection (c), the head of an executive agency
  old but not greater than $5,000,000 with respect     shall make publicly available, within 14 days
  to which the contracting officer reasonably          after the award of the contract, the documents
  expects, based on the nature of the property or      containing the justification and approval re-
  services sought and on market research, that         quired by subsection (f)(1) with respect to the
  offers will include only commercial items.           procurement.
   (2)(A) The Administrator of General Services          (B) In the case of a procurement permitted by
shall prescribe regulations that provide special       subsection (c)(2), subparagraph (A) shall be ap-
simplified procedures for acquisitions of lease-       plied by substituting ‘‘30 days’’ for ‘‘14 days’’.
hold interests in real property at rental rates          (2) The documents shall be made available on
that do not exceed the simplified acquisition          the website of the agency and through a govern-
threshold.                                             ment-wide website selected by the Adminis-
   (B) For purposes of subparagraph (A), the rent-     trator for Federal Procurement Policy.
al rate or rates under a multiyear lease do not          (3) This subsection does not require the public
exceed the simplified acquisition threshold if         availability of information that is exempt from
the average annual amount of the rent payable          public disclosure under section 552(b) of title 5.
for the period of the lease does not exceed the        (June 30, 1949, ch. 288, title III, § 303, 63 Stat. 395;
simplified acquisition threshold.                      July 12, 1952, ch. 703, § 1(m), 66 Stat. 594; Pub. L.
   (3) A proposed purchase or contract for an          90–268, § 2, Mar. 16, 1968, 82 Stat. 49; Pub. L.
amount above the simplified acquisition thresh-        98–369, div. B, title VII, § 2711(a)(1), July 18, 1984,
old may not be divided into several purchases or       98 Stat. 1175; Pub. L. 98–577, title V, § 504(a)(1),
contracts for lesser amounts in order to use the       (2), Oct. 30, 1984, 98 Stat. 3086; Pub. L. 99–145,
simplified procedures required by paragraph (1).       title IX, § 961(a)(2), title XIII, § 1304(c)(2), (3),
   (4) In using the simplified procedures, an exec-    Nov. 8, 1985, 99 Stat. 703, 742; Pub. L. 101–510, div.
utive agency shall promote competition to the          A, title VIII, § 806(c), Nov. 5, 1990, 104 Stat. 1592;
maximum extent practicable.                            Pub. L. 103–355, title I, §§ 1051–1053, 1055(a), title
   (5) An executive agency shall comply with the       IV, § 4402(a), title VII, § 7203(b)(1), Oct. 13, 1994,
Federal Acquisition Regulation provisions re-          108 Stat. 3260, 3261, 3265, 3348, 3380; Pub. L.
ferred to in section 427(f) of this title.             104–106, div. D, title XLI, §§ 4101(b), 4102(b), title
(h) Efficient implementation of requirement            XLII, § 4202(b)(1), title XLIII, § 4321(e)(2), Feb. 10,
                                                       1996, 110 Stat. 642, 643, 653, 674; Pub. L. 104–320,
   The Federal Acquisition Regulation shall en-        §§ 7(a)(2), 11(c)(2), Oct. 19, 1996, 110 Stat. 3871,
sure that the requirement to obtain full and           3873; Pub. L. 105–85, div. A, title VIII,
open competition is implemented in a manner            § 850(f)(4)(B), Nov. 18, 1997, 111 Stat. 1850; Pub. L.
that is consistent with the need to efficiently        110–181, div. A, title VIII, § 844(a), Jan. 28, 2008,
fulfill the Government’s requirements.                 122 Stat. 239; Pub. L. 110–417, [div. A], title VIII,
(i) Merit-based award of contracts                     § 862(a), Oct. 14, 2008, 122 Stat. 4546.)
   (1) It is the policy of Congress that an execu-                        REFERENCES IN TEXT
tive agency should not be required by legislation         Subsection (h) of this section, referred to in subsec.
to award a new contract to a specific non-Fed-         (c)(5), was redesignated subsec. (i) and a new subsec. (h)
eral Government entity. It is further the policy       was added by Pub. L. 104–106, div. D, title XLI, § 4101(b),
of Congress that any program, project, or tech-        Feb. 10, 1996, 110 Stat. 642.
nology identified in legislation be procured              Section 414 of this title, referred to in subsec.
                                                       (f)(1)(B)(iii), was amended generally by Pub. L. 108–136,
through merit-based selection procedures.
                                                       div. A, title XIV, § 1421(a)(1), Nov. 24, 2003, 117 Stat. 1666,
   (2) A provision of law may not be construed as      and, as so amended, no longer contains a par. (3). See
requiring a new contract to be awarded to a            section 414(c)(1) of this title.
specified non-Federal Government entity unless            The Javits-Wagner-O’Day Act, referred to in subsec.
that provision of law—                                 (f)(2)(D), is act June 25, 1938, ch. 697, 52 Stat. 1196, as
     (A) specifically refers to this subsection;       amended, which is classified to sections 46 to 48c of this
     (B) specifically identifies the particular non-   title. For complete classification of this Act to the
                                                       Code, see Tables.
   Federal Government entity involved; and
     (C) specifically states that the award to that                            AMENDMENTS
   entity is required by such provision of law in        2008—Subsec. (d)(3). Pub. L. 110–417 added par. (3).
   contravention of the policy set forth in para-        Subsec. (f)(4), (5). Pub. L. 110–181, § 844(a)(2), redesig-
   graph (1).                                          nated par. (5) as (4) and struck out former par. (4) which
                                                       read as follows: ‘‘The justification required by para-
  (3) For purposes of this subsection, a contract      graph (1)(A) and any related information shall be made
is a new contract unless the work provided for in      available for inspection by the public consistent with
the contract is a continuation of the work per-        the provisions of section 552 of title 5.’’
Page 63                                   TITLE 41—PUBLIC CONTRACTS                                                       § 253

   Subsec. (j). Pub. L. 110–181, § 844(a)(1), added subsec.         Subsec. (g)(5). Pub. L. 101–510, § 806(c)(3), added par.
(j).                                                              (5).
   1997—Subsec. (g)(5). Pub. L. 105–85 substituted ‘‘sec-           1985—Subsec. (f)(1)(C). Pub. L. 99–145, § 1304(c)(2), sub-
tion 427(f)’’ for ‘‘section 427(g)’’.                             stituted ‘‘any’’ for ‘‘Any’’.
   1996—Subsec. (c)(3)(C). Pub. L. 104–320 substituted              Subsec. (f)(2). Pub. L. 99–145, § 961(a)(2), added subpars.
‘‘agency, or to procure the services of an expert or neu-         (A) and (B), designated existing provision as subpar.
tral for use’’ for ‘‘agency, or’’ and inserted ‘‘or nego-         (C), and redesignated as subpar. (D), cls. (i) and (ii) pro-
tiated rulemaking’’ after ‘‘alternative dispute resolu-           visions previously designated subpars. (A) and (B), sub-
tion’’.                                                           stituting in cl. (ii) ‘‘section 637(a) of title 15’’ for ‘‘the
   Subsec. (f)(1)(B)(i). Pub. L. 104–106, § 4102(b)(1), sub-      authority of section 637(a) of title 15’’.
stituted ‘‘$500,000 (but equal to or less than $10,000,000)’’       Subsec.(g)(1). Pub. L. 99–145, § 1304(c)(3), inserted a
for ‘‘$100,000 (but equal to or less than $1,000,000)’’ and       comma after ‘‘1984’’.
‘‘(ii) or (iii); and’’ for ‘‘(ii), (iii), or (iv);’’.               1984—Subsec. (a). Pub. L. 98–369 substituted provi-
   Subsec. (f)(1)(B)(ii). Pub. L. 104–106, § 4102(b)(2), sub-     sions requiring procurement through full and open
stituted ‘‘$10,000,000 (but equal to or less than                 competition for provisions requiring advertisement for
$50,000,000)’’ for ‘‘$1,000,000 (but equal to or less than        bids to be made a sufficient time prior to the purchase
$10,000,000)’’ and ‘‘civilian,’’ for ‘‘civilian;’’.               or contract and to permit full and free competition,
   Subsec. (f)(1)(B)(iii). Pub. L. 104–106, § 4102(b)(3), sub-    and struck out provision that no advertisement or bid
stituted ‘‘$50,000,000’’ for ‘‘$10,000,000’’.                     invitation for carriage of Government property in other
   Subsec. (f)(2)(D). Pub. L. 104–106, § 4321(e)(2), sub-         than Government-owned cargo containers could specify
stituted ‘‘the Javits-Wagner-O’Day Act (41 U.S.C. 46 et           carriage in cargo containers of any stated length,
seq.),’’ for ‘‘the Act of June 25, 1938 (41 U.S.C. 46 et seq.),   height, or width.
popularly referred to as the Wagner-O’Day Act,’’.                   Subsec. (b). Pub. L. 98–369 substituted provisions re-
   Subsec. (g)(1). Pub. L. 104–106, § 4202(b)(1)(A), sub-         garding the exclusion of a particular source of property
stituted ‘‘shall provided for—’’ for ‘‘shall provide for          or services from competitive procedures for provisions
special simplified procedures for purchases of property           regarding the opening of bids and procedures for
and services for amounts not greater than the sim-                awards, and inserted provision that in fulfilling the
plified acquisition threshold.’’ and added subpars. (A)           statutory requirements relating to small business con-
and (B).                                                          cerns and socially and economically disadvantaged
   Subsec. (g)(5). Pub. L. 104–106, § 4202(b)(1)(B), added        small business concerns, an executive agency shall use
par. (5).                                                         competitive procedures but may restrict a solicitation
   Subsecs. (h), (i). Pub. L. 104–106, § 4101(b), added sub-      to allow only such business concerns to compete.
sec. (h) and redesignated former subsec. (h) as (i).                Subsec. (b)(2). Pub. L. 98–577, § 504(a)(1), substituted
   1994—Subsec. (a)(1)(A). Pub. L. 103–355, § 1051(1), sub-       provisions to the effect that executive agencies may
stituted ‘‘Federal Acquisition Regulation’’ for ‘‘modi-           provide for procurement of property or services covered
fications to regulations promulgated pursuant to sec-             by this section using competitive procedures but ex-
tion 2752 of the Competition in Contracting Act of                cluding other than small business concerns for former
1984’’.                                                           provisions which provided that executive agencies shall
   Subsec. (b)(1)(D) to (F). Pub. L. 103–355, § 1052(a),
                                                                  use competitive procedures but may restrict a solicita-
added subpars. (D) to (F).
                                                                  tion to allow only such small business concerns to com-
   Subsec. (b)(4). Pub. L. 103–355, § 1052(b), added par. (4).
   Subsec. (c)(3). Pub. L. 103–355, § 1055(a), struck out         pete.
                                                                    Subsec. (b)(3). Pub. L. 98–577, § 504(a)(1), added par. (3).
‘‘or’’ before ‘‘(B)’’ and inserted ‘‘, or’’ and cl. (C) before
                                                                    Subsecs. (c) to (g). Pub. L. 98–369 added subsecs. (c) to
period at end.
   Subsec. (c)(5). Pub. L. 103–355, § 7203(b)(1)(A), inserted     (g).
                                                                    Subsec. (f)(2). Pub. L. 98–577, § 504(a)(2), designated the
‘‘subject to subsection (h) of this section,’’ before ‘‘a
                                                                  final sentence as subpar. (A) and added subpar. (B).
statute’’.
                                                                    1968—Subsec. (a). Pub. L. 90–268 inserted provision
   Subsec. (f)(1)(B)(i). Pub. L. 103–355, § 1053, inserted be-
                                                                  that no advertisement or invitation to bid for carriage
fore semicolon at end ‘‘or by an official referred to in
                                                                  of Government property in other than Government-
clause (ii), (iii), or (iv)’’.
   Subsec. (g)(1). Pub. L. 103–355, § 4402(a)(1)(A), sub-         owned cargo containers shall specify carriage of such
stituted ‘‘purchases of property and services for                 property in cargo containers of any stated length,
amounts not greater than the simplified acquisition               height, or width.
threshold’’ for ‘‘small purchases of property and serv-             1952—Subsec. (a). Act July 12, 1952, substituted ‘‘prop-
ices’’.                                                           erty’’ for ‘‘supplies’’.
   Pub. L. 103–355, §§ 1051(2), 4402(a)(1)(B), amended par.                 EFFECTIVE DATE OF 1997 AMENDMENT
(1) identically, substituting ‘‘Federal Acquisition Regu-
lation’’ for ‘‘regulations modified, in accordance with             Amendment by Pub. L. 105–85 effective 180 days after
section 2752 of the Competition in Contracting Act of             Nov. 18, 1997, see section 850(g) of Pub. L. 105–85, set out
1984,’’.                                                          as a note under section 2302c of Title 10, Armed Forces.
   Subsec. (g)(2). Pub. L. 103–355, § 4402(a)(2), added par.                EFFECTIVE DATE OF 1996 AMENDMENT
(2) and struck out former par. (2) which read as follows:
‘‘For the purposes of this subchapter, a small purchase             For effective date and applicability of amendment by
is a purchase or contract for an amount which does not            Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
exceed the small purchase threshold.’’                            out as a note under section 251 of this title.
   Subsec. (g)(3). Pub. L. 103–355, § 4402(a)(3), substituted               EFFECTIVE DATE OF 1994 AMENDMENT
‘‘simplified acquisition threshold’’ for ‘‘small purchase
threshold’’ and ‘‘simplified procedures’’ for ‘‘small pur-          For effective date and applicability of amendment by
chase procedures’’.                                               Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set
   Subsec. (g)(4). Pub. L. 103–355, § 4402(a)(4), substituted     out as a note under section 251 of this title.
‘‘the simplified procedures’’ for ‘‘small purchase proce-                   EFFECTIVE DATE OF 1985 AMENDMENT
dures’’.
   Subsec. (g)(5). Pub. L. 103–355, § 4402(a)(5), struck out        Amendment by section 961(a)(2) of Pub. L. 99–145 ef-
par. (5) which read as follows: ‘‘In this subsection, the         fective as if included in enactment of Competition in
term ‘small purchase threshold’ has the meaning given             Contracting Act of 1984, Pub. L. 98–369, div. B, title VII,
such term in section 403(11) of this title.’’                     see section 961(e) of Pub. L. 99–145, set out as a note
   Subsec. (h). Pub. L. 103–355, § 7203(b)(1)(B), added sub-      under section 2304 of Title 10, Armed Forces.
sec. (h).
                                                                            EFFECTIVE DATE OF 1984 AMENDMENT
   1990—Subsec. (g)(2), (3). Pub. L. 101–510, § 806(c)(1), (2),
substituted ‘‘the small purchase threshold’’ for                    Amendment by Pub. L. 98–369 applicable with respect
‘‘$25,000’’.                                                      to any solicitation for bids or proposals issued after
§ 253a                                   TITLE 41—PUBLIC CONTRACTS                                               Page 64

Mar. 31, 1985, see section 2751 of Pub. L. 98–369, set out             ‘‘(A) The Committee on Governmental Affairs of
as a note under section 251 of this title.                           the Senate and the Committee on Government Re-
                                                                     form [now Committee on Oversight and Govern-
                     EFFECTIVE DATE                                  ment Reform] of the House of Representatives.
  Section effective July 1, 1949, see section 605, for-                ‘‘(B) The Committees on Appropriations of the
merly section 505, of act June 30, 1949, ch. 288, 63 Stat.           Senate and House of Representatives.
403; renumbered by act Sept. 5, 1950, ch. 849, § 6(a), (b),            ‘‘(C) Each committee that the head of the execu-
64 Stat. 583.                                                        tive agency determines has legislative jurisdiction
                                                                     for the operations of such department or agency to
TERMINATION OF AUTHORITY TO ISSUE SOLICITATIONS                      which the information relates.
 FOR PURCHASES OF COMMERCIAL ITEMS IN EXCESS OF                   ‘‘(c) FISCAL YEAR 2003 CONTRACTS.—This section shall
 SIMPLIFIED ACQUISITION THRESHOLD                               apply to contracts entered into on or after October 1,
  Authority to issue solicitations for purchases of com-        2002, except that, in the case of a contract entered into
mercial items in excess of simplified acquisition               before the date of the enactment of this Act [Nov. 24,
threshold pursuant to special simplified procedures au-         2003], subsection (a) shall be applied as if the contract
thorized by subsec. (g)(1) of this section to expire three      had been entered into on the date of the enactment of
years after date certain amendments by section 4202 of          this Act.
Pub. L. 104–106 take effect pursuant to section 4401(b) of        ‘‘(d) RELATIONSHIP TO OTHER DISCLOSURE LAWS.—
Pub. L. 104–106, set out as a note under section 251 of         Nothing in this section shall be construed as affecting
this title, see section 4202(e) of Pub. L. 104–106, set out     obligations to disclose United States Government in-
as a note under section 2304 of Title 10, Armed Forces.         formation under any other provision of law.
                                                                  ‘‘(e) DEFINITIONS.—In this section, the terms ‘execu-
 REFERENCES IN OTHER LAWS TO GS–16, 17, OR 18 PAY               tive agency’ and ‘full and open competition’ have the
                     RATES                                      meanings given such terms in section 4 of the Office of
  References in laws to the rates of pay for GS–16, 17,         Federal Procurement Policy Act (41 U.S.C. 403).’’
or 18, or to maximum rates of pay under the General                               SMALL BUSINESS ACT
Schedule, to be considered references to rates payable
under specified sections of Title 5, Government Organi-           Section 2711(c) of Pub. L. 98–369 provided that: ‘‘The
zation and Employees, see section 529 [title I, § 101(c)(1)]    amendments made by this section [amending this sec-
of Pub. L. 101–509, set out in a note under section 5376        tion and section 259 of this title and enacting sections
of Title 5.                                                     253a and 253b of this title] do not supersede or affect the
                                                                provisions of section 8(a) of the Small Business Act (15
PUBLIC DISCLOSURE OF NONCOMPETITIVE CONTRACTING                 U.S.C. 637(a)).’’
FOR THE RECONSTRUCTION OF INFRASTRUCTURE IN IRAQ
                                                                                       DEFINITIONS
  Pub. L. 108–136, div. A, title XIV, § 1442, Nov. 24, 2003,
117 Stat. 1674, provided that:                                    The definitions in section 102 of Title 40, Public
  ‘‘(a) DISCLOSURE REQUIRED.—                                   Buildings, Property, and Works, apply to this sub-
     ‘‘(1) PUBLICATION AND PUBLIC AVAILABILITY.—The             chapter.
  head of an executive agency of the United States that
  enters into a contract for the repair, maintenance, or        § 253a. Planning and solicitation requirements
  construction of infrastructure in Iraq without full
  and open competition shall publish in the Federal             (a) Preparation; planning; specifications in solic-
  Register or Commerce Business Daily and otherwise                 itation
  make available to the public, not later than 30 days            (1) In preparing for the procurement of prop-
  after the date on which the contract is entered into,         erty or services, an executive agency shall—
  the following information:
                                                                    (A) specify its needs and solicit bids or pro-
        ‘‘(A) The amount of the contract.
        ‘‘(B) A brief description of the scope of the con-        posals in a manner designed to achieve full
     tract.                                                       and open competition for the procurement;
        ‘‘(C) A discussion of how the executive agency              (B) use advance procurement planning and
     identified, and solicited offers from, potential con-        market research; and
     tractors to perform the contract, together with a              (C) develop specifications in such manner as
     list of the potential contractors that were issued           is necessary to obtain full and open competi-
     solicitations for the offers.                                tion with due regard to the nature of the prop-
        ‘‘(D) The justification and approval documents on
                                                                  erty or services to be acquired.
     which was based the determination to use proce-
     dures other than procedures that provide for full            (2) Each solicitation under this subchapter
     and open competition.                                      shall include specifications which—
     ‘‘(2) INAPPLICABILITY TO CONTRACTS AFTER FISCAL                (A) consistent with the provisions of this
  YEAR 2005.—Paragraph (1) does not apply to a con-
                                                                  subchapter, permit full and open competition;
  tract entered into after September 30, 2005.
  ‘‘(b) CLASSIFIED INFORMATION.—                                    (B) include restrictive provisions or condi-
     ‘‘(1) AUTHORITY TO WITHHOLD.—The head of an exec-            tions only to the extent necessary to satisfy
  utive agency may—                                               the needs of the executive agency or as au-
        ‘‘(A) withhold from publication and disclosure            thorized by law.
     under subsection (a) any document that is classified
     for restricted access in accordance with an Execu-           (3) For the purposes of paragraphs (1) and (2),
     tive order in the interest of national defense or for-     the type of specification included in a solicita-
     eign policy; and                                           tion shall depend on the nature of the needs of
        ‘‘(B) redact any part so classified that is in a doc-   the executive agency and the market available
     ument not so classified before publication and dis-        to satisfy such needs. Subject to such needs,
     closure of the document under subsection (a).              specifications may be stated in terms of—
     ‘‘(2) AVAILABILITY TO CONGRESS.—In any case in                 (A) function, so that a variety of products or
  which the head of an executive agency withholds in-
                                                                  services may qualify;
  formation under paragraph (1), the head of such exec-
  utive agency shall make available an unredacted ver-              (B) performance, including specifications of
  sion of the document containing that information to             the range of acceptable characteristics or of
  the chairman and ranking member of each of the fol-             the minimum acceptable standards; or
  lowing committees of Congress:                                    (C) design requirements.
Page 65                           TITLE 41—PUBLIC CONTRACTS                                                § 253a

(b) Contents of solicitation                          (d) Additional information in solicitation
  In addition to the specifications described in        Nothing in this section prohibits an executive
subsection (a) of this section, each solicitation     agency from—
for sealed bids or competitive proposals (other           (1) providing additional information in a so-
than for a procurement for commercial items             licitation, including numeric weights for all
using special simplified procedures or a purchase       evaluation factors and subfactors on a case-
for an amount not greater than the simplified           by-case basis; or
acquisition threshold) shall at a minimum in-             (2) stating in a solicitation that award will
clude—                                                  be made to the offeror that meets the solicita-
    (1) a statement of—                                 tion’s mandatory requirements at the lowest
      (A) all significant factors and significant       cost or price.
    subfactors which the executive agency rea-        (e) Evaluation of purchase options
    sonably expects to consider in evaluating           An executive agency, in issuing a solicitation
    sealed bids (including price) or competitive      for a contract to be awarded using sealed bid
    proposals (including cost or price, cost-relat-   procedures, may not include in such solicitation
    ed or price-related factors and subfactors,       a clause providing for the evaluation of prices
    and noncost-related or nonprice-related fac-      for options to purchase additional property or
    tors and subfactors); and                         services under the contract unless the executive
      (B) the relative importance assigned to         agency has determined that there is a reason-
    each of those factors and subfactors; and         able likelihood that the options will be exer-
                                                      cised.
   (2)(A) in the case of sealed bids—
     (i) a statement that sealed bids will be         (June 30, 1949, ch. 288, title III, § 303A, as added
   evaluated without discussions with the bid-        Pub. L. 98–369, div. B, title VII, § 2711(a)(2), July
   ders; and                                          18, 1984, 98 Stat. 1178; amended Pub. L. 103–355,
     (ii) the time and place for the opening of       title I, §§ 1061(a), (b), 1062, title IV, § 4402(b), Oct.
   the sealed bids; or                                13, 1994, 108 Stat. 3266, 3267, 3348; Pub. L. 104–106,
                                                      div. D, title XLII, § 4202(b)(2), Feb. 10, 1996, 110
   (B) in the case of competitive proposals—          Stat. 653.)
     (i) either a statement that the proposals
                                                                            AMENDMENTS
   are intended to be evaluated with, and award
   made after, discussions with the offerors, or         1996—Subsec. (b). Pub. L. 104–106 inserted ‘‘a procure-
   a statement that the proposals are intended        ment for commercial items using special simplified
                                                      procedures or’’ after ‘‘(other than for’’ in introductory
   to be evaluated, and award made, without           provisions.
   discussions with the offerors (other than dis-        1994—Subsec. (b). Pub. L. 103–355, § 4402(b), substituted
   cussions conducted for the purpose of minor        ‘‘a purchase for an amount not greater than the sim-
   clarification) unless discussions are deter-       plified acquisition threshold)’’ for ‘‘small purchases)’’
   mined to be necessary; and                         in introductory provisions.
                                                         Subsec. (b)(1)(A). Pub. L. 103–355, § 1061(a)(1)(A),
     (ii) the time and place for submission of        amended subpar. (A) generally. Prior to amendment,
   proposals.                                         subpar. (A) read as follows: ‘‘all significant factors (in-
                                                      cluding price) which the executive agency reasonably
(c) Evaluation factors
                                                      expects to consider in evaluating sealed bids or com-
  (1) In prescribing the evaluation factors to be     petitive proposals; and’’.
included in each solicitation for competitive            Subsec. (b)(1)(B). Pub. L. 103–355, § 1061(a)(1)(B), sub-
proposals, an executive agency—                       stituted ‘‘factors and subfactors’’ for ‘‘factors’’.
                                                         Subsec. (b)(2)(B)(i). Pub. L. 103–355, § 1061(a)(2),
    (A) shall clearly establish the relative im-      amended cl. (i) generally. Prior to amendment, cl. (i)
  portance assigned to the evaluation factors         read as follows: ‘‘a statement that the proposals are in-
  and subfactors, including the quality of the        tended to be evaluated with, and awards made after,
  product or services to be provided (including       discussions with the offerors, but might be evaluated
  technical capability, management capability,        and awarded without discussions with the offerors;
  prior experience, and past performance of the       and’’.
                                                         Subsecs. (c), (d). Pub. L. 103–355, § 1061(b), added sub-
  offeror);                                           secs. (c) and (d).
    (B) shall include cost or price to the Federal       Subsec. (e). Pub. L. 103–355, § 1062, added subsec. (e).
  Government as an evaluation factor that must
                                                               EFFECTIVE DATE OF 1996 AMENDMENT
  be considered in the evaluation of proposals;
  and                                                   For effective date and applicability of amendment by
    (C) shall disclose to offerors whether all        Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
                                                      out as a note under section 251 of this title.
  evaluation factors other than cost or price,
  when combined, are—                                          EFFECTIVE DATE OF 1994 AMENDMENT
       (i) significantly more important than cost       For effective date and applicability of amendment by
    or price;                                         Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set
       (ii) approximately equal in importance to      out as a note under section 251 of this title.
    cost or price; or                                                      EFFECTIVE DATE
       (iii) significantly less important than cost
                                                        Section applicable with respect to any solicitation
    or price.                                         for bids or proposals issued after Mar. 31, 1985, see sec-
  (2) The regulations implementing subpara-           tion 2751 of Pub. L. 98–369, set out as an Effective Date
graph (C) of paragraph (1) may not define the         of 1984 Amendment note under section 251 of this title.
terms ‘‘significantly more important’’ and ‘‘sig-        AUTHORIZATION OF TELECOMMUTING FOR FEDERAL
nificantly less important’’ as specific numeric                          CONTRACTORS
weights that would be applied uniformly to all          Pub. L. 108–136, div. A, title XIV, § 1428, Nov. 24, 2003,
solicitations or a class of solicitations.            117 Stat. 1670, provided that:
§ 253b                                  TITLE 41—PUBLIC CONTRACTS                                           Page 66

  ‘‘(a) AMENDMENT TO THE FEDERAL ACQUISITION          REGU-    the successful bidder. Within 3 days after the
LATION.—Not later than 180 days after the date        of the   date of contract award, the executive agency
enactment of this Act [Nov. 24, 2003], the Federal Ac-         shall notify, in writing or by electronic means,
quisition Regulatory Council shall amend the Federal
                                                               each bidder not awarded the contract that the
Acquisition Regulation issued in accordance with sec-
tions 6 and 25 of the Office of Federal Procurement Pol-       contract has been awarded.
icy Act (41 U.S.C. 405 and 421) to permit telecommuting        (d) Discussions with offerors; written notifica-
by employees of Federal Government contractors in the              tion
performance of contracts entered into with executive             (1) An executive agency shall evaluate com-
agencies.
                                                               petitive proposals in accordance with subsection
  ‘‘(b) CONTENT OF AMENDMENT.—The regulation issued
pursuant to subsection (a) shall, at a minimum, provide        (a) of this section and may award a contract—
that solicitations for the acquisition of property or              (A) after discussions with the offerors, pro-
services may not set forth any requirement or evalua-            vided that written or oral discussions have
tion criteria that would—                                        been conducted with all responsible offerors
     ‘‘(1) render an offeror ineligible to enter into a con-     who submit proposals within the competitive
  tract on the basis of the inclusion of a plan of the of-       range; or
  feror to permit the offeror’s employees to telecom-              (B) based on the proposals received and with-
  mute, unless the contracting officer concerned first           out discussions with the offerors (other than
  determines that the requirements of the agency, in-            discussions conducted for the purpose of minor
  cluding security requirements, cannot be met if the
  telecommuting is permitted and documents in writ-
                                                                 clarification), if, as required by section
  ing the basis for that determination; or                       253a(b)(2)(B)(i) of this title, the solicitation in-
     ‘‘(2) reduce the scoring of an offer on the basis of        cluded a statement that proposals are in-
  the inclusion in the offer of a plan of the offeror to         tended to be evaluated, and award made, with-
  permit the offeror’s employees to telecommute, un-             out discussions, unless discussions are deter-
  less the contracting officer concerned first deter-            mined to be necessary.
  mines that the requirements of the agency, including
  security requirements, would be adversely impacted             (2) If the contracting officer determines that
  if telecommuting is permitted and documents in               the number of offerors that would otherwise be
  writing the basis for that determination.                    included in the competitive range under para-
  ‘‘(c) DEFINITION.—In this section, the term ‘executive       graph (1)(A) exceeds the number at which an ef-
agency’ has the meaning given that term in section 4(1)        ficient competition can be conducted, the con-
of the Office of Federal Procurement Policy Act (41            tracting officer may limit the number of propos-
U.S.C. 403(1)).’’
                                                               als in the competitive range, in accordance with
                  SMALL BUSINESS ACT                           the criteria specified in the solicitation, to the
  Section not to affect or supersede the provisions of         greatest number that will permit an efficient
section 637(a) of Title 15, Commerce and Trade, see sec-       competition among the offerors rated most
tion 2711(c) of Pub. L. 98–369, set out as a note under        highly in accordance with such criteria.
section 253 of this title.                                       (3) Except as otherwise provided in subsection
                                                               (b) of this section, the executive agency shall
                       DEFINITIONS
                                                               award a contract with reasonable promptness to
  The definitions in section 102 of Title 40, Public           the responsible source whose proposal is most
Buildings, Property, and Works, apply to this sub-             advantageous to the United States, considering
chapter.                                                       only cost or price and the other factors included
§ 253b. Evaluation and award                                   in the solicitation. The executive agency shall
                                                               award the contract by transmitting, in writing
(a) Basis                                                      or by electronic means, notice of the award to
  An executive agency shall evaluate sealed bids               such source and, within 3 days after the date of
and competitive proposals, and award a con-                    contract award, shall notify, in writing or by
tract, based solely on the factors specified in the            electronic means, all other offerors of the rejec-
solicitation.                                                  tion of their proposals.
(b) Rejection of bids or proposals                             (e) Post-award debriefings
  All sealed bids or competitive proposals re-                   (1) When a contract is awarded by the head of
ceived in response to a solicitation may be re-                an executive agency on the basis of competitive
jected if the agency head determines that such                 proposals, an unsuccessful offeror, upon written
action is in the public interest.                              request received by the agency within 3 days
(c) Opening of bids; promptness of award; writ-                after the date on which the unsuccessful offeror
    ten notice                                                 receives the notification of the contract award,
                                                               shall be debriefed and furnished the basis for the
  Sealed bids shall be opened publicly at the                  selection decision and contract award. The exec-
time and place stated in the solicitation. The                 utive agency shall debrief the offeror within, to
executive agency shall evaluate the bids in ac-                the maximum extent practicable, 5 days after
cordance with subsection (a) of this section                   receipt of the request by the executive agency.
without discussions with the bidders and, except                 (2) The debriefing shall include, at a mini-
as provided in subsection (b) of this section,                 mum—
shall award a contract with reasonable prompt-                     (A) the executive agency’s evaluation of the
ness to the responsible source whose bid con-                    significant weak or deficient factors in the of-
forms to the solicitation and is most advan-                     feror’s offer;
tageous to the United States, considering only                     (B) the overall evaluated cost and technical
price and the other price-related factors in-                    rating of the offer of the contractor awarded
cluded in the solicitation. The award of a con-                  the contract and the overall evaluated cost
tract shall be made by transmitting, in writing                  and technical rating of the offer of the de-
or by electronic means, notice of the award to                   briefed offeror;
Page 67                             TITLE 41—PUBLIC CONTRACTS                                       § 253b

    (C) the overall ranking of all offers;              tity of other offerors and shall not disclose in-
    (D) a summary of the rationale for the              formation about the content, ranking, or eval-
  award;                                                uation of other offerors’ proposals.
    (E) in the case of a proposal that includes a       (g) Summary of debriefing
  commercial item that is an end item under the
  contract, the make and model of the item                 The contracting officer shall include a sum-
  being provided in accordance with the offer of        mary of any debriefing conducted under sub-
  the contractor awarded the contract; and              section (e) or (f) of this section in the contract
    (F) reasonable responses to relevant ques-          file.
  tions posed by the debriefed offeror as to            (h) Alternative dispute resolution
  whether source selection procedures set forth            The Federal Acquisition Regulation shall in-
  in the solicitation, applicable regulations, and      clude a provision encouraging the use of alter-
  other applicable authorities were followed by         native dispute resolution techniques to provide
  the executive agency.                                 informal, expeditious, and inexpensive proce-
   (3) The debriefing may not include point-by-         dures for an offeror to consider using before fil-
point comparisons of the debriefed offeror’s offer      ing a protest, prior to the award of a contract,
with other offers and may not disclose any in-          of the exclusion of the offeror from the competi-
formation that is exempt from disclosure under          tive range (or otherwise from further consider-
section 552(b) of title 5.                              ation) for that contract.
   (4) Each solicitation for competitive proposals      (i) Antitrust violations
shall include a statement that information de-             If the agency head considers that a bid or pro-
scribed in paragraph (2) may be disclosed in            posal evidences a violation of the antitrust laws,
post-award debriefings.                                 such agency head shall refer the bid or proposal
   (5) If, within one year after the date of the        to the Attorney General for appropriate action.
contract award and as a result of a successful
procurement protest, the executive agency seeks         (j) Planning for future competition
to fulfill the requirement under the protested             (1)(A) In preparing a solicitation for the award
contract either on the basis of a new solicitation      of a development contract for a major system,
of offers or on the basis of new best and final of-     the head of an agency shall consider requiring in
fers requested for that contract, the head of           the solicitation that an offeror include in its
such executive agency shall make available to           offer proposals described in subparagraph (B). In
all offerors—                                           determining whether to require such proposals,
     (A) the information provided in debriefings        the head of the agency shall give due consider-
   under this subsection regarding the offer of         ation to the purposes for which the system is
   the contractor awarded the contract; and             being procured and the technology necessary to
     (B) the same information that would have           meet the system’s required capabilities. If such
   been provided to the original offerors.              proposals are required, the head of the agency
(f) Preaward debriefings                                shall consider them in evaluating the offeror’s
   (1) When the contracting officer excludes an         price.
offeror submitting a competitive proposal from             (B) The proposals that the head of an agency
the competitive range (or otherwise excludes            is to consider requiring in a solicitation for the
such an offeror from further consideration prior        award of a development contract are the follow-
to the final source selection decision), the ex-        ing:
cluded offeror may request in writing, within 3              (i) Proposals to incorporate in the design of
days after the date on which the excluded of-              the major system items which are currently
feror receives notice of its exclusion, a debrief-         available within the supply system of the Fed-
ing prior to award. The contracting officer shall          eral agency responsible for the major system,
make every effort to debrief the unsuccessful of-          available elsewhere in the national supply sys-
feror as soon as practicable but may refuse the            tem, or commercially available from more
request for a debriefing if it is not in the best in-      than one source.
terests of the Government to conduct a debrief-              (ii) With respect to items that are likely to
ing at that time.                                          be required in substantial quantities during
   (2) The contracting officer is required to de-          the system’s service life, proposals to incor-
brief an excluded offeror in accordance with sub-          porate in the design of the major system items
section (e) of this section only if that offeror re-       which the United States will be able to ac-
quested and was refused a preaward debriefing              quire competitively in the future.
under paragraph (1) of this subsection.                   (2)(A) In preparing a solicitation for the award
   (3) The debriefing conducted under this sub-         of a production contract for a major system, the
section shall include—                                  head of an agency shall consider requiring in the
     (A) the executive agency’s evaluation of the       solicitation that an offeror include in its offer
   significant elements in the offeror’s offer;         proposals described in subparagraph (B). In de-
     (B) a summary of the rationale for the offer-      termining whether to require such proposals,
   or’s exclusion; and                                  the head of the agency shall give due consider-
     (C) reasonable responses to relevant ques-         ation to the purposes for which the system is
   tions posed by the debriefed offeror as to           being procured and the technology necessary to
   whether source selection procedures set forth        meet the system’s required capabilities. If such
   in the solicitation, applicable regulations, and     proposals are required, the head of the agency
   other applicable authorities were followed by        shall consider them in evaluating the offeror’s
   the executive agency.                                price.
  (4) The debriefing conducted pursuant to this           (B) The proposals that the head of an agency
subsection may not disclose the number or iden-         is to consider requiring in a solicitation for the
§ 253b                              TITLE 41—PUBLIC CONTRACTS                                               Page 68

award of a production contract are proposals            18, 1984, 98 Stat. 1179; amended Pub. L. 98–577,
identifying opportunities to ensure that the            title II, § 201(a), Oct. 30, 1984, 98 Stat. 3068; Pub.
United States will be able to obtain on a com-          L. 103–355, title I, §§ 1061(c), 1063–1066, Oct. 13,
petitive basis items procured in connection with        1994, 108 Stat. 3267–3269; Pub. L. 104–106, div. D,
the system that are likely to be reprocured in          title XLI, §§ 4103(b), 4104(b), div. E, title LVI,
substantial quantities during the service life of       § 5607(c), Feb. 10, 1996, 110 Stat. 644, 645, 701; Pub.
the system. Proposals submitted in response to          L. 104–201, div. A, title VIII, § 821(b), title X,
such requirement may include the following:             § 1074(b)(7), Sept. 23, 1996, 110 Stat. 2609, 2660.)
    (i) Proposals to provide to the United States                              AMENDMENTS
  the right to use technical data to be provided
  under the contract for competitive reprocure-            1996—Subsec. (d)(2), (3). Pub. L. 104–106, § 4103(b),
                                                        added par. (2) and redesignated former par. (2) as (3).
  ment of the item, together with the cost to              Subsec. (e)(6). Pub. L. 104–106, § 4104(b)(1), struck out
  the United States, if any, of acquiring such          par. (6) which read as follows: ‘‘The contracting officer
  technical data and the right to use such data.        shall include a summary of the debriefing in the con-
    (ii) Proposals for the qualification or devel-      tract file.’’
  opment of multiple sources of supply for the             Subsecs. (f) to (h). Pub. L. 104–106, § 4104(b)(3), added
  item.                                                 subsecs. (f) to (h). Former subsecs. (f) to (h) redesig-
                                                        nated (i) to (k), respectively.
   (3) If the head of an agency is making a non-           Subsecs. (i), (j). Pub. L. 104–106, § 4104(b)(2), redesig-
competitive award of a development contract or          nated subsecs. (f) and (g) as (i) and (j), respectively.
a production contract for a major system, the           Former subsec. (i) redesignated (l).
factors specified in paragraphs (1) and (2) to be          Subsec. (k). Pub. L. 104–106, § 5607(c), as amended by
                                                        Pub. L. 104–201, § 1074(b)(7), struck out par. (3) which
considered in evaluating an offer for a contract
                                                        read as follows: ‘‘Regulations implementing this sub-
may be considered as objectives in negotiating          section shall be consistent with the regulations regard-
the contract to be awarded.                             ing the preparation and submission of an agency’s pro-
(k) Protest file                                        test file (the so-called ‘rule 4 file’) for protests to the
                                                        General Services Board of Contract Appeals under sec-
   (1) If, in the case of a solicitation for a con-     tion 759 of title 40.’’
tract issued by, or an award or proposed award             Pub. L. 104–106, § 4104(b)(2), redesignated subsec. (h) as
of a contract by, the head of an executive agen-        (k).
cy, a protest is filed pursuant to the procedures          Subsec. (l). Pub. L. 104–106, § 4104(b)(2), redesignated
in subchapter V of chapter 35 of title 31, and an       subsec. (i) as (l).
actual or prospective offeror so requests, a file          Subsec. (m). Pub. L. 104–201, § 821(b), added subsec.
                                                        (m).
of the protest shall be established by the procur-         1994—Subsec. (a). Pub. L. 103–355, § 1061(c)(1), inserted
ing activity and reasonable access shall be pro-        ‘‘, and award a contract,’’ after ‘‘competitive propos-
vided to actual or prospective offerors.                als’’.
   (2) Information exempt from disclosure under            Subsec. (c). Pub. L. 103–355, §§ 1061(c)(2), 1063(a), in-
section 552 of title 5 may be redacted in a file es-    serted ‘‘in accordance with subsection (a) of this sec-
tablished pursuant to paragraph (1) unless an ap-       tion’’ after ‘‘shall evaluate the bids’’ in second sen-
plicable protective order provides otherwise.           tence, substituted ‘‘transmitting, in writing or by elec-
                                                        tronic means, notice’’ for ‘‘transmitting written no-
(l) Agency actions on protests                          tice’’ in third sentence, and inserted at end ‘‘Within 3
   If, in connection with a protest, the head of an     days after the date of contract award, the executive
executive agency determines that a solicitation,        agency shall notify, in writing or by electronic means,
proposed award, or award does not comply with           each bidder not awarded the contract that the contract
                                                        has been awarded.’’
the requirements of law or regulation, the head            Subsec. (d)(1). Pub. L. 103–355, § 1061(c)(3)(A), added
of such executive agency—                               par. (1) and struck out former par. (1) which read as fol-
     (1) may take any action set out in subpara-        lows: ‘‘The executive agency shall evaluate competitive
   graphs (A) through (F) of subsection (b)(1) of       proposals and may award a contract—
   section 3554 of title 31; and                             ‘‘(A) after discussions conducted with the offerors
     (2) may pay costs described in paragraph (1)          at any time after receipt of the proposals and before
   of section 3554(c) of such title within the lim-        the award of the contract; or
                                                             ‘‘(B) without discussions with the offerors (other
   its referred to in paragraph (2) of such section.       than discussions conducted for the purpose of minor
(m) Prohibition on release of contractor propos-           clarification) when it can be clearly demonstrated
     als                                                   from the existence of full and open competition or ac-
                                                           curate prior cost experience with the product or serv-
   (1) Except as provided in paragraph (2), a pro-         ice that acceptance of an initial proposal without dis-
posal in the possession or control of an execu-            cussions would result in the lowest overall cost to the
tive agency may not be made available to any               Government.’’
person under section 552 of title 5.                       Subsec. (d)(2). Pub. L. 103–355, §§ 1061(c)(3)(C), 1063(b),
   (2) Paragraph (1) does not apply to any pro-         inserted ‘‘cost or’’ before ‘‘price’’ in first sentence, and,
posal that is set forth or incorporated by ref-         in second sentence, substituted ‘‘transmitting, in writ-
erence in a contract entered into between the           ing or by electronic means, notice’’ for ‘‘transmitting
                                                        written notice’’ and ‘‘, within 3 days after the date of
agency and the contractor that submitted the
                                                        contract award, shall notify, in writing or by electronic
proposal.                                               means,’’ for ‘‘shall promptly notify’’.
   (3) In this subsection, the term ‘‘proposal’’           Pub. L. 103–355, § 1061(c)(3)(B), redesignated par. (4) as
means any proposal, including a technical, man-         (2) and struck out former par. (2) which read as follows:
agement, or cost proposal, submitted by a con-          ‘‘In the case of award of a contract under paragraph
tractor in response to the requirements of a so-        (1)(A), the executive agency shall conduct, before such
licitation for a competitive proposal.                  award, written or oral discussions with all responsible
                                                        sources who submit proposals within the competitive
(June 30, 1949, ch. 288, title III, § 303B, as added    range, considering only price and the other factors in-
Pub. L. 98–369, div. B, title VII, § 2711(a)(2), July   cluded in the solicitation.’’
Page 69                                  TITLE 41—PUBLIC CONTRACTS                                                  § 253c

   Subsec. (d)(3). Pub. L. 103–355, § 1061(c)(3)(B), struck     the award or failure to award the contract to request a
out par. (3) which read as follows: ‘‘In the case of award      review, at a level above the contracting officer, of any
of a contract under paragraph (1)(B), the executive             decision by a contracting officer that is alleged to have
agency shall award the contract based on the proposals          violated a statute or regulation and, thereby, caused
as received (and as clarified, if necessary, in discussions     prejudice to the protester; and
conducted for the purpose of minor clarification).’’              (d) except where immediate contract award or per-
   Subsec. (d)(4). Pub. L. 103–355, § 1061(c)(3)(B), redesig-   formance is justified for urgent and compelling reasons
nated par. (4) as (2).                                          or is determined to be in the best interest of the United
   Subsecs. (e) to (g). Pub. L. 103–355, § 1064, added sub-     States, prohibit award or performance of the contract
sec. (e) and redesignated former subsecs. (e) and (f) as        while a timely filed protest is pending before the agen-
(f) and (g), respectively.                                      cy. To allow for the withholding of a contract award or
   Subsec. (h). Pub. L. 103–355, § 1065, added subsec. (h).     performance, the agency must have received notice of
   Subsec. (i). Pub. L. 103–355, § 1066, added subsec. (i).     the protest within either 10 calendar days after the
   1984—Subsec. (f). Pub. L. 98–577 added subsec. (f).          contract award or 5 calendar days after the bidder or
                                                                offeror who is protesting the contract award was given
         EFFECTIVE DATE OF 1996 AMENDMENTS
                                                                the opportunity to be debriefed by the agency, which-
  Section 1074(b)(7) of Pub. L. 104–201 provided that the       ever date is later.
amendment made by that section is effective Feb. 10,              SEC. 2. The Administrator for Federal Procurement
1996.                                                           Policy shall: (a) work with the heads of executive agen-
  For effective date and applicability of amendment by          cies to provide policy guidance and leadership nec-
sections 4103(b) and 4104(b) of Pub. L. 104–106, see sec-       essary to implement provisions of this order; and
tion 4401 of Pub. L. 104–106, set out as a note under sec-        (b) review and evaluate agency experience and per-
tion 251 of this title.                                         formance under this order, and report on any findings
  Amendment by section 5607(c) of Pub. L. 104–106 effec-        to the President within 2 years from the date of this
tive 180 days after Feb. 10, 1996, see section 5701 of Pub.     order.
L. 104–106, Feb. 10, 1996, 110 Stat. 702.                         SEC. 3. The Administrator of General Services, the
                                                                Secretary of Defense, and the Administrator of the Na-
          EFFECTIVE DATE OF 1994 AMENDMENT                      tional Aeronautics and Space Administration, in co-
  For effective date and applicability of amendment by          ordination with the Office of Federal Procurement Pol-
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set      icy, shall amend the Federal Acquisition Regulation, 48
out as a note under section 251 of this title.                  C.F.R. 1, within 180 days of the date of this order to fur-
                                                                ther the purposes of this order.
          EFFECTIVE DATE OF 1984 AMENDMENT
                                                                                                   WILLIAM J. CLINTON.
  Section 201(b) of Pub. L. 98–577 provided that: ‘‘The
amendment made by subsection (a) [amending this sec-                                   DEFINITIONS
tion] shall apply with respect to any solicitation issued         The definitions in section 102 of Title 40, Public
more than 180 days after the date of enactment of this          Buildings, Property, and Works, apply to this sub-
Act [Oct. 30, 1984].’’                                          chapter.
                     EFFECTIVE DATE
                                                                § 253c. Encouragement of new competition
  Section applicable with respect to any solicitation
for bids or proposals issued after Mar. 31, 1985, see sec-      (a) ‘‘Qualification requirement’’ defined
tion 2751 of Pub. L. 98–369, set out as an Effective Date
                                                                  In this section, ‘‘qualification requirement’’
of 1984 Amendment note under section 251 of this title.
                                                                means a requirement for testing or other qual-
                  SMALL BUSINESS ACT                            ity assurance demonstration that must be com-
  Section not to affect or supersede the provisions of          pleted by an offeror before award of a contract.
section 637(a) of Title 15, Commerce and Trade, see sec-        (b) Agency head; functions; prior to enforcement
tion 2711(c) of Pub. L. 98–369, set out as a note under              of qualification requirement
section 253 of this title.
                                                                  Except as provided in subsection (c) of this
  EX. ORD. NO. 12979. AGENCY PROCUREMENT PROTESTS
                                                                section, the head of the agency shall, before en-
  Ex. Ord. No. 12979, Oct. 25, 1995, 60 F.R. 55171, pro-        forcing any qualification requirement—
vided:                                                               (1) prepare a written justification stating
  By the authority vested in me as President by the               the necessity for establishing the qualification
Constitution and the laws of the United States of
                                                                  requirement and specify why the qualification
America, and in order to ensure effective and efficient
expenditure of public funds and fair and expeditious              requirement must be demonstrated before con-
resolution of protests to the award of Federal procure-           tract award;
ment contracts, it is hereby ordered as follows:                     (2) specify in writing and make available to
  SECTION 1. Heads of executive departments and agen-             a potential offeror upon request all require-
cies (‘‘agencies’’) engaged in the procurement of sup-            ments which a prospective offeror, or its prod-
plies and services shall prescribe administrative proce-          uct, must satisfy in order to become qualified,
dures for the resolution of protests to the award of              such requirements to be limited to those least
their procurement contracts as an alternative to pro-
                                                                  restrictive to meet the purposes necessitating
tests in fora outside the procuring agencies. Procedures
prescribed pursuant to this order shall:                          the establishment of the qualification require-
  (a) emphasize that whenever conduct of a procure-               ment;
ment is contested, all parties should use their best ef-             (3) specify an estimate of the costs of testing
forts to resolve the matter with agency contracting of-           and evaluation likely to be incurred by a po-
ficers;                                                           tential offeror in order to become qualified;
  (b) to the maximum extent practicable, provide for                 (4) ensure that a potential offeror is pro-
inexpensive, informal, procedurally simple, and expedi-           vided, upon request, a prompt opportunity to
tious resolution of protests, including, where appro-
                                                                  demonstrate at its own expense (except as pro-
priate and as permitted by law, the use of alternative
dispute resolution techniques, third party neutrals, and          vided in subsection (d) of this section) its abil-
another agency’s personnel;                                       ity to meet the standards specified for quali-
  (c) allow actual or prospective bidders or offerors             fication using qualified personnel and facili-
whose direct economic interests would be affected by              ties of the agency concerned or of another
§ 253c                              TITLE 41—PUBLIC CONTRACTS                                          Page 70

  agency obtained through interagency agree-             (d) Number; qualified sources or products; fewer
  ment, or under contract, or other methods ap-              than two actual manufacturers; functions of
  proved by the agency (including use of ap-                 agency head
  proved testing and evaluation services not               (1) If the number of qualified sources or quali-
  provided under contract to the agency);                fied products available to compete actively for
    (5) if testing and evaluation services are pro-      an anticipated future requirement is fewer than
  vided under contract to the agency for the             two actual manufacturers or the products of two
  purposes of clause (4), provide to the extent          actual manufacturers, respectively, the head of
  possible that such services be provided by a           the agency concerned shall—
  contractor who is not expected to benefit from             (A) periodically publish notice in the Com-
  an absence of additional qualified sources and           merce Business Daily soliciting additional
  who shall be required in such contract to ad-            sources or products to seek qualification, un-
  here to any restriction on technical data as-            less the contracting officer determines that
  serted by the potential offeror seeking quali-           such publication would compromise national
  fication; and                                            security; and
                                                             (B) bear the cost of conducting the specified
    (6) ensure that a potential offeror seeking            testing and evaluation (excluding the costs as-
  qualification is promptly informed as to                 sociated with producing the item or establish-
  whether qualification is attained and, in the            ing the production, quality control, or other
  event qualification is not attained, is prompt-          system to be tested and evaluated) for a small
  ly furnished specific information why quali-             business concern or a product manufactured
  fication was not attained.                               by a small business concern which has met the
                                                           standards specified for qualification and which
(c) Applicability; waiver authority; referral of of-       could reasonably be expected to compete for a
    fers                                                   contract for that requirement, but such costs
  (1) Subsection (b) of this section does not              may be borne only if the head of the agency
apply with respect to a qualification require-             determines that such additional qualified
ment established by statute prior to October 30,           sources or products are likely to result in cost
1984.                                                      savings from increased competition for future
                                                           requirements sufficient to offset (within a rea-
  (2) Except as provided in paragraph (3), if it is        sonable period of time considering the dura-
unreasonable to specify the standards for quali-           tion and dollar value of anticipated future re-
fication which a prospective offeror or its prod-          quirements) the costs incurred by the agency.
uct must satisfy, a determination to that effect
shall be submitted to the advocate for competi-             (2) The head of an agency shall require a pro-
tion of the procuring activity responsible for the       spective contractor requesting the United
purchase of the item subject to the qualification        States to bear testing and evaluation costs
requirement. After considering any comments of           under paragraph (1)(B) to certify as to its status
the advocate for competition reviewing such de-          as a small business concern under section 632 of
termination, the head of the procuring activity          title 15.
may waive the requirements of paragraphs (2)             (e) Examination; need for qualification require-
through (5) of subsection (b) of this section for             ment
up to two years with respect to the item subject            Within seven years after the establishment of
to the qualification requirement.                        a qualification requirement, the need for such
  (3) The waiver authority contained in para-            qualification requirement shall be examined and
graph (2) shall not apply with respect to any            the standards of such requirement revalidated in
qualified products list.                                 accordance with the requirements of subsection
  (4) A potential offeror may not be denied the          (b) of this section. The preceding sentence does
opportunity to submit and have considered an             not apply in the case of a qualification require-
offer for a contract solely because the potential        ment for which a waiver is in effect under sub-
offeror has not been identified as meeting a             section (c)(2) of this section.
qualification requirement, if the potential of-          (f) Enforcement determination by agency head
feror can demonstrate to the satisfaction of the            Except in an emergency as determined by the
contracting officer that the potential offeror or        head of the agency, whenever the head of the
its product meets the standards established for          agency determines not to enforce a qualification
qualification or can meet such standards before          requirement for a solicitation, the agency may
the date specified for award of the contract.            not thereafter enforce that qualification re-
  (5) Nothing contained in this subsection re-           quirement unless the agency complies with the
quires the referral of an offer to the Small Busi-       requirements of subsection (b) of this section.
ness Administration pursuant to section                  (June 30, 1949, ch. 288, title III, § 303C, formerly
637(b)(7) of title 15 if the basis for the referral is   § 303D, as added Pub. L. 98–577, title II, § 202(a),
a challenge by the offeror to either the validity        Oct. 30, 1984, 98 Stat. 3069; renumbered § 303C,
of the qualification requirement or the offeror’s        Pub. L. 99–145, title XIII, § 1304(c)(4)(A), Nov. 8,
compliance with such requirement.                        1985, 99 Stat. 742.)
  (6) The head of an agency need not delay a pro-                           EFFECTIVE DATE
posed procurement in order to comply with sub-
                                                           Section 202(b) of Pub. L. 98–577 provided that: ‘‘The
section (b) of this section or in order to provide       amendment made by subsection (a) [enacting this sec-
a potential offeror with an opportunity to dem-          tion] shall apply with respect to solicitations issued
onstrate its ability to meet the standards speci-        more than 180 days after the date of enactment of this
fied for qualification.                                  Act [Oct. 30, 1984].’’
Page 71                             TITLE 41—PUBLIC CONTRACTS                                                § 253d

                    DEFINITIONS                         section (b) of this section, the contracting offi-
  The definitions in section 102 of Title 40, Public    cer shall issue a decision pertaining to the valid-
Buildings, Property, and Works, apply to this sub-      ity of the asserted restriction.
chapter.                                                   (2) If a justification is submitted in response
                                                        to the notice provided pursuant to subsection (b)
§ 253d. Validation of proprietary data restric-         of this section, a contracting officer shall within
    tions                                               60 days of receipt of any justification submitted,
(a) Contracts; delivery of technical services; con-     issue a decision or notify the party asserting the
    tents                                               restriction of the time within which a decision
  A contract for property or services entered           will be issued.
into by an executive agency which provides for          (e) Claim; considered claim within Contract Dis-
the delivery of technical data, shall provide                putes Act of 1978
that—                                                      If a claim pertaining to the validity of the as-
    (1) a contractor or subcontractor at any tier       serted restriction is submitted in writing to a
  shall be prepared to furnish to the contracting       contracting officer by a contractor or sub-
  officer a written justification for any restric-      contractor at any tier, such claim shall be con-
  tion asserted by the contractor or subcontrac-        sidered a claim within the meaning of the Con-
  tor on the right of the United States to use          tract Disputes Act of 1978 (41 U.S.C. 601 et seq.).
  such technical data; and                              (f) Challenge; use of technical data; sustained; li-
    (2) the contracting officer may review the               ability of United States for costs and fees
  validity of any restriction asserted by the con-
  tractor or by a subcontractor under the con-             (1) If, upon final disposition, the contracting
  tract on the right of the United States to use        officer’s challenge to the restriction on the right
  technical data furnished to the United States         of the United States to use such technical data
  under the contract if the contracting officer         is sustained—
                                                             (A) the restriction on the right of the United
  determines that reasonable grounds exist to
                                                           States to use the technical data shall be can-
  question the current validity of the asserted
                                                           celled; and
  restriction and that the continued adherence               (B) if the asserted restriction is found not to
  to the asserted restriction by the United                be substantially justified, the contractor or
  States would make it impracticable to procure            subcontractor, as appropriate, shall be liable
  the item competitively at a later time.                  to the United States for payment of the cost
(b) Review; challenge; notice                              to the United States of reviewing the asserted
  If after such review the contracting officer de-         restriction and the fees and other expenses (as
termines that a challenge to the asserted re-              defined in section 2412(d)(2)(A) of title 28) in-
striction is warranted, the contracting officer            curred by the United States in challenging the
shall provide written notice to the contractor or          asserted restriction, unless special circum-
subcontractor asserting the restriction. Such              stances would make such payment unjust.
notice shall state—                                       (2) If, upon final disposition, the contracting
    (1) the grounds for challenging the asserted        officer’s challenge to the restriction on the right
  restriction; and                                      of the United States to use such technical data
    (2) the requirement for a response within 60        is not sustained—
  days justifying the current validity of the as-           (A) the United States shall continue to be
  serted restriction.                                     bound by the restriction; and
(c) Written request; additional time; schedule of           (B) the United States shall be liable for pay-
    responses                                             ment to the party asserting the restriction for
  If a contractor or subcontractor asserting a re-        fees and other expenses (as defined in section
striction subject to this section submits to the          2412(d)(2)(A) of title 28) incurred by the party
contracting officer a written request, showing            asserting the restriction in defending the as-
the need for additional time to comply with the           serted restriction if the challenge by the
requirement to justify the current validity of            United States is found not to be made in good
the asserted restriction, additional time to ade-         faith.
quately permit the submission of such justifica-        (June 30, 1949, ch. 288, title III, § 303D, formerly
tion shall be provided by the contracting officer       § 303E, as added Pub. L. 98–577, title II, § 203(a),
as appropriate. If a party asserting a restriction      Oct. 30, 1984, 98 Stat. 3071; renumbered § 303D,
receives notices of challenges to restrictions on       Pub. L. 99–145, title XIII, § 1304(c)(4)(A), Nov. 8,
technical data from more than one contracting           1985, 99 Stat. 742.)
officer, and notifies each contracting officer of
                                                                          REFERENCES IN TEXT
the existence of more than one challenge, the
contracting officer initiating the first in time           The Contract Disputes Act of 1978, referred to in sub-
challenge, after consultation with the party as-        sec. (e), is Pub. L. 95–563, Nov. 1, 1978, 92 Stat. 2383, as
                                                        amended, which is classified principally to chapter 9
serting the restriction and the other contracting
                                                        (§ 601 et seq.) of this title. For complete classification of
officers, shall formulate a schedule of responses       this Act to the Code, see Short Title note set out under
to each of the challenges that will afford the          section 601 of this title and Tables.
party asserting the restriction with an equitable
opportunity to respond to each such challenge.                               EFFECTIVE DATE
(d) Decision; validity of asserted restriction; fail-     Section 203(b) of Pub. L. 98–577 provided that: ‘‘The
    ure to submit response                              amendment made by subsection (a) [enacting this sec-
                                                        tion] shall apply with respect to solicitations issued
  (1) Upon a failure by the contractor or sub-          more than 60 days after the date of the enactment of
contractor to submit any response under sub-            this Act [Oct. 30, 1984].’’
§ 253e                                    TITLE 41—PUBLIC CONTRACTS                                                 Page 72

                        DEFINITIONS                                any item or process (including computer soft-
  The definitions in section 102 of Title 40, Public               ware) made or furnished by the subcontractor
Buildings, Property, and Works, apply to this sub-                 under the contract (or any follow-on produc-
chapter.                                                           tion contract); or
                                                                      (2) otherwise act to restrict unreasonably
§ 253e. Repealed. Pub. L. 103–355, title I, § 1252,                the ability of a subcontractor to make sales to
    Oct. 13, 1994, 108 Stat. 3284                                  the United States described in clause (1).
  Section, act June 30, 1949, ch. 288, title III, § 303E, for-   (b) Rights under law
merly § 303F, as added Oct. 30, 1984, Pub. L. 98–577, title
II, § 204(a), 98 Stat. 3072; renumbered § 303E, Nov. 8, 1985,
                                                                   This section does not prohibit a contractor
Pub. L. 99–145, title XIII, § 1304(c)(4)(A), 99 Stat. 742, re-   from asserting rights it otherwise has under law.
lated to commercial pricing for supplies.                        (c) Inapplicability to certain contracts
               EFFECTIVE DATE OF REPEAL                            This section does not apply to a contract for
  For effective date and applicability of repeal, see sec-       an amount that is not greater than the sim-
tion 10001 of Pub. L. 103–355, set out as an Effective           plified acquisition threshold.
Date of 1994 Amendment note under section 251 of this            (d) Inapplicability when Government treated
title.                                                                similarly to other purchasers
§ 253f. Economic order quantities                                  An agreement between the contractor in a
                                                                 contract for the acquisition of commercial
(a) Procurement of supplies; costs advantageous                  items and a subcontractor under such contract
    to United States                                             that restricts sales by such subcontractor di-
  Each executive agency shall procure supplies                   rectly to persons other than the contractor may
in such quantity as (A) will result in the total                 not be considered to unreasonably restrict sales
cost and unit cost most advantageous to the                      by that subcontractor to the United States in
United States, where practicable, and (B) does                   violation of the provision included in such con-
not exceed the quantity reasonably expected to                   tract pursuant to subsection (a) of this section if
be required by the agency.                                       the agreement does not result in the Federal
(b) Opinions; economic advantage to United                       Government being treated differently with re-
    States                                                       gard to the restriction than any other prospec-
                                                                 tive purchaser of such commercial items from
  Each solicitation for a contract for supplies
                                                                 that subcontractor.
shall, if practicable, include a provision inviting
each offeror responding to the solicitation to                   (June 30, 1949, ch. 288, title III, § 303G, formerly
state an opinion on whether the quantity of the                  § 303H, as added Pub. L. 98–577, title II, § 206(a),
supplies proposed to be procured is economically                 Oct. 30, 1984, 98 Stat. 3073; renumbered § 303G,
advantageous to the United States and, if appli-                 Pub. L. 99–145, title XIII, § 1304(c)(4)(A), Nov. 8,
cable, to recommend a quantity or quantities                     1985, 99 Stat. 742; amended Pub. L. 103–355, title
which would be more economically advan-                          IV, § 4103(b), title VIII, § 8204(a), Oct. 13, 1994, 108
tageous to the United States. Each such recom-                   Stat. 3341, 3396.)
mendation shall include a quotation of the total
                                                                                        AMENDMENTS
price and the unit price for supplies procured in
each recommended quantity.                                         1994—Subsec. (c). Pub. L. 103–355, § 4103(b), added sub-
                                                                 sec. (c).
(June 30, 1949, ch. 288, title III, § 303F, formerly               Subsec. (d). Pub. L. 103–355, § 8204(a), added subsec. (d).
§ 303G, as added Pub. L. 98–577, title II, § 205(a),
Oct. 30, 1984, 98 Stat. 3073; renumbered § 303F,                           EFFECTIVE DATE OF 1994 AMENDMENT
Pub. L. 99–145, title XIII, § 1304(c)(4)(A), Nov. 8,               For effective date and applicability of amendment by
1985, 99 Stat. 742.)                                             Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set
                                                                 out as a note under section 251 of this title.
                     EFFECTIVE DATE
                                                                                      EFFECTIVE DATE
  Section 205(b) of Pub. L. 98–577 provided that: ‘‘The
amendment made by subsection (a) [enacting this sec-               Section 206(b) of Pub. L. 98–577 provided that: ‘‘The
tion] shall take effect at the end of the 180-day period         amendment made by subsection (a) [enacting this sec-
beginning on the date of the enactment of this Act               tion] shall apply with respect to solicitations made
[Oct. 30, 1984].’’                                               more than 180 days after the date of enactment of this
                                                                 Act [Oct. 30, 1984].’’
                        DEFINITIONS
                                                                                        DEFINITIONS
  The definitions in section 102 of Title 40, Public
Buildings, Property, and Works, apply to this sub-                 The definitions in section 102 of Title 40, Public
chapter.                                                         Buildings, Property, and Works, apply to this sub-
                                                                 chapter.
§ 253g. Prohibition of contractors limiting sub-
    contractor sales directly to United States                   § 253h. Task and delivery order contracts: gen-
                                                                     eral authority
(a) Contract restrictions
  Each contract for the purchase of property or                  (a) Authority to award
services made by an executive agency shall pro-                    Subject to the requirements of this section,
vide that the contractor will not—                               section 253j of this title, and other applicable
    (1) enter into any agreement with a sub-                     law, the head of an executive agency may enter
  contractor under the contract that has the ef-                 into a task or delivery order contract (as defined
  fect of unreasonably restricting sales by the                  in section 253k of this title) for procurement of
  subcontractor directly to the United States of                 services or property.
Page 73                           TITLE 41—PUBLIC CONTRACTS                                                  § 253h

(b) Solicitation                                         task or delivery order contracts for the same
  The solicitation for a task or delivery order          or similar services or property under the au-
contract shall include the following:                    thority of paragraph (1)(B); and
    (1) The period of the contract, including the          (B) establish criteria for determining when
  number of options to extend the contract and           award of multiple task or delivery order con-
  the period for which the contract may be ex-           tracts would not be in the best interest of the
  tended under each option, if any.                      Federal Government.
    (2) The maximum quantity or dollar value of       (e) Contract modifications
  the services or property to be procured under          A task or delivery order may not increase the
  the contract.                                       scope, period, or maximum value of the task or
    (3) A statement of work, specifications, or       delivery order contract under which the order is
  other description that reasonably describes         issued. The scope, period, or maximum value of
  the general scope, nature, complexity, and          the contract may be increased only by modifica-
  purposes of the services or property to be pro-     tion of the contract.
  cured under the contract.
                                                      (f) Inapplicability to contracts for advisory and
(c) Applicability of restriction on use of non-            assistance services
    competitive procedures
                                                         Except as otherwise specifically provided in
  The head of an executive agency may use pro-        section 253i of this title, this section does not
cedures other than competitive procedures to          apply to a task or delivery order contract for
enter into a task or delivery order contract          the acquisition of advisory and assistance serv-
under this section only if an exception in sub-       ices (as defined in section 1105(g) of title 31).
section (c) of section 253 of this title applies to
the contract and the use of such procedures is        (g) Relationship to other contracting authority
approved in accordance with subsection (f) of            Nothing in this section may be construed to
such section.                                         limit or expand any authority of the head of an
(d) Single and multiple contract awards               executive agency or the Administrator of Gen-
                                                      eral Services to enter into schedule, multiple
  (1) The head of an executive agency may exer-
                                                      award, or task or delivery order contracts under
cise the authority provided in this section—
                                                      any other provision of law.
    (A) to award a single task or delivery order
  contract; or                                        (June 30, 1949, ch. 288, title III, § 303H, as added
    (B) if the solicitation states that the head of   Pub. L. 103–355, title I, § 1054(a), Oct. 13, 1994, 108
  the executive agency has the option to do so,       Stat. 3261; amended Pub. L. 110–181, div. A, title
  to award separate task or delivery order con-       VIII, § 843(b)(1), Jan. 28, 2008, 122 Stat. 238.)
  tracts for the same or similar services or prop-
                                                                              AMENDMENTS
  erty to two or more sources.
                                                        2008—Subsec. (d)(3), (4). Pub. L. 110–181 added par. (3)
  (2) No determination under section 253(b) of        and redesignated former par. (3) as (4).
this title is required for an award of multiple
task or delivery order contracts under para-                    EFFECTIVE DATE OF 2008 AMENDMENT
graph (1)(B).                                           Pub. L. 110–181, div. A, title VIII, § 843(b)(3)(A), Jan.
  (3)(A) No task or delivery order contract in an     28, 2008, 122 Stat. 239, provided that: ‘‘The amendments
amount estimated to exceed $100,000,000 (includ-      made by paragraph (1) [amending this section] shall
ing all options) may be awarded to a single           take effect on the date that is 120 days after the date
source unless the head of the executive agency        of the enactment of this Act [Jan. 28, 2008], and shall
                                                      apply with respect to any contract awarded on or after
determines in writing that—                           such date.’’
    (i) the task or delivery orders expected
  under the contract are so integrally related                              EFFECTIVE DATE
  that only a single source can reasonably per-         For effective date and applicability of section, see
  form the work;                                      section 10001 of Pub. L. 103–355, set out as an Effective
    (ii) the contract provides only for firm, fixed   Date of 1994 Amendment note under section 251 of this
  price task orders or delivery orders for—           title.
       (I) products for which unit prices are es-                            CONSTRUCTION
    tablished in the contract; or
       (II) services for which prices are estab-        Section 1054(b) of Pub. L. 103–355 provided that:
    lished in the contract for the specific tasks     ‘‘Nothing in section 303H, 303I, 303J, or 303K of the Fed-
                                                      eral Property and Administrative Services Act of 1949
    to be performed;                                  [41 U.S.C. 253h, 253i, 253j, 253k], as added by subsection
   (iii) only one source is qualified and capable     (a), shall be construed as modifying or superseding, or
 of performing the work at a reasonable price         as intended to impair or restrict, authorities or respon-
 to the government; or                                sibilities under—
                                                           ‘‘(1) the Brooks Automatic Data Processing Act
   (iv) because of exceptional circumstances, it        (section 111 of the Federal Property and Administra-
 is necessary in the public interest to award           tive Services Act of 1949 ([former] 40 U.S.C. 759)); and
 the contract to a single source.                          ‘‘(2) the Brooks Architect-Engineers Act (title IX of
  (B) The head of the executive agency shall no-        the Federal Property and Administrative Services
                                                        Act of 1949 (40 U.S.C. 541 et seq.) [now 40 U.S.C.
tify Congress within 30 days after any deter-           1101–1104]).’’
mination under subparagraph (A)(iv).
  (4) The regulations implementing this sub-             REQUIREMENTS FOR PURCHASE OF PROPERTY AND
section shall—                                         SERVICES PURSUANT TO MULTIPLE AWARD CONTRACTS
    (A) establish a preference for awarding, to         Pub. L. 110–417, [div. A], title VIII, § 863(a)–(e), Oct. 14,
  the maximum extent practicable, multiple            2008, 122 Stat. 4547, 4548, provided that:
§ 253h                                    TITLE 41—PUBLIC CONTRACTS                                                  Page 74

  ‘‘(a) REGULATIONS REQUIRED.—Not later than one year                 Services Act of 1949 (41 U.S.C. 253(f)(1)), except in
after the date of the enactment of this Act [Oct. 14,                 the event of extraordinary circumstances or classi-
2008], the Federal Acquisition Regulation shall be                    fied orders.
amended to require enhanced competition in the pur-                   ‘‘(2) EXEMPTION.—This subsection does not require
chase of property and services by all executive agencies           the public availability of information that is exempt
pursuant to multiple award contracts.                              from public disclosure under section 552(b) of title 5,
  ‘‘(b) CONTENT OF REGULATIONS.—                                   United States Code.
     ‘‘(1) IN GENERAL.—The regulations required by sub-            ‘‘(d) DEFINITIONS.—In this section:
  section (a) shall provide, at a minimum, that each in-              ‘‘(1) The term ‘executive agency’ has the meaning
  dividual purchase of property or services in excess of           given such term in section 4(1) of the Office of Fed-
  the simplified acquisition threshold that is made                eral Procurement Policy Act (41 U.S.C. 403(1)).
  under a multiple award contract shall be made on a                  ‘‘(2) The term ‘individual purchase’ means a task
  competitive basis unless a contracting officer—                  order, delivery order, or other purchase.
        ‘‘(A) waives the requirement on the basis of a de-            ‘‘(3) The term ‘multiple award contract’ means—
     termination that—                                                   ‘‘(A) a contract that is entered into by the Ad-
           ‘‘(i) one of the circumstances described in para-          ministrator of General Services under the multiple
        graphs (1) through (4) of section 303J(b) of the              award schedule program referred to in section
        Federal Property and Administrative Services                  2302(2)(C) of title 10, United States Code;
        Act of 1949 (41 U.S.C. 253j(b)) or section 2304c(b) of           ‘‘(B) a multiple award task order contract that is
        title 10, United States Code, applies to such indi-           entered into under the authority of sections 2304a
        vidual purchase; or                                           through 2304d of title 10, United States Code, or sec-
           ‘‘(ii) a law expressly authorizes or requires that         tions 303H through 303K of the Federal Property
        the purchase be made from a specified source; and             and Administrative Services Act of 1949 (41 U.S.C.
        ‘‘(B) justifies the determination in writing.                 253h through 253k); and
     ‘‘(2) COMPETITIVE BASIS PROCEDURES.—For purposes                    ‘‘(C) any other indefinite delivery, indefinite
  of this subsection, an individual purchase of property              quantity contract that is entered into by the head
  or services is made on a competitive basis only if it               of an executive agency with 2 or more sources pur-
  is made pursuant to procedures that—                                suant to the same solicitation.
        ‘‘(A) except as provided in paragraph (3), require            ‘‘(4) The term ‘sole source task or delivery order’
     fair notice of the intent to make that purchase (in-          means any order that does not follow the competitive
     cluding a description of the work to be performed             procedures in subsection (b)(2) or (b)(3).
     and the basis on which the selection will be made)            ‘‘(e) APPLICABILITY.—The regulations required by sub-
     to be provided to all contractors offering such prop-       section (a) shall apply to all individual purchases of
     erty or services under the multiple award contract;         property or services that are made under multiple
     and                                                         award contracts on or after the effective date of such
        ‘‘(B) afford all contractors responding to the no-       regulations, without regard to whether the multiple
     tice a fair opportunity to make an offer and have           award contracts were entered into before, on, or after
     that offer fairly considered by the official making         such effective date.’’
     the purchase.
                                                                    GUIDANCE ON USE OF TASK ORDER AND DELIVERY
     ‘‘(3) EXCEPTION TO NOTICE REQUIREMENT.—
        ‘‘(A) IN GENERAL.—Notwithstanding paragraph (2),                         ORDER CONTRACTS
     and subject to subparagraph (B), notice may be pro-           Pub. L. 106–65, div. A, title VIII, § 804, Oct. 5, 1999, 113
     vided to fewer than all contractors offering such           Stat. 704, provided that:
     property or services under a multiple award con-              ‘‘(a) GUIDANCE IN THE FEDERAL ACQUISITION REGULA-
     tract as described in subsection (d)(2)(A) [sic] if no-     TION.—Not later than 180 days after the date of the en-
     tice is provided to as many contractors as prac-            actment of this Act [Oct. 5, 1999], the Federal Acquisi-
     ticable.                                                    tion Regulation issued in accordance with sections 6
        ‘‘(B) LIMITATION ON EXCEPTION.—A purchase may            and 25 of the Office of Federal Procurement Policy Act
     not be made pursuant to a notice that is provided           (41 U.S.C. 405 and 421) shall be revised to provide guid-
     to fewer than all contractors under subparagraph            ance to agencies on the appropriate use of task order
     (A) unless—                                                 and delivery order contracts in accordance with sec-
           ‘‘(i) offers were received from at least 3 quali-     tions 2304a through 2304d of title 10, United States
        fied contractors; or                                     Code, and sections 303H through 303K of the Federal
           ‘‘(ii) a contracting officer of the executive agen-   Property and Administrative Services Act of 1949 (41
        cy determines in writing that no additional quali-       U.S.C. 253h through 253k).
        fied contractors were able to be identified despite        ‘‘(b) CONTENT OF GUIDANCE.—The regulations issued
        reasonable efforts to do so.                             pursuant to subsection (a) shall, at a minimum, provide
  ‘‘(c) PUBLIC NOTICE REQUIREMENTS RELATED TO SOLE               the following:
SOURCE TASK OR DELIVERY ORDERS.—                                      ‘‘(1) Specific guidance on the appropriate use of
     ‘‘(1) PUBLIC NOTICE REQUIRED.—Not later than one              governmentwide and other multiagency contracts en-
  year after the date of the enactment of this Act [Oct.           tered into in accordance with the provisions of law
  14, 2008], the Federal Acquisition Regulation shall be           referred to in that subsection.
  amended to require the head of each executive agency                ‘‘(2) Specific guidance on steps that agencies should
  to—                                                              take in entering into and administering multiple
        ‘‘(A) publish on FedBizOpps notice of all sole             award task order and delivery order contracts to en-
     source task or delivery orders in excess of the sim-          sure compliance with—
     plified acquisition threshold that are placed against               ‘‘(A) the requirement in section 5122 of the
     multiple award contracts not later than 14 days                  Clinger-Cohen Act (40 U.S.C. 1422) [now 40 U.S.C.
     after such orders are placed, except in the event of             11312] for capital planning and investment control
     extraordinary circumstances or classified orders;                in purchases of information technology products
     and                                                              and services;
        ‘‘(B) disclose the determination required by sub-                ‘‘(B) the requirement in section 2304c(b) of title
     section (b)(1) related to sole source task or delivery           10, United States Code, and section 303J(b) of the
     orders in excess of the simplified acquisition                   Federal Property and Administrative Services Act
     threshold placed against multiple award contracts                of 1949 (41 U.S.C. 253j(b)) to ensure that all contrac-
     through the same mechanism and to the same ex-                   tors are afforded a fair opportunity to be considered
     tent as the disclosure of documents containing a                 for the award of task orders and delivery orders;
     justification and approval required by section                   and
     2304(f)(1) of title 10, United States Code, and section             ‘‘(C) the requirement in section 2304c(c) of title 10,
     303(f)(1) of the Federal Property and Administrative             United States Code, and section 303J(c) of the Fed-
Page 75                                TITLE 41—PUBLIC CONTRACTS                                           § 253i

     eral Property and Administrative Services Act of        same or similar services to two or more sources
     1949 (41 U.S.C. 253j(c)) for a statement of work in     if the solicitation states that the head of the ex-
     each task order or delivery order issued that clear-    ecutive agency has the option to do so.
     ly specifies all tasks to be performed or property to
                                                                (2) If, in the case of a task order contract for
     be delivered under the order.
  ‘‘(c) GSA FEDERAL SUPPLY SCHEDULES PROGRAM.—               advisory and assistance services to be entered
The Administrator for Federal Procurement Policy             into under the authority of this section, the con-
shall consult with the Administrator of General Serv-        tract period is to exceed three years and the
ices to assess the effectiveness of the multiple awards      contract amount is estimated to exceed
schedule program of the General Services Administra-         $10,000,000 (including all options), the solicita-
tion referred to in section 309(b)(3) of the Federal Prop-   tion shall—
erty and Administrative Services Act of 1949 (41 U.S.C.           (A) provide for a multiple award authorized
259(b)(3)) that is administered as the Federal Supply
                                                                under paragraph (1); and
Schedules program. The assessment shall include ex-
amination of the following:                                       (B) include a statement that the head of the
     ‘‘(1) The administration of the program by the Ad-         executive agency may also elect to award only
  ministrator of General Services.                              one task order contract if the head of the ex-
     ‘‘(2) The ordering and program practices followed          ecutive agency determines in writing that
  by Federal customer agencies in using schedules es-           only one of the offerers is capable of providing
  tablished under the program.                                  the services required at the level of quality re-
  ‘‘(d) GAO REPORT.—Not later than one year after the           quired.
date on which the regulations required by subsection
(a) are published in the Federal Register, the Comptrol-        (3) Paragraph (2) does not apply in the case of
ler General shall submit to Congress an evaluation of—       a solicitation for which the head of the execu-
     ‘‘(1) executive agency compliance with the regula-      tive agency concerned determines in writing
  tions; and                                                 that, because the services required under the
     ‘‘(2) conformance of the regulations with existing
                                                             contract are unique or highly specialized, it is
  law, together with any recommendations that the
  Comptroller General considers appropriate.’’               not practicable to award more than one con-
                                                             tract.
§ 253i. Task order contracts: advisory and assist-           (f) Contract modifications
    ance services
                                                                (1) A task order may not increase the scope,
(a) Authority to award                                       period, or maximum value of the task order con-
  (1) Subject to the requirements of this section,           tract under which the order is issued. The scope,
section 253j of this title, and other applicable             period, or maximum value of the contract may
law, the head of an executive agency may enter               be increased only by modification of the con-
into a task order contract (as defined in section            tract.
253k of this title) for procurement of advisory                 (2) Unless use of procedures other than com-
and assistance services.                                     petitive procedures is authorized by an excep-
  (2) The head of an executive agency may enter              tion in subsection (c) of section 253 of this title
into a task order contract for advisory and as-              and approved in accordance with subsection (f)
sistance services only under the authority of                of such section, competitive procedures shall be
this section.                                                used for making such a modification.
                                                                (3) Notice regarding the modification shall be
(b) Limitation on contract period
                                                             provided in accordance with section 416 of this
  The period of a task order contract entered                title and section 637(e) of title 15.
into under this section, including all periods of            (g) Contract extensions
extensions of the contract under options, modi-
fications, or otherwise, may not exceed five                    (1) Notwithstanding the limitation on the con-
years unless a longer period is specifically au-             tract period set forth in subsection (b) of this
thorized in a law that is applicable to such con-            section or in a solicitation or contract pursuant
tract.                                                       to subsection (e) of this section, a contract en-
                                                             tered into by the head of an executive agency
(c) Content of notice
                                                             under this section may be extended on a sole-
  The notice required by section 416 of this title           source basis for a period not exceeding six
and section 637(e) of title 15 shall reasonably and          months if the head of such executive agency de-
fairly describe the general scope, magnitude,                termines that—
and duration of the proposed task order contract                  (A) the award of a follow-on contract has
in a manner that would reasonably enable a po-                  been delayed by circumstances that were not
tential offeror to decide whether to request the                reasonably foreseeable at the time the initial
solicitation and consider submitting an offer.                  contract was entered into; and
(d) Required content of solicitation and contract                 (B) the extension is necessary in order to en-
  (1) The solicitation shall include the informa-               sure continuity of the receipt of services pend-
tion (regarding services) described in section                  ing the award of, and commencement of per-
253h(b) of this title.                                          formance under, the follow-on contract.
  (2) A task order contract entered into under                 (2) A task order contract may be extended
this section shall contain the same information              under the authority of paragraph (1) only once
that is required by paragraph (1) to be included             and only in accordance with the limitations and
in the solicitation of offers for that contract.             requirements of this subsection.
(e) Multiple awards                                          (h) Inapplicability to certain contracts
  (1) The head of an executive agency may, on                  This section does not apply to a contract for
the basis of one solicitation, award separate                the acquisition of property or services that in-
task order contracts under this section for the              cludes acquisition of advisory and assistance
§ 253i                                  TITLE 41—PUBLIC CONTRACTS                                                Page 76

services if the head of the executive agency en-                 head of an agency may not issue a waiver under para-
tering into such contract determines that, under                 graph (1) if the report required by paragraph (3) is not
the contract, advisory and assistance services                   submitted by the date set forth in that paragraph.
                                                                 ‘‘(b) CIVILIAN AGENCY CONTRACTS.—
are necessarily incident to, and not a significant                  ‘‘(1) WAIVER AUTHORITY.—The head of an executive
component of, the contract.                                      agency may issue a waiver to extend a task order
(i) ‘‘Advisory and assistance services’’ defined                 contract entered into under section 303I of the Fed-
                                                                 eral Property and Administrative Services Act of 1949
   In this section, the term ‘‘advisory and assist-              (41 U.S.C. 253i) for a period not exceeding 10 years,
ance services’’ has the meaning given such term                  through five one-year options, if the head of the agen-
in section 1105(g) of title 31.                                  cy determines in writing—
                                                                       ‘‘(A) that the contract provides engineering or
(June 30, 1949, ch. 288, title III, § 303I, as added                technical services of such a unique and substantial
Pub. L. 103–355, title I, § 1054(a), Oct. 13, 1994, 108             technical nature that award of a new contract
Stat. 3262.)                                                        would be harmful to the continuity of the program
                                                                    for which the services are performed;
                     EFFECTIVE DATE                                    ‘‘(B) that award of a new contract would create a
  For effective date and applicability of section, see              large disruption in services provided to the execu-
section 10001 of Pub. L. 103–355, set out as an Effective           tive agency; and
Date of 1994 Amendment note under section 251 of this                  ‘‘(C) that the executive agency would, through
title.                                                              award of a new contract, endure program risk dur-
                                                                    ing critical program stages due to loss of program
                      CONSTRUCTION                                  corporate knowledge of ongoing program activities.
  Section not to be construed as modifying or supersed-             ‘‘(2) DELEGATION.—The authority of the head of an
ing, or as intended to impair or restrict, authorities or        executive agency under paragraph (1) may be dele-
responsibilities under former 40 U.S.C. 759 or sub-              gated only to the Chief Acquisition Officer of the
chapter VI (§ 541 et seq.) of chapter 10 of former title 40      agency (or the senior procurement executive in the
[now 40 U.S.C. 1101–1104], see section 1054(b) of Pub. L.        case of an agency for which a Chief Acquisition Offi-
103–355, set out as a note under section 253h of this            cer has not been appointed or designated under sec-
title.                                                           tion 16(a) of the Office of Federal Procurement Policy
                                                                 Act (41 U.S.C. 414(a))).
  WAIVERS TO EXTEND TASK ORDER CONTRACTS FOR                        ‘‘(3) REPORT.—Not later than April 1, 2007, the Ad-
       ADVISORY AND ASSISTANCE SERVICES                          ministrator for Federal Procurement Policy shall
                                                                 submit to the Committee on Homeland Security and
  Pub. L. 109–364, div. A, title VIII, § 834, Oct. 17, 2006,     Governmental Affairs of the Senate and the Commit-
120 Stat. 2332, provided that:                                   tee on Government Reform of the House of Rep-
  ‘‘(a) DEFENSE CONTRACTS.—                                      resentatives a report on advisory and assistance serv-
     ‘‘(1) WAIVER AUTHORITY.—The head of an agency               ices. The report shall include the following informa-
  may issue a waiver to extend a task order contract             tion:
  entered into under section 2304b of title 10, United                 ‘‘(A) The methods used by executive agencies to
  States Code, for a period not exceeding 10 years,                 identify a contract as an advisory and assistance
  through five one-year options, if the head of the agen-           services contract, as defined in section 303I(i) of the
  cy determines in writing—                                         Federal Property and Administrative Services Act
        ‘‘(A) that the contract provides engineering or             of 1949 (41 U.S.C. 253i(i)).
     technical services of such a unique and substantial               ‘‘(B) The number of such contracts awarded by
     technical nature that award of a new contract                  each executive agency during the five-year period
     would be harmful to the continuity of the program              preceding the date of the enactment of this Act
     for which the services are performed;                          [Oct. 17, 2006].
        ‘‘(B) that award of a new contract would create a              ‘‘(C) The average annual expenditures by each ex-
     large disruption in services provided to the Depart-           ecutive agency for such contracts.
     ment of Defense; and                                              ‘‘(D) The average length of such contracts.
        ‘‘(C) that the Department of Defense would,                    ‘‘(E) The number of such contracts recompeted
     through award of a new contract, endure program                and awarded to the previous award winner.
     risk during critical program stages due to loss of             ‘‘(4) PROHIBITION ON USE OF AUTHORITY BY EXECUTIVE
     program corporate knowledge of ongoing program              AGENCIES IF REPORT NOT SUBMITTED.—The head of an
     activities.                                                 executive agency may not issue a waiver under para-
     ‘‘(2) DELEGATION.—The authority of the head of an           graph (1) if the report required by paragraph (3) is not
  agency under paragraph (1) may be delegated only to            submitted by the date set forth in that paragraph.
  the senior procurement executive of the agency.                ‘‘(c) TERMINATION OF AUTHORITY.—A waiver may not
     ‘‘(3) REPORT.—Not later than April 1, 2007, the Sec-      be issued under this section after December 31, 2011.
  retary of Defense shall submit to the Committees on            ‘‘(d) COMPTROLLER GENERAL REVIEW.—
  Armed Services of the Senate and the House of Rep-                ‘‘(1) REPORT REQUIREMENT.—Not later than one year
  resentatives a report on advisory and assistance serv-         after the date of the enactment of this Act [Oct. 17,
  ices. The report shall include the following informa-          2006], the Comptroller General shall submit to the
  tion:                                                          committees described in paragraph (3) a report on the
        ‘‘(A) The methods used by the Department of De-          use of advisory and assistance services contracts by
     fense to identify a contract as an advisory and as-         the Federal Government.
     sistance services contract, as defined in section              ‘‘(2) DEFENSE AND CIVILIAN AGENCY CONTRACTS COV-
     2304b of title 10, United States Code.                      ERED.—The report shall cover both of the following:
        ‘‘(B) The number of such contracts awarded by                  ‘‘(A) Advisory and assistance services contracts
     the Department during the five-year period preced-             as defined in section 2304b of title 10, United States
     ing the date of the enactment of this Act [Oct. 17,            Code.
     2006].                                                            ‘‘(B) Advisory and assistance services contracts
        ‘‘(C) The average annual expenditures by the De-            as defined in section 303I(i) of the Federal Property
     partment for such contracts.                                   and Administrative Services Act of 1949 (41 U.S.C.
        ‘‘(D) The average length of such contracts.                 253i(i)).
        ‘‘(E) The number of such contracts recompeted               ‘‘(3) MATTERS COVERED.—The report shall address
     and awarded to the previous award winner.                   the following issues:
     ‘‘(4) PROHIBITION ON USE OF AUTHORITY BY DEPART-                  ‘‘(A) The extent to which executive agencies and
  MENT OF DEFENSE IF REPORT NOT SUBMITTED.—The                      elements of the Department of Defense require ad-
Page 77                              TITLE 41—PUBLIC CONTRACTS                                                § 253j

   visory and assistance services for periods of greater   (d) Enhanced competition for orders in excess of
   than five years.                                            $5,000,000
      ‘‘(B) The extent to which such advisory and as-
   sistance services are provided by the same contrac-       In the case of a task or delivery order in ex-
   tors under recurring contracts.                         cess of $5,000,000, the requirement to provide all
      ‘‘(C) The rationale for contracting for advisory     contractors a fair opportunity to be considered
   and assistance services that will be needed on a        under subsection (b) is not met unless all such
   continuing basis, rather than performing the serv-      contractors are provided, at a minimum—
   ices inside the Federal Government.                         (1) a notice of the task or delivery order that
      ‘‘(D) The contract types and oversight mecha-
   nisms used by the Federal Government in contracts
                                                             includes a clear statement of the executive
   for advisory and assistance services and the extent       agency’s requirements;
   to which such contract types and oversight mecha-           (2) a reasonable period of time to provide a
   nisms are adequate to protect the interests of the        proposal in response to the notice;
   Government and taxpayers.                                   (3) disclosure of the significant factors and
      ‘‘(E) The actions taken by the Federal Govern-         subfactors, including cost or price, that the
   ment to prevent organizational conflicts of interest      executive agency expects to consider in evalu-
   and improper personal services contracts in its con-      ating such proposals, and their relative impor-
   tracts for advisory and assistance services.
   ‘‘(4) COMMITTEES.—The committees described in
                                                             tance;
 this paragraph are the following:                             (4) in the case of an award that is to be made
      ‘‘(A) The Committees on Armed Services and on          on a best value basis, a written statement doc-
   Homeland Security and Governmental Affairs of             umenting the basis for the award and the rel-
   the Senate.                                               ative importance of quality and price or cost
      ‘‘(B) The Committees on Armed Services and on          factors; and
   Government Reform [now Oversight and Govern-                (5) an opportunity for a post-award debrief-
   ment Reform] of the House of Representatives.’’           ing consistent with the requirements of sec-
§ 253j. Task and delivery order contracts: orders            tion 253b(e) of this title.
                                                           (e) Protests
(a) Issuance of orders
                                                             (1) A protest is not authorized in connection
  The following actions are not required for is-
                                                           with the issuance or proposed issuance of a task
suance of a task or delivery order under a task
                                                           or delivery order except for—
or delivery order contract:
                                                               (A) a protest on the ground that the order
     (1) A separate notice for such order under
                                                             increases the scope, period, or maximum value
  section 416 of this title or section 637(e) of title
                                                             of the contract under which the order is is-
  15.
                                                             sued; or
     (2) Except as provided in subsection (b) of
                                                               (B) a protest of an order valued in excess of
  this section, a competition (or a waiver of
                                                             $10,000,000.
  competition approved in accordance with sec-
  tion 253(f) of this title) that is separate from            (2) Notwithstanding section 3556 of title 31, the
  that used for entering into the contract.                Comptroller General of the United States shall
(b) Multiple award contracts                               have exclusive jurisdiction of a protest author-
                                                           ized under paragraph (1)(B).
  When multiple contracts are awarded under                   (3) This subsection shall be in effect for three
section 253h(d)(1)(B) or 253i(e) of this title, all        years, beginning on the date that is 120 days
contractors awarded such contracts shall be pro-           after January 28, 2008.
vided a fair opportunity to be considered, pursu-
ant to procedures set forth in the contracts, for          (f) Task and delivery order ombudsman
each task or delivery order in excess of $2,500               The head of each executive agency who awards
that is to be issued under any of the contracts            multiple task or delivery order contracts pursu-
unless—                                                    ant to section 253h(d)(1)(B) or 253i(e) of this title
     (1) the executive agency’s need for the serv-         shall appoint or designate a task and delivery
  ices or property ordered is of such unusual ur-          order ombudsman who shall be responsible for
  gency that providing such opportunity to all             reviewing complaints from the contractors on
  such contractors would result in unacceptable            such contracts and ensuring that all of the con-
  delays in fulfilling that need;                          tractors are afforded a fair opportunity to be
     (2) only one such contractor is capable of            considered for task or delivery orders when re-
  providing the services or property required at           quired under subsection (b) of this section. The
  the level of quality required because the serv-          task and delivery order ombudsman shall be a
  ices or property ordered are unique or highly            senior agency official who is independent of the
  specialized;                                             contracting officer for the contracts and may be
     (3) the task or delivery order should be is-          the executive agency’s competition advocate.
  sued on a sole-source basis in the interest of           (g) Applicability
  economy and efficiency because it is a logical              This section applies to task and delivery order
  follow-on to a task or delivery order already            contracts entered into under sections 253h and
  issued on a competitive basis; or                        253i of this title.
     (4) it is necessary to place the order with a
  particular contractor in order to satisfy a              (June 30, 1949, ch. 288, title III, § 303J, as added
  minimum guarantee.                                       Pub. L. 103–355, title I, § 1054(a), Oct. 13, 1994, 108
(c) Statement of work                                      Stat. 3264; amended Pub. L. 110–181, div. A, title
                                                           VIII, § 843(b)(2), Jan. 28, 2008, 122 Stat. 238.)
  A task or delivery order shall include a state-
ment of work that clearly specifies all tasks to                                 AMENDMENTS
be performed or property to be delivered under               2008—Subsec. (d). Pub. L. 110–181, § 843(b)(2)(B), added
the order.                                                 subsec. (d). Former subsec. (d) redesignated (e).
§ 253k                                    TITLE 41—PUBLIC CONTRACTS                                              Page 78

  Subsec. (e). Pub. L. 110–181, § 843(b)(2)(C), added sub-       § 253l. Severable services contracts for periods
sec. (e) and struck out former subsec. (e). Prior to                 crossing fiscal years
amendment, text read as follows: ‘‘A protest is not au-
thorized in connection with the issuance or proposed is-         (a) Authority
suance of a task or delivery order except for a protest            The head of an executive agency may enter
on the ground that the order increases the scope, pe-            into a contract for procurement of severable
riod, or maximum value of the contract under which               services for a period that begins in one fiscal
the order is issued.’’
                                                                 year and ends in the next fiscal year if (without
  Pub. L. 110–181, § 843(b)(2)(A), redesignated subsec. (d)
as (e). Former subsec. (e) redesignated (f).                     regard to any option to extend the period of the
  Subsecs. (f), (g). Pub. L. 110–181, § 843(b)(2)(A), redesig-   contract) the contract period does not exceed
nated subsecs. (e) and (f) as (f) and (g), respectively.         one year.
                                                                 (b) Obligation of funds
          EFFECTIVE DATE OF 2008 AMENDMENT                         Funds made available for a fiscal year may be
  Pub. L. 110–181, div. A, title VIII, § 843(b)(3)(B), Jan.      obligated for the total amount of a contract en-
28, 2008, 122 Stat. 239, provided that: ‘‘The amendments         tered into under the authority of subsection (a)
made by paragraph (2) [amending this section] shall              of this section.
take effect on the date that is 120 days after the date
of the enactment of this Act [Jan. 28, 2008], and shall          (June 30, 1949, ch. 288, title III, § 303L, as added
apply with respect to any task or delivery order award-          Pub. L. 103–355, title I, § 1073, Oct. 13, 1994, 108
ed on or after such date.’’                                      Stat. 3271; amended Pub. L. 104–106, div. D, title
                                                                 XLIII, § 4321(a)(1), Feb. 10, 1996, 110 Stat. 671.)
                     EFFECTIVE DATE                                                    AMENDMENTS
  For effective date and applicability of section, see             1996—Pub. L. 104–106 made technical correction to di-
section 10001 of Pub. L. 103–355, set out as an Effective        rectory language of Pub. L. 103–355, § 1073, which en-
Date of 1994 Amendment note under section 251 of this            acted this section.
title.
                                                                          EFFECTIVE DATE OF 1996 AMENDMENT
                       CONSTRUCTION                                Section 4321(a) of Pub. L. 104–106 provided that the
                                                                 amendment made by that section is effective as of Oct.
  Section not to be construed as modifying or supersed-
                                                                 13, 1994, and as if included in Pub. L. 103–355.
ing, or as intended to impair or restrict, authorities or
responsibilities under former 40 U.S.C. 759 or sub-                                  EFFECTIVE DATE
chapter VI (§ 541 et seq.) of chapter 10 of former title 40        For effective date and applicability of section, see
[now 40 U.S.C. 1101–1104], see section 1054(b) of Pub. L.        section 10001 of Pub. L. 103–355, set out as an Effective
103–355, set out as a note under section 253h of this            Date of 1994 Amendment note under section 251 of this
title.                                                           title.

§ 253k. Task and delivery order contracts: defini-               § 253l–1. Contract authority of Comptroller Gen-
    tions                                                            eral

  In sections 253h, 253i, and 253j of this title:                  The Comptroller General may use available
    (1) The term ‘‘task order contract’’ means a                 funds, now and hereafter, to enter into contracts
  contract for services that does not procure or                 for the acquisition of severable services for a pe-
  specify a firm quantity of services (other than                riod that begins in one fiscal year and ends in
  a minimum or maximum quantity) and that                        the next fiscal year and to enter in multiyear
  provides for the issuance of orders for the per-               contracts for the acquisition of property and
  formance of tasks during the period of the                     nonaudit-related services, to the same extent as
  contract.                                                      executive agencies under the authority of sec-
    (2) The term ‘‘delivery order contract’’                     tions 253l and 254c, respectively, of this title.
  means a contract for property that does not                    (Pub. L. 105–18, title II, § 7004, June 12, 1997, 111
  procure or specify a firm quantity of property                 Stat. 192.)
  (other than a minimum or maximum quan-                                               CODIFICATION
  tity) and that provides for the issuance of or-
                                                                   Section was not enacted as part of title III of act
  ders for the delivery of property during the pe-               June 30, 1949, ch. 288, 63 Stat. 393, which comprises this
  riod of the contract.                                          subchapter.
(June 30, 1949, ch. 288, title III, § 303K, as added
                                                                 § 253l–2. Contract authority of Library of Con-
Pub. L. 103–355, title I, § 1054(a), Oct. 13, 1994, 108
                                                                     gress
Stat. 3265.)
                                                                   The Library of Congress may use available
                     EFFECTIVE DATE                              funds, now and hereafter, to enter into contracts
  For effective date and applicability of section, see           for the lease or acquisition of severable services
section 10001 of Pub. L. 103–355, set out as an Effective        for a period that begins in one fiscal year and
Date of 1994 Amendment note under section 251 of this            ends in the next fiscal year and to enter into
title.                                                           multi-year contracts for the acquisition of prop-
                                                                 erty and services pursuant to sections 253l and
                       CONSTRUCTION                              254c of this title, respectively.
  Section not to be construed as modifying or supersed-          (Pub. L. 106–57, title II, § 207, Sept. 29, 1999, 113
ing, or as intended to impair or restrict, authorities or        Stat. 423.)
responsibilities under former 40 U.S.C. 759 or sub-
chapter VI (§ 541 et seq.) of chapter 10 of former title 40                            CODIFICATION
[now 40 U.S.C. 1101–1104], see section 1054(b) of Pub. L.          Section was not enacted as part of title III of act
103–355, set out as a note under section 253h of this            June 30, 1949, ch. 288, 63 Stat. 393, which comprises this
title.                                                           subchapter.
Page 79                                         TITLE 41—PUBLIC CONTRACTS                                     § 253l–8

§ 253l–3. Contract authority of Chief Administra-                                  CODIFICATION
    tive Officer of the House of Representatives               Section was not enacted as part of title III of act
                                                             June 30, 1949, ch. 288, 63 Stat. 393, which comprises this
  During fiscal year 2001 and any succeeding fis-
                                                             subchapter.
cal year, the Chief Administrative Officer of the
House of Representatives may—                                § 253l–6. Contract authority of Capitol Police
    (1) enter into contracts for the acquisition of
  severable services for a period that begins in 1           (a) In general
  fiscal year and ends in the next fiscal year to              The United States Capitol Police may—
  the same extent as the head of an executive                     (1) enter into contracts for the acquisition of
  agency under the authority of section 253l of                severable services for a period that begins in 1
  this title; and                                              fiscal year and ends in the next fiscal year to
    (2) enter into multiyear contracts for the ac-             the same extent as the head of an executive
  quisitions of property and nonaudit-related                  agency under the authority of section 253l of
  services to the same extent as executive agen-               this title; and
  cies under the authority of section 254c of this                (2) enter into multiyear contracts for the ac-
  title.                                                       quisitions of property and nonaudit-related
(Pub. L. 106–554, § 1(a)(2) [title I, § 101], Dec. 21,         services to the same extent as executive agen-
2000, 114 Stat. 2763, 2763A–100.)                              cies under the authority of section 254c of this
                                                               title.
                           CODIFICATION
                                                             (b) Effective date
  Section was not enacted as part of title III of act
June 30, 1949, ch. 288, 63 Stat. 393, which comprises this
                                                               This section shall apply to fiscal year 2003 and
subchapter.                                                  each fiscal year thereafter.
                                                             (Pub. L. 108–7, div. H, title I, § 1002, Feb. 20, 2003,
§ 253l–4. Contract authority of Congressional                117 Stat. 357.)
    Budget Office
                                                                                   CODIFICATION
  Beginning on December 21, 2000, and hereafter,
the Congressional Budget Office may use avail-                 Section was not enacted as part of title III of act
                                                             June 30, 1949, ch. 288, 63 Stat. 393, which comprises this
able funds to enter into contracts for the pro-
                                                             subchapter.
curement of severable services for a period that
begins in one fiscal year and ends in the next fis-          § 253l–7. Contract authority of Architect of the
cal year and may enter into multi-year con-                      Capitol
tracts for the acquisition of property and serv-
ices, to the same extent as executive agencies               (a) In general
under the authority of section 1 253l and 254c, re-            The Architect of the Capitol may—
spectively, of this title.                                        (1) enter into contracts for the acquisition of
(Pub. L. 106–554, § 1(a)(2) [title I, § 110], Dec. 21,         severable services for a period that begins in 1
2000, 114 Stat. 2763, 2763A–108.)                              fiscal year and ends in the next fiscal year to
                                                               the same extent as the head of an executive
                           CODIFICATION                        agency under the authority of section 253l of
  Section was not enacted as part of title III of act          this title; and
June 30, 1949, ch. 288, 63 Stat. 393, which comprises this        (2) enter into multiyear contracts for the ac-
subchapter.                                                    quisitions of property and nonaudit-related
                                                               services to the same extent as executive agen-
§ 253l–5. Contract authority of Secretary and Ser-             cies under the authority of section 254c of this
    geant at Arms and Doorkeeper of the Senate                 title.
  (a) Subject to regulations prescribed by the               (b) Effective date
Committee on Rules and Administration of the                   This section shall apply to fiscal year 2003 and
Senate, the Secretary and the Sergeant at Arms               each fiscal year thereafter.
and Doorkeeper of the Senate may—
    (1) enter into contracts for the acquisition of          (Pub. L. 108–7, div. H, title I, § 1202, Feb. 20, 2003,
  severable services for a period that begins in             117 Stat. 373.)
  one fiscal year and ends in the next fiscal year                                 CODIFICATION
  to the same extent and under the same condi-
  tions as the head of an executive agency under               Section was not enacted as part of title III of act
                                                             June 30, 1949, ch. 288, 63 Stat. 393, which comprises this
  the authority of section 253l of this title; and
                                                             subchapter.
    (2) enter into multiyear contracts for the ac-
  quisition of property and services to the same             § 253l–8. Contract authority         of   Secretary    of
  extent and under the same conditions as the                    Smithsonian Institution
  head of an executive agency under the author-
  ity of section 254c of this title.                         (a) In general
  (b) This section shall take effect on October 1,             The Secretary of the Smithsonian Institution
2002, and shall apply in fiscal year 2003 and suc-           may—
cessive fiscal years.                                             (1) enter into multi-year contracts for the
                                                               acquisition of property and services under the
(Pub. L. 108–7, div. H, title I, § 5, Feb. 20, 2003, 117       authority of section 254c of this title; and
Stat. 350.)                                                       (2) enter into contracts for the acquisition of
                                                               severable services for a period that begins in
 1 So   in original. Probably should be ‘‘sections’’.          one fiscal year and ends in the next fiscal year
§ 253m                                 TITLE 41—PUBLIC CONTRACTS                                       Page 80

  under the authority of section 253l of this                   (2) The contracting officer solicits phase-one
  title.                                                      proposals that—
(b) Effective date                                                (A) include information on the offeror’s—
                                                                    (i) technical approach; and
  This section shall apply to contracts entered                     (ii) technical qualifications; and
into on or after August 15, 2003.
                                                                  (B) do not include—
(Pub. L. 108–72, § 4, Aug. 15, 2003, 117 Stat. 889.)                (i) detailed design information; or
                      CODIFICATION                                  (ii) cost or price information.
  Section was not enacted as part of title III of act           (3) The evaluation factors to be used in eval-
June 30, 1949, ch. 288, 63 Stat. 393, which comprises this    uating phase-one proposals are stated in the
subchapter.                                                   solicitation and include specialized experience
                                                              and technical competence, capability to per-
§ 253m. Design-build selection procedures
                                                              form, past performance of the offeror’s team
(a) Authorization                                             (including the architect-engineer and con-
  Unless the traditional acquisition approach of              struction members of the team) and other ap-
design-bid-build established under sections 1101              propriate factors, except that cost-related or
to 1104 of title 40 is used or another acquisition            price-related evaluation factors are not per-
procedure authorized by law is used, the head of              mitted. Each solicitation establishes the rel-
an executive agency shall use the two-phase se-               ative importance assigned to the evaluation
lection procedures authorized in this section for             factors and subfactors that must be considered
entering into a contract for the design and con-              in the evaluation of phase-one proposals. The
struction of a public building, facility, or work             agency evaluates phase-one proposals on the
when a determination is made under subsection                 basis of the phase-one evaluation factors set
(b) of this section that the procedures are appro-            forth in the solicitation.
priate for use.                                                 (4) The contracting officer selects as the
                                                              most highly qualified the number of offerors
(b) Criteria for use                                          specified in the solicitation to provide the
  A contracting officer shall make a determina-               property or services under the contract and re-
tion whether two-phase selection procedures are               quests the selected offerors to submit phase-
appropriate for use for entering into a contract              two competitive proposals that include tech-
for the design and construction of a public build-            nical proposals and cost or price information.
ing, facility, or work when the contracting offi-             Each solicitation establishes with respect to
cer anticipates that three or more offers will be             phase two—
received for such contract, design work must be                   (A) the technical submission for the pro-
performed before an offeror can develop a price                 posal, including design concepts or proposed
or cost proposal for such contract, the offeror                 solutions to requirements addressed within
will incur a substantial amount of expense in                   the scope of work (or both), and
preparing the offer, and the contracting officer                  (B) the evaluation factors and subfactors,
has considered information such as the follow-                  including cost or price, that must be consid-
ing:                                                            ered in the evaluations of proposals in ac-
    (1) The extent to which the project require-                cordance with subsections (b), (c), and (d) of
  ments have been adequately defined.                           section 253a of this title.
    (2) The time constraints for delivery of the               The contracting officer separately evaluates
  project.                                                     the submissions described in subparagraphs
    (3) The capability and experience of poten-                (A) and (B).
  tial contractors.                                              (5) The agency awards the contract in ac-
    (4) The suitability of the project for use of              cordance with section 253b of this title.
  the two-phase selection procedures.
    (5) The capability of the agency to manage               (d) Solicitation to state number of offerors to be
  the two-phase selection process.                               selected for phase-two requests for competi-
    (6) Other criteria established by the agency.                tive proposals
(c) Procedures described                                       A solicitation issued pursuant to the proce-
                                                             dures described in subsection (c) of this section
  Two-phase selection procedures consist of the              shall state the maximum number of offerors
following:                                                   that are to be selected to submit competitive
    (1) The agency develops, either in-house or              proposals pursuant to subsection (c)(4) of this
  by contract, a scope of work statement for in-             section. The maximum number specified in the
  clusion in the solicitation that defines the               solicitation shall not exceed 5 unless the agency
  project and provides prospective offerors with             determines with respect to an individual solici-
  sufficient information regarding the Govern-               tation that a specified number greater than 5 is
  ment’s requirements (which may include cri-                in the Government’s interest and is consistent
  teria and preliminary design, budget param-                with the purposes and objectives of the two-
  eters, and schedule or delivery requirements)              phase selection process.
  to enable the offerors to submit proposals
  which meet the Government’s needs. If the                  (e) Requirement for guidance and regulations
  agency contracts for development of the scope                The Federal Acquisition Regulation shall in-
  of work statement, the agency shall contract               clude guidance—
  for architectural and engineering services as                  (1) regarding the factors that may be consid-
  defined by and in accordance with sections                   ered in determining whether the two-phase
  1101 to 1104 of title 40.                                    contracting procedures authorized by sub-
Page 81                                 TITLE 41—PUBLIC CONTRACTS                                                      § 254

  section (a) of this section are appropriate for              time of entering into the contract, of the project
  use in individual contracting situations;                    to which such fee is applicable is authorized in
    (2) regarding the factors that may be used in              contracts for architectural or engineering serv-
  selecting contractors; and                                   ices relating to any public works or utility
    (3) providing for a uniform approach to be                 project). All cost and cost-plus-a-fixed-fee con-
  used Government-wide.                                        tracts shall provide for advance notification by
                                                               the contractor to the procuring agency of any
(June 30, 1949, ch. 288, title III, § 303M, as added
                                                               subcontract thereunder on a cost-plus-a-fixed-
Pub. L. 104–106, div. D, title XLI, § 4105(b)(1), Feb.
                                                               fee basis and of any fixed-price subcontract or
10, 1996, 110 Stat. 647.)
                                                               purchase order which exceeds in dollar amount
                       CODIFICATION                            either the simplified acquisition threshold or 5
                                                               percent of the total estimated cost of the prime
  ‘‘Sections 1101 to 1104 of title 40’’ substituted in sub-
sec. (a) for ‘‘the Brooks Architect-Engineers Act (title       contract; and a procuring agency, through any
IX of this Act)’’ and in subsec. (c)(1) for ‘‘the Brooks       authorized representative thereof, shall have the
Architect-Engineers Act (40 U.S.C. 541 et seq.)’’ on au-       right to inspect the plans and to audit the books
thority of Pub. L. 107–217, § 5(c), Aug. 21, 2002, 116 Stat.   and records of any prime contractor or sub-
1303, the first section of which enacted Title 40, Public      contractor engaged in the performance of a cost
Buildings, Property, and Works.                                or cost-plus-a-fixed-fee contract.
                     EFFECTIVE DATE                            (June 30, 1949, ch. 288, title III, § 304, 63 Stat. 395;
  For effective date and applicability of section, see
                                                               Oct. 31, 1951, ch. 652, 65 Stat. 700; July 12, 1952,
section 4401 of Pub. L. 104–106, set out as an Effective       ch. 703, § 1(m), 66 Stat. 594; Pub. L. 89–607, § 2,
Date of 1996 Amendment note under section 251 of this          Sept. 27, 1966, 80 Stat. 850; Pub. L. 98–369, div. B,
title.                                                         title VII, §§ 2712, 2714(a)(2), (3), July 18, 1984, 98
                                                               Stat. 1181, 1184; Pub. L. 103–355, title I, §§ 1071,
§ 254. Contract requirements                                   1251(a)(1), title II, § 2251(b), title IV, §§ 4103(c),
                                                               4402(c), title VIII, § 8204(b), title X, § 10005(e), Oct.
(a) Contracts awarded using procedures other
                                                               13, 1994, 108 Stat. 3270, 3278, 3320, 3341, 3349, 3396,
    than sealed-bid procedures
                                                               3408.)
  Except as provided in subsection (b) of this
                                                                                      AMENDMENTS
section, contracts awarded after using proce-
dures other than sealed-bid procedures may be                     1994—Subsec. (a). Pub. L. 103–355, §§ 4103(c), 8204(b), in-
of any type which in the opinion of the agency                 serted at end ‘‘The preceding sentence does not apply
                                                               to a contract for an amount that is not greater than
head will promote the best interests of the Gov-               the simplified acquisition threshold or to a contract for
ernment. Every contract awarded after using                    the acquisition of commercial items.’’
procedures other than sealed-bid procedures                       Subsec. (b). Pub. L. 103–355, §§ 4402(c), 10005(e), sub-
shall contain a suitable warranty, as determined               stituted ‘‘percent’’ for ‘‘per centum’’ wherever appear-
by the agency head, by the contractor that no                  ing and ‘‘either the simplified acquisition threshold’’
person or selling agency has been employed or                  for ‘‘either $25,000’’ in last sentence.
                                                                  Pub. L. 103–355, § 1071, struck out after first sentence
retained to solicit or secure such contract upon               ‘‘Neither a cost nor a cost-plus-a-fixed-fee contract nor
an agreement or understanding for a commis-                    an incentive-type contract shall be used unless the
sion, percentage, brokerage, or contingent fee,                agency head determines that such method of contract-
excepting bona fide employees or bona fide es-                 ing is likely to be less costly than other methods or
tablished commercial or selling agencies main-                 that it is impractical to secure property or services of
tained by the contractor for the purpose of se-                the kind or quality required without the use of a cost
curing business, for the breach or violation of                or cost-plus-a-fixed-fee contract or an incentive-type
                                                               contract.’’
which warranty the Government shall have the                      Subsec. (c). Pub. L. 103–355, § 2251(b), struck out sub-
right to annul such contract without liability or              sec. (c) which related to examination of books, records,
in its discretion to deduct from the contract                  etc. of contractors, time limitations, exemptions, ex-
price or consideration the full amount of such                 ceptional conditions, and reports to Congress. See sec-
commission, percentage, brokerage, or contin-                  tion 254d of this title.
gent fee. The preceding sentence does not apply                   Subsec. (d). Pub. L. 103–355, § 1251(a)(1), struck out
to a contract for an amount that is not greater                subsec. (d) which related to submission of cost or pric-
                                                               ing data by contractors and subcontractors, certificate
than the simplified acquisition threshold or to a              requirements, adjustment of price, inspection of books,
contract for the acquisition of commercial                     records, etc., necessity of data, and exceptions. See sec-
items.                                                         tion 254b of this title.
(b) Barred contracts; fee limitation; determina-                  1984—Pub. L. 98–369, § 2714(a)(2), amended section
                                                               catchline generally.
    tion of use; advance notification                             Subsec. (a). Pub. L. 98–369, § 2714(a)(3)(A), (B), sub-
  The cost-plus-a-percentage-of-cost system of                 stituted ‘‘awarded after using procedures other than
contracting shall not be used, and in the case of              sealed-bid procedures’’ for ‘‘negotiated pursuant to sec-
a cost-plus-a-fixed-fee contract the fee shall not             tion 252(c) of this title’’ in first and second sentences.
                                                                  Subsec. (c). Pub. L. 98–369, § 2714(a)(3)(C), substituted
exceed 10 percent of the estimated cost of the                 ‘‘awarded after using procedures other than sealed-bid
contract, exclusive of the fee, as determined by               procedures’’ for ‘‘negotiated without advertising pursu-
the agency head at the time of entering into                   ant to authority contained in this Act’’ in first sen-
such contract (except that a fee not in excess of              tence.
15 percent of such estimated cost is authorized                   Subsec. (d). Pub. L. 98–369, § 2712, added subsec. (d).
in any such contract for experimental, develop-                   1966—Subsec. (c). Pub. L. 89–607 provided for exemp-
                                                               tion of certain contracts with foreign contractors from
mental, or research work and that a fee inclu-                 the requirement for an examination-of-records clause,
sive of the contractor’s costs and not in excess               such determination to be reported to Congress.
of 6 percent of the estimated cost, exclusive of                  1952—Subsec. (b). Act July 12, 1952, substituted ‘‘prop-
fees, as determined by the agency head at the                  erty’’ for ‘‘supplies’’.
§ 254                                     TITLE 41—PUBLIC CONTRACTS                                                 Page 82

  1951—Subsec. (c). Act Oct. 31, 1951, added subsec. (c).             ‘‘(2) YEARS.—The report required by subsection (d)
                                                                   shall be submitted from March 1, 2009, until March 1,
          EFFECTIVE DATE OF 1994 AMENDMENT
                                                                   2014.
  For effective date and applicability of amendment by             ‘‘(g) EXECUTIVE AGENCY DEFINED.—In this section, the
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set       term ‘executive agency’ has the meaning given such
out as a note under section 251 of this title.                   term in section 4(1) of the Office of Federal Procure-
                                                                 ment Policy Act (41 U.S.C. 403(1)).’’
          EFFECTIVE DATE OF 1984 AMENDMENT
  Amendment by Pub. L. 98–369 applicable with respect                            EXEMPTION OF FUNCTIONS
to any solicitation for bids or proposals issued after             Functions authorized by Foreign Assistance Act of
Mar. 31, 1985, see section 2751 of Pub. L. 98–369, set out       1961, as amended, as exempt, see Ex. Ord. No. 11223, eff.
as a note under section 251 of this title.                       May 12, 1965, 30 F.R. 6635, set out as a note under sec-
                                                                 tion 2393 of Title 22, Foreign Relations and Intercourse.
                     EFFECTIVE DATE
  Section effective July 1, 1949, see section 605, for-                            FOREIGN CONTRACTORS
merly section 505, of act June 30, 1949, ch. 288, 63 Stat.         Secretaries of Defense, Army, Navy, or Air Force, or
403; renumbered by act Sept. 5, 1950, ch. 849, § 6(a), (b),      their designees, to determine, prior to exercising the
64 Stat. 583.                                                    authority provided in the amendment of this section by
  REGULATIONS ON THE USE OF COST-REIMBURSEMENT                   Pub. L. 89–607 to exempt certain contracts with foreign
                   CONTRACTS                                     contractors from the requirement of an examination-
                                                                 of-records clause, that all reasonable efforts have been
  Pub. L. 110–417, [div. A], title VIII, § 864, Oct. 14, 2008,   made to include such examination-of-records clause, as
122 Stat. 4549, provided that:                                   required by par. (11) of Part I of Ex. Ord. No. 10789, and
  ‘‘(a) IN GENERAL.—Not later than 270 days after the            that alternate sources of supply are not reasonably
date of the enactment of this Act [Oct. 14, 2008], the           available, see par. (11) of Part I of Ex. Ord. No. 10789,
Federal Acquisition Regulation shall be revised to ad-           eff. Nov. 14, 1958, 23 F.R. 8897, as amended, set out as a
dress the use of cost-reimbursement contracts.                   note under section 1431 of Title 50, War and National
  ‘‘(b) CONTENT.—The regulations promulgated under               Defense.
subsection (a) shall include, at a minimum, guidance
regarding—                                                                      EXECUTIVE ORDER NO. 12800
     ‘‘(1) when and under what circumstances cost-reim-            Ex. Ord. No. 12800, Apr. 13, 1992, 57 F.R. 12985, 13413,
  bursement contracts are appropriate;                           which required Federal contractors to post a notice
     ‘‘(2) the acquisition plan findings necessary to sup-       that employees could not be required to be members of
  port a decision to use cost-reimbursement contracts;           a union in order to retain their jobs, was revoked by
  and                                                            Ex. Ord. No. 12836, § 1, Feb. 1, 1993, 58 F.R. 7045, which
     ‘‘(3) the acquisition workforce resources necessary
                                                                 was itself revoked as it relates to notification of em-
  to award and manage cost-reimbursement contracts.
                                                                 ployee rights concerning payment of union dues or fees
  ‘‘(c) INSPECTOR GENERAL REVIEW.—Not later than one
                                                                 by Ex. Ord. No. 13201, § 11, Feb. 17, 2001, 66 F.R. 11221,
year after the regulations required by subsection (a)
                                                                 which was itself revoked by Ex. Ord. No. 13496, § 13, Jan.
are promulgated, the Inspector General for each execu-
                                                                 30, 2009, 74 F.R. 6110, set out below, and as it relates to
tive agency shall review the use of cost-reimbursement
                                                                 project agreements by Ex. Ord. No. 13202, § 8, Feb. 17,
contracts by such agency for compliance with such reg-
                                                                 2001, 66 F.R. 11226, which was itself revoked by Ex. Ord.
ulations and shall include the results of the review in
                                                                 No. 13502, § 8, Feb. 6, 2009, 74 F.R. 6986, set out as a note
the Inspector General’s next semiannual report.
  ‘‘(d) REPORT.—Subject to subsection (f), the Director          under section 251 of this title.
of the Office of Management and Budget shall submit                             EXECUTIVE ORDER NO. 13201
an annual report to Congressional committees identi-
fied in subsection (e) on the use of cost-reimbursement            Ex. Ord. No. 13201, Feb. 17, 2001, 66 F.R. 11221, which
contracts and task or delivery orders by all executive           related to notification of employee rights concerning
agencies. The report shall be submitted no later than            payment of union dues or fees, was revoked by Ex. Ord.
March 1 and shall cover the fiscal year ending Septem-           No. 13496, § 13, Jan. 30, 2009, 74 F.R. 6110, set out below.
ber 30 of the prior year. The report shall include—               EX. ORD. NO. 13496. NOTIFICATION OF EMPLOYEE RIGHTS
     ‘‘(1) the total number and value of contracts award-                     UNDER FEDERAL LABOR LAWS
  ed and orders issued during the covered fiscal year;
     ‘‘(2) the total number and value of cost-reimburse-            Ex. Ord. No. 13496, Jan. 30, 2009, 74 F.R. 6107, provided:
  ment contracts awarded and orders issued during the               By the authority vested in me as President by the
  covered fiscal year; and                                       Constitution and the laws of the United States of
     ‘‘(3) an assessment of the effectiveness of the regu-       America, including the Federal Property and Adminis-
  lations promulgated pursuant to subsection (a) in en-          trative Services Act, 40 U.S.C. 101 et seq., and in order
  suring the appropriate use of cost-reimbursement               to ensure the economical and efficient administration
  contracts.                                                     and completion of Government contracts, it is hereby
  ‘‘(e) CONGRESSIONAL COMMITTEES DEFINED.—The re-                ordered that:
port required by subsection (d) shall be submitted to               SECTION 1. Policy. This order is designed to promote
the Committee on Oversight and Government Reform                 economy and efficiency in Government procurement.
of the House of Representatives; the Committee on                When the Federal Government contracts for goods or
Homeland Security and Governmental Affairs of the                services, it has a proprietary interest in ensuring that
Senate; the Committees on Appropriations of the House            those contracts will be performed by contractors whose
of Representatives and the Senate; and, in the case of           work will not be interrupted by labor unrest. The at-
the Department of Defense and the Department of En-              tainment of industrial peace is most easily achieved
ergy, the Committees on Armed Services of the Senate             and workers’ productivity is enhanced when workers
and the House of Representatives.                                are well informed of their rights under Federal labor
  ‘‘(f) REQUIREMENTS LIMITED TO CERTAIN AGENCIES AND             laws, including the National Labor Relations Act (Act),
YEARS.—                                                          29 U.S.C. 151 et seq. As the Act recognizes, ‘‘encouraging
     ‘‘(1) AGENCIES.—The requirement in subsection (c)           the practice and procedure of collective bargaining and
  shall apply only to those executive agencies that              . . . protecting the exercise by workers of full freedom
  awarded contracts or issued orders (under contracts            of association, self-organization, and designation of
  previously awarded) in a total amount of at least              representatives of their own choosing, for the purpose
  $1,000,000,000 in the fiscal year proceeding the fiscal        of negotiating the terms and conditions of their em-
  year in which the assessments and reports are sub-             ployment or other mutual aid or protection’’ will
  mitted.                                                        ‘‘eliminate the causes of certain substantial obstruc-
Page 83                                 TITLE 41—PUBLIC CONTRACTS                                                § 254

tions to the free flow of commerce’’ and ‘‘mitigate and       sions set out in subsection (a) of this section necessary
eliminate these obstructions when they have oc-               to achieve the purposes of this order, the Secretary
curred.’’ 29 U.S.C. 151. Relying on contractors whose         promptly shall issue such rules, regulations, or orders
employees are informed of such rights under Federal           as are needed to cause the substitution or addition of
labor laws facilitates the efficient and economical com-      appropriate contractual provisions in Government con-
pletion of the Federal Government’s contracts.                tracts thereafter entered into.
  SEC. 2. Contract Clause. Except in contracts exempted         SEC. 4. Exemptions. (a) If the Secretary finds that the
in accordance with section 3 of this order, all Govern-       application of any of the requirements of this order
ment contracting departments and agencies shall, to           would not serve the purposes of this order or would im-
the extent consistent with law, include the following         pair the ability of the Government to procure goods or
provisions in every Government contract, other than           services on an economical and efficient basis, the Sec-
collective bargaining agreements as defined in 5 U.S.C.       retary may exempt a contracting department or agency
7103(a)(8) and purchases under the simplified acquisi-        or group of departments or agencies from the require-
tion threshold as defined in the Office of Federal Pro-       ments of any or all of the provisions of this order with
curement Policy Act, 41 U.S.C. 403.                           respect to a particular contract or subcontract or any
  ‘‘1. During the term of this contract, the contractor       class of contracts or subcontracts.
agrees to post a notice, of such size and in such form,         (b) The Secretary may, if the Secretary finds that
and containing such content as the Secretary of Labor         special circumstances require an exemption in order to
shall prescribe, in conspicuous places in and about its       serve the national interest, exempt a contracting de-
plants and offices where employees covered by the Na-         partment or agency from the requirements of any or all
tional Labor Relations Act engage in activities relat-        of the provisions of section 2 of this order with respect
ing to the performance of the contract, including all         to a particular contract or subcontract or class of con-
places where notices to employees are customarily             tracts or subcontracts.
posted both physically and electronically. The notice           SEC. 5. Investigation.
shall include the information contained in the notice           (a) The Secretary may investigate any Government
published by the Secretary of Labor in the Federal Reg-       contractor, subcontractor, or vendor to determine
ister (Secretary’s Notice).                                   whether the contractual provisions required by section
  ‘‘2. The contractor will comply with all provisions of      2 of this order have been violated.
the Secretary’s Notice, and related rules, regulations,         Such investigations shall be conducted in accordance
and orders of the Secretary of Labor.                         with procedures established by the Secretary.
  ‘‘3. In the event that the contractor does not comply         (b) The Secretary shall receive and investigate com-
with any of the requirements set forth in paragraphs (1)      plaints by employees of a Government contractor or
or (2) above, this contract may be cancelled, termi-          subcontractor, where such complaints allege a failure
nated, or suspended in whole or in part, and the con-         to perform or a violation of the contractual provisions
tractor may be declared ineligible for further Govern-        required by section 2 of this order.
ment contracts in accordance with procedures author-            SEC. 6. Compliance.
ized in or adopted pursuant to Executive Order [number          (a) The Secretary, or any agency or officer in the ex-
as provided by the Federal Register [13496]] of [insert       ecutive branch lawfully designated by rule, regulation,
new date [Jan. 30, 2009]]. Such other sanctions or rem-       or order of the Secretary, may hold such hearings, pub-
edies may be imposed as are provided in Executive             lic or private, regarding compliance with this order as
Order [number as provided by the Federal Register             the Secretary may deem advisable.
[13496]] of [insert new date [Jan. 30, 2009]], or by rule,      (b) The Secretary may hold hearings, or cause hear-
regulation, or order of the Secretary of Labor, or as are     ings to be held, in accordance with subsection (a) of
otherwise provided by law.                                    this section, prior to imposing, ordering, or rec-
  ‘‘4. The contractor will include the provisions of para-    ommending the imposition of sanctions under this
graphs (1) through (3) above in every subcontract en-         order. Neither an order for cancellation, termination,
tered into in connection with this contract (unless ex-       or suspension of any contract or debarment of any con-
empted by rules, regulations, or orders of the Secretary      tractor from further Government contracts under sec-
of Labor issued pursuant to section 3 of Executive            tion 7(b) of this order nor the inclusion of a contractor
Order [number as provided by the Federal Register             on a published list of noncomplying contractors under
[13496]] of [insert new date [Jan. 30, 2009]]) so that such   section 7(c) of this order shall be carried out without
provisions will be binding upon each subcontractor.           affording the contractor an opportunity for a hearing.
The contractor will take such action with respect to            SEC. 7. Remedies. In accordance with such rules, regu-
any such subcontract as may be directed by the Sec-           lations, or orders as the Secretary may issue or adopt,
retary of Labor as a means of enforcing such provi-           the Secretary may:
sions, including the imposition of sanctions for non-           (a) after consulting with the contracting department
compliance: Provided, however, that if the contractor         or agency, direct that department or agency to cancel,
becomes involved in litigation with a subcontractor, or       terminate, suspend, or cause to be cancelled, termi-
is threatened with such involvement, as a result of           nated, or suspended, any contract, or any portion or
such direction, the contractor may request the United         portions thereof, for failure of the contractor to comply
States to enter into such litigation to protect the in-       with the contractual provisions required by section 2 of
terests of the United States.’’                               this order; contracts may be cancelled, terminated, or
  SEC. 3. Administration.                                     suspended absolutely, or continuance of contracts may
  (a) The Secretary of Labor (Secretary) shall be re-         be conditioned upon future compliance: Provided, that
sponsible for the administration and enforcement of           before issuing a directive under this subsection, the
this order. The Secretary shall adopt such rules and          Secretary shall provide the head of the contracting de-
regulations and issue such orders as are necessary and        partment or agency an opportunity to offer written ob-
appropriate to achieve the purposes of this order.            jections to the issuance of such a directive, which ob-
  (b) Within 120 days of the effective date of this order,    jections shall include a complete statement of reasons
the Secretary shall initiate a rulemaking to prescribe        for the objections, among which reasons shall be a find-
the size, form, and content of the notice to be posted by     ing that completion of the contract is essential to the
a contractor under paragraph 1 of the contract clause         agency’s mission: And provided further, that no direc-
described in section 2 of this order. Such notice shall       tive shall be issued by the Secretary under this sub-
describe the rights of employees under Federal labor          section so long as the head of the contracting depart-
laws, consistent with the policy set forth in section 1       ment or agency, or his or her designee, continues to ob-
of this order.                                                ject to the issuance of such directive;
  (c) Whenever the Secretary finds that an act of Con-          (b) after consulting with each affected contracting
gress, clarification of existing law by the courts or the     department or agency, provide that one or more con-
National Labor Relations Board, or other circum-              tracting departments or agencies shall refrain from en-
stances make modification of the contractual provi-           tering into further contracts, or extensions or other
§ 254a                                  TITLE 41—PUBLIC CONTRACTS                                              Page 84

modifications of existing contracts, with any non-            able at law or in equity by any party against the
complying contractor, until such contractor has sat-          United States, its departments, agencies, or entities,
isfied the Secretary that such contractor has complied        its officers, employees, or agents, or any other person.
with and will carry out the provisions of this order:           SEC. 16. Effective Date. This order shall become effec-
Provided, that before issuing a directive under this sub-     tive immediately, and shall apply to contracts result-
section, the Secretary shall provide the head of each         ing from solicitations issued on or after the effective
contracting department or agency an opportunity to            date of the rule promulgated by the Secretary pursuant
offer written objections to the issuance of such a direc-     to section 3(b) of this order.
tive, which objections shall include a complete state-                                                BARACK OBAMA.
ment of reasons for the objections, among which rea-
sons shall be a finding that further contracts or exten-                            DEFINITIONS
sions or other modifications of existing contracts with         The definitions in section 102 of Title 40, Public
the noncomplying contractor are essential to the agen-        Buildings, Property, and Works, apply to this sub-
cy’s mission: And provided further, that no directive         chapter.
shall be issued by the Secretary under this subsection
so long as the head of a contracting department or            § 254a. Cost-type research and development con-
agency, or his or her designee, continues to object to            tracts with educational institutions
the issuance of such directive; and
  (c) publish, or cause to be published, the names of           On and after September 5, 1962, provision may
contractors that have, in the judgment of the Sec-            be made in cost-type research and development
retary, failed to comply with the provisions of this          contracts (including grants) with universities,
order or of related rules, regulations, and orders of the     colleges, or other educational institutions for
Secretary.                                                    payment of reimbursable indirect costs on the
  SEC. 8. Reports. Whenever the Secretary invokes sec-
tion 7(a) or 7(b) of this order, the contracting depart-
                                                              basis of predetermined fixed-percentage rates
ment or agency shall report to the Secretary the re-          applied to the total, or an element thereof, of
sults of the action it has taken within such time as the      the reimbursable direct costs incurred.
Secretary shall specify.                                      (Pub. L. 87–638, Sept. 5, 1962, 76 Stat. 437.)
  SEC. 9. Cooperation. Each contracting department and
agency shall cooperate with the Secretary and provide                               CODIFICATION
such information and assistance as the Secretary may
                                                                Section was not enacted as part of title III of act
require in the performance of the Secretary’s functions
                                                              June 30, 1949, ch. 288, 63 Stat. 393, which comprises this
under this order.
                                                              subchapter.
  SEC. 10. Sufficiency of Remedies. If the Secretary finds
that the authority vested in the Secretary by sections        § 254b. Cost or pricing data: truth in negotiations
5 through 9 of this order is not sufficient to effectuate
the purposes of this order, the Secretary shall develop       (a) Required cost or pricing data and certifi-
recommendations on how better to effectuate those                 cation
purposes.                                                       (1) The head of an executive agency shall re-
  SEC. 11. Delegation. The Secretary may, in accordance
with law, delegate any function or duty of the Sec-           quire offerors, contractors, and subcontractors
retary under this order to any officer in the Depart-         to make cost or pricing data available as fol-
ment of Labor or to any other officer in the executive        lows:
branch of the Government, with the consent of the                 (A) An offeror for a prime contract under
head of the department or agency in which that officer          this subchapter to be entered into using proce-
serves.                                                         dures other than sealed-bid procedures shall be
  SEC. 12. Implementation. To the extent permitted by           required to submit cost or pricing data before
law, the Federal Acquisition Regulatory Council (FAR
                                                                the award of a contract if—
Council) shall take whatever action is required to im-
plement in the Federal Acquisition Regulation (FAR)                 (i) in the case of a prime contract entered
the provisions of this order and any related rules, regu-         into after October 13, 1994, the price of the
lations, or orders issued by the Secretary under this             contract to the United States is expected to
order and shall amend the FAR to require each solicita-           exceed $500,000; and
tion of offers for a contract to include a provision that           (ii) in the case of a prime contract entered
implements section 2 of this order.                               into on or before October 13, 1994, the price
  SEC. 13. Revocation of Prior Order and Actions. Execu-          of the contract to the United States is ex-
tive Order 13201 of February 17, 2001, is revoked. The
                                                                  pected to exceed $100,000.
heads of executive departments and agencies shall, to
the extent permitted by law, revoke expeditiously any             (B) The contractor for a prime contract
orders, rules, regulations, guidelines, or policies imple-      under this subchapter shall be required to sub-
menting or enforcing Executive Order 13201.                     mit cost or pricing data before the pricing of
  SEC. 14. Severability. If any provision of this order, or
                                                                a change or modification to the contract if—
the application of such provision to any person or cir-
cumstance, is held to be invalid, the remainder of this             (i) in the case of a change or modification
order and the application of the provisions of such to            made to a prime contract referred to in sub-
any person or circumstances shall not be affected                 paragraph (A)(i), the price adjustment is ex-
thereby.                                                          pected to exceed $500,000;
  SEC. 15. General Provisions.                                      (ii) in the case of a change or modification
  (a) Nothing in this order shall be construed to impair          made to a prime contract that was entered
or otherwise affect:                                              into on or before October 13, 1994, and that
     (i) authority granted by law to a department, agen-
  cy, or the head thereof; or
                                                                  has been modified pursuant to paragraph (6),
     (ii) functions of the Director of the Office of Man-         the price adjustment is expected to exceed
  agement and Budget relating to budgetary, adminis-              $500,000; and
  trative, or legislative proposals.                                (iii) in the case of a change or modification
  (b) This order shall be implemented consistent with             not covered by clause (i) or (ii), the price ad-
applicable law and subject to the availability of appro-          justment is expected to exceed $100,000.
priations.
  (c) This order is not intended to, and does not, create         (C) An offeror for a subcontract (at any tier)
any right or benefit, substantive or procedural, enforce-       of a contract under this subchapter shall be re-
Page 85                            TITLE 41—PUBLIC CONTRACTS                                       § 254b

 quired to submit cost or pricing data before          paragraph (1) in connection with a prime con-
 the award of the subcontract if the prime con-        tract entered into on or before October 13, 1994,
 tractor and each higher-tier subcontractor            the head of the executive agency that entered
 have been required to make available cost or          into such contract shall modify the contract to
 pricing data under this section and—                  reflect subparagraphs (B)(ii) and (C)(ii) of para-
     (i) in the case of a subcontract under a          graph (1). All such modifications shall be made
   prime contract referred to in subparagraph          without requiring consideration.
   (A)(i), the price of the subcontract is ex-           (7) Effective on October 1 of each year that is
   pected to exceed $500,000;                          divisible by 5, each amount set forth in para-
     (ii) in the case of a subcontract entered         graph (1) shall be adjusted to the amount that is
   into under a prime contract that was en-            equal to the fiscal year 1994 constant dollar
   tered into on or before October 13, 1994, and       value of the amount set forth. Any amount, as
   that has been modified pursuant to para-            so adjusted, that is not evenly divisible by
   graph (6), the price of the subcontract is ex-      $50,000 shall be rounded to the nearest multiple
   pected to exceed $500,000; and                      of $50,000. In the case of an amount that is even-
     (iii) in the case of a subcontract not cov-       ly divisible by $25,000 but not evenly divisible by
   ered by clause (i) or (ii), the price of the sub-   $50,000, the amount shall be rounded to the next
   contract is expected to exceed $100,000.            higher multiple of $50,000.
   (D) The subcontractor for a subcontract cov-        (b) Exceptions
 ered by subparagraph (C) shall be required to
                                                         (1) In general
 submit cost or pricing data before the pricing
 of a change or modification to the subcontract            Submission of certified cost or pricing data
 if—                                                     shall not be required under subsection (a) of
     (i) in the case of a change or modification         this section in the case of a contract, a sub-
   to a subcontract referred to in subparagraph          contract, or a modification of a contract or
   (C)(i) or (C)(ii), the price adjustment is ex-        subcontract—
   pected to exceed $500,000; and                             (A) for which the price agreed upon is
     (ii) in the case of a change or modification          based on—
   to a subcontract referred to in subparagraph                 (i) adequate price competition; or
   (C)(iii), the price adjustment is expected to                (ii) prices set by law or regulation;
   exceed $100,000.
                                                             (B) for the acquisition of a commercial
  (2) A person required, as an offeror, contrac-           item; or
tor, or subcontractor, to submit cost or pricing             (C) in an exceptional case when the head of
data under paragraph (1) (or required by the               the procuring activity, without delegation,
head of the procuring activity concerned to sub-           determines that the requirements of this
mit such data under subsection (c) of this sec-            section may be waived and justifies in writ-
tion) shall be required to certify that, to the            ing the reasons for such determination.
best of the person’s knowledge and belief, the
                                                         (2) Modifications of contracts and subcontracts
cost or pricing data submitted are accurate,
                                                             for commercial items
complete, and current.
  (3) Cost or pricing data required to be submit-          In the case of a modification of a contract or
ted under paragraph (1) (or under subsection (c)         subcontract for a commercial item that is not
of this section), and a certification required to        covered by the exception to the submission of
be submitted under paragraph (2), shall be sub-          certified cost or pricing data in paragraph
mitted—                                                  (1)(A) or (1)(B), submission of certified cost or
    (A) in the case of a submission by a prime           pricing data shall not be required under sub-
  contractor (or an offeror for a prime contract),       section (a) of this section if—
  to the contracting officer for the contract (or            (A) the contract or subcontract being
  to a designated representative of the contract-          modified is a contract or subcontract for
  ing officer); or                                         which submission of certified cost or pricing
    (B) in the case of a submission by a sub-              data may not be required by reason of para-
  contractor (or an offeror for a subcontract), to         graph (1)(A) or (1)(B); and
  the prime contractor.                                      (B) the modification would not change the
  (4) Except as provided under subsection (b) of           contract or subcontract, as the case may be,
this section, this section applies to contracts en-        from a contract or subcontract for the ac-
tered into by the head of an executive agency on           quisition of a commercial item to a contract
behalf of a foreign government.                            or subcontract for the acquisition of an item
  (5) A waiver of requirements for submission of           other than a commercial item.
certified cost or pricing data that is granted         (c) Cost or pricing data on below-threshold con-
under subsection (b)(1)(C) of this section in the          tracts
case of a contract or subcontract does not waive
                                                         (1) Authority to require submission
the requirement under paragraph (1)(C) for sub-
mission of cost or pricing data in the case of             Subject to paragraph (2), when certified cost
subcontracts under that contract or subcontract          or pricing data are not required to be submit-
unless the head of the procuring activity grant-         ted by subsection (a) of this section for a con-
ing the waiver determines that the requirement           tract, subcontract, or modification of a con-
under that paragraph should be waived in the             tract or subcontract, such data may neverthe-
case of such subcontracts and justifies in writ-         less be required to be submitted by the head of
ing the reasons for the determination.                   the procuring activity, but only if the head of
  (6) Upon the request of a contractor that was          the procuring activity determines that such
required to submit cost or pricing data under            data are necessary for the evaluation by the
§ 254b                             TITLE 41—PUBLIC CONTRACTS                                     Page 86

  agency of the reasonableness of the price of         mined by the head of the executive agency that
  the contract, subcontract, or modification of a      such price was increased because the contractor
  contract or subcontract. In any case in which        (or any subcontractor required to make avail-
  the head of the procuring activity requires          able such a certificate) submitted defective cost
  such data to be submitted under this sub-            or pricing data.
  section, the head of the procuring activity            (B) For the purposes of this section, defective
  shall justify in writing the reason for such re-     cost or pricing data are cost or pricing data
  quirement.                                           which, as of the date of agreement on the price
  (2) Exception                                        of the contract (or another date agreed upon be-
                                                       tween the parties), were inaccurate, incomplete,
     The head of the procuring activity may not        or noncurrent. If for purposes of the preceding
  require certified cost or pricing data to be sub-    sentence the parties agree upon a date other
  mitted under this paragraph for any contract         than the date of agreement on the price of the
  or subcontract, or modification of a contract        contract, the date agreed upon by the parties
  or subcontract, covered by the exceptions in         shall be as close to the date of agreement on the
  subparagraph (A) or (B) of subsection (b)(1) of      price of the contract as is practicable.
  this section.                                          (2) In determining for purposes of a contract
  (3) Delegation of authority prohibited               price adjustment under a contract provision re-
     The head of a procuring activity may not          quired by paragraph (1) whether, and to what ex-
  delegate the functions under this paragraph.         tent, a contract price was increased because the
                                                       contractor (or a subcontractor) submitted defec-
(d) Submission of other information                    tive cost or pricing data, it shall be a defense
  (1) Authority to require submission                  that the United States did not rely on the defec-
     When certified cost or pricing data are not       tive data submitted by the contractor or sub-
  required to be submitted under this section for      contractor.
  a contract, subcontract, or modification of a          (3) It is not a defense to an adjustment of the
  contract or subcontract, the contracting offi-       price of a contract under a contract provision
  cer shall require submission of data other than      required by paragraph (1) that—
  certified cost or pricing data to the extent             (A) the price of the contract would not have
  necessary to determine the reasonableness of           been modified even if accurate, complete, and
  the price of the contract, subcontract, or             current cost or pricing data had been submit-
  modification of the contract or subcontract.           ted by the contractor or subcontractor be-
  Except in the case of a contract or subcontract        cause the contractor or subcontractor—
  covered by the exceptions in subsection                     (i) was the sole source of the property or
  (b)(1)(A) of this section, the contracting officer       services procured; or
                                                              (ii) otherwise was in a superior bargaining
  shall require that the data submitted include,
                                                           position with respect to the property or
  at a minimum, appropriate information on the
                                                           services procured;
  prices at which the same item or similar items
  have previously been sold that is adequate for          (B) the contracting officer should have
  evaluating the reasonableness of the price for        known that the cost or pricing data in issue
  the procurement.                                      were defective even though the contractor or
  (2) Limitations on authority                          subcontractor took no affirmative action to
                                                        bring the character of the data to the atten-
     The Federal Acquisition Regulation shall in-       tion of the contracting officer;
  clude the following provisions regarding the            (C) the contract was based on an agreement
  types of information that contracting officers        between the contractor and the United States
  may require under paragraph (1):                      about the total cost of the contract and there
       (A) Reasonable limitations on requests for       was no agreement about the cost of each item
     sales data relating to commercial items.           procured under such contract; or
       (B) A requirement that a contracting offi-         (D) the prime contractor or subcontractor
     cer limit, to the maximum extent prac-             did not submit a certification of cost or pric-
     ticable, the scope of any request for informa-     ing data relating to the contract as required
     tion relating to commercial items from an          under subsection (a)(2) of this section.
     offeror to only that information that is in
     the form regularly maintained by the offeror        (4)(A) A contractor shall be allowed to offset
     in commercial operations.                         an amount against the amount of a contract
       (C) A statement that any information re-        price adjustment under a contract provision re-
     ceived relating to commercial items that is       quired by paragraph (1) if—
     exempt from disclosure under section 552(b)           (i) the contractor certifies to the contract-
     of title 5 shall not be disclosed by the Fed-       ing officer (or to a designated representative
     eral Government.                                    of the contracting officer) that, to the best of
                                                         the contractor’s knowledge and belief, the
(e) Price reductions for defective cost or pricing       contractor is entitled to the offset; and
     data                                                  (ii) the contractor proves that the cost or
  (1)(A) A prime contract (or change or modi-            pricing data were available before the date of
fication to a prime contract) under which a cer-         agreement on the price of the contract (or
tificate under subsection (a)(2) of this section is      price of the modification), or, if applicable
required shall contain a provision that the price        consistent with paragraph (1)(B), another date
of the contract to the United States, including          agreed upon between the parties, and that the
profit or fee, shall be adjusted to exclude any          data were not submitted as specified in sub-
significant amount by which it may be deter-             section (a)(3) of this section before such date.
Page 87                             TITLE 41—PUBLIC CONTRACTS                                                 § 254b

   (B) A contractor shall not be allowed to offset        sidiaries, or affiliates of a contractor or a sub-
an amount otherwise authorized to be offset               contractor.
under subparagraph (A) if—
     (i) the certification under subsection (a)(2) of     (3) Commercial item
   this section with respect to the cost or pricing         The term ‘‘commercial item’’ has the mean-
   data involved was known to be false when               ing provided such term by section 403(12) of
   signed; or                                             this title.
     (ii) the United States proves that, had the
   cost or pricing data referred to in subpara-         (June 30, 1949, ch. 288, title III, § 304A, as added
   graph (A)(ii) been submitted to the United           Pub. L. 103–355, title I, § 1251(a)(2), Oct. 13, 1994,
   States before the date of agreement on the           108 Stat. 3278; amended Pub. L. 104–106, div. D,
   price of the contract (or price of the modifica-     title XLII, § 4201(b), title XLIII, § 4321(e)(3), (4),
   tion) or, if applicable under paragraph (1)(B),      Feb. 10, 1996, 110 Stat. 651, 675; Pub. L. 105–261,
   another date agreed upon between the parties,        div. A, title VIII, §§ 805(b), 808(b), Oct. 17, 1998, 112
   the submission of such cost or pricing data          Stat. 2083, 2085.)
   would not have resulted in an increase in that
   price in the amount to be offset.                                           AMENDMENTS
(f) Interest and penalties for certain overpay-            1998—Subsec. (a)(5). Pub. L. 105–261, § 805(b), amended
     ments                                              par. (5) generally. Prior to amendment, par. (5) read as
   (1) If the United States makes an overpayment        follows: ‘‘For purposes of paragraph (1)(C), a contractor
to a contractor under a contract with an execu-         or subcontractor granted a waiver under subsection
tive agency subject to this section and the over-       (b)(1)(B) of this section shall be considered as having
payment was due to the submission by the con-           been required to make available cost or pricing data
                                                        under this section.’’
tractor of defective cost or pricing data, the
                                                           Subsec. (d)(1). Pub. L. 105–261, § 808(b), substituted
contractor shall be liable to the United States—        ‘‘the contracting officer shall require that the data sub-
     (A) for interest on the amount of such over-       mitted’’ for ‘‘the data submitted shall’’.
   payment, to be computed—                                1996—Subsec. (b). Pub. L. 104–106, § 4201(b)(1), amended
        (i) for the period beginning on the date the    subsec. (b) generally, substituting pars. (1) and (2) re-
     overpayment was made to the contractor             lating to submission of certified cost or pricing data for
     and ending on the date the contractor repays       former pars. (1) and (2) relating to submission of cost or
     the amount of such overpayment to the              pricing data and striking out par. (3) relating to FAR
     United States; and                                 standards.
        (ii) at the current rate prescribed by the         Subsec. (c). Pub. L. 104–106, § 4201(b)(1), amended sub-
     Secretary of the Treasury under section 6621       sec. (c) generally, substituting pars. (1) to (3) relating
                                                        to authority to require submission of certified cost or
     of title 26; and
                                                        pricing data for former par. (1) relating to authority to
   (B) if the submission of such defective data         require submission of cost or pricing data and striking
  was a knowing submission, for an additional           out former par. (2) relating to authority to require in-
  amount equal to the amount of the overpay-            formation other than certified cost or pricing data.
  ment.                                                    Subsec. (c)(1). Pub. L. 104–106, § 4321(e)(3), which di-
                                                        rected amendment of heading of par. (1) by changing
  (2) Any liability under this subsection of a          each letter that is capitalized (other than the first let-
contractor that submits cost or pricing data but        ter of the first word) to lowercase, could not be exe-
refuses to submit the certification required by         cuted because of the general amendment of subsec. (c)
subsection (a)(2) of this section with respect to       by Pub. L. 104–106, § 4201(b)(1). See above.
the cost or pricing data shall not be affected by          Subsec. (d). Pub. L. 104–106, § 4201(b)(1), amended sub-
the refusal to submit such certification.               sec. (d) generally, substituting pars. (1) and (2) relating
                                                        to submission of other information for former pars. (1)
(g) Right of United States to examine contractor        to (6) relating to additional exceptions regarding com-
    records                                             mercial items.
  For the purpose of evaluating the accuracy,              Subsec. (d)(2)(A)(ii). Pub. L. 104–106, § 4321(e)(4), which
completeness, and currency of cost or pricing           directed amendment of par. (2)(A)(ii) by inserting ‘‘to’’
data required to be submitted by this section, an       after ‘‘The information referred’’, could not be exe-
                                                        cuted because par. (2)(A) did not contain a cl. (ii) or the
executive agency shall have the authority pro-          phrase ‘‘The information referred’’, subsequent to the
vided by section 254d(a)(2) of this title.              general amendment of subsec. (d) by Pub. L. 104–106,
(h) Definitions                                         § 4201(b)(1). See above.
  In this section:                                         Subsecs. (h), (i). Pub. L. 104–106, § 4201(b)(2), redesig-
                                                        nated subsec. (i) as (h) and struck out heading and text
  (1) Cost or pricing data                              of former subsec. (h). Text read as follows: ‘‘The Fed-
    The term ‘‘cost or pricing data’’ means all         eral Acquisition Regulation shall include regulations
  facts that, as of the date of agreement on the        concerning the types of information that offerors must
  price of a contract (or the price of a contract       submit for a contracting officer to consider in deter-
  modification) or, if applicable consistent with       mining whether the price of a procurement to the Gov-
                                                        ernment is fair and reasonable when certified cost or
  subsection (e)(1)(B) of this section, another         pricing data are not required to be submitted under
  date agreed upon between the parties, a pru-          this section because the price of the procurement to
  dent buyer or seller would reasonably expect          the United States is not expected to exceed the applica-
  to affect price negotiations significantly. Such      ble threshold amount set forth in subsection (a) of this
  term does not include information that is             section (as adjusted pursuant to paragraph (7) of such
  judgmental, but does include the factual infor-       subsection). Such information, at a minimum, shall in-
  mation from which a judgment was derived.             clude appropriate information on the prices at which
                                                        the same item or similar items have previously been
  (2) Subcontract
                                                        sold that is adequate for evaluating the reasonableness
    The term ‘‘subcontract’’ includes a transfer        of the price of a proposed contract or subcontract for
  of commercial items between divisions, sub-           the procurement.’’
§ 254c                                    TITLE 41—PUBLIC CONTRACTS                                                   Page 88

          EFFECTIVE DATE OF 1996 AMENDMENT                         United States Code (relating to truth in negotia-
                                                                   tions), only if the contracting officer determines in
  For effective date and applicability of amendment by
                                                                   writing that the offeror has submitted sufficient in-
Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
                                                                   formation to evaluate, through price analysis, the
out as a note under section 251 of this title.
                                                                   reasonableness of the price for such services.
                     EFFECTIVE DATE                                  ‘‘(2) INFORMATION SUBMITTED.—To the extent nec-
                                                                   essary to make a determination under paragraph (1),
  For effective date and applicability of section, see
                                                                   the contracting officer may request the offeror to
section 10001 of Pub. L. 103–355, set out as an Effective
                                                                   submit—
Date of 1994 Amendment note under section 251 of this
                                                                        ‘‘(A) prices paid for the same or similar commer-
title.
                                                                     cial items under comparable terms and conditions
  Section 1251(b) of Pub. L. 103–355, as amended by Pub.
                                                                     by both government and commercial customers;
L. 104–106, div. D, title XLIII, § 4321(a)(3), Feb. 10, 1996,
                                                                     and
110 Stat. 671, provided that: ‘‘Subsection (a) of section
                                                                        ‘‘(B) if the contracting officer determines that the
304A of the Federal Property and Administrative Serv-
                                                                     information described in subparagraph (A) is not
ices Act of 1949 [subsec. (a) of this section], as added by
                                                                     sufficient to determine the reasonableness of price,
subsection (a), shall apply according to the provisions
                                                                     other relevant information regarding the basis for
thereof on and after the date of the enactment of this
                                                                     price or cost, including information on labor costs,
Act [Oct. 13, 1994], notwithstanding section 10001(b) [see
                                                                     material costs, and overhead rates.’’
Effective Date of 1994 Amendment note set out under
section 251 of this title].’’                                    ELIGIBILITY FOR CONTRACTS AND SUBCONTRACTS TO BE
  [Section 4321(a) of Pub. L. 104–106 provided that the                       CONDITIONED ON COMPLIANCE
amendment made by that section to section 1251(b) of
Pub. L. 103–355, set out above, is effective as of Oct. 13,        Pub. L. 105–261, div. A, title VIII, § 808(c), Oct. 17, 1998,
1994, and as if included in Pub. L. 103–355 as enacted.]         112 Stat. 2085, provided that: ‘‘Not later than 180 days
                                                                 after the date of the enactment of this Act [Oct. 17,
     LIMITATIONS ON TIERING OF SUBCONTRACTORS                    1998], the Federal Acquisition Regulation shall be
  Pub. L. 110–417, [div. A], title VIII, § 866, Oct. 14, 2008,   amended to provide that an offeror’s compliance with a
122 Stat. 4551, provided that:                                   requirement to submit data for a contract or sub-
  ‘‘(a) REGULATIONS.—Not later than one year after the           contract in accordance with section 2306a(d)(1) of title
date of the enactment of this Act [Oct. 14, 2008], the           10, United States Code, or section 304A(d)(1) of the Fed-
Federal Acquisition Regulation shall be amended, for             eral Property and Administrative Services Act of 1949
executive agencies other than the Department of De-              [41 U.S.C. 254b(d)(1)] shall be a condition for the offeror
fense, to minimize the excessive use by contractors of           to be eligible to enter into the contract or subcontract,
subcontractors, or of tiers of subcontractors, that add          subject to such exceptions as the Federal Acquisition
no or negligible value, and to ensure that neither a con-        Regulatory Council determines appropriate.’’
tractor nor a subcontractor receives indirect costs or                  CRITERIA FOR DETERMINING SPECIFIC PRICE
profit on work performed by a lower-tier subcontractor                           INFORMATION REQUIRED
to which the higher-tier contractor or subcontractor
adds no, or negligible, value (but not to limit charges            Pub. L. 105–261, div. A, title VIII, § 808(d), Oct. 17, 1998,
for indirect costs and profit based on the direct costs of       112 Stat. 2085, provided that: ‘‘Not later than 180 days
managing lower-tier subcontracts).                               after the date of the enactment of this Act [Oct. 17,
  ‘‘(b) COVERED CONTRACTS.—This section applies to               1998], the Federal Acquisition Regulation shall be
any cost-reimbursement type contract or task or deliv-           amended to include criteria for contracting officers to
ery order in an amount greater than the simplified ac-           apply for determining the specific price information
quisition threshold (as defined by section 4 of the Office       that an offeror should be required to submit under sec-
of Federal Procurement Policy Act (41 U.S.C. 403)).              tion 2306a(d) of title 10, United States Code, or section
  ‘‘(c) RULE OF CONSTRUCTION.—Nothing in this section            304A(d) of the Federal Property and Administrative
shall be construed as limiting the ability of the Depart-        Services Act of 1949 (41 U.S.C. 254b(d)).’’
ment of Defense to implement more restrictive limita-
tions on the tiering of subcontractors.
                                                                 § 254c. Multiyear contracts
  ‘‘(d) APPLICABILITY.—The Department of Defense                 (a) Authority
shall continue to be subject to guidance on limitations
on tiering of subcontractors issued by the Department              An executive agency may enter into a multi-
pursuant to section 852 of the John Warner National              year contract for the acquisition of property or
Defense Authorization Act for Fiscal Year 2007 (Public           services if—
Law 109–364; 120 Stat. 2340 [10 U.S.C. 2324 note]).                  (1) funds are available and obligated for such
  ‘‘(e) EXECUTIVE AGENCY DEFINED.—In this section, the             contract, for the full period of the contract or
term ‘executive agency’ has the meaning given such                 for the first fiscal year in which the contract
term in section 4(1) of the Office of Federal Procure-             is in effect, and for the estimated costs associ-
ment Policy Act (41 U.S.C. 403(1)).’’
                                                                   ated with any necessary termination of such
  MINIMIZING ABUSE OF COMMERCIAL SERVICES ITEM                     contract; and
                    AUTHORITY                                        (2) the executive agency determines that—
  Pub. L. 110–417, [div. A], title VIII, § 868, Oct. 14, 2008,          (A) the need for the property or services is
122 Stat. 4552, provided that:                                       reasonably firm and continuing over the pe-
  ‘‘(a) REGULATIONS REQUIRED.—Not later than 180 days                riod of the contract; and
after the date of the enactment of this Act [Oct. 14,                   (B) a multiyear contract will serve the
2008], the Federal Acquisition Regulation shall be                   best interests of the United States by en-
amended with respect to the procurement of commer-                   couraging full and open competition or pro-
cial services.
  ‘‘(b) APPLICABILITY OF COMMERCIAL PROCEDURES.—
                                                                     moting economy in administration, perform-
     ‘‘(1) SERVICES OF A TYPE SOLD IN MARKETPLACE.—                  ance, and operation of the agency’s pro-
  The regulations modified pursuant to subsection (a)                grams.
  shall ensure that services that are not offered and            (b) Termination clause
  sold competitively in substantial quantities in the
  commercial marketplace, but are of a type offered                A multiyear contract entered into under the
  and sold competitively in substantial quantities in            authority of this section shall include a clause
  the commercial marketplace, may be treated as com-             that provides that the contract shall be termi-
  mercial items for purposes of section 254b of title 41,        nated if funds are not made available for the
Page 89                               TITLE 41—PUBLIC CONTRACTS                                         § 254d

continuation of such contract in any fiscal year                (B) the discussions conducted on the pro-
covered by the contract. Amounts available for                posal;
paying termination costs shall remain available                 (C) pricing of the contract or subcontract; or
for such purpose until the costs associated with                (D) performance of the contract or sub-
termination of the contract are paid.                         contract.
(c) Cancellation ceiling notice                             (b) Subpoena power
  Before any contract described in subsection (a)             (1) The Inspector General of an executive
of this section that contains a clause setting              agency appointed under section 3 or 8G 1 of the
forth a cancellation ceiling in excess of                   Inspector General Act of 1978 (5 U.S.C. App.) or,
$10,000,000 may be awarded, the executive agency            upon request of the head of an executive agency,
shall give written notification of the proposed             the Director of the Defense Contract Audit
contract and of the proposed cancellation ceil-             Agency (or any successor agency) of the Depart-
ing for that contract to the Congress, and such             ment of Defense or the Inspector General of the
contract may not then be awarded until the end              General Services Administration may require by
of a period of 30 days beginning on the date of             subpoena the production of records of a contrac-
such notification.                                          tor, access to which is provided for that execu-
(d) Multiyear contract defined                              tive agency by subsection (a) of this section.
  For the purposes of this section, a multiyear               (2) Any such subpoena, in the case of contu-
contract is a contract for the purchase of prop-            macy or refusal to obey, shall be enforceable by
erty or services for more than one, but not more            order of an appropriate United States district
than five, program years. Such a contract may               court.
provide that performance under the contract                   (3) The authority provided by paragraph (1)
during the second and subsequent years of the               may not be delegated.
contract is contingent upon the appropriation of              (4) In the year following a year in which au-
funds and (if it does so provide) may provide for           thority provided in paragraph (1) is exercised for
a cancellation payment to be made to the con-               an executive agency, the head of the executive
tractor if such appropriations are not made.                agency shall submit to the Committee on Gov-
                                                            ernmental Affairs of the Senate and the Com-
(e) Rule of construction                                    mittee on Government Operations of the House
  Nothing in this section is intended to modify             of Representatives a report on the exercise of
or affect any other provision of law that author-           such authority during such preceding year and
izes multiyear contracts.                                   the reasons why such authority was exercised in
(June 30, 1949, ch. 288, title III, § 304B, as added        any instance.
Pub. L. 103–355, title I, § 1072, Oct. 13, 1994, 108        (c) Comptroller General authority
Stat. 3270.)                                                  (1) Except as provided in paragraph (2), each
                    EFFECTIVE DATE                          contract awarded after using procedures other
  For effective date and applicability of section, see
                                                            than sealed bid procedures shall provide that the
section 10001 of Pub. L. 103–355, set out as an Effective   Comptroller General and his representatives are
Date of 1994 Amendment note under section 251 of this       authorized to examine any records of the con-
title.                                                      tractor, or any of its subcontractors, that di-
                                                            rectly pertain to, and involve transactions relat-
§ 254d. Examination of records of contractor                ing to, the contract or subcontract and to inter-
(a) Agency authority                                        view any current employee regarding such
  (1) The head of an executive agency, acting               transactions.
through an authorized representative, is author-              (2) Paragraph (1) does not apply to a contract
ized to inspect the plant and audit the records             or subcontract with a foreign contractor or for-
of—                                                         eign subcontractor if the executive agency con-
    (A) a contractor performing a cost-reim-                cerned determines, with the concurrence of the
  bursement,    incentive,   time-and-materials,            Comptroller General or his designee, that the
  labor-hour, or price-redeterminable contract,             application of that paragraph to the contract or
  or any combination of such contracts, made by             subcontract would not be in the public interest.
  that executive agency under this subchapter;              However, the concurrence of the Comptroller
  and                                                       General or his designee is not required—
    (B) a subcontractor performing any cost-re-                 (A) where the contractor or subcontractor is
  imbursement, incentive, time-and-materials,                 a foreign government or agency thereof or is
  labor-hour,   or   price-redeterminable   sub-              precluded by the laws of the country involved
  contract or any combination of such sub-                    from making its records available for exam-
  contracts under a contract referred to in sub-              ination; and
  paragraph (A).                                                (B) where the executive agency determines,
                                                              after taking into account the price and avail-
  (2) The head of an executive agency, acting                 ability of the property and services from
through an authorized representative, is author-              United States sources, that the public interest
ized, for the purpose of evaluating the accuracy,             would be best served by not applying para-
completeness, and currency of certified cost or               graph (1).
pricing data required to be submitted pursuant
to section 254b of this title with respect to a               (3) Paragraph (1) may not be construed to re-
contract or subcontract, to examine all records             quire a contractor or subcontractor to create or
of the contractor or subcontractor related to—              maintain any record that the contractor or sub-
    (A) the proposal for the contract or sub-
  contract;                                                  1 See   References in Text note below.
§ 255                               TITLE 41—PUBLIC CONTRACTS                                           Page 90

contractor does not maintain in the ordinary            § 4321(e)(5), Feb. 10, 1996, 110 Stat. 675; Pub. L.
course of business or pursuant to another provi-        104–201, div. A, title VIII, § 808(b), Sept. 23, 1996,
sion of law.                                            110 Stat. 2607; Pub. L. 110–417, [div. A], title VIII,
(d) Limitation on audits relating to indirect costs     § 871(a), Oct. 14, 2008, 122 Stat. 4555.)
   An executive agency may not perform an                                 REFERENCES IN TEXT
audit of indirect costs under a contract, sub-            Section 3 and 8G of the Inspector General Act of 1978,
contract, or modification before or after enter-        referred to in subsec. (b)(1), are sections 3 and 8G of
ing into the contract, subcontract, or modifica-        Pub. L. 95–452, which are set out in the Appendix to
tion in any case in which the contracting officer       Title 5, Government Organization and Employees.
determines that the objectives of the audit can                               AMENDMENTS
reasonably be met by accepting the results of an          2008—Subsec. (c)(1). Pub. L. 110–417 inserted before pe-
audit that was conducted by any other depart-           riod at end ‘‘and to interview any current employee re-
ment or agency of the Federal Government                garding such transactions’’.
within one year preceding the date of the con-            1996—Subsec. (a)(2). Pub. L. 104–106 substituted ‘‘sec-
tracting officer’s determination.                       tion 254b’’ for ‘‘section 254c’’.
                                                          Subsec. (d). Pub. L. 104–201 amended heading and text
(e) Limitation                                          of subsec. (d) generally. Prior to amendment, text read
   The authority of an executive agency under           as follows: ‘‘An executive agency may not perform a
                                                        preaward audit to evaluate proposed indirect costs
subsection (a) of this section, and the authority       under any contract, subcontract, or modification to be
of the Comptroller General under subsection (c)         entered into in accordance with this subchapter in any
of this section, with respect to a contract or          case in which the contracting officer determines that
subcontract shall expire three years after final        the objectives of the audit can reasonably be met by ac-
payment under such contract or subcontract.             cepting the results of an audit conducted by any other
                                                        department or agency of the Federal Government with-
(f) Inapplicability to certain contracts                in one year preceding the date of the contracting offi-
   This section does not apply to the following         cer’s determination.’’
contracts:                                                1994—Subsec. (f)(2). Pub. L. 103–355, § 4103(d), added
      (1) Contracts for utility services at rates not   par. (2).
   exceeding those established to apply uni-                                CHANGE OF NAME
   formly to the public, plus any applicable rea-         Committee on Governmental Affairs of Senate
   sonable connection charge.                           changed to Committee on Homeland Security and Gov-
      (2) A contract or subcontract that is not         ernmental Affairs of Senate, effective Jan. 4, 2005, by
   greater than the simplified acquisition thresh-      Senate Resolution No. 445, One Hundred Eighth Con-
   old.                                                 gress, Oct. 9, 2004.
                                                          Committee on Government Operations of House of
(g) Form of original record storage                     Representatives treated as referring to Committee on
   Nothing in this section shall be construed to        Government Reform and Oversight of House of Rep-
preclude a contractor from duplicating or stor-         resentatives by section 1(a) of Pub. L. 104–14, set out as
                                                        a note preceding section 21 of Title 2, The Congress.
ing original records in electronic form.
                                                        Committee on Government Reform and Oversight of
(h) Use of images of original records                   House of Representatives changed to Committee on
   An executive agency shall not require a con-         Government Reform of House of Representatives by
                                                        House Resolution No. 5, One Hundred Sixth Congress,
tractor or subcontractor to provide original
                                                        Jan. 6, 1999. Committee on Government Reform of
records in an audit carried out pursuant to this        House of Representatives changed to Committee on
section if the contractor or subcontractor pro-         Oversight and Government Reform of House of Rep-
vides photographic or electronic images of the          resentatives by House Resolution No. 6, One Hundred
original records and meets the following re-            Tenth Congress, Jan. 5, 2007.
quirements:                                                      EFFECTIVE DATE OF 1996 AMENDMENT
      (1) The contractor or subcontractor has es-
                                                          For effective date and applicability of amendment by
   tablished procedures to ensure that the imag-
                                                        Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
   ing process preserves the integrity, reliability,    out as a note under section 251 of this title.
   and security of the original records.
      (2) The contractor or subcontractor main-                             EFFECTIVE DATE
   tains an effective indexing system to permit           For effective date and applicability of section, includ-
   timely and convenient access to the imaged           ing amendment by Pub. L. 103–355, see section 10001 of
   records.                                             Pub. L. 103–355, set out as an Effective Date of 1994
                                                        Amendment note under section 251 of this title.
      (3) The contractor or subcontractor retains
   the original records for a minimum of one            § 255. Contract financing
   year after imaging to permit periodic valida-
   tion of the imaging systems.                         (a) Payment authority
(i) ‘‘Records’’ defined                                   Any executive agency may—
                                                            (1) make advance, partial, progress or other
   In this section, the term ‘‘records’’ includes         payments under contracts for property or
books, documents, accounting procedures and               services made by the agency; and
practices, and other data, regardless of type and           (2) insert in solicitations for procurement of
regardless of whether such items are in written           property or services a provision limiting to
form, in the form of computer data, or in any             small business concerns advance or progress
other form.                                               payments.
(June 30, 1949, ch. 288, title III, § 304C, as added    (b) Performance-based payments
and amended Pub. L. 103–355, title II, § 2251(a),         Whenever practicable, payments under sub-
title IV, § 4103(d), Oct. 13, 1994, 108 Stat. 3318,     section (a) of this section shall be made on any
3341; Pub. L. 104–106, div. D, title XLIII,             of the following bases:
Page 91                           TITLE 41—PUBLIC CONTRACTS                                         § 255

     (1) Performance measured by objective,           executive agency, with commercial terms and
   quantifiable methods such as delivery of ac-       conditions pursuant to paragraphs (1) and (2).
   ceptable items, work measurement, or statis-       (g) Action in case of fraud
   tical process controls.
                                                         (1) In any case in which the remedy coordina-
     (2) Accomplishment of events defined in the
                                                      tion official of an executive agency finds that
   program management plan.
                                                      there is substantial evidence that the request of
     (3) Other quantifiable measures of results.
                                                      a contractor for advance, partial, or progress
(c) Payment amount                                    payment under a contract awarded by that exec-
   Payments made under subsection (a) of this         utive agency is based on fraud, the remedy co-
section may not exceed the unpaid contract            ordination official shall recommend that the ex-
price.                                                ecutive agency reduce or suspend further pay-
                                                      ments to such contractor.
(d) Security for advance payments
                                                         (2) The head of an executive agency receiving
   Advance payments under subsection (a) of this      a recommendation under paragraph (1) in the
section may be made only upon adequate secu-          case of a contractor’s request for payment under
rity and a determination by the agency head           a contract shall determine whether there is sub-
that to do so would be in the public interest.        stantial evidence that the request is based on
Such security may be in the form of a lien in         fraud. Upon making such a determination, the
favor of the Government on the property con-          head of the executive agency may reduce or sus-
tracted for, on the balance in an account in          pend further payments to the contractor under
which such payments are deposited, and on such        such contract.
of the property acquired for performance of the          (3) The extent of any reduction or suspension
contract as the parties may agree. This lien          of payments by an executive agency under para-
shall be paramount to all other liens and is ef-      graph (2) on the basis of fraud shall be reason-
fective immediately upon the first advancement        ably commensurate with the anticipated loss to
of funds without filing, notice, or any other ac-     the United States resulting from the fraud.
tion by the United States.                               (4) A written justification for each decision of
(e) Conditions for progress payments                  the head of an executive agency whether to re-
                                                      duce or suspend payments under paragraph (2),
   (1) The executive agency shall ensure that any     and for each recommendation received by the
payment for work in progress (including mate-         executive agency in connection with such deci-
rials, labor, and other items) under a contract of    sion, shall be prepared and be retained in the
an executive agency that provides for such pay-       files of the executive agency.
ments is commensurate with the work accom-               (5) The head of each executive agency shall
plished that meets standards established under        prescribe procedures to ensure that, before the
the contract. The contractor shall provide such       head of the executive agency decides to reduce
information and evidence as the executive agen-       or suspend payments in the case of a contractor
cy determines necessary to permit the executive       under paragraph (2), the contractor is afforded
agency to carry out the preceding sentence.           notice of the proposed reduction or suspension
   (2) The executive agency shall ensure that         and an opportunity to submit matters to the ex-
progress payments referred to in paragraph (1)        ecutive agency in response to such proposed re-
are not made for more than 80 percent of the          duction or suspension.
work accomplished under the contract so long             (6) Not later than 180 days after the date on
as the executive agency has not made the con-         which the head of an executive agency reduces
tractual terms, specifications, and price defi-       or suspends payments to a contractor under
nite.                                                 paragraph (2), the remedy coordination official
   (3) This subsection applies to any contract in     of the executive agency shall—
an amount greater than $25,000.                            (A) review the determination of fraud on
(f) Conditions for payments for commercial items         which the reduction or suspension is based;
   (1) Payments under subsection (a) of this sec-        and
tion for commercial items may be made under                (B) transmit a recommendation to the head
such terms and conditions as the head of the ex-         of such executive agency whether the suspen-
ecutive agency determines are appropriate or             sion or reduction should continue.
customary in the commercial marketplace and             (7) The head of each executive agency who re-
are in the best interests of the United States.       ceives recommendations made by a remedy co-
The head of the executive agency shall obtain         ordination official of the executive agency to re-
adequate security for such payments. If the se-       duce or suspend payments under paragraph (2)
curity is in the form of a lien in favor of the       during a fiscal year shall prepare for such year
United States, such lien is paramount to all          a report that contains the recommendations,
other liens and is effective immediately upon         the actions taken on the recommendations and
the first payment, without filing, notice, or         the reasons for such actions, and an assessment
other action by the United States.                    of the effects of such actions on the Federal
   (2) Advance payments made under subsection         Government. Any such report shall be available
(a) of this section for commercial items may in-      to any Member of Congress upon request.
clude payments, in a total amount of not more           (8) The head of an executive agency may not
than 15 percent of the contract price, in advance     delegate responsibilities under this subsection
of any performance of work under the contract.        to any person in a position below level IV of the
   (3) The conditions of subsections (d) and (e) of   Executive Schedule.
this section need not be applied if they would be       (9) In this subsection, the term ‘‘remedy co-
inconsistent, as determined by the head of the        ordination official’’, with respect to an execu-
§ 256                                     TITLE 41—PUBLIC CONTRACTS                                              Page 92

tive agency, means the person or entity in that                  tion] are not intended to impair or modify procedures
executive agency who coordinates within that                     required by the provisions of chapter 39 of title 31,
executive agency the administration of crimi-                    United States Code, and the regulations issued pursu-
                                                                 ant to such provisions of law (as such procedures are in
nal, civil, administrative, and contractual rem-
                                                                 effect on the date of the enactment of this Act [Oct. 13,
edies resulting from investigations of fraud or                  1994]), except that the Government may accept pay-
corruption related to procurement activities.                    ment terms offered by a contractor offering a commer-
(June 30, 1949, ch. 288, title III, § 305, 63 Stat. 396;         cial item.’’
July 12, 1952, ch. 703, § 1(m), 66 Stat. 594; Pub. L.                                  DEFINITIONS
85–800, § 4, Aug. 28, 1958, 72 Stat. 966; Pub. L.                  The definitions in section 102 of Title 40, Public
103–355, title II, § 2051(a)–(e), Oct. 13, 1994, 108             Buildings, Property, and Works, apply to this sub-
Stat. 3303, 3304; Pub. L. 104–106, div. D, title                 chapter.
XLIII, § 4321(a)(4), Feb. 10, 1996, 110 Stat. 671.)
                                                                 § 256. Allowable costs
                   REFERENCES IN TEXT
                                                                 (a) Indirect cost that violates FAR cost principle
  Level IV of the Executive Schedule, referred to in
subsec. (g)(8), is set out in section 5315 of Title 5, Gov-        An executive agency shall require that a cov-
ernment Organization and Employees.                              ered contract provide that if the contractor sub-
                                                                 mits to the executive agency a proposal for set-
                       AMENDMENTS
                                                                 tlement of indirect costs incurred by the con-
   1996—Subsecs. (e) to (g). Pub. L. 104–106 made tech-          tractor for any period after such costs have been
nical correction to directory language of Pub. L.                accrued and if that proposal includes the sub-
103–355, § 2051(e). See 1994 Amendment note below.               mission of a cost which is unallowable because
   1994—Pub. L. 103–355, § 2051(a)(1), inserted section
catchline.
                                                                 the cost violates a cost principle in the Federal
   Subsec. (a). Pub. L. 103–355, § 2051(a)(2), (c), inserted     Acquisition Regulation (referred to in section
heading and struck out ‘‘bid’’ before ‘‘solicitations’’ in       421(c)(1) of this title) or an executive agency
par. (2).                                                        supplement to the Federal Acquisition Regula-
   Subsec. (b). Pub. L. 103–355, § 2051(a)(5), (b), added sub-   tion, the cost shall be disallowed.
sec. (b) and redesignated former subsec. (b) as (c).             (b) Penalty for violation of cost principle
   Pub. L. 103–355, § 2051(a)(3), inserted heading.
   Subsec. (c). Pub. L. 103–355, § 2051(a)(5), redesignated        (1) If the executive agency determines that a
subsec. (b) as (c). Former subsec. (c) redesignated (d).         cost submitted by a contractor in its proposal
   Pub. L. 103–355, § 2051(a)(4), inserted heading.              for settlement is expressly unallowable under a
   Subsec. (d). Pub. L. 103–355, § 2051(d), inserted before      cost principle referred to in subsection (a) of
period at end of third sentence ‘‘and is effective imme-         this section that defines the allowability of spe-
diately upon the first advancement of funds without fil-
ing, notice, or any other action by the United States’’.
                                                                 cific selected costs, the executive agency shall
   Pub. L. 103–355, § 2051(a)(5), redesignated subsec. (c) as    assess a penalty against the contractor in an
(d).                                                             amount equal to—
   Subsecs. (e) to (g). Pub. L. 103–355, § 2051(e), as amend-        (A) the amount of the disallowed cost allo-
ed by Pub. L. 104–106, added subsecs. (e) to (g).                  cated to covered contracts for which a pro-
   1958—Pub. L. 85–800 authorized advance or other pay-            posal for settlement of indirect costs has been
ments under contracts for property or services by agen-            submitted; plus
cy and insertion in bid solicitations of provision limit-            (B) interest (to be computed based on provi-
ing advance or progress payments to small business
concerns, restricted payments under subsec. (a) of this
                                                                   sions in the Federal Acquisition Regulation)
section to unpaid contract price, and reworded gener-              to compensate the United States for the use of
ally conditions for making advance payments.                       any funds which a contractor has been paid in
   1952—Subsecs. (a), (b). Act July 12, 1952, substituted          excess of the amount to which the contractor
‘‘property’’ for ‘‘supplies’’ wherever appearing.                  was entitled.
          EFFECTIVE DATE OF 1996 AMENDMENT                         (2) If the executive agency determines that a
  Section 4321(a) of Pub. L. 104–106 provided that the           proposal for settlement of indirect costs submit-
amendment made by that section is effective as of Oct.           ted by a contractor includes a cost determined
13, 1994, and as if included in Pub. L. 103–355 as enacted.      to be unallowable in the case of such contractor
                                                                 before the submission of such proposal, the exec-
          EFFECTIVE DATE OF 1994 AMENDMENT                       utive agency shall assess a penalty against the
  For effective date and applicability of amendment by           contractor in an amount equal to two times the
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set       amount of the disallowed cost allocated to cov-
out as a note under section 251 of this title.                   ered contracts for which a proposal for settle-
                     EFFECTIVE DATE                              ment of indirect costs has been submitted.
  Section effective July 1, 1949, see section 605, for-
                                                                 (c) Waiver of penalty
merly section 505, of act June 30, 1949, ch. 288, 63 Stat.         The Federal Acquisition Regulation shall pro-
403; renumbered by act Sept. 5, 1950, ch. 849, § 6(a), (b),      vide for a penalty under subsection (b) of this
64 Stat. 583.                                                    section to be waived in the case of a contractor’s
                EXEMPTION OF FUNCTIONS                           proposal for settlement of indirect costs when—
                                                                     (1) the contractor withdraws the proposal be-
  Functions authorized by Foreign Assistance Act of
                                                                   fore the formal initiation of an audit of the
1961, as amended, as exempt, see Ex. Ord. No. 11223, eff.
May 12, 1965, 30 F.R. 6635, set out as a note under sec-           proposal by the Federal Government and re-
tion 2393 of Title 22, Foreign Relations and Intercourse.          submits a revised proposal;
                                                                     (2) the amount of unallowable costs subject
  RELATIONSHIP TO PROMPT PAYMENT REQUIREMENTS                      to the penalty is insignificant; or
 Section 2051(f) of Pub. L. 103–355 provided that: ‘‘The             (3) the contractor demonstrates, to the con-
amendments made by this section [amending this sec-                tracting officer’s satisfaction, that—
Page 93                           TITLE 41—PUBLIC CONTRACTS                                        § 256

      (A) it has established appropriate policies          (ii) is paid to the employee contingent
    and personnel training and an internal con-          upon, and following, a change in manage-
    trol and review system that provide assur-           ment control over, or ownership of, the con-
    ances that unallowable costs subject to pen-         tractor or a substantial portion of the con-
    alties are precluded from being included in          tractor’s assets.
    the contractor’s proposal for settlement of          (L) Costs of commercial insurance that pro-
    indirect costs; and                                tects against the costs of the contractor for
      (B) the unallowable costs subject to the         correction of the contractor’s own defects in
    penalty were inadvertently incorporated            materials or workmanship.
    into the proposal.                                   (M) Costs of severance pay paid by the con-
(d) Applicability of contract disputes procedure       tractor to foreign nationals employed by the
    to disallowance of cost and assessment of          contractor under a service contract performed
    penalty                                            outside the United States, to the extent that
  An action of an executive agency under sub-          the amount of severance pay paid in any case
section (a) or (b) of this section—                    exceeds the amount paid in the industry in-
    (1) shall be considered a final decision for       volved under the customary or prevailing
  the purposes of section 605 of this title; and       practice for firms in that industry providing
    (2) is appealable in the manner provided in        similar services in the United States, as deter-
  section 606 of this title.                           mined under the Federal Acquisition Regula-
(e) Specific costs not allowable                       tion.
                                                         (N) Costs of severance pay paid by the con-
  (1) The following costs are not allowable under
                                                       tractor to a foreign national employed by the
a covered contract:
                                                       contractor under a service contract performed
    (A) Costs of entertainment, including
                                                       in a foreign country if the termination of the
  amusement, diversion, and social activities,
                                                       employment of the foreign national is the re-
  and any costs directly associated with such
                                                       sult of the closing of, or the curtailment of ac-
  costs (such as tickets to shows or sports
                                                       tivities at, a United States facility in that
  events, meals, lodging, rentals, transpor-
                                                       country at the request of the government of
  tation, and gratuities).
                                                       that country.
    (B) Costs incurred to influence (directly or
                                                         (O) Costs incurred by a contractor in connec-
  indirectly) legislative action on any matter
                                                       tion with any criminal, civil, or administra-
  pending before Congress, a State legislature,
                                                       tive proceeding commenced by the United
  or a legislative body of a political subdivision
                                                       States or a State, to the extent provided in
  of a State.
                                                       subsection (k) of this section.
    (C) Costs incurred in defense of any civil or
                                                         (P) Costs of compensation of senior execu-
  criminal fraud proceeding or similar proceed-
                                                       tives of contractors for a fiscal year, regard-
  ing (including filing of any false certification)
                                                       less of the contract funding source, to the ex-
  brought by the United States where the con-
                                                       tent that such compensation exceeds the
  tractor is found liable or had pleaded nolo con-
                                                       benchmark compensation amount determined
  tendere to a charge of fraud or similar pro-
                                                       applicable for the fiscal year by the Adminis-
  ceeding (including filing of a false certifi-
                                                       trator for Federal Procurement Policy under
  cation).
                                                       section 435 of this title.
    (D) Payments of fines and penalties result-
  ing from violations of, or failure to comply          (2)(A) Pursuant to the Federal Acquisition
  with, Federal, State, local, or foreign laws and    Regulation and subject to the availability of ap-
  regulations, except when incurred as a result       propriations, an executive agency, in awarding a
  of compliance with specific terms and condi-        covered contract, may waive the application of
  tions of the contract or specific written in-       the provisions of paragraphs (1)(M) and (1)(N) to
  structions from the contracting officer au-         that contract if the executive agency deter-
  thorizing in advance such payments in accord-       mines that—
  ance with applicable provisions of the Federal          (i) the application of such provisions to the
  Acquisition Regulation.                               contract would adversely affect the continu-
    (E) Costs of membership in any social, din-         ation of a program, project, or activity that
  ing, or country club or organization.                 provides significant support services for em-
    (F) Costs of alcoholic beverages.                   ployees of the executive agency posted outside
    (G) Contributions or donations, regardless of       the United States;
  the recipient.                                          (ii) the contractor has taken (or has estab-
    (H) Costs of advertising designed to promote        lished plans to take) appropriate actions with-
  the contractor or its products.                       in the contractor’s control to minimize the
    (I) Costs of promotional items and memora-          amount and number of incidents of the pay-
  bilia, including models, gifts, and souvenirs.        ment of severance pay by the contractor to
    (J) Costs for travel by commercial aircraft         employees under the contract who are foreign
  which exceed the amount of the standard com-          nationals; and
  mercial fare.                                           (iii) the payment of severance pay is nec-
    (K) Costs incurred in making any payment            essary in order to comply with a law that is
  (commonly known as a ‘‘golden parachute               generally applicable to a significant number of
  payment’’) which is—                                  businesses in the country in which the foreign
      (i) in an amount in excess of the normal          national receiving the payment performed
    severance pay paid by the contractor to an          services under the contract or is necessary to
    employee upon termination of employment;            comply with a collective bargaining agree-
    and                                                 ment.
§ 256                             TITLE 41—PUBLIC CONTRACTS                                     Page 94

  (B) An executive agency shall include in the       garding a determination of the allowability of
solicitation for a covered contract a statement      indirect costs of the contractor.
indicating—                                             (4) The Federal Acquisition Regulation shall
    (i) that a waiver has been granted under sub-    require that all categories of costs designated in
  paragraph (A) for the contract; or                 the report of a contract auditor as questioned
    (ii) whether the executive agency will con-      with respect to a proposal for settlement be re-
  sider granting such a waiver, and, if the execu-   solved in such a manner that the amount of the
  tive agency will consider granting a waiver,       individual questioned costs that are paid will be
  the criteria to be used in granting the waiver.    reflected in the settlement.
   (C) An executive agency shall make the final      (g) Applicability of regulations to subcontractors
determination regarding whether to grant a              The regulations referred to in subsections (e)
waiver under subparagraph (A) with respect to a      and (f)(1) of this section shall require prime con-
covered contract before award of the contract.       tractors of a covered contract, to the maximum
   (3) The provisions of the Federal Acquisition     extent practicable, to apply the provisions of
Regulation implementing this section may es-         such regulations to all subcontractors of the
tablish appropriate definitions, exclusions, limi-   covered contract.
tations, and qualifications. Any submission by a     (h) Contractor certification required
contractor of costs which are incurred by the           (1) A proposal for settlement of indirect costs
contractor and which are claimed to be allow-        applicable to a covered contract shall include a
able under Department of Energy management           certification by an official of the contractor
and operating contracts shall be considered a        that, to the best of the certifying official’s
‘‘proposal for settlement of indirect costs in-      knowledge and belief, all indirect costs included
curred by the contractor for any period after        in the proposal are allowable. Any such certifi-
such costs have been accrued’’, as used in this      cation shall be in a form prescribed in the Fed-
section.                                             eral Acquisition Regulation.
(f) Required regulations                                (2) An executive agency may, in an excep-
   (1) The Federal Acquisition Regulation shall      tional case, waive the requirement for certifi-
contain provisions on the allowability of con-       cation under paragraph (1) in the case of any
tractor costs. Such provisions shall define in de-   contract if the agency—
tail and in specific terms those costs which are          (A) determines in such case that it would be
unallowable, in whole or in part, under covered         in the interest of the United States to waive
contracts. The regulations shall, at a minimum,         such certification; and
clarify the cost principles applicable to contrac-        (B) states in writing the reasons for that de-
tor costs of the following:                             termination and makes such determination
     (A) Air shows.                                     available to the public.
     (B) Membership in civic, community, and         (i) Penalties for submission of cost known as not
   professional organizations.                            allowable
     (C) Recruitment.                                   The submission to an executive agency of a
     (D) Employee morale and welfare.                proposal for settlement of costs for any period
     (E) Actions to influence (directly or indi-     after such costs have been accrued that includes
   rectly) executive branch action on regulatory     a cost that is expressly specified by statute or
   and contract matters (other than costs in-        regulation as being unallowable, with the
   curred in regard to contract proposals pursu-     knowledge that such cost is unallowable, shall
   ant to solicited or unsolicited bids).            be subject to the provisions of section 287 of
     (F) Community relations.                        title 18 and section 3729 of title 31.
     (G) Dining facilities.                          (j) Contractor to have burden of proof
     (H) Professional and consulting services, in-
                                                        In a proceeding before a board of contract ap-
   cluding legal services.
                                                     peals, the United States Court of Federal
     (I) Compensation.
                                                     Claims, or any other Federal court in which the
     (J) Selling and marketing.
                                                     reasonableness of indirect costs for which a con-
     (K) Travel.
                                                     tractor seeks reimbursement from the United
     (L) Public relations.
     (M) Hotel and meal expenses.                    States is in issue, the burden of proof shall be
     (N) Expense of corporate aircraft.              upon the contractor to establish that those
     (O) Company-furnished automobiles.              costs are reasonable.
     (P) Advertising.                                (k) Proceeding costs not allowable
     (Q) Conventions.                                   (1) Except as otherwise provided in this sub-
  (2) The Federal Acquisition Regulation shall       section, costs incurred by a contractor in con-
require that a contracting officer not resolve       nection with any criminal, civil, or administra-
any questioned costs until the contracting offi-     tive proceeding commenced by the United
cer has obtained—                                    States or a State are not allowable as reimburs-
    (A) adequate documentation with respect to       able costs under a covered contract if the pro-
  such costs; and                                    ceeding (A) relates to a violation of, or failure to
    (B) the opinion of the contract auditor on       comply with, a Federal or State statute or regu-
  the allowability of such costs.                    lation, and (B) results in a disposition described
                                                     in paragraph (2).
  (3) The Federal Acquisition Regulation shall          (2) A disposition referred to in paragraph (1)(B)
provide that, to the maximum extent prac-            is any of the following:
ticable, a contract auditor be present at any ne-         (A) In the case of a criminal proceeding, a
gotiation or meeting with the contractor re-            conviction (including a conviction pursuant to
Page 95                           TITLE 41—PUBLIC CONTRACTS                                           § 256

 a plea of nolo contendere) by reason of the vio-    volves the same contractor misconduct alleged
 lation or failure referred to in paragraph (1).     as the basis of another criminal, civil, or admin-
   (B) In the case of a civil or administrative      istrative proceeding, and (ii) the costs of such
 proceeding involving an allegation of fraud or      other proceeding are not allowable under para-
 similar misconduct, a determination of con-         graph (1).
 tractor liability on the basis of the violation       (6) In this subsection:
 or failure referred to in paragraph (1).                (A) The term ‘‘proceeding’’ includes an in-
   (C) In the case of any civil or administrative      vestigation.
 proceeding, the imposition of a monetary pen-           (B) The term ‘‘costs’’, with respect to a pro-
 alty by reason of the violation or failure re-        ceeding—
 ferred to in paragraph (1).                                (i) means all costs incurred by a contrac-
   (D) A final decision—                                 tor, whether before or after the commence-
     (i) to debar or suspend the contractor,             ment of any such proceeding; and
     (ii) to rescind or void the contract, or               (ii) includes—
     (iii) to terminate the contract for default,              (I) administrative and clerical expenses;
 by reason of the violation or failure referred                (II) the cost of legal services, including
 to in paragraph (1).                                       legal services performed by an employee of
   (E) A disposition of the proceeding by con-              the contractor;
 sent or compromise if such action could have                  (III) the cost of the services of account-
 resulted in a disposition described in subpara-            ants and consultants retained by the con-
 graph (A), (B), (C), or (D).                               tractor; and
                                                               (IV) the pay of directors, officers, and
  (3) In the case of a proceeding referred to in            employees of the contractor for time de-
paragraph (1) that is commenced by the United               voted by such directors, officers, and em-
States and is resolved by consent or compromise             ployees to such proceeding.
pursuant to an agreement entered into by a con-
tractor and the United States, the costs in-               (C) The term ‘‘penalty’’ does not include res-
curred by the contractor in connection with             titution, reimbursement, or compensatory
such proceeding that are otherwise not allow-           damages.
able as reimbursable costs under such paragraph      (l) ‘‘Covered contract’’ defined
may be allowed to the extent specifically pro-          (1) In this section, the term ‘‘covered con-
vided in such agreement.                             tract’’ means a contract for an amount in excess
  (4) In the case of a proceeding referred to in     of $500,000 that is entered into by an executive
paragraph (1) that is commenced by a State, the      agency, except that such term does not include
executive agency that awarded the covered con-       a fixed-price contract without cost incentives or
tract involved in the proceeding may allow the       any firm, fixed price contract for the purchase
costs incurred by the contractor in connection       of commercial items.
with such proceeding as reimbursable costs if           (2) Effective on October 1 of each year that is
the executive agency determines, in accordance       divisible by five, the amount set forth in para-
with the Federal Acquisition Regulation, that        graph (1) shall be adjusted to the equivalent
the costs were incurred as a result of (A) a spe-    amount in constant fiscal year 1994 dollars. An
cific term or condition of the contract, or (B)      amount, as so adjusted, that is not evenly divis-
specific written instructions of the executive       ible by $50,000 shall be rounded to the nearest
agency.                                              multiple of $50,000. In the case of an amount
  (5)(A) Except as provided in subparagraph (C),     that is evenly divisible by $25,000 but is not
costs incurred by a contractor in connection         evenly divisible by $50,000, the amount shall be
with a criminal, civil, or administrative pro-       rounded to the next higher multiple of $50,000.
ceeding commenced by the United States or a          (m) Other definitions
State in connection with a covered contract
                                                        In this section:
may be allowed as reimbursable costs under the
                                                           (1) The term ‘‘compensation’’, for a fiscal
contract if such costs are not disallowable under
                                                        year, means the total amount of wages, salary,
paragraph (1), but only to the extent provided in
                                                        bonuses and deferred compensation for the fis-
subparagraph (B).
                                                        cal year, whether paid, earned, or otherwise
  (B)(i) The amount of the costs allowable under
                                                        accruing, as recorded in an employer’s cost ac-
subparagraph (A) in any case may not exceed
                                                        counting records for the fiscal year.
the amount equal to 80 percent of the amount of
                                                           (2) The term ‘‘senior executives’’, with re-
the costs incurred, to the extent that such costs
                                                        spect to a contractor, means the five most
are determined to be otherwise allowable and al-
                                                        highly compensated employees in manage-
locable under the Federal Acquisition Regula-
                                                        ment positions at each home office and each
tion.
  (ii) Regulations issued for the purpose of            segment of the contractor.
                                                           (3) The term ‘‘fiscal year’’ means a fiscal
clause (i) shall provide for appropriate consider-
                                                        year established by a contractor for account-
ation of the complexity of procurement litiga-
                                                        ing purposes.
tion, generally accepted principles governing
the award of legal fees in civil actions involving   (June 30, 1949, ch. 288, title III, § 306, as added
the United States as a party, and such other fac-    Pub. L. 100–700, § 8(a)(1), Nov. 19, 1988, 102 Stat.
tors as may be appropriate.                          4634; amended Pub. L. 103–355, title II, § 2151, Oct.
  (C) In the case of a proceeding referred to in     13, 1994, 108 Stat. 3309; Pub. L. 105–85, div. A, title
subparagraph (A), contractor costs otherwise al-     VIII, § 808(b), Nov. 18, 1997, 111 Stat. 1836; Pub. L.
lowable as reimbursable costs under this para-       105–261, div. A, title VIII, § 804(b), Oct. 17, 1998,
graph are not allowable if (i) such proceeding in-   112 Stat. 2083.)
§ 256                                     TITLE 41—PUBLIC CONTRACTS                                                  Page 96

                     PRIOR PROVISIONS                              ‘‘(2) Not later than 90 days after the date of the enact-
                                                                 ment of this Act, the Federal Acquisition Regulatory
   A prior section 256, act June 30, 1949, ch. 288, title III,
                                                                 Council shall amend the cost principle in the Federal
§ 306, 63 Stat. 396, related to waiver of liquidated dam-
                                                                 Acquisition Regulation that is set out in section
ages, prior to repeal by act Sept. 5, 1950, ch. 849, § 10(b),
                                                                 31.205–14 of title 48, Code of Federal Regulations, relat-
64 Stat. 591, eff. July 1, 1949. See section 256a of this
                                                                 ing to unallowability of entertainment costs—
title.                                                                ‘‘(A) by inserting in the cost principle a statement
                       AMENDMENTS                                  that costs made specifically unallowable under that
                                                                   cost principle are not allowable under any other cost
  1998—Subsec. (m)(2). Pub. L. 105–261 amended par. (2)            principle; and
generally. Prior to amendment, par. (2) read as follows:              ‘‘(B) by striking out ‘(but see 31.205–1 and 31.205–13)’.
‘‘The term ‘senior executive’, with respect to a contrac-          ‘‘(b) DEFINITIONS.—In this section:
tor, means—                                                           ‘‘(1) The term ‘employee’ includes officers and di-
    ‘‘(A) the chief executive officer of the contractor or         rectors of a contractor.
  any individual acting in a similar capacity for the                 ‘‘(2) The term ‘covered contract’ has the meaning
  contractor;                                                      given such term in section 2324(l) of title 10, United
    ‘‘(B) the four most highly compensated employees               States Code (as amended by section 2101(c)), and sec-
  in management positions of the contractor other                  tion 306(l) of the Federal Property and Administra-
  than the chief executive officer; and                            tive Services Act of 1949 (as added by section 2151) [41
    ‘‘(C) in the case of a contractor that has compo-              U.S.C. 256(l)].
  nents which report directly to the contractor’s head-            ‘‘(c) EFFECTIVE DATE.—Any amendments to the Fed-
  quarters, the five most highly compensated individ-            eral Acquisition Regulation made pursuant to sub-
  uals in management positions at each such compo-               section (a) shall apply with respect to costs incurred
  nent.’’                                                        after the date on which the amendments made by sec-
  1997—Subsec. (e)(1)(P). Pub. L. 105–85, § 808(b)(1), added     tion 2101 apply (as provided in section 10001) [set out as
subpar. (P).                                                     an Effective Date of 1994 Amendment note under sec-
  Subsec. (m). Pub. L. 105–85, § 808(b)(2), added subsec.        tion 251 of this title]) or the date on which the amend-
(m).                                                             ments made by section 2151 apply (as provided in sec-
  1994—Pub. L. 103–355 amended section generally, sub-           tion 10001), whichever is later.’’
stituting present provisions for provisions outlining                  EX. ORD. NO. 13494. ECONOMY IN GOVERNMENT
limitations on allowability of costs incurred by con-                                  CONTRACTING
tractors in criminal, civil, or administrative proceed-
ings relating to violations of Federal or State statutes           Ex. Ord. No. 13494, Jan. 30, 2009, 74 F.R. 6101, as
or regulations, which resulted in dispositions against           amended by Ex. Ord. No. 13517, § 2, Oct. 30, 2009, 74 F.R.
contractors based on such violations.                            57239, provided:
                                                                   By the authority vested in me as President by the
          EFFECTIVE DATE OF 1998 AMENDMENT                       Constitution and the laws of the United States of
  Amendment by Pub. L. 105–261 applicable with re-               America, including the Federal Property and Adminis-
spect to costs of compensation of senior executives in-          trative Services Act, 40 U.S.C. 101 et seq., it is hereby
curred after Jan. 1, 1999, under covered contracts en-           ordered that:
                                                                   SECTION 1. To promote economy and efficiency in
tered into before, on, or after Oct. 17, 1998, see section
                                                                 Government contracting, certain costs that are not di-
804(d) of Pub. L. 105–261, set out as a note under section
                                                                 rectly related to the contractors’ provision of goods
2324 of Title 10, Armed Forces.
                                                                 and services to the Government shall be unallowable
          EFFECTIVE DATE OF 1997 AMENDMENT                       for payment, thereby directly reducing Government ex-
                                                                 penditures. This order is also consistent with the policy
  Amendment by Pub. L. 105–85 effective on date that             of the United States to remain impartial concerning
is 90 days after Nov. 18, 1997, and applicable with re-          any labor-management dispute involving Government
spect to costs of compensation incurred after Jan. 1,            contractors. This order does not restrict the manner in
1998, under covered contracts entered into before, on, or        which recipients of Federal funds may expend those
after Nov. 18, 1997, see section 808(e) of Pub. L. 105–85,       funds.
set out as an Effective Date note under section 435 of             SEC. 2. It is the policy of the executive branch in pro-
this title.                                                      curing goods and services that, to ensure the economi-
          EFFECTIVE DATE OF 1994 AMENDMENT                       cal and efficient administration of Government con-
                                                                 tracts, contracting departments and agencies, when
  For effective date and applicability of amendment by           they enter into, receive proposals for, or make dis-
Pub. L. 103–355, see section 10001 of Pub. l. 103–355, set       bursements pursuant to a contract as to which certain
out as a note under section 251 of this title.                   costs are treated as unallowable, shall treat as unal-
                     EFFECTIVE DATE                              lowable the costs of any activities undertaken to per-
                                                                 suade employees—whether employees of the recipient
  Section effective with respect to contracts awarded            of the Federal disbursements or of any other entity—to
after Nov. 19, 1988, see section 8(e) of Pub. L. 100–700, set    exercise or not to exercise, or concerning the manner of
out as an Effective and Termination Dates of 1988                exercising, the right to organize and bargain collec-
Amendment note under section 2324 of Title 10, Armed             tively through representatives of the employees’ own
Forces.                                                          choosing. Such unallowable costs shall be excluded
REVISION OF COST PRINCIPLE RELATING TO ENTERTAIN-                from any billing, claim, proposal, or disbursement ap-
 MENT, GIFT, AND RECREATION COSTS FOR CONTRAC-                   plicable to any such Federal Government contract.
                                                                   SEC. 3. Contracting departments and agencies shall
 TOR EMPLOYEES
                                                                 treat as allowable costs incurred in maintaining satis-
  Section 2192 of Pub. L. 103–355 provided that:                 factory relations between the contractor and its em-
  ‘‘(a) COSTS NOT ALLOWABLE.—(1) The costs of gifts or           ployees (other than the costs of any activities under-
recreation for employees of a contractor or members of           taken to persuade employees to exercise or not to exer-
their families that are provided by the contractor to            cise, or concerning the manner of exercising, the right
improve employee morale or performance or for any                to organize and bargain collectively), including costs of
other purpose are not allowable under a covered con-             labor management committees, employee publications,
tract unless, within 120 days after the date of the enact-       and other related activities. See 48 C.F.R. 31.205–21.
ment of this Act [Oct. 13, 1994], the Federal Acquisition          SEC. 4. Examples of costs unallowable under section 2
Regulatory Council prescribes amendments to the Fed-             of this order include the costs of the following activi-
eral Acquisition Regulation specifying circumstances             ties, when they are undertaken to persuade employees
under which such costs are allowable under a covered             to exercise or not to exercise, or concern the manner of
contract.                                                        exercising, rights to organize and bargain collectively:
Page 97                                TITLE 41—PUBLIC CONTRACTS                                                    § 257

  (a) preparing and distributing materials;                  and subject to his direction, to any other officer
  (b) hiring or consulting legal counsel or consultants;     or officers or officials of the agency.
  (c) holding meetings (including paying the salaries of
the attendees at meetings held for this purpose); and        (b) Basis of determinations; finding conclusive;
  (d) planning or conducting activities by managers,             preservation of findings; copy
supervisors, or union representatives during work              Each determination or decision required by
hours.
                                                             section 254 or by section 255(d) of this title shall
  SEC. 5. Within 150 days of the effective date of this
order, the Federal Acquisition Regulatory Council            be based upon written findings made by the offi-
(FAR Council) shall adopt such rules and regulations         cial making such determination, which findings
and issue such orders as are deemed necessary and ap-        shall be final and shall be available within the
propriate to carry out this order. Such rules, regula-       agency for a period of at least six years follow-
tions, and orders shall minimize the costs of compli-        ing the date of the determination.
ance for contractors and shall not interfere with the
ability of contractors to engage in advocacy through         (June 30, 1949, ch. 288, title III, § 307, 63 Stat. 396;
activities for which they do not claim reimbursement.        Pub. L. 85–800, § 5, Aug. 28, 1958, 72 Stat. 967; Pub.
  SEC. 6. Each contracting department or agency shall        L. 89–343, §§ 3, 4, Nov. 8, 1965, 79 Stat. 1303; Pub.
cooperate with the FAR Council and provide such infor-       L. 98–369, div. B, title VII, § 2714(a)(4), July 18,
mation and assistance as the FAR Council may require         1984, 98 Stat. 1184; Pub. L. 104–106, div. D, title
in the performance of its functions under this order.        XLIII, § 4321(e)(6), Feb. 10, 1996, 110 Stat. 675; Pub.
  SEC. 7. (a) This order shall be implemented consistent
                                                             L. 104–316, title I, § 121(c), Oct. 19, 1996, 110 Stat.
with applicable law and subject to the availability of
appropriations.                                              3836.)
  (b) This order is not intended to, and does not, create                      REFERENCES IN TEXT
any right or benefit, substantive or procedural, enforce-
able at law or in equity by any party against the              This Act, referred to in subsec. (a), is act June 30,
United States, its departments, agencies, or entities,       1949, ch. 288, 63 Stat. 377, as amended, known as the
its officers, employees, or agents, or any other person.     Federal Property and Administrative Services Act of
  SEC. 8. This order shall become effective imme-            1949. Except for title III of the Act, which is classified
diately, and shall apply to contracts resulting from so-     generally to this subchapter, the Act was repealed and
licitations issued on or after the effective date of the     reenacted by Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116
action taken by the FAR Council under section 5 of           Stat. 1062, 1304, as chapters 1 to 11 of Title 40, Public
this order.                                                  Buildings, Property, and Works.
                                       BARACK OBAMA.                                CODIFICATION
§ 256a. Waiver of liquidated damages                           ‘‘Section 121(d)(1) and (2) of title 40’’ substituted in
                                                             subsec. (a) for ‘‘section 205(d)’’, meaning section 205(d)
  Whenever any contract made on behalf of the                of the Federal Property and Administrative Services
Government by the head of any Federal Agency,                Act of 1949, on authority of Pub. L. 107–217, § 5(c), Aug.
or by officers authorized by him so to do, in-               21, 2002, 116 Stat. 1303, the first section of which enacted
cludes a provision for liquidated damages for                Title 40, Public Buildings, Property, and Works.
delay, the Secretary of the Treasury upon rec-
                                                                                    AMENDMENTS
ommendation of such head is authorized and em-
powered to remit the whole or any part of such                 1996—Subsec. (b). Pub. L. 104–316 struck out at end ‘‘A
damages as in his discretion may be just and                 copy of the findings shall be submitted to the General
                                                             Accounting Office with the contract.’’
equitable.
                                                               Pub. L. 104–106 substituted ‘‘section 255(d)’’ for ‘‘sec-
(Sept. 5, 1950, ch. 849, § 10(a), 64 Stat. 591; Pub. L.      tion 255(c)’’.
104–316, title II, § 202(u), Oct. 19, 1996, 110 Stat.          1984—Subsec. (a). Pub. L. 98–369, § 2714(a)(4), sub-
3845.)                                                       stituted provision that determinations and decisions
                                                             provided in this Act to be made by the Administrator
                      CODIFICATION                           or other agency head shall be final for provision that
  Section was not enacted as part of title III of act        such determinations and decisions provided in this sub-
June 30, 1949, ch. 288, 63 Stat. 393, which comprises this   chapter to be made by such official would be final, and
subchapter.                                                  inserted exception for determinations or decisions
                                                             under sections 253, 253a, and 253b of this title, sub-
                      AMENDMENTS                             stituted ‘‘Except as provided in section 253(d)(2) of this
                                                             title’’ for ‘‘Except as provided in subsection (b) of this
 1996—Pub. L. 104–316 substituted ‘‘Secretary of the
                                                             section’’, and directed the substitution of ‘‘this Act’’
Treasury’’ for ‘‘Comptroller General’’.
                                                             for ‘‘this chapter’’ after ‘‘powers provided by’’, which
§ 257. Administrative determinations                         substitution was not capable of literal execution be-
                                                             cause the original text read ‘‘this title’’. Consequently,
(a) Conclusiveness; delegation of powers                     the amendment was executed by substituting ‘‘this
  Determinations and decisions provided in this              Act’’ for ‘‘this title’’ as the probable intent of Congress.
                                                               Subsecs. (b), (c). Pub. L. 98–369, § 2714(a)(4)(D)–(F), re-
Act to be made by the Administrator or other
                                                             designated subsec. (c) as (b), struck out ‘‘paragraphs
agency head shall be final. Such determinations              (11), (12), (13), or of section 253(c)’’, and struck out
or decisions may be made with respect to indi-               former subsec. (b) which related to nondelegable powers
vidual purchases or contracts or, except for de-             and powers delegable to certain persons.
terminations or decisions under sections 253,                  Subsec. (d). Pub. L. 98–369, § 2714(a)(4)(G), struck out
253a, and 253b of this title, with respect to class-         subsec. (d) which related to preservation of data relat-
es of purchases or contracts. Except as provided             ing to contracts negotiated pursuant to the former pro-
in section 253(d)(2) of this title, and except as            visions of section 252(c) of this title.
                                                               1965—Subsec. (a). Pub. L. 89–343, § 3, inserted ‘‘and ex-
provided in section 121(d)(1) and (2) of title 40
                                                             cept as provided in section 486(d) of title 40 with respect
with respect to the Administrator, the agency                to the Administrator’’.
head is authorized to delegate his powers pro-                 Subsec. (b). Pub. L. 89–343, § 4, struck out provisions
vided by this Act, including the making of such              which made the power of Administrator to make the
determinations and decisions, in his discretion              delegations and determinations specified in section
§ 258                                           TITLE 41—PUBLIC CONTRACTS                                                     Page 98

252(a) of this title delegable only to Deputy Adminis-                      offers for such procurements are permitted to
trator or to chief official of any principal organiza-                      compete; and
tional unit of General Services Administration.                               (5) a competitive selection of research pro-
   1958—Subsec. (b). Pub. L. 85–800, § 5(a), (b), substituted
                                                                            posals resulting from a general solicitation
‘‘(12)’’ for ‘‘(11)’’, ‘‘(13)’’ for ‘‘(12)’’, and ‘‘(11)’’ for ‘‘(10)’’
and struck out ‘‘and in section 255(a) of this title’’ be-                  and peer review or scientific review (as appro-
fore ‘‘shall not be delegable’’ in first sentence.                          priate) solicited pursuant to section 638 of
   Subsec. (c). Pub. L. 85–800, § 5(a), (c), substituted ‘‘(11),            title 15.
(12), (13), or (14)’’ for ‘‘(10), (11), (12), or (13)’’, and                (c) The following terms have the meanings
‘‘255(c)’’ for ‘‘255(a)’’.
                                                                          provided such terms in section 403 of this title:
             EFFECTIVE DATE OF 1996 AMENDMENT                                 (1) The term ‘‘procurement’’.
  For effective date and applicability of amendment by                        (2) The term ‘‘procurement system’’.
Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set                     (3) The term ‘‘standards’’.
out as a note under section 251 of this title.                                (4) The term ‘‘full and open competition’’.
                                                                              (5) The term ‘‘responsible source’’.
             EFFECTIVE DATE OF 1984 AMENDMENT                                 (6) The term ‘‘technical data’’.
  Amendment by Pub. L. 98–369 applicable with respect                         (7) The term ‘‘major system’’.
to any solicitation for bids or proposals issued after                        (8) The term ‘‘item’’.
Mar. 31, 1985, see section 2751 of Pub. L. 98–369, set out                    (9) The term ‘‘item of supply’’.
as a note under section 251 of this title.                                    (10) The term ‘‘supplies’’.
                         EFFECTIVE DATE                                       (11) The term ‘‘commercial item’’.
                                                                              (12) The term ‘‘nondevelopmental item’’.
  Section effective July 1, 1949, see section 605, for-                       (13) The term ‘‘commercial component’’.
merly section 505, of act June 30, 1949, ch. 288, 63 Stat.                    (14) The term ‘‘component’’.
403; renumbered by act Sept. 5, 1950, ch. 849, § 6(a), (b),
64 Stat. 583.                                                               (d)(1) The term ‘‘simplified acquisition thresh-
                            DEFINITIONS
                                                                          old’’ has the meaning provided that term in sec-
                                                                          tion 403 of this title, except that, in the case of
  The definitions in section 102 of Title 40, Public                      any contract to be awarded and performed, or
Buildings, Property, and Works, apply to this sub-                        purchase to be made, outside the United States
chapter.
                                                                          in support of a contingency operation or a hu-
§ 258. Repealed. Pub. L. 103–355, title VII, § 7205,                      manitarian or peacekeeping operation, the term
    Oct. 13, 1994, 108 Stat. 3382                                         means an amount equal to two times the
                                                                          amount specified for that term in section 403 of
   Section, acts June 30, 1949, ch. 288, title III, § 308, 63             this title.
Stat. 397; July 18, 1984, Pub. L. 98–369, div. B, title VII,                (2) In paragraph (1):
§ 2714(a)(5), 98 Stat. 1185, related to application of cer-
                                                                              (A) The term ‘‘contingency operation’’ has
tain laws to purchases or contracts.
                                                                            the meaning given such term in section 101(a)
§ 259. Definitions                                                          of title 10.
                                                                              (B) The term ‘‘humanitarian or peacekeep-
  As used in this subchapter—                                               ing operation’’ means a military operation in
  (a) The term ‘‘agency head’’ shall mean the                               support of the provision of humanitarian or
head or any assistant head of any executive                                 foreign disaster assistance or in support of a
agency, and may at the option of the Adminis-                               peacekeeping operation under chapter VI or
trator include the chief official of any principal                          VII of the Charter of the United Nations. The
organizational unit of the General Services Ad-                             term does not include routine training, force
ministration.                                                               rotation, or stationing.
  (b) The term ‘‘competitive procedures’’ means
procedures under which an executive agency en-                              (e) The term ‘‘Federal Acquisition Regula-
ters into a contract pursuant to full and open                            tion’’ means the Federal Acquisition Regulation
competition. Such term also includes—                                     issued pursuant to section 421(c)(1) of this title.
    (1) procurement of architectural or engineer-                         (June 30, 1949, ch. 288, title III, § 309, 63 Stat. 397;
  ing services conducted in accordance with                               July 12, 1952, ch. 703, § 1(h), 66 Stat. 593; Pub. L.
  title IX of this Act; 1                                                 98–369, div. B, title VII, § 2711(a)(3), July 18, 1984,
    (2) the competitive selection of basic re-                            98 Stat. 1180; Pub. L. 98–577, title V, § 504(a)(3),
  search proposals resulting from a general so-                           (4), Oct. 30, 1984, 98 Stat. 3086; Pub. L. 103–355,
  licitation and the peer review or scientific re-                        title I, § 1551, Oct. 13, 1994, 108 Stat. 3298; Pub. L.
  view (as appropriate) of such proposals;                                104–201, div. A, title VIII, § 807(b), Sept. 23, 1996,
    (3) the procedures established by the Admin-                          110 Stat. 2606; Pub. L. 105–85, div. A, title X,
  istrator for the multiple awards schedule pro-                          § 1073(g)(1), Nov. 18, 1997, 111 Stat. 1906.)
  gram of the General Services Administration
                                                                                             REFERENCES IN TEXT
  if—
      (A) participation in the program has been                             This Act, referred to in subsec. (b)(1), is the Federal
    open to all responsible sources; and                                  Property and Administrative Services Act of 1949, ap-
                                                                          proved June 30, 1949, ch. 288, 63 Stat. 377. Title IX of
      (B) orders and contracts under such proce-
                                                                          this Act, which was classified generally to subchapter
    dures result in the lowest overall cost alter-                        VI (§ 541 et seq.) of chapter 10 of former Title 40, Public
    native to meet the needs of the Government;                           Buildings, Property, and Works, was repealed and reen-
    (4) procurements conducted in furtherance of                          acted by Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat.
                                                                          1062, 1304, as chapter 11 (§ 1101 et seq.) of Title 40, Public
  section 644 of title 15 as long as all responsible
                                                                          Buildings, Property, and Works. For disposition of sec-
  business concerns that are entitled to submit                           tions of former Title 40 to revised Title 40, see Table
                                                                          preceding section 101 of Title 40. For complete classi-
  1 See   References in Text note below.                                  fication of this Act to the Code, see Tables.
Page 99                                 TITLE 41—PUBLIC CONTRACTS                                                   § 261

                      AMENDMENTS                              sealed-bid procedures’’ for ‘‘section 252(c)(15) of this
   1997—Subsec. (b)(2). Pub. L. 105–85 struck out ‘‘and’’     title without regard to the advertising requirements of
at end.                                                       sections 252(c) and 253 of this title’’.
   1996—Subsec. (d). Pub. L. 104–201 designated existing        1965—Pub. L. 89–343 substituted provisions making
provisions as par. (1), inserted ‘‘or a humanitarian or       sections 5, 8, and 13 of this title inapplicable to the pro-
peacekeeping operation’’ after ‘‘contingency oper-            curement of property or services made by an executive
ation’’, and added par. (2).                                  agency pursuant to this subchapter, and requiring any
   1994—Subsecs. (c) to (e). Pub. L. 103–355 added subsecs.   provision of law which authorizes an executive agency
(c) to (e) and struck out former subsec. (c) which read       (other than an executive agency which is exempted
as follows: ‘‘The terms ‘full and open competition’, ‘re-     from the provisions of this subchapter by section 252(a)
sponsible source’, ‘technical data’, ‘major system’,          of this title) to procure any property or services with-
‘item’, ‘item of supply’, and ‘supplies’ have the same        out advertising or without regard to said section 5 of
meanings provided such terms in section 403 of this           this title to be construed to authorize the procurement
title.’’                                                      of such property or services pursuant to section
   1984—Subsec. (b). Pub. L. 98–369 added subsec. (b).        252(c)(15) of this title without regard to the advertising
   Subsec. (b)(4), (5). Pub. L. 98–577, § 504(a)(3), added    requirements of section 252(c) and 253 of this title, for
pars. (4) and (5).                                            provisions which made sections 5, 6, 6a, and 13 of this
   Subsec. (c). Pub. L. 98–577, § 504(a)(4), substituted      title inapplicable to the procurement of property or
‘‘, ‘responsible source’, ‘technical data’, ‘major sys-       services by the General Services Administration, or
tem’, ‘item’, ‘item of supply’, and ‘supplies’ have’’ for     within the scope of authority delegated by the Admin-
‘‘and ‘responsible source’ have’’ before ‘‘the meaning’’.
                                                              istrator to any other executive agency, and which re-
   Pub. L. 98–369 added subsec. (c).
   1952—Subsec. (b). Act July 12, 1952, repealed subsec.      quired reference in any Act to the applicability of sec-
(b) which defined ‘‘supplies’’.                               tion 5 of this title to the procurement of property or
                                                              services by the General Services Administration or any
          EFFECTIVE DATE OF 1994 AMENDMENT                    constituent organization thereof or any other executive
  For effective date and applicability of amendment by        agency delegated authority pursuant to section
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set    252(a)(2) of this title to be deemed a reference to section
out as a note under section 251 of this title.                252(c) of this title.
                                                                1958—Subsec. (b). Pub. L. 85–800 inserted ‘‘or any
          EFFECTIVE DATE OF 1984 AMENDMENT                    other executive agency delegated authority pursuant to
  Amendment by Pub. L. 98–369 applicable with respect         section 252(a)(2) of this title’’.
to any solicitation for bids or proposals issued after          1952—Act July 12, 1952, designated existing provisions
Mar. 31, 1985, see section 2751 of Pub. L. 98–369, set out    as subsec. (a), added subsec. (b), and substituting ‘‘prop-
as a note under section 251 of this title.                    erty’’ for ‘‘supplies’’ in subsec. (a).
                    EFFECTIVE DATE                                     EFFECTIVE DATE OF 1984 AMENDMENT
  Section effective July 1, 1949, see section 605, for-         Amendment by Pub. L. 98–369 applicable with respect
merly section 505, of act June 30, 1949, ch. 288, 63 Stat.    to any solicitation for bids or proposals issued after
403; renumbered by act Sept. 5, 1950, ch. 849, § 6(a), (b),   Mar. 31, 1985, see section 2751 of Pub. L. 98–369, set out
64 Stat. 583.                                                 as a note under section 251 of this title.
                  SMALL BUSINESS ACT                                               EFFECTIVE DATE
  Amendment to this section by section 2711(a)(3) of
                                                                Section effective July 1, 1949, see section 605, for-
Pub. L. 98–369 not to affect or supersede the provisions
of section 637(a) of Title 15, Commerce and Trade, see        merly section 505, of act June 30, 1949, ch. 288, 63 Stat.
section 2711(c) of Pub. L. 98–369, set out as a note under    403; renumbered by act Sept. 5, 1950, ch. 849, § 6(a), (b),
section 253 of this title.                                    64 Stat. 583.

                       DEFINITIONS                            § 261. Assignment and delegation of procurement
  The definitions in section 102 of Title 40, Public              functions and responsibilities
Buildings, Property, and Works, apply to this sub-
chapter.
                                                              (a) In general
                                                                Except to the extent expressly prohibited by
§ 260. Laws not applicable to contracts                       another provision of law, the head of an execu-
  Sections 5, 8, and 13 of this title shall not               tive agency may delegate to any other officer or
apply to the procurement of property or services              official of that agency, any power under this
made by an executive agency pursuant to this                  subchapter.
subchapter. Any provision of law which author-                (b) Procurements for or with other agencies
izes an executive agency (other than an execu-
tive agency which is exempted from the provi-                   Subject to subsection (a) of this section, to fa-
sions of this subchapter by section 252(a) of this            cilitate the procurement of property and serv-
title), to procure any property or services with-             ices covered by this subchapter by each execu-
out advertising or without regard to said section             tive agency for any other executive agency, and
5 of this title shall be construed to authorize the           to facilitate joint procurement by those execu-
procurement of such property or services pursu-               tive agencies—
ant to the provisions of this subchapter relating                  (1) the head of an executive agency may
to procedures other than sealed-bid procedures.                 delegate functions and assign responsibilities
                                                                relating to procurement to any officer or em-
(June 30, 1949, ch. 288, title III, § 310, 63 Stat. 397;        ployee within such agency;
July 12, 1952, ch. 703, § 1(m), (n), 66 Stat. 594; Pub.
                                                                   (2) the heads of two or more executive agen-
L. 85–800, § 6, Aug. 28, 1958, 72 Stat. 967; Pub. L.
                                                                cies may by agreement delegate procurement
89–343, § 5, Nov. 8, 1965, 79 Stat. 1303; Pub. L.
                                                                functions and assign procurement responsibil-
98–369, div. B, title VII, § 2714(a)(6), July 18, 1984,
                                                                ities, consistent with section 1535 of title 31
98 Stat. 1185.)
                                                                and regulations issued under section 1074 of
                      AMENDMENTS                                the Federal Acquisition Streamlining Act of
  1984—Pub. L. 98–369 substituted ‘‘the provisions of           1994, from one executive agency to another of
this subchapter relating to procedures other than               those executive agencies or to an officer or ci-
§ 262                                     TITLE 41—PUBLIC CONTRACTS                                              Page 100

  vilian employee of another of those executive                  age, 90 percent of the cost, performance, and
  agencies; and                                                  schedule goals established for major acquisition
    (3) the heads of two or more executive agen-                 programs of the agency.
  cies may establish joint or combined offices to                (b) Establishment of goals
  exercise procurement functions and respon-                       (1) The head of each executive agency shall ap-
  sibilities.                                                    prove or define the cost, performance, and
(June 30, 1949, ch. 288, title III, § 311, as added              schedule goals for major acquisition programs of
Pub. L. 103–355, title I, § 1552, Oct. 13, 1994, 108             the agency.
Stat. 3299.)                                                       (2) The chief financial officer of an executive
                                                                 agency shall evaluate the cost goals proposed
                   REFERENCES IN TEXT
                                                                 for each major acquisition program of the agen-
  Section 1074 of the Federal Acquisition Streamling             cy.
Act of 1994, referred to in subsec. (b)(2), is section 1074      (c) Identification of noncompliant programs
of Pub. L. 103–355, which is set out as a note under sec-
tion 1535 of Title 31, Money and Finance.                          Whenever it is necessary to do so in order to
                                                                 implement the policy set out in subsection (a) of
                     PRIOR PROVISIONS                            this section, the head of an executive agency
  A prior section 261, Pub. L. 101–509, title V, § 532, Nov.     shall—
5, 1990, 104 Stat. 1470; Pub. L. 102–393, title V, § 529, Oct.        (1) determine whether there is a continuing
6, 1992, 106 Stat. 1761, related to Internal Revenue Serv-         need for programs that are significantly be-
ice procurement of expert services, prior to repeal by             hind schedule, over budget, or not in compli-
Pub. L. 103–355, § 1055(c).                                        ance with performance or capability require-
                     EFFECTIVE DATE                                ments; and
                                                                      (2) identify suitable actions to be taken, in-
  For effective date and applicability of section, see
                                                                   cluding termination, with respect to such pro-
section 10001 of Pub. L. 103–355, set out as an Effective
Date of 1994 Amendment note under section 251 of this              grams.
title.                                                           (June 30, 1949, ch. 288, title III, § 313, as added
                                                                 Pub. L. 103–355, title V, § 5051(a), Oct. 13, 1994, 108
§ 262. Determinations and decisions                              Stat. 3351; amended Pub. L. 105–85, div. A, title
(a) Individual or class determinations and deci-                 VIII, § 851(a), Nov. 18, 1997, 111 Stat. 1851.)
    sions authorized                                                                   AMENDMENTS
  Determinations and decisions required to be                      1997—Subsec. (a). Pub. L. 105–85 amended heading and
made under this subchapter by the head of an                     text of subsec. (a) generally. Prior to amendment, text
executive agency may be made for an individual                   read as follows: ‘‘It is the policy of Congress that the
purchase or contract or, except to the extent ex-                head of each executive agency should achieve, on aver-
pressly prohibited by another provision of law,                  age, 90 percent of the cost and schedule goals estab-
for a class of purchases or contracts. Such deter-               lished for major and nonmajor acquisition programs of
                                                                 the agency without reducing the performance or capa-
minations and decisions are final.
                                                                 bilities of the items being acquired.’’
(b) Written findings required
                                                                    ENHANCED SYSTEM OF PERFORMANCE INCENTIVES
  (1) Each determination under section 255(d) of
                                                                   Section 5051(c) of Pub. L. 103–355 provided that:
this title or section 254d(c)(2)(B) of this title                ‘‘Within one year after the date of the enactment of
shall be based on a written finding by the person                this Act [Oct. 13, 1994], the Deputy Director for Manage-
making the determination or decision. The find-                  ment of the Office of Management and Budget, in con-
ing shall set out facts and circumstances that                   sultation with appropriate officials in other depart-
support the determination or decision.                           ments and agencies of the Federal Government, shall,
  (2) Each finding referred to in paragraph (1) is               to the maximum extent consistent with applicable
final.                                                           law—
                                                                     ‘‘(1) establish policies and procedures for the heads
  (3) The head of an executive agency shall                        of such departments and agencies to designate acqui-
maintain for a period of not less than 6 years a                   sition positions and manage employees (including the
copy of each finding referred to in paragraph (1)                  accession, education, training and career develop-
that is made by a person in that executive agen-                   ment of employees) in the designated acquisition po-
cy. The period begins on the date of the deter-                    sitions; and
mination or decision to which the finding re-                        ‘‘(2) review the incentives and personnel actions
lates.                                                             available to the heads of departments and agencies of
                                                                   the Federal Government for encouraging excellence
(June 30, 1949, ch. 288, title III, § 312, as added                in the acquisition workforce of the Federal Govern-
Pub. L. 103–355, title I, § 1553, Oct. 13, 1994, 108               ment and provide an enhanced system of incentives
Stat. 3300.)                                                       for the encouragement of excellence in such work-
                                                                   force which—
                     EFFECTIVE DATE                                     ‘‘(A) relates pay to performance (including the ex-
                                                                     tent to which the performance of personnel in such
  For effective date and applicability of section, see
                                                                     workforce contributes to achieving the cost goals,
section 10001 of Pub. L. 103–355, set out as an Effective
                                                                     schedule goals, and performance goals established
Date of 1994 Amendment note under section 251 of this
                                                                     for acquisition programs pursuant to section 313(b)
title.
                                                                     of the Federal Property and Administrative Serv-
                                                                     ices Act of 1949, as added by subsection (a) [41
§ 263. Performance based management: acquisi-
                                                                     U.S.C. 263(b)]); and
    tion programs                                                       ‘‘(B) provides for consideration, in personnel eval-
(a) Congressional policy                                             uations and promotion decisions, of the extent to
                                                                     which the performance of personnel in such work-
  It is the policy of Congress that the head of                      force contributes to achieving such cost goals,
each executive agency should achieve, on aver-                       schedule goals, and performance goals.’’
Page 101                                   TITLE 41—PUBLIC CONTRACTS                                                     § 264

                RECOMMENDED LEGISLATION                              ‘‘(3) To the maximum extent practicable, only the
                                                                   contract clauses listed pursuant to paragraph (1) may
  Section 5051(d) of Pub. L. 103–355 provided that: ‘‘Not
                                                                   be used in a contract, and only the contract clauses re-
later than one year after the date of the enactment of
                                                                   ferred to in paragraph (2) may be required to be used in
this Act [Oct. 13, 1994], the Administrator for Federal
                                                                   a subcontract, for the acquisition of commercial items
Procurement Policy shall submit to Congress any rec-
                                                                   or commercial components by or for an executive agen-
ommended legislation that the Secretary considers
                                                                   cy.
necessary to carry out section 313 of the Federal Prop-              ‘‘(4) The Federal Acquisition Regulation shall provide
erty and Administrative Services Act of 1949, as added             standards and procedures for waiving the use of con-
by subsection (a) [41 U.S.C. 263], and otherwise to facili-        tract clauses required pursuant to paragraph (1), other
tate and enhance management of Federal Government                  than those required by law, including standards for de-
acquisition programs and the acquisition workforce of              termining the cases in which a waiver is appropriate.
the Federal Government on the basis of performance.’’                ‘‘(5) For purposes of this subsection, the term ‘sub-
                                                                   contract’ includes a transfer of commercial items be-
§ 264. Relationship of commercial item provisions                  tween divisions, subsidiaries, or affiliates of a contrac-
    to other provisions of law                                     tor or subcontractor.
                                                                     ‘‘(c) MARKET ACCEPTANCE.—(1) The Federal Acquisi-
(a) Applicability of subchapter                                    tion Regulation shall provide that under appropriate
  Unless otherwise specifically provided, noth-                    conditions the head of an executive agency may require
ing in this section, section 264a of this title, or                offerors to demonstrate that the items offered—
section 264b of this title shall be construed as                        ‘‘(A) have either—
                                                                           ‘‘(i) achieved commercial market acceptance; or
providing that any other provision of this sub-                            ‘‘(ii) been satisfactorily supplied to an executive
chapter relating to procurement is inapplicable                         agency under current or recent contracts for the
to the procurement of commercial items.                                 same or similar requirements; and
                                                                        ‘‘(B) otherwise meet the item description, specifica-
(b) List of laws inapplicable to contracts for ac-
                                                                     tions, or other criteria prescribed in the public notice
    quisition of commercial items                                    and solicitation relating to the contract.
  No contract for the procurement of a commer-                       ‘‘(2) The Federal Acquisition Regulation shall provide
cial item entered into by the head of an execu-                    guidance to ensure that the criteria for determining
tive agency shall be subject to any law properly                   commercial market acceptance include the consider-
                                                                   ation of—
listed in the Federal Acquisition Regulation                            ‘‘(A) the minimum needs of the executive agency
(pursuant to section 430 of this title).                             concerned; and
(June 30, 1949, ch. 288, title III, § 314, as added                     ‘‘(B) the entire relevant commercial market, in-
                                                                     cluding small businesses.
Pub. L. 103–355, title VIII, § 8201, Oct. 13, 1994, 108              ‘‘(d) PROVISIONS RELATING TO TYPES OF CONTRACTS
Stat. 3394.)                                                       FOR COMMERCIAL ITEMS.—(1) [The] Federal Acquisition
                                                                   Regulation shall include, for acquisitions of commer-
                      EFFECTIVE DATE
                                                                   cial items—
  For effective date and applicability of section, see                  ‘‘(A) a requirement that firm, fixed price contracts
section 10001 of Pub. L. 103–355, set out as an Effective            or fixed price with economic price adjustment con-
Date of 1994 Amendment note under section 251 of this                tracts be used to the maximum extent practicable;
title.                                                                  ‘‘(B) a prohibition on use of cost type contracts;
                                                                     and
                        REGULATIONS                                     ‘‘(C) subject to paragraph (2), authority for use of a
   Pub. L. 103–355, title VIII, § 8002, Oct. 13, 1994, 108 Stat.     time-and-materials contract or a labor-hour contract
3386, as amended by Pub. L. 108–136, div. A, title XIV,              for the procurement of commercial services that are
§ 1432, Nov. 24, 2003, 117 Stat. 1672, provided that:                commonly sold to the general public through such
   ‘‘(a) IN GENERAL.—The Federal Acquisition Regula-                 contracts and are purchased by the procuring agency
tion shall provide regulations to implement paragraphs               on a competitive basis.
(12) through (15) of section 4 of the Office of Federal              ‘‘(2) A time-and-materials contract or a labor-hour
Procurement Policy Act [41 U.S.C. 403(12)–(15)], chapter           contract may be used pursuant to the authority re-
140 of title 10, United States Code, and sections 314              ferred to in paragraph (1)(C)—
                                                                        ‘‘(A) only for a procurement of commercial services
through 314B of the Federal Property and Administra-
                                                                     in a category of commercial services described in
tive Services Act of 1949 [41 U.S.C. 264–264b].
                                                                     paragraph (3); and—
   ‘‘(b) CONTRACT CLAUSES.—(1) The regulations pre-
                                                                        ‘‘(B) only if the contracting officer for such pro-
scribed under subsection (a) shall contain a list of con-
                                                                     curement—
tract clauses to be included in contracts for the acqui-                   ‘‘(i) executes a determination and findings that
sition of commercial end items. Such list shall, to the                 no other contract type is suitable;
maximum extent practicable, include only those con-                        ‘‘(ii) includes in the contract a ceiling price that
tract clauses—                                                          the contractor exceeds at its own risk; and
      ‘‘(A) that are required to implement provisions of                   ‘‘(iii) authorizes any subsequent change in the
   law or executive orders applicable to acquisitions of                ceiling price only upon a determination, docu-
   commercial items or commercial components, as the                    mented in the contract file, that it is in the best in-
   case may be; or                                                      terest of the procuring agency to change such ceil-
      ‘‘(B) that are determined to be consistent with                   ing price.
   standard commercial practice.                                     ‘‘(3) The categories of commercial services referred to
   ‘‘(2) Such regulations shall provide that a prime con-          in paragraph (2) are as follows:
tractor shall not be required by the Federal Govern-                    ‘‘(A) Commercial services procured for support of a
ment to apply to any of its divisions, subsidiaries, af-             commercial item, as described in section 4(12)(E) of
filiates, subcontractors, or suppliers that are furnish-             the Office of Federal Procurement Policy Act (41
ing commercial items any contract clause except                      U.S.C. 403(12)(E)).
those—                                                                  ‘‘(B) Any other category of commercial services
      ‘‘(A) that are required to implement provisions of             that is designated by the Administrator for Federal
   law or executive orders applicable to subcontractors              Procurement Policy in the Federal Acquisition Regu-
   furnishing commercial items or commercial compo-                  lation for the purposes of this paragraph on the basis
   nents, as the case may be; or                                     that—
      ‘‘(B) that are determined to be consistent with                      ‘‘(i) the commercial services in such category are
   standard commercial practice.                                        of a type of commercial services that are commonly
§ 264a                                   TITLE 41—PUBLIC CONTRACTS                                            Page 102

     sold to the general public through use of time-and-        § 264a. Definitions relating to procurement of
     materials or labor-hour contracts; and                         commercial items
        ‘‘(ii) it would be in the best interests of the Fed-
     eral Government to authorize use of time-and-ma-              As used in this subchapter, the terms ‘‘com-
     terials or labor-hour contracts for purchases of the       mercial    item’’,  ‘‘nondevelopmental    item’’,
     commercial services in such category.                      ‘‘component’’, and ‘‘commercial component’’
  ‘‘(e) CONTRACT QUALITY REQUIREMENTS.—The regula-              have the meanings provided in section 403 of this
tions prescribed under subsection (a) shall include pro-        title.
visions that—
     ‘‘(1) permit, to the maximum extent practicable, a         (June 30, 1949, ch. 288, title III, § 314A, as added
  contractor under a commercial items acquisition to            Pub. L. 103–355, title VIII, § 8202, Oct. 13, 1994, 108
  use the existing quality assurance system of the con-         Stat. 3394; amended Pub. L. 104–106, div. D, title
  tractor as a substitute for compliance with an other-         XLIII, § 4321(e)(7), Feb. 10, 1996, 110 Stat. 675.)
  wise applicable requirement for the Government to
  inspect or test the commercial items before the con-                               AMENDMENTS
  tractor’s tender of those items for acceptance by the           1996—Pub. L. 104–106 inserted ‘‘relating to procure-
  Government;                                                   ment of commercial items’’ after ‘‘Definitions’’ in sec-
     ‘‘(2) require that, to the maximum extent prac-            tion catchline.
  ticable, the executive agency take advantage of war-
  ranties (including extended warranties) offered by of-                 EFFECTIVE DATE OF 1996 AMENDMENT
  ferors of commercial items and use such warranties              For effective date and applicability of amendment by
  for the repair and replacement of commercial items;           Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
  and                                                           out as a note under section 251 of this title.
     ‘‘(3) set forth guidance regarding the use of past
  performance of commercial items and sources as a                                  EFFECTIVE DATE
  factor in contract award decisions.                             For effective date and applicability of section, see
  ‘‘(f) DEFENSE CONTRACT CLAUSES.—(1) Section 824(b)            section 10001 of Pub. L. 103–355, set out as an Effective
of the National Defense Authorization Act for Fiscal            Date of 1994 Amendment note under section 251 of this
Years 1990 and 1991 (Public Law 101–189; [former] 10            title.
U.S.C. 2325 note) shall cease to be effective on the date
on which the regulations implementing this section be-          § 264b. Preference for acquisition of commercial
come effective [Oct. 1, 1995, see 60 F.R. 48231, Sept. 18,          items
1995].
                                                                (a) Preference
  ‘‘(2) Notwithstanding subsection (b), a contract of the
Department of Defense entered into before the date on             The head of each executive agency shall en-
which section 824(b) ceases to be effective under para-         sure that, to the maximum extent practicable—
graph (1), and a subcontract entered into before such               (1) requirements of the executive agency
date under such a contract, may include clauses devel-            with respect to a procurement of supplies or
oped pursuant to paragraphs (2) and (3) of section 824(b)         services are stated in terms of—
of the National Defense Authorization Act for Fiscal
                                                                      (A) functions to be performed;
Years 1990 and 1991 (Public Law 101–189; [former] 10
U.S.C. 2325 note).’’                                                  (B) performance required; or
                                                                      (C) essential physical characteristics;
     PROVISIONS NOT AFFECTED BY TITLE VIII OF                        (2) such requirements are defined so that
                  PUB. L. 103–355                                 commercial items or, to the extent that com-
                                                                  mercial items suitable to meet the executive
  Section 8304 of title VIII of Pub. L. 103–355 provided
that: ‘‘Nothing in this title [enacting this section, sec-        agency’s needs are not available, nondevelop-
tions 264a, 264b, and 430 of this title, sections 2375 to         mental items other than commercial items,
2377 of Title 10, Armed Forces, and section 334 of former         may be procured to fulfill such requirements;
Title 40, Public Buildings, Property, and Works, now              and
section 3707 of Title 40, amending sections 57, 58, 253g,            (3) offerors of commercial items and non-
254, 403, 416, 418, 422, 423, and 701 of this title, sections     developmental items other than commercial
2306, 2320, 2321, 2384, 2393, 2397, 2397b, 2397c, 2402, 2408,     items are provided an opportunity to compete
and 2410b of Title 10, section 1368 of Title 33, Navigation
                                                                  in any procurement to fill such requirements.
and Navigable Waters, and section 40118 of Title 49,
Transportation, repealing section 424 of this title and         (b) Implementation
section 2325 of Title 10, enacting provisions set out as          The head of each executive agency shall en-
notes under this section, sections 264b and 430 of this         sure that procurement officials in that execu-
title, and section 7606 of Title 42, The Public Health and
                                                                tive agency, to the maximum extent prac-
Welfare, and amending provisions set out as notes
under sections 2301 and 2327 of Title 10] shall be con-         ticable—
strued as modifying or superseding, or as intended to                (1) acquire commercial items or nondevelop-
impair or restrict, authorities or responsibilities               mental items other than commercial items to
under—                                                            meet the needs of the executive agency;
    ‘‘(1) section 2323 of title 10, United States Code, or           (2) require prime contractors and sub-
  section 7102 of the Federal Acquisition Streamlining            contractors at all levels under the executive
  Act of 1994 [Pub. L. 103–355, 15 U.S.C. 644 note];              agency contracts to incorporate commercial
    ‘‘(2) the Brooks Automatic Data Processing Act                items or nondevelopmental items other than
  (section 111 of the Federal Property and Administra-            commercial items as components of items sup-
  tive Services Act of 1949 ([former] 40 U.S.C. 759));
                                                                  plied to the executive agency;
    ‘‘(3) Brooks Architect-Engineers Act (title IX of the
  Federal Property and Administrative Services Act of                (3) modify requirements in appropriate cases
  1949 (40 U.S.C. 541 et seq.) [now 40 U.S.C. 1101–1104]);        to ensure that the requirements can be met by
    ‘‘(4) subsections (a) and (d) of section 8 of the Small       commercial items or, to the extent that com-
  Business Act (15 U.S.C. 637(a) and (d)); or                     mercial items suitable to meet the executive
    ‘‘(5) the Javits-Wagner-O’Day Act (41 U.S.C.                  agency’s needs are not available, nondevelop-
  46–48c).’’                                                      mental items other than commercial items;
Page 103                               TITLE 41—PUBLIC CONTRACTS                                           § 265

    (4) state specifications in terms that enable               ‘‘(3) Any recommendations for changes in law or
  and encourage bidders and offerors to supply                regulations that the Comptroller General considers
  commercial items or, to the extent that com-                appropriate.’’
  mercial items suitable to meet the executive               § 265. Contractor employees: protection from re-
  agency’s needs are not available, nondevelop-                  prisal for disclosure of certain information
  mental items other than commercial items in
  response to the executive agency solicitations;            (a) Prohibition of reprisals
    (5) revise the executive agency’s procure-                 An employee of a contractor may not be dis-
  ment policies, practices, and procedures not               charged, demoted, or otherwise discriminated
  required by law to reduce any impediments in               against as a reprisal for disclosing to a Member
  those policies, practices, and procedures to the           of Congress or an authorized official of an execu-
  acquisition of commercial items; and                       tive agency or the Department of Justice infor-
    (6) require training of appropriate personnel            mation relating to a substantial violation of law
  in the acquisition of commercial items.                    related to a contract (including the competition
(c) Preliminary market research                              for or negotiation of a contract).
  (1) The head of an executive agency shall con-             (b) Investigation of complaints
duct market research appropriate to the circum-                A person who believes that the person has
stances—                                                     been subjected to a reprisal prohibited by sub-
    (A) before developing new specifications for             section (a) of this section may submit a com-
  a procurement by that executive agency; and                plaint to the Inspector General of the executive
    (B) before soliciting bids or proposals for a            agency. Unless the Inspector General determines
  contract in excess of the simplified acquisition           that the complaint is frivolous, the Inspector
  threshold.                                                 General shall investigate the complaint and,
                                                             upon completion of such investigation, submit a
  (2) The head of an executive agency shall use
                                                             report of the findings of the investigation to the
the results of market research to determine
                                                             person, the contractor concerned, and the head
whether there are commercial items or, to the
                                                             of the agency. In the case of an executive agency
extent that commercial items suitable to meet
                                                             that does not have an Inspector General, the du-
the executive agency’s needs are not available,
                                                             ties of the Inspector General under this section
nondevelopmental items other than commercial
                                                             shall be performed by an official designated by
items available that—
                                                             the head of the executive agency.
    (A) meet the executive agency’s require-
  ments;                                                     (c) Remedy and enforcement authority
    (B) could be modified to meet the executive                (1) If the head of an executive agency deter-
  agency’s requirements; or                                  mines that a contractor has subjected a person
    (C) could meet the executive agency’s re-                to a reprisal prohibited by subsection (a) of this
  quirements if those requirements were modi-                section, the head of the executive agency may
  fied to a reasonable extent.                               take one or more of the following actions:
  (3) In conducting market research, the head of                  (A) Order the contractor to take affirmative
an executive agency should not require poten-                  action to abate the reprisal.
tial sources to submit more than the minimum                      (B) Order the contractor to reinstate the
information that is necessary to make the de-                  person to the position that the person held be-
terminations required in paragraph (2).                        fore the reprisal, together with the compensa-
                                                               tion (including back pay), employment bene-
(June 30, 1949, ch. 288, title III, § 314B, as added           fits, and other terms and conditions of em-
Pub. L. 103–355, title VIII, § 8203, Oct. 13, 1994, 108        ployment that would apply to the person in
Stat. 3394.)                                                   that position if the reprisal had not been
                                                               taken.
                    EFFECTIVE DATE
                                                                  (C) Order the contractor to pay the com-
  For effective date and applicability of section, see         plainant an amount equal to the aggregate
section 10001 of Pub. L. 103–355, set out as an Effective      amount of all costs and expenses (including at-
Date of 1994 Amendment note under section 251 of this
                                                               torneys’ fees and expert witnesses’ fees) that
title.
                                                               were reasonably incurred by the complainant
     COMPTROLLER GENERAL REVIEW OF FEDERAL                     for, or in connection with, bringing the com-
       GOVERNMENT USE OF MARKET RESEARCH                       plaint regarding the reprisal, as determined by
  Section 8305 of Pub. L. 103–355 provided that:               the head of the executive agency.
  ‘‘(a) REPORT REQUIRED.—Not later than 2 years after          (2) Whenever a person fails to comply with an
the date of the enactment of this Act [Oct. 13, 1994], the
                                                             order issued under paragraph (1), the head of the
Comptroller General of the United States shall submit
to the Congress a report on the use of market research       executive agency shall file an action for enforce-
by the Federal Government in support of the procure-         ment of such order in the United States district
ment of commercial items and nondevelopmental                court for a district in which the reprisal was
items.                                                       found to have occurred. In any action brought
  ‘‘(b) CONTENT OF REPORT.—The report shall include          under this paragraph, the court may grant ap-
the following:                                               propriate relief, including injunctive relief and
     ‘‘(1) A review of existing Federal Government mar-      compensatory and exemplary damages.
  ket research efforts to gather data concerning com-
                                                               (3) Any person adversely affected or aggrieved
  mercial and other nondevelopmental items.
     ‘‘(2) A review of the feasibility of creating a Gov-    by an order issued under paragraph (1) may ob-
  ernment-wide data base for storing, retrieving, and        tain review of the order’s conformance with this
  analyzing market data, including use of existing Fed-      subsection, and any regulations issued to carry
  eral Government resources.                                 out this section, in the United States court of
§ 266                                    TITLE 41—PUBLIC CONTRACTS                                            Page 104

appeals for a circuit in which the reprisal is al-                   (3) specifically states that the award to that
leged in the order to have occurred. No petition                  entity is required by such provision of law in
seeking such review may be filed more than 60                     contravention of the policy set forth in sub-
days after issuance of the order by the head of                   section (a) of this section.
the agency. Review shall conform to chapter 7 of                (c) New grant defined
title 5.
                                                                  For purposes of this section, a grant is a new
(d) Construction                                                grant unless the work provided for in the grant
  Nothing in this section may be construed to                   is a continuation of the work performed by the
authorize the discharge of, demotion of, or dis-                specified entity under a preceding grant.
crimination against an employee for a disclo-                   (d) Inapplicability to certain grants
sure other than a disclosure protected by sub-                    This section shall not apply with respect to
section (a) of this section or to modify or dero-               any grant that calls upon the National Academy
gate from a right or remedy otherwise available                 of Sciences to investigate, examine, or experi-
to the employee.                                                ment upon any subject of science or art of sig-
(e) Definitions                                                 nificance to an executive agency and to report
  In this section:                                              on such matters to Congress or any agency of
    (1) The term ‘‘contract’’ means a contract                  the Federal Government.
  awarded by the head of an executive agency.                   (June 30, 1949, ch. 288, title III, § 316, as added
    (2) The term ‘‘contractor’’ means a person                  Pub. L. 103–355, title VII, § 7203(b)(2), Oct. 13,
  awarded a contract with an executive agency.                  1994, 108 Stat. 3381; amended Pub. L. 104–106, div.
    (3) The term ‘‘Inspector General’’ means an                 D, title XLIII, § 4321(e)(9), Feb. 10, 1996, 110 Stat.
  Inspector General appointed under the Inspec-                 675.)
  tor General Act of 1978.                                                           AMENDMENTS
(June 30, 1949, ch. 288, title III, § 315, as added               1996—Pub. L. 104–106 made technical amendment to
Pub. L. 103–355, title VI, § 6006, Oct. 13, 1994, 108           section catchline in original.
Stat. 3365; amended Pub. L. 104–106, div. D, title
                                                                         EFFECTIVE DATE OF 1996 AMENDMENT
XLIII, § 4321(e)(8), Feb. 10, 1996, 110 Stat. 675.)
                                                                  For effective date and applicability of amendment by
                  REFERENCES IN TEXT                            Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
   The Inspector General Act of 1978, referred to in sub-       out as a note under section 251 of this title.
sec. (e)(3), is Pub. L. 95–452, Oct. 12, 1978, 92 Stat. 1101,                       EFFECTIVE DATE
as amended, which is set out in the Appendix to Title
5, Government Organization and Employees.                         For effective date and applicability of section, see
                                                                section 10001 of Pub. L. 103–355, set out as an Effective
                       AMENDMENTS                               Date of 1994 Amendment note under section 251 of this
                                                                title.
  1996—Subsec. (b). Pub. L. 104–106 substituted ‘‘Inspec-
tor General’’ for ‘‘inspector general’’ after ‘‘does not        § 266a. Share-in-savings contracts
have an’’ and after ‘‘the duties of the’’.
                                                                (a) Authority to enter into share-in-savings con-
          EFFECTIVE DATE OF 1996 AMENDMENT                          tracts
  For effective date and applicability of amendment by            (1) The head of an executive agency may enter
Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set       into a share-in-savings contract for information
out as a note under section 251 of this title.
                                                                technology (as defined in section 11101(6) of title
                     EFFECTIVE DATE                             40) in which the Government awards a contract
  For effective date and applicability of section, see
                                                                to improve mission-related or administrative
section 10001 of Pub. L. 103–355, set out as an Effective       processes or to accelerate the achievement of its
Date of 1994 Amendment note under section 251 of this           mission and share with the contractor in savings
title.                                                          achieved through contract performance.
                                                                  (2)(A) Except as provided in subparagraph (B),
§ 266. Merit-based award of grants for research                 a share-in-savings contract shall be awarded for
    and development                                             a period of not more than five years.
                                                                  (B) A share-in-savings contract may be award-
(a) Policy
                                                                ed for a period greater than five years, but not
  It is the policy of Congress that an executive                more than 10 years, if the head of the agency de-
agency should not be required by legislation to                 termines in writing prior to award of the con-
award a new grant for research, development,                    tract that—
test, or evaluation to a non-Federal Government                     (i) the level of risk to be assumed and the in-
entity. It is further the policy of Congress that                 vestment to be undertaken by the contractor
any program, project, or technology identified                    is likely to inhibit the government from ob-
in legislation be awarded through merit-based                     taining the needed information technology
selection procedures.                                             competitively at a fair and reasonable price if
(b) Rule of construction                                          the contract is limited in duration to a period
                                                                  of five years or less; and
  A provision of law may not be construed as re-
                                                                    (ii) usage of the information technology to
quiring a new grant to be awarded to a specified
                                                                  be acquired is likely to continue for a period
non-Federal Government entity unless that pro-
                                                                  of time sufficient to generate reasonable bene-
vision of law—
                                                                  fit for the government.
    (1) specifically refers to this subsection;
    (2) specifically identifies the particular non-               (3) Contracts awarded pursuant to the author-
  Federal Government entity involved; and                       ity of this section shall, to the maximum extent
Page 105                           TITLE 41—PUBLIC CONTRACTS                                         §§ 271 to 274

practicable, be performance-based contracts                     (II) $5,000,000.
that identify objective outcomes and contain
                                                           (ii) Unfunded contingent liability in excess
performance standards that will be used to
                                                         of $1,000,000 has been approved by the Director
measure achievement and milestones that must
                                                         of the Office of Management and Budget or the
be met before payment is made.
  (4) Contracts awarded pursuant to the author-          Director’s designee.
ity of this section shall include a provision con-       (B) The aggregate number of share-in-savings
taining a quantifiable baseline that is to be the      contracts that may be entered into under sub-
basis upon which a savings share ratio is estab-       paragraph (A) by all executive agencies to which
lished that governs the amount of payment a            this subchapter 1 applies in a fiscal year may not
contractor is to receive under the contract. Be-       exceed 5 in each of fiscal years 2003, 2004, and
fore commencement of performance of such a             2005.
contract, the senior procurement executive of          (c) Definitions
the agency shall determine in writing that the
terms of the provision are quantifiable and will         In this section:
likely yield value to the Government.                      (1) The term ‘‘contractor’’ means a private
  (5)(A) The head of the agency may retain sav-          entity that enters into a contract with an
ings realized through the use of a share-in-sav-         agency.
ings contract under this section that are in ex-           (2) The term ‘‘savings’’ means—
cess of the total amount of savings paid to the              (A) monetary savings to an agency; or
contractor under the contract, but may not re-               (B) savings in time or other benefits real-
tain any portion of such savings that is attrib-           ized by the agency, including enhanced reve-
utable to a decrease in the number of civilian             nues (other than enhanced revenues from the
employees of the Federal Government perform-               collection of fees, taxes, debts, claims, or
ing the function. Except as provided in subpara-           other amounts owed the Federal Govern-
graph (B), savings shall be credited to the appro-         ment).
priation or fund against which charges were               (3) The term ‘‘share-in-savings contract’’
made to carry out the contract and shall be used         means a contract under which—
for information technology.                                 (A) a contractor provides solutions for—
  (B) Amounts retained by the agency under this               (i) improving the agency’s mission-relat-
subsection shall—                                           ed or administrative processes; or
    (i) without further appropriation, remain
                                                              (ii) accelerating the achievement of
  available until expended; and
    (ii) be applied first to fund any contingent li-        agency missions; and
  abilities associated with share-in-savings pro-            (B) the head of the agency pays the con-
  curements that are not fully funded.                     tractor an amount equal to a portion of the
(b) Cancellation and termination                           savings derived by the agency from—
  (1) If funds are not made available for the con-             (i) any improvements in mission-related
tinuation of a share-in-savings contract entered             or administrative processes that result
into under this section in a subsequent fiscal               from implementation of the solution; or
year, the contract shall be canceled or termi-                 (ii) acceleration of achievement of agen-
nated. The costs of cancellation or termination              cy missions.
may be paid out of—                                    (d) Termination
    (A) appropriations available for the perform-        No share-in-savings contracts may be entered
  ance of the contract;                                into under this section after September 30, 2005.
    (B) appropriations available for acquisition
  of the information technology procured under         (June 30, 1949, ch. 288, title III, § 317, as added
  the contract, and not otherwise obligated; or        Pub. L. 107–347, title II, § 210(b), Dec. 17, 2002, 116
    (C) funds subsequently appropriated for pay-       Stat. 2934.)
  ments of costs of cancellation or termination,                            REFERENCES IN TEXT
  subject to the limitations in paragraph (3).
                                                         The words ‘‘this subchapter’’, referred to in subsec.
  (2) The amount payable in the event of can-          (b)(3)(B), were in the original ‘‘this chapter’’ and have
cellation or termination of a share-in-savings         been translated as if they read ‘‘this title’’ in the origi-
contract shall be negotiated with the contractor       nal, meaning title III of act June 30, 1949, ch. 288, to re-
at the time the contract is entered into.              flect the probable intent of Congress.
  (3)(A) Subject to subparagraph (B), the head of
                                                                               EFFECTIVE DATE
an executive agency may enter into share-in-
savings contracts under this section in any              Section effective 120 days after Dec. 17, 2002, see sec-
given fiscal year even if funds are not made spe-      tion 402(a) of Pub. L. 107–347, set out as a note under
cifically available for the full costs of cancella-    section 3601 of Title 44, Public Printing and Documents.
tion or termination of the contract if funds are                SUBCHAPTER V—FOREIGN EXCESS
available and sufficient to make payments with                           PROPERTY
respect to the first fiscal year of the contract
and the following conditions are met regarding         §§ 271 to 274. Transferred
the funding of cancellation and termination li-
                                                                                 CODIFICATION
ability:
    (i) The amount of unfunded contingent li-            Section 271, act June 30, 1949, ch. 288, title IV, § 401, 63
  ability for the contract does not exceed the         Stat. 397, which related to disposal of foreign excess
  lesser of—                                           property, was transferred to section 511 of former Title
       (I) 25 percent of the estimated costs of a
    cancellation or termination; or                     1 See   References in Text note below.
§§ 281 to 291                             TITLE 41—PUBLIC CONTRACTS                                                        Page 106

40, Public Buildings, Property, and Works, and was re-           chapter 27 (§ 2701 et seq.), chapter 29 (§ 2901 et seq.), and
pealed and reenacted as section 701(b)(1), (b)(2)(B), (c) of     chapter 31 (§ 3101 et seq.) of Title 44, Public Printing
Title 40, Public Buildings, Property, and Works, by              and Documents.
Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062,
1304.                                                                     CHAPTER 5—JUDICIAL REVIEW OF
  Section 272, act June 30, 1949, ch. 288, title IV, § 402, 63              ADMINISTRATIVE DECISIONS
Stat. 398, which related to methods and terms of dis-
posal, was transferred to section 512 of former Title 40,        Sec.
and was repealed and reenacted as sections 702 to 704 of         321.         Limitation on pleading contract provisions
Title 40, Public Buildings, Property, and Works, by                             relating to finality; standards of review.
Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062,      322.         Contract provisions making decisions final on
1304.                                                                           questions of law.
  Section 273, act June 30, 1949, ch. 288, title IV, § 403, 63
Stat. 398, which related to proceeds from disposals, was         § 321. Limitation on pleading contract provisions
transferred to section 513 of former Title 40, and was re-           relating to finality; standards of review
pealed and reenacted as section 705 of Title 40, Public
Buildings, Property, and Works, by Pub. L. 107–217, §§ 1,
                                                                   No provision of any contract entered into by
6(b), Aug. 21, 2002, 116 Stat. 1062, 1304.                       the United States, relating to the finality or
  Section 274, act June 30, 1949, ch. 288, title IV, § 404, 63   conclusiveness of any decision of the head of any
Stat. 398, which related to general provisions, was              department or agency or his duly authorized
transferred to section 514 of former Title 40, and was re-       representative or board in a dispute involving a
pealed and reenacted as section 701(a), (b)(1), (2)(A), (3),     question arising under such contract, shall be
(4) of Title 40, Public Buildings, Property, and Works,          pleaded in any suit now filed or to be filed as
by Pub. L. 107–217, §§ 1, 6(b), Aug. 21, 2002, 116 Stat. 1062,   limiting judicial review of any such decision to
1304.
                                                                 cases where fraud by such official or his said
     SUBCHAPTER VI—FEDERAL RECORD                                representative or board is alleged: Provided, how-
             MANAGEMENT                                          ever, That any such decision shall be final and
                                                                 conclusive unless the same is fradulent 1 or ca-
§§ 281 to 291. Transferred                                       pricious or arbitrary or so grossly erroneous as
                                                                 necessarily to imply bad faith, or is not sup-
                       CODIFICATION                              ported by substantial evidence.
  Section 281, acts June 30, 1949, ch. 288, title V, § 502;
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to
                                                                 (May 11, 1954, ch. 199, § 1, 68 Stat. 81.)
custody and control of property, was transferred to sec-                AGENCY ACTIONS GENERALLY, JUDICIAL REVIEW
tion 392 of former Title 44, Public Printing and Docu-
ments.                                                             Judicial review of agency actions generally, see sec-
  Section 282, acts June 30, 1949, ch. 288, title V, § 503;      tion 701 et seq. of Title 5, Government Organization and
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to   Employees.
National Historical Publications Commission, was
transferred to section 393 of former Title 44.                   § 322. Contract provisions making decisions final
  Section 283, acts June 30, 1949, ch. 288, title V, § 504;          on questions of law
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to
                                                                   No Government contract shall contain a provi-
establishment of Federal Records Council, was trans-
ferred to section 394 of former Title 44.                        sion making final on a question of law the deci-
  Section 284, acts June 30, 1949, ch. 288, title V, § 505;      sion of any administrative official, representa-
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to   tive, or board.
records management by Administrator, was transferred
                                                                 (May 11, 1954, ch. 199, § 2, 68 Stat. 81.)
to section 395 of former Title 44.
  Section 285, acts June 30, 1949, ch. 288, title V, § 506;        CHAPTER 6—SERVICE CONTRACT LABOR
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to
records management by agency heads, was transferred
                                                                              STANDARDS
to section 396 of former Title 44.                               Sec.
  Section 286, acts June 30, 1949, ch. 288, title V, § 507;      351.         Required contract provisions; minimum
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to                  wages.
Archival administration, was transferred to section 397          352.         Violations.
of former Title 44.                                              353.         Law governing authority of Secretary.
  Section 287, acts June 30, 1949, ch. 288, title V, § 508;      354.         List of violators; prohibition of contract
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to                  award to firms appearing on list; actions to
reports, was transferred to section 398 of former Title                         recover underpayments; payment of sums
44.                                                                             recovered.
  Section 288, acts June 30, 1949, ch. 288, title V, § 509;      355.         Exclusion of fringe benefit payments in deter-
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to                  mining overtime pay.
legal status of reproductions; official seal; fees for cop-      356.         Exemptions.
ies and reproductions, was transferred to section 399 of         357.         Definitions.
former Title 44.                                                 358.         Wage and fringe benefit determinations of
  Section 289, acts June 30, 1949, ch. 288, title V, § 510;                     Secretary.
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to
limitation on liability, was transferred to section 400 of       § 351. Required contract provisions; minimum
former Title 44.                                                     wages
  Section 290, acts June 30, 1949, ch. 288, title V, § 511;
Sept. 5, 1950, ch. 849, § 6(d), 64 Stat. 583, which related to     (a) Every contract (and any bid specification
definitions, was transferred to section 401 of former            therefor) entered into by the United States or
Title 44.                                                        the District of Columbia in excess of $2,500, ex-
  Section 291, act Aug. 2, 1946, ch. 753, title I, § 140, 60     cept as provided in section 356 of this title,
Stat. 833, which related to transfer of records of Con-
gress, was transferred to section 402 of former Title 44.
                                                                 whether negotiated or advertised, the principal
  Sections 392 to 402 of former Title 44 are covered by
chapter 21 (§ 2101 et seq.), chapter 25 (§ 2501 et seq.),         1 So   in original. Probably should be ‘‘fraudulent’’.
Page 107                          TITLE 41—PUBLIC CONTRACTS                                                  § 351

purpose of which is to furnish services in the          (b)(1) No contractor who enters into any con-
United States through the use of service em-          tract with the Federal Government the principal
ployees, shall contain the following:                 purpose of which is to furnish services through
    (1) A provision specifying the minimum            the use of service employees and no subcontrac-
  monetary wages to be paid the various classes       tor thereunder shall pay any of his employees
  of service employees in the performance of the      engaged in performing work on such contracts
  contract or any subcontract thereunder, as de-      less than the minimum wage specified under sec-
  termined by the Secretary, or his authorized        tion 206(a)(1) of title 29.
  representative, in accordance with prevailing         (2) The provisions of sections 352 to 354 of this
  rates for such employees in the locality, or,       title shall be applicable to violations of this sub-
  where a collective-bargaining agreement cov-        section.
  ers any such service employees, in accordance
                                                      (Pub. L. 89–286, § 2, Oct. 22, 1965, 79 Stat. 1034;
  with the rates for such employees provided for
                                                      Pub. L. 92–473, §§ 1, 2, Oct. 9, 1972, 86 Stat. 789;
  in such agreement, including prospective wage
                                                      Pub. L. 94–489, §§ 1, 2, Oct. 13, 1976, 90 Stat. 2358.)
  increases provided for in such agreement as a
  result of arm’s length negotiations. In no case                            AMENDMENTS
  shall such wages be lower than the minimum            1976—Subsec. (a). Pub. L. 94–489, § 1(a), struck out ‘‘as
  specified in subsection (b) of this section.        defined herein’’ after ‘‘use of service employees’’.
    (2) A provision specifying the fringe benefits      Subsec. (a)(5). Pub. L. 94–489, § 2, inserted ‘‘or section
  to be furnished in the various classes of serv-     5332’’ after ‘‘section 5341’’.
  ice employees, engaged in the performance of          Subsec. (b)(1). Pub. L. 94–489, § 1(b), struck out ‘‘as de-
  the contract or any subcontract thereunder, as      fined herein’’ after ‘‘use of service employees’’.
                                                        1972—Subsec. (a)(1). Pub. L. 92–473, § 1(a), provided for
  determined by the Secretary or his authorized
                                                      minimum monetary wages to be paid service employees
  representative to be prevailing for such em-        where collective-bargaining agreement covers any such
  ployees in the locality, or, where a collective-    service employees in accordance with the rates for such
  bargaining agreement covers any such service        employees provided for in such agreement, including
  employees, to be provided for in such agree-        prospective wage increases provided for in such agree-
  ment, including prospective fringe benefits in-     ment as a result of arm’s-length negotiations.
  creases provided for in such agreement as a re-       Subsec. (a)(2). Pub. L. 92–473, § 1(b), provided for fringe
  sult of arm’s-length negotiations. Such fringe      benefits to be furnished service employees where collec-
                                                      tive-bargaining agreement covers any such service em-
  benefits shall include medical or hospital care,
                                                      ployees, to be provided for in such agreement, includ-
  pensions on retirement or death, compensa-          ing prospective fringe increases provided for in such
  tion for injuries or illness resulting from occu-   agreement as a result of arm’s-length negotiations.
  pational activity, or insurance to provide any        Subsec. (a)(5). Pub. L. 92–473, § 2, added par. (5).
  of the foregoing, unemployment benefits, life
                                                                           EFFECTIVE DATE
  insurance, disability and sickness insurance,
  accident insurance, vacation and holiday pay,         Section 9 of Pub. L. 89–286 provided that: ‘‘This Act
  costs of apprenticeship or other similar pro-       [enacting this chapter] shall apply to all contracts en-
  grams and other bona fide fringe benefits not       tered into pursuant to negotiations concluded or invi-
                                                      tations for bids issued on or after ninety days from the
  otherwise required by Federal, State, or local      date of enactment of this Act [Oct. 22, 1965].’’
  law to be provided by the contractor or sub-
  contractor. The obligation under this subpara-                             SHORT TITLE
  graph may be discharged by furnishing any             Section 1 of Pub. L. 89–286 provided that: ‘‘This Act
  equivalent combinations of fringe benefits or       [enacting this chapter] may be cited as the ‘Service
  by making equivalent or differential payments       Contract Act of 1965’.’’
  in cash under rules and regulations estab-            EX. ORD. NO. 13495. NONDISPLACEMENT OF QUALIFIED
  lished by the Secretary.                                    WORKERS UNDER SERVICE CONTRACTS
    (3) A provision that no part of the services
                                                        Ex. Ord. No. 13495, Jan. 30, 2009, 74 F.R. 6103, provided:
  covered by this chapter will be performed in
                                                        When a service contract expires, and a follow-on con-
  buildings or surroundings or under working          tract is awarded for the same service, at the same loca-
  conditions, provided by or under the control or     tion, the successor contractor or its subcontractors
  supervision of the contractor or any sub-           often hires the majority of the predecessor’s employ-
  contractor, which are unsanitary or hazardous       ees. On some occasions, however, a successor contrac-
  or dangerous to the health or safety of service     tor or its subcontractors hires a new work force, thus
  employees engaged to furnish the services.          displacing the predecessor’s employees.
    (4) A provision that on the date a service em-      The Federal Government’s procurement interests in
  ployee commences work on a contract to              economy and efficiency are served when the successor
                                                      contractor hires the predecessor’s employees. A carry-
  which this chapter applies, the contractor or
                                                      over work force reduces disruption to the delivery of
  subcontractor will deliver to the employee a        services during the period of transition between con-
  notice of the compensation required under           tractors and provides the Federal Government the ben-
  paragraphs (1) and (2) of this subsection, on a     efits of an experienced and trained work force that is
  form prepared by the Federal agency, or will        familiar with the Federal Government’s personnel, fa-
  post a notice of the required compensation in       cilities, and requirements.
  a prominent place at the worksite.                    Therefore, by the authority vested in me as President
    (5) A statement of the rates that would be        by the Constitution and the laws of the United States
  paid by the Federal agency to the various           of America, including the Federal Property and Admin-
                                                      istrative Services Act, 40 U.S.C. 101 et seq., and in order
  classes of service employees if section 5341 or
                                                      to promote economy and efficiency in Federal Govern-
  section 5332 of title 5 were applicable to them.    ment procurement, it is hereby ordered as follows:
  The Secretary shall give due consideration to         SECTION 1. Policy. It is the policy of the Federal Gov-
  such rates in making the wage and fringe ben-       ernment that service contracts and solicitations for
  efit determinations specified in this section.      such contracts shall include a clause that requires the
§ 351                                 TITLE 41—PUBLIC CONTRACTS                                             Page 108

contractor, and its subcontractors, under a contract        in which the employee must accept such offer, but in
that succeeds a contract for performance of the same or     no case shall the period within which the employee
similar services at the same location, to offer those       must accept the offer of employment be less than 10
employees (other than managerial and supervisory em-        days.
ployees) employed under the predecessor contract               ‘‘(b) Notwithstanding the obligation under paragraph
whose employment will be terminated as a result of the      (a) above, the contractor and any subcontractors (1)
award of the successor contract, a right of first refusal   may employ under this contract any employee who has
of employment under the contract in positions for           worked for the contractor or subcontractor for at least
which they are qualified. There shall be no employment      3 months immediately preceding the commencement of
openings under the contract until such right of first re-   this contract and who would otherwise face lay-off or
fusal has been provided. Nothing in this order shall be     discharge, (2) are not required to offer a right of first
construed to permit a contractor or subcontractor to        refusal to any employee(s) of the predecessor contrac-
fail to comply with any provision of any other Execu-       tor who are not service employees within the meaning
tive Order or law of the United States.                     of the Service Contract Act of 1965, as amended, 41
  SEC. 2. Definitions.                                      U.S.C. 357(b), and (3) are not required to offer a right of
  (a) ‘‘Service contract’’ or ‘‘contract’’ means any con-   first refusal to any employee(s) of the predecessor con-
tract or subcontract for services entered into by the       tractor whom the contractor or any of its subcontrac-
Federal Government or its contractors that is covered       tors reasonably believes, based on the particular em-
by the Service Contract Act of 1965, as amended, 41         ployee’s past performance, has failed to perform suit-
U.S.C. 351 et seq., and its implementing regulations.       ably on the job.
  (b) ‘‘Employee’’ means a service employee as defined         ‘‘(c) In accordance with Federal Acquisition Regula-
in the Service Contract Act of 1965, 41 U.S.C. 357(b).      tion 52.222–41(n), the contractor shall, not less than 10
  SEC. 3. Exclusions. This order shall not apply to:        days before completion of this contract, furnish the
  (a) contracts or subcontracts under the simplified ac-    Contracting Officer a certified list of the names of all
quisition threshold as defined in 41 U.S.C. 403;            service employees working under this contract and its
  (b) contracts or subcontracts awarded pursuant to the     subcontracts during the last month of contract per-
Javits-Wagner-O’Day Act, 41 U.S.C. 46–48c;                  formance. The list shall also contain anniversary dates
  (c) guard, elevator operator, messenger, or custodial     of employment of each service employee under this
services provided to the Federal Government under           contract and its predecessor contracts either with the
contracts or subcontracts with sheltered workshops          current or predecessor contractors or their subcontrac-
employing the severely handicapped as described in          tors. The Contracting Officer will provide the list to
section 505 of the Treasury, Postal Services [sic] and      the successor contractor, and the list shall be provided
General Government Appropriations Act, 1995, Public         on request to employees or their representatives.
Law 103–329;                                                   ‘‘(d) If it is determined, pursuant to regulations is-
  (d) agreements for vending facilities entered into pur-   sued by the Secretary of Labor (Secretary), that the
suant to the preference regulations issued under the        contractor or its subcontractors are not in compliance
Randolph-Sheppard Act, 20 U.S.C. 107; or                    with the requirements of this clause or any regulation
  (e) employees who were hired to work under a Federal      or order of the Secretary, appropriate sanctions may be
service contract and one or more nonfederal service         imposed and remedies invoked against the contractor
contracts as part of a single job, provided that the em-    or its subcontractors, as provided in Executive Order
ployees were not deployed in a manner that was de-          (No.) lllll [13495], the regulations, and relevant or-
signed to avoid the purposes of this order.                 ders of the Secretary, or as otherwise provided by law.
  SEC. 4. Authority to Exempt Contracts. If the head of a      ‘‘(e) In every subcontract entered into in order to per-
contracting department or agency finds that the appli-      form services under this contract, the contractor will
cation of any of the requirements of this order would       include provisions that ensure that each subcontractor
not serve the purposes of this order or would impair the    will honor the requirements of paragraphs (a) through
ability of the Federal Government to procure services       (b) with respect to the employees of a predecessor sub-
on an economical and efficient basis, the head of such      contractor or subcontractors working under this con-
department or agency may exempt its department or           tract, as well as of a predecessor contractor and its sub-
agency from the requirements of any or all of the pro-      contractors. The subcontract shall also include provi-
visions of this order with respect to a particular con-     sions to ensure that the subcontractor will provide the
tract, subcontract, or purchase order or any class of       contractor with the information about the employees
contracts, subcontracts, or purchase orders.                of the subcontractor needed by the contractor to com-
  SEC. 5. Contract Clause. The following contract clause    ply with paragraph 5(c), above. The contractor will
shall be included in solicitations for and service con-     take such action with respect to any such subcontract
tracts that succeed contracts for performance of the        as may be directed by the Secretary as a means of en-
same or similar work at the same location:                  forcing such provisions, including the imposition of
  ‘‘NONDISPLACEMENT OF QUALIFIED WORKERS                    sanctions for non-compliance: provided, however, that
  ‘‘(a) Consistent with the efficient performance of this   if the contractor, as a result of such direction, becomes
contract, the contractor and its subcontractors shall,      involved in litigation with a subcontractor, or is
except as otherwise provided herein, in good faith offer    threatened with such involvement, the contractor may
those employees (other than managerial and super-           request that the United States enter into such litiga-
visory employees) employed under the predecessor con-       tion to protect the interests of the United States.’’
tract whose employment will be terminated as a result          SEC. 6. Enforcement. (a) The Secretary of Labor (Sec-
of award of this contract or the expiration of the con-     retary) is responsible for investigating and obtaining
tract under which the employees were hired, a right of      compliance with this order. In such proceedings, the
first refusal of employment under this contract in posi-    Secretary shall have the authority to issue final orders
tions for which employees are qualified. The contractor     prescribing appropriate sanctions and remedies, includ-
and its subcontractors shall determine the number of        ing, but not limited to, orders requiring employment
employees necessary for efficient performance of this       and payment of wages lost. The Secretary also may
contract and may elect to employ fewer employees            provide that where a contractor or subcontractor has
than the predecessor contractor employed in connec-         failed to comply with any order of the Secretary or has
tion with performance of the work. Except as provided       committed willful violations of this order or the regu-
in paragraph (b) there shall be no employment opening       lations issued pursuant thereto, the contractor or sub-
under this contract, and the contractor and any sub-        contractor, and its responsible officers, and any firm in
contractors shall not offer employment under this con-      which the contractor or subcontractor has a substan-
tract, to any person prior to having complied fully with    tial interest, shall be ineligible to be awarded any con-
this obligation. The contractor and its subcontractors      tract of the United States for a period of up to 3 years.
shall make an express offer of employment to each em-       Neither an order for debarment of any contractor or
ployee as provided herein and shall state the time with-    subcontractor from further Government contracts
Page 109                               TITLE 41—PUBLIC CONTRACTS                                                § 353

under this section nor the inclusion of a contractor or      the underpaid employees from any accrued pay-
subcontractor on a published list of noncomplying con-       ments withheld under this chapter.
tractors shall be carried out without affording the con-
tractor or subcontractor an opportunity for a hearing.       (b) Enforcement of section
  (b) This order creates no rights under the Contract          In accordance with regulations prescribed pur-
Disputes Act [of 1978], and disputes regarding the re-       suant to section 353 of this title, the Federal
quirement of the contract clause prescribed by section       agency head or the Secretary is hereby author-
5 of this order, to the extent permitted by law, shall be
                                                             ized to carry out the provisions of this section.
disposed of only as provided by the Secretary in regula-
tions issued under this order. To the extent practicable,    (c) Cancellation of contract; contracts for com-
such regulations shall favor the resolution of disputes          pletion of original contract; liability of origi-
by efficient and informal alternative dispute resolution         nal contractor for additional cost
methods. The Secretary shall, in consultation with the
Federal Acquisition Regulatory Council, issue regula-          In addition, when a violation is found of any
tions, within 180 days of the date of this order, to the     contract stipulation, the contract is subject
extent permitted by law, to implement the require-           upon written notice to cancellation by the con-
ments of this order. The Federal Acquisition Regu-           tracting agency. Whereupon, the United States
latory Council shall issue, within 180 days of the date      may enter into other contracts or arrangements
of this order, to the extent permitted by law, regula-       for the completion of the original contract,
tions in the Federal Acquisition Regulation to provide       charging any additional cost to the original con-
for inclusion of the contract clause in Federal solicita-
                                                             tractor.
tions and contracts subject to this order.
  SEC. 7. Revocation. Executive Order 13204 of February      (Pub. L. 89–286, § 3, Oct. 22, 1965, 79 Stat. 1035.)
17, 2001, is revoked.
  SEC. 8. Severability. If any provision of this order, or   § 353. Law governing authority of Secretary
the application of such provision or amendment to any
person or circumstance, is held to be invalid, the re-
                                                             (a) Enforcement of chapter
mainder of this order and the application of the provi-        Sections 38 and 39 of this title shall govern the
sions of such to any person or circumstances shall not       Secretary’s authority to enforce this chapter,
be affected thereby.                                         make rules, regulations, issue orders, hold hear-
  SEC. 9. General Provisions. (a) Nothing in this order      ings, and make decisions based upon findings of
shall be construed to impair or otherwise affect:
     (i) authority granted by law to an executive depart-
                                                             fact, and take other appropriate action here-
  ment, agency, or the head thereof; or                      under.
     (ii) functions of the Director of the Office of Man-    (b) Limitations and regulations allowing vari-
  agement and Budget relating to budgetary, adminis-             ations, tolerances, and exemptions
  trative, or legislative proposals.
  (b) This order shall be implemented consistent with          The Secretary may provide such reasonable
applicable law and subject to the availability of appro-     limitations and may make such rules and regu-
priations.                                                   lations allowing reasonable variation, toler-
  (c) This order is not intended to, and does not, create    ances, and exemptions to and from any or all
any right or benefit, substantive or procedural, enforce-    provisions of this chapter (other than section 358
able at law or in equity by any party against the            of this title), but only in special circumstances
United States, its departments, agencies, or entities,       where he determines that such limitation, vari-
its officers, employees, or agents, or any other person.
This order is not intended, however, to preclude judi-
                                                             ation, tolerance, or exemption is necessary and
cial review of final decisions by the Secretary in ac-       proper in the public interest or to avoid the seri-
cordance with the Administrative Procedure Act, 5            ous impairment of government business, and is
U.S.C. 701 et seq.                                           in accord with the remedial purpose of this
  SEC. 10. Effective Date. This order shall become effec-    chapter to protect prevailing labor standards.
tive immediately and shall apply to solicitations issued     (c) Predecessor contracts; employees’ wages and
on or after the effective date for the action taken by
the Federal Acquisition Regulatory Council under sec-
                                                                 fringe benefits
tion 6(b) of this order.                                       No contractor or subcontractor under a con-
                                        BARACK OBAMA.        tract, which succeeds a contract subject to this
                                                             chapter and under which substantially the same
§ 352. Violations                                            services are furnished, shall pay any service em-
(a) Liability of responsible party; withholding              ployee under such contract less than the wages
    payments due on contract; payment of un-                 and fringe benefits, including accrued wages and
    derpaid employees from withheld payments                 fringe benefits, and any prospective increases in
                                                             wages and fringe benefits provided for in a col-
  Any violation of any of the contract stipula-
                                                             lective-bargaining agreement as a result of
tions required by section 351(a)(1) or (2) or of
                                                             arm’s-length negotiations, to which such service
section 351(b) of this title shall render the party
                                                             employees would have been entitled if they were
responsible therefor liable for a sum equal to the
                                                             employed under the predecessor contract: Pro-
amount of any deductions, rebates, refunds, or
                                                             vided, That in any of the foregoing circum-
underpayment of compensation due to any em-
                                                             stances such obligations shall not apply if the
ployee engaged in the performance of such con-
                                                             Secretary finds after a hearing in accordance
tract. So much of the accrued payment due on
                                                             with regulations adopted by the Secretary that
the contract or any other contract between the
                                                             such wages and fringe benefits are substantially
same contractor and the Federal Government
                                                             at variance with those which prevail for services
may be withheld as is necessary to pay such em-
                                                             of a character similar in the locality.
ployees. Such withheld sums shall be held in a
deposit fund. On order of the Secretary, any                 (d) Duration of contract
compensation which the head of the Federal                     Subject to limitations in annual appropriation
agency or the Secretary has found to be due pur-             Acts but notwithstanding any other provision of
suant to this chapter shall be paid directly to              law, contracts to which this chapter applies
§ 354                                   TITLE 41—PUBLIC CONTRACTS                                                 Page 110

may, if authorized by the Secretary, be for any                                       AMENDMENTS
term of years not exceeding five, if each such                   1972—Subsec. (a). Pub. L. 92–473 authorized award of
contract provides for the periodic adjustment of               contracts to violators because of unusual circum-
wages and fringe benefits pursuant to future de-               stances and required the Secretary to forward names of
terminations, issued in the manner prescribed in               violators to Comptroller General within ninety days of
section 351 of this title no less often than once              hearing examiner’s finding of a violation where the
every two years during the term of the contract,               Secretary does not recommend awards because of un-
                                                               usual circumstances.
covering the various classes of service employ-
ees.                                                           § 355. Exclusion of fringe benefit payments in de-
(Pub. L. 89–286, § 4, Oct. 22, 1965, 79 Stat. 1035;                termining overtime pay
Pub. L. 92–473, § 3, Oct. 9, 1972, 86 Stat. 789.)                In determining any overtime pay to which
                                                               such service employees are entitled under any
                      AMENDMENTS                               Federal law, the regular or basic hourly rate of
   1972—Subsec. (b). Pub. L. 92–473, § 3(a), excluded sec-     pay of such an employee shall not include any
tion 358 of this title from being subject to Secretary’s       fringe benefit payments computed hereunder
authority to provide limitations and to make regula-           which are excluded from the regular rate under
tions respecting application of provisions of this chap-       the Fair Labor Standards Act [29 U.S.C. 201 et
ter, substituted ‘‘but only in special circumstances
                                                               seq.] by provisions of section 7(d) thereof [29
where he determines that such limitation, variation,
tolerance, or exemption is necessary and proper’’ for          U.S.C. 207(d)].
‘‘as he may find necessary and proper’’, and authorized        (Pub. L. 89–286, § 6, Oct. 22, 1965, 79 Stat. 1035.)
administrative action in accord with the remedial pur-
pose of this chapter to protect prevailing labor stand-                           REFERENCES IN TEXT
ards.                                                            The Fair Labor Standards Act, referred to in text, is
   Subsecs. (c), (d). Pub. L. 92–473, § 3(b), added subsecs.   act June 25, 1938, ch. 676, 52 Stat. 1060, as amended,
(c) and (d).                                                   known as the Fair Labor Standards Act of 1938, which
                                                               is classified generally to chapter 8 (§ 201 et seq.) of Title
§ 354. List of violators; prohibition of contract              29, Labor. For complete classification of this Act to the
    award to firms appearing on list; actions to               Code, see section 201 of Title 29 and Tables.
    recover underpayments; payment of sums re-                 § 356. Exemptions
    covered
                                                                 This chapter shall not apply to—
  (a) The Comptroller General is directed to dis-                  (1) any contract of the United States or Dis-
tribute a list to all agencies of the Government                 trict of Columbia for construction, alteration
giving the names of persons or firms that the                    and/or repair, including painting and decorat-
Federal agencies or the Secretary have found to                  ing of public buildings or public works;
have violated this chapter. Unless the Secretary                   (2) any work required to be done in accord-
otherwise recommends because of unusual cir-                     ance with the provisions of the Walsh-Healey
cumstances, no contract of the United States                     Public Contracts Act [41 U.S.C. 35 et seq.];
shall be awarded to the persons or firms appear-                   (3) any contract for the carriage of freight or
ing on this list or to any firm, corporation, part-              personnel by vessel, airplane, bus, truck, ex-
nership, or association in which such persons or                 press, railway line or oil or gas pipeline where
firms have a substantial interest until three                    published tariff rates are in effect;
years have elapsed from the date of publication                    (4) any contract for the furnishing of serv-
of the list containing the name of such persons                  ices by radio, telephone, telegraph, or cable
or firms. Where the Secretary does not other-                    companies, subject to the Communications
wise recommend because of unusual circum-                        Act of 1934 [47 U.S.C. 151 et seq.];
stances, he shall, not later than ninety days                      (5) any contract for public utility services,
after a hearing examiner has made a finding of                   including electric light and power, water,
a violation of this chapter, forward to the Comp-                steam, and gas;
troller General the name of the individual or                      (6) any employment contract providing for
firm found to have violated the provisions of                    direct services to a Federal agency by an indi-
this chapter.                                                    vidual or individuals; and
  (b) If the accrued payments withheld under                       (7) any contract with the United States
the terms of the contract are insufficient to re-                Postal Service, the principal purpose of which
imburse all service employees with respect to                    is the operation of postal contract stations.
whom there has been a failure to pay the com-
pensation required pursuant to this chapter, the               (Pub. L. 89–286, § 7, Oct. 22, 1965, 79 Stat. 1035;
United States may bring action against the con-                Pub. L. 91–375, §§ 4(a), 6(o), Aug. 12, 1970, 84 Stat.
tractor, subcontractor, or any sureties in any                 773, 783.)
court of competent jurisdiction to recover the                                    REFERENCES IN TEXT
remaining amount of underpayments. Any sums
                                                                 The Walsh-Healey Public Contracts Act, referred to
thus recovered by the United States shall be
                                                               in par. (2), probably means act June 30, 1936, ch. 881, 49
held in the deposit fund and shall be paid, on                 Stat. 2036, as amended, known as the Walsh-Healey Act,
order of the Secretary, directly to the underpaid              which is classified generally to sections 35 to 45 of this
employee or employees. Any sum not paid to an                  title. For complete classification of this Act to the
employee because of inability to do so within                  Code, see Short Title note under section 35 of this title
three years shall be covered into the Treasury of              and Tables. See also section 262 of Title 29, Labor.
the United States as miscellaneous receipts.                     The Communications Act of 1934, as amended, re-
                                                               ferred to in par. (4), is act June 19, 1934, ch. 652, 48 Stat.
(Pub. L. 89–286, § 5, Oct. 22, 1965, 79 Stat. 1035;            1064, as amended, which is classified principally to
Pub. L. 92–473, § 4, Oct. 9, 1972, 86 Stat. 790.)              chapter 5 (§ 151 et seq.) of Title 47, Telegraphs, Tele-
Page 111                                TITLE 41—PUBLIC CONTRACTS                                                           § 358

phones, and Radiotelegraphs. For complete classifica-           1973—Subsec. (d). Pub. L. 93–57 defined ‘‘United
tion of this Act to the Code, see section 609 of Title 47     States’’ to include Canton Island.
and Tables.
                                                                          EFFECTIVE DATE OF 1973 AMENDMENT
                     CHANGE OF NAME
                                                                Section 2 of Pub. L. 93–57 provided that: ‘‘The amend-
  In par. (7), ‘‘United States Postal Service’’ sub-          ment made hereby [amending this section] shall be ef-
stituted for ‘‘Post Office Department’’ pursuant to Pub.      fective with respect to all contracts entered into at any
L. 91–375, §§ 4(a), 6(o), Aug. 12, 1970, 84 Stat. 773, 783,   time after the date of enactment [July 6, 1973].’’
which are set out as notes preceding section 101 of Title
39, Postal Service, and under section 201 of Title 39, re-    § 358. Wage and fringe benefit determinations of
spectively, which abolished Post Office Department,               Secretary
transferred its functions to United States Postal Serv-
ice, and provided that references in other laws to Post         It is the intent of the Congress that deter-
Office Department shall be considered a reference to          minations of minimum monetary wages and
United States Postal Service.                                 fringe benefits for the various classes of service
                                                              employees under the provisions of paragraphs (1)
§ 357. Definitions                                            and (2) of section 351 1 of this title should be
  For the purposes of this chapter—                           made with respect to all contracts subject to
    (a) ‘‘Secretary’’ means Secretary of Labor.               this chapter, as soon as it is administratively
    (b) The term ‘‘service employee’’ means any               feasible to do so. In any event, the Secretary
  person engaged in the performance of a con-                 shall make such determinations with respect to
  tract entered into by the United States and                 at least the following contracts subject to this
  not exempted under section 356 of this title,               chapter which are entered into during the appli-
  whether negotiated or advertised, the prin-                 cable fiscal year:
  cipal purpose of which is to furnish services in                (1) For the fiscal year ending June 30, 1973,
  the United States (other than any person em-                  all contracts under which more than twenty-
  ployed in a bona fide executive, administra-                  five service employees are to be employed.
  tive, or professional capacity, as those terms                  (2) For the fiscal year ending June 30, 1974,
  are defined in part 541 of title 29, Code of Fed-             all contracts, under which more than twenty
  eral Regulations, as of July 30, 1976, and any                service employees are to be employed.
  subsequent revision of those regulations); and                  (3) For the fiscal year ending June 30, 1975,
  shall include all such persons regardless of any              all contracts under which more than fifteen
  contractual relationship that may be alleged                  service employees are to be employed.
  to exist between a contractor or subcontractor                  (4) For the fiscal year ending June 30, 1976,
  and such persons.                                             all contracts under which more than ten serv-
    (c) The term ‘‘compensation’’ means any of                  ice employees are to be employed.
  the payments or fringe benefits described in                    (5) On or after July 1, 1976, all contracts
  section 351 of this title.                                    under which more than five service employees
    (d) The term ‘‘United States’’ when used in                 are to be employed.
  a geographical sense shall include any State of             (Pub. L. 89–286, § 10, as added Pub. L. 92–473, § 5,
  the United States, the District of Columbia,                Oct. 9, 1972, 86 Stat. 790; amended Pub. L. 94–273,
  Puerto Rico, the Virgin Islands, Outer Con-                 § 29, Apr. 21, 1976, 90 Stat. 380.)
  tinental Shelf lands as defined in the Outer
                                                                                          AMENDMENTS
  Continental Shelf Lands Act, American
  Samoa, Guam, Wake Island, Eniwetok Atoll,                     1976—Par. (5). Pub. L. 94–273 substituted ‘‘On or after
  Kwajalein Atoll, Johnston Island, and Canton                July 1, 1976’’ for ‘‘For the fiscal year ending June 30,
  Island, but shall not include any other terri-              1977, and for each fiscal year thereafter’’.
  tory under the jurisdiction of the United                            CHAPTER 7—OFFICE OF FEDERAL
  States or any United States base or possession                           PROCUREMENT POLICY
  within a foreign country.
                                                              Sec.
(Pub. L. 89–286, § 8, Oct. 22, 1965, 79 Stat. 1036;           401, 402.    Repealed.
Pub. L. 93–57, § 1, July 6, 1973, 87 Stat. 140; Pub.          403.         Definitions.
L. 94–489, § 3, Oct. 13, 1976, 90 Stat. 2358.)                404.         Establishment of Office of Federal Procure-
                                                                            ment Policy; appointment of Adminis-
                  REFERENCES IN TEXT                                        trator.
   The Outer Continental Shelf Lands Act, referred to in      405.         Authority and functions of the Adminis-
subsec. (d), is act Aug. 7, 1953, ch. 345, 67 Stat. 462, as                 trator.
amended, which is classified generally to subchapter III      405a.        Uniform Federal procurement regulations
(§ 1331 et seq.) of chapter 29 of Title 43, Public Lands.                   and procedures.
For complete classification of this Act to the Code, see      405b.        Conflict of interest standards for individuals
Short Title note set out under section 1331 of Title 43                     providing consulting services.
and Tables.                                                   405c.        Ethics safeguards related to contractor con-
                                                                            flicts of interest.
                      AMENDMENTS                              406.         Administrative powers.
  1976—Subsec. (b). Pub. L. 94–489 substituted provision      407.         Repealed.
defining service employees to include all employees,          408.         Applicability of existing laws.
but excluding bona fide executive, administrative, and        409.         Repealed.
professional employees, for provision defining service        410.         Authorization of appropriations.
employees as guards, watchmen, any person engaged in          411.         Delegation of authority by Administrator.
                                                              412.         Comptroller General’s access to information
a recognized trade or craft, or in unskilled, semiskilled,
                                                                            from Administrator; rule making proce-
or skilled manual labor occupations; and any other em-
                                                                            dure.
ployee including a foreman or supervisor in a position
having trade, craft, or laboring experience as the para-
mount requirement.                                             1 So   in original. Probably should be section ‘‘351(a)’’.
§§ 401, 402                              TITLE 41—PUBLIC CONTRACTS                                                 Page 112

Sec.                                                                      EFFECTIVE DATE OF 1979 AMENDMENT
413.      Tests of innovative procurement methods and
            procedures.                                           Section 12 of Pub. L. 96–83 provided that: ‘‘Except to
414.      Chief Acquisition Officers and senior procure-        the extent otherwise provided therein, the amendments
            ment executives.                                    made by this Act [see Short Title of 1979 Amendment
414a.     Personnel evaluation.                                 note below] shall take effect on October 1, 1979.’’
414b.     Chief Acquisition Officers Council.                               SHORT TITLE OF 2003 AMENDMENT
415.      Repealed.
416.      Procurement notice.                                     Pub. L. 108–136, div. A, title XIV, § 1401, Nov. 24, 2003,
417.      Record requirements.                                  117 Stat. 1663, provided that: ‘‘This title [enacting sec-
417a.     Procurement data.                                     tions 414b, 428a, and 437 of this title, amending sections
417b.     Database for Federal agency contract and              403, 414, 433, and 436 of this title, section 2855 of Title 10,
            grant officers and suspension and debar-            Armed Forces, and section 1115 of Title 31, Money and
            ment officials.                                     Finance, enacting provisions set out as notes under sec-
418.      Advocates for competition.                            tions 253, 253a, 405, 428a, and 433 of this title and section
418a.     Rights in technical data.                             1103 of Title 40, Public Buildings, Property, and Works,
418b.     Publication of proposed regulations.                  amending provisions set out as notes under section 264
419.      Contracting functions performed by Federal            of this title, section 2304 of Title 10, and section 501 of
            personnel.                                          Title 31, and repealing provisions set out as a note
420.      Repealed.                                             under section 2302 of Title 10] may be cited as the ‘Serv-
421.      Federal Acquisition Regulatory Council.               ices Acquisition Reform Act of 2003’.’’
422.      Cost Accounting Standards Board.
423.      Restrictions on disclosing and obtaining con-                     SHORT TITLE OF 1988 AMENDMENT
            tractor bid or proposal information or                Section 1 of Pub. L. 100–679 provided that: ‘‘This Act
            source selection information.                       [enacting sections 421 to 424 of this title, amending this
424.      Repealed.                                             section, sections 402, 403, 405, 410, and 420 of this title,
425.      Contract clauses and certifications.                  sections 5312 to 5315, 8331, 8401, 8701, and 8901 of Title 5,
426.      Use of electronic commerce in Federal pro-            Government Organization and Employees, and section
            curement.                                           541 of former Title 40, Public Buildings, Property, and
426a.     Repealed.                                             Works, repealing section 2168 of Title 50, Appendix, War
427.      Simplified acquisition procedures.                    and National Defense, and enacting provisions set out
428.      Procedures applicable to purchases below              as notes under sections 405 and 423 of this title and sec-
            micro-purchase threshold.                           tion 5312 of Title 5] may be cited as the ‘Office of Fed-
428a.     Special emergency procurement authority.              eral Procurement Policy Act Amendments of 1988’.’’
429.      List of laws inapplicable to contracts not
            greater than simplified acquisition thresh-                     SHORT TITLE OF 1983 AMENDMENT
            old in Federal Acquisition Regulation.                Section 1 of Pub. L. 98–191 provided: ‘‘That this Act
430.      List of laws inapplicable to procurements of          [enacting sections 413 to 415 of this title, amending this
            commercial items in Federal Acquisition             section, sections 5, 6a–1, 252, 403, 405, 407, 409, 410, and
            Regulation.                                         411 of this title, section 831h of Title 16, Conservation,
431.      Commercially available off-the-shelf item ac-         and sections 474, 481, and 487 of former Title 40, Public
            quisitions: lists of inapplicable laws in Fed-      Buildings, Property, and Works] may be cited as the
            eral Acquisition Regulation.                        ‘Office of Federal Procurement Policy Act Amend-
431a.     Inflation adjustment of acquisition-related           ments of 1983’.’’
            dollar thresholds.
432.      Value engineering.                                                SHORT TITLE OF 1979 AMENDMENT
433.      Acquisition workforce.                                  Section 1(a) of Pub. L. 96–83 provided that: ‘‘This Act
433a.     Federal acquisition workforce improvements.           [amending this section, sections 403, 405, 407, and 409 to
434.      Modular contracting for information tech-             412 of this title, and sections 474, 481, and 487 of former
            nology.                                             Title 40, Public Buildings, Property and Works, and en-
435.      Levels of compensation of certain contractor          acting provisions set out as notes under this section
            personnel not allowable as costs under cer-         and section 405a of this title] may be cited as the ‘Of-
            tain contracts.                                     fice of Federal Procurement Policy Act Amendments of
436.      Protection of constitutional rights of con-           1979’.’’
            tractors.
437.      Incentives for efficient performance of serv-                                 SHORT TITLE
            ices contracts.
                                                                  Section 1(a) of Pub. L. 93–400, as amended by Pub. L.
438.      Civilian Board of Contract Appeals.
                                                                103–355, title X, § 10005(a)(1), Oct. 13, 1994, 108 Stat. 3406,
439.      Public-private competition required before
                                                                provided that: ‘‘This Act [enacting this chapter and
            conversion to contractor performance.
                                                                amending section 5315 of Title 5, Government Organiza-
440.      Contingency Contracting Corps.
                                                                tion and Employees, and sections 474, 481, and 487 of
§§ 401, 402. Repealed. Pub. L. 104–106, div. D, title           former Title 40, Public Buildings, Property, and Works]
                                                                may be cited as the ‘Office of Federal Procurement Pol-
    XLIII, § 4305(a)(2), Feb. 10, 1996, 110 Stat. 665
                                                                icy Act’.’’
   Section 401, Pub. L. 93–400, § 2, Aug. 30, 1974, 88 Stat.                      STYLISTIC CONSISTENCY
796; Pub. L. 96–83, § 2, Oct. 10, 1979, 93 Stat. 648; Pub. L.
98–191, § 3, Dec. 1, 1983, 97 Stat. 1325; Pub. L. 100–679,        Section 10005(b)(1) of Pub. L. 103–355 provided that:
§ 2(a), Nov. 17, 1988, 102 Stat. 4055; Pub. L. 103–355, title   ‘‘The Office of Federal Procurement Policy Act (41
I, § 1091(a), Oct. 13, 1994, 108 Stat. 3272, stated policy of   U.S.C. 401 et seq.) is amended so that the section des-
United States Government relating to procurement of             ignation and section heading of each section of such
property and services.                                          Act is in the same form and typeface as the section des-
   Section 402, Pub. L. 93–400, § 3, Aug. 30, 1974, 88 Stat.    ignation and heading of this section [108 Stat. 3406].’’
796; Pub. L. 100–679, § 2(b), Nov. 17, 1988, 102 Stat. 4055,
                                                                    REQUIREMENTS FOR USE OF APPROPRIATIONS BY
stated findings of Congress and purpose of this chapter.
                                                                   EXECUTIVE AGENCIES FOR SERVICES BY CONTRACT
               EFFECTIVE DATE OF REPEAL
                                                                  Pub. L. 102–394, title V, § 502, Oct. 6, 1992, 106 Stat.
  For effective date and applicability of repeal, see sec-      1825, provided that: ‘‘No part of any appropriation con-
tion 4401 of Pub. L. 104–106, set out as an Effective Date      tained in this Act or subsequent Departments of Labor,
of 1996 Amendment note under section 251 of this title.         Health and Human Services, and Education, and Relat-
Page 113                                    TITLE 41—PUBLIC CONTRACTS                                                §§ 401, 402

ed Agencies Appropriations Acts shall be expended by                trator for Federal Procurement Policy shall be respon-
an executive agency, as referred to in the Office of Fed-           sible for the overall direction and oversight of the poli-
eral Procurement Policy Act (41 U.S.C. 401 et seq.), pur-           cies affecting procurement programs for labor surplus
suant to any obligation for services by contract, unless            areas.
such executive agency has awarded and entered into                                                          JIMMY CARTER.
such contract in full compliance with such Act and reg-
ulations promulgated thereunder.’’                                                  EXECUTIVE ORDER NO. 12092
  Similar provisions were contained in the following                  Ex. Ord. No. 12092, Nov. 1, 1978, 43 F.R. 51375, as
prior appropriation acts:                                           amended by Ex. Ord. No. 12161, Sept. 28, 1979, 44 F.R.
  Pub. L. 102–170, title V, § 502, Nov. 26, 1991, 105 Stat.         56663, which related to the prohibition against infla-
1140.                                                               tionary procurement practices, was revoked by Ex. Ord.
  Pub. L. 101–517, title V, § 502, Nov. 5, 1990, 104 Stat.          No. 12288, Jan. 29, 1981, 46 F.R. 10135.
2221.
  Pub. L. 101–166, title V, § 502, Nov. 21, 1989, 103 Stat.                         EXECUTIVE ORDER NO. 12352
1189.                                                                 Ex. Ord. No. 12352, Mar. 17, 1982, 47 F.R. 12125, which
  Pub. L. 100–202, § 101(h) [title V, § 502], Dec. 22, 1987, 101    related to Federal procurement reform to support mis-
Stat. 1329–256, 1329–287.                                           sion accomplishment more effectively, was revoked by
  Pub. L. 99–500, § 101(i) [H.R. 5233, title V, § 502], Oct. 18,    Ex. Ord. No. 12931, § 4, Oct. 13, 1994, 59 F.R. 52388, set out
1986, 100 Stat. 1783–287, and Pub. L. 99–591, § 101(i) [H.R.        below.
5233, title V, § 502], Oct. 30, 1986, 100 Stat. 3341–287.
  Pub. L. 99–178, title V, § 502, Dec. 12, 1985, 99 Stat. 1132.                     EXECUTIVE ORDER NO. 12818
  Pub. L. 98–619, title V, § 502, Nov. 8, 1984, 98 Stat. 3332.        Ex. Ord. No. 12818, Oct. 23, 1992, 57 F.R. 48713, which
  Pub. L. 98–139, title V, § 502, Oct. 31, 1983, 97 Stat. 899.      prohibited executive agencies from requiring labor
  Pub. L. 97–377, title I, § 101(e)(1) [title V, § 502], Dec. 21,   agreements on Federal or federally funded construction
1982, 96 Stat. 1878, 1904.                                          projects, was revoked by Ex. Ord. No. 12836, § 1, Feb. 1,
  EX. ORD. NO. 12073. FEDERAL PROCUREMENT IN LABOR                  1993, 58 F.R. 7045, which was itself revoked as it relates
                    SURPLUS AREAS                                   to notification of employee rights concerning payment
                                                                    of union dues or fees by Ex. Ord. No. 13201, § 11, Feb. 17,
  Ex. Ord. No. 12073, Aug. 16, 1978, 43 F.R. 36873, pro-            2001, 66 F.R. 11221, which was itself revoked by Ex. Ord.
vided:                                                              No. 13496, § 13, Jan. 30, 2009, 74 F.R. 6110, set out as a
  By the authority vested in me as President by the                 note under section 254 of this title, and as it relates to
Constitution of the United States of America, and in                project agreements by Ex. Ord. No. 13202, § 8, Feb. 17,
order to strengthen the economic base of our Nation, it             2001, 66 F.R. 11226, which was itself revoked by Ex. Ord.
is hereby ordered as follows:                                       No. 13502, § 8, Feb. 6, 2009, 74 F.R. 6986, set out as a note
     1–1. PROCUREMENTS IN LABOR SURPLUS AREAS                       under section 251 of this title.

  1–101. Executive agencies shall emphasize procure-                  EX. ORD. NO. 12931. FEDERAL PROCUREMENT REFORM
ment set-asides in labor surplus areas in order to                    Ex. Ord. No. 12931, Oct. 13, 1994, 59 F.R. 52387, pro-
strengthen our Nation’s economy.                                    vided:
  1–102. Labor surplus area procurements shall be con-                By the authority vested in me as President by the
sistent with this Order and, to the extent funds are                Constitution and the laws of the United States of
available, the priorities of Section 15 of the Small Busi-          America, and in order to ensure effective and efficient
ness Act, as amended by Public Law 95–89 (15 U.S.C.                 spending of public funds through fundamental reforms
644).                                                               in Government procurement, it is hereby ordered as fol-
       1–2. ADMINISTRATOR OF GENERAL SERVICES                       lows:
                                                                      SECTION 1. To make procurement more effective in
  1–201. The Administrator shall coordinate with and                support of mission accomplishment and consistent with
advise State and local officials with regard to Federal             recommendations of the National Performance Review,
efforts to encourage procurements in labor surplus                  heads of executive agencies engaged in the procure-
areas with the aim of fostering economic development                ment of supplies and services shall:
in labor surplus areas.                                               (a) Review agency procurement rules, reporting re-
  1–202. The Administrator shall establish specific labor           quirements, contractual requirements, certification
surplus area procurement targets for Executive agen-                procedures, and other administrative procedures over
cies in consultation with the heads of those agencies.              and above those required by statute, and, where prac-
  1–203. In cooperation with the heads of Executive                 ticable, replace them with guiding principles that en-
agencies, the Administrator shall encourage the use of              courage and reward innovation;
set-asides or other appropriate methods for meeting                   (b) Review existing and planned agency programs to
procurement targets in labor surplus areas.                         assure that such programs meet agency mission needs;
  1–204. The Administrator shall report every six                     (c) Ensure that procurement organizations focus on
months to the President on the progress of the agencies             measurable results and on increased attention to un-
in achieving the procurement targets.                               derstanding and meeting customer needs;
                                                                      (d) Increase the use of commercially available items
              1–3. AGENCY RESPONSIBILITIES
                                                                    where practicable, place more emphasis on past con-
  1–301. The Secretary of Labor shall classify and des-             tractor performance, and promote best value rather
ignate labor markets which are labor surplus areas.                 than simply low cost in selecting sources for supplies
The Secretary shall provide labor market data to the                and services;
heads of agencies and State and local officials in order              (e) Ensure that simplified acquisition procedures are
to promote the development of business opportunities                used, to the maximum extent practicable, for procure-
in labor surplus areas.                                             ments under the simplified acquisition threshold in
  1–302. The heads of Executive agencies shall cooperate            order to reduce administrative burdens and more effec-
with the Administrator in carrying out his responsibil-             tively support the accomplishment of agency missions;
ities for labor surplus area programs and shall provide               (f) Expand the use of the Government purchase card
the information necessary for setting procurement tar-              by the agency and take maximum advantage of the
gets and recording achievement. They shall keep the                 micro-purchase authority provided in the Federal Ac-
Administrator informed of plans and programs which                  quisition Streamlining Act of 1994 [Pub. L. 103–355, see
affect labor surplus procurements, with particular at-              Short Title of 1994 Amendment note set out under sec-
tention to opportunities for minority firms.                        tion 251 of this title] by delegating the authority, to
  1–303. In accord with Section 6 of the Office of Federal          the maximum extent practicable, to the offices that
Procurement Policy Act (41 U.S.C. 405), the Adminis-                will be using the supplies or services to be purchased;
§ 403                                   TITLE 41—PUBLIC CONTRACTS                                             Page 114

  (g) Establish clear lines of contracting authority and       fundamentally altering and improving the way the Fed-
accountability;                                                eral Government buys goods and services by ensuring
  (h) Establish career education programs for procure-         that electronic commerce is implemented for appro-
ment professionals, including requirements for success-        priate Federal purchases as quickly as possible.
ful completion of educational requirements or manda-             1. OBJECTIVES.
tory training for entry level positions and for pro-             The objectives of this electronic commerce initiative
motion to higher level positions, in order to ensure a         are to:
highly qualified procurement work force;                         (a) exchange procurement information—such as so-
  (i) Designate a Procurement Executive with agency-           licitations, offers, contracts, purchase orders, invoices,
                                                               payments, and other contractual documents—elec-
wide responsibility to oversee development of procure-
                                                               tronically between the private sector and the Federal
ment goals, guidelines, and innovation, measure and
                                                               Government to the maximum extent practical;
evaluate procurement office performance against stat-            (b) provide businesses, including small, small dis-
ed goals, enhance career development of the procure-           advantaged, and women-owned businesses, with greater
ment work force, and advise the agency heads whether           access to Federal procurement opportunities;
goals are being achieved; and                                    (c) ensure that potential suppliers are provided sim-
  (j) Review existing and planned information tech-            plified access to the Federal Government’s electronic
nology acquisitions and contracts to ensure that the           commerce system;
agency receives the best value with regard to price and          (d) employ nationally and internationally recognized
technology, and consider alternatives in cases where           data formats that serve to broaden and ease the elec-
best value is not being obtained.                              tronic interchange of data; and
  SEC. 2. The Director of the Office of Personnel Man-           (e) use agency and industry systems and networks to
agement, in consultation with the heads of executive           enable the Government and potential suppliers to ex-
agencies, shall ensure that personnel policies and clas-       change information and access Federal procurement
sification standards meet the needs of executive agen-         data.
cies for a professional procurement work force.                  2. IMPLEMENTATION.
  SEC. 3. The Administrator of the Office of Federal             The President’s Management Council, in coordina-
Procurement Policy, after consultation with the Direc-         tion with the Office of Federal Procurement Policy of
tor of the Office of Management and Budget, shall work         the Office of Management and Budget, and in consulta-
jointly with the heads of executive agencies to provide        tion with appropriate Federal agencies with applicable
broad policy guidance and overall leadership necessary         technical and functional expertise, as necessary, shall
                                                               provide overall leadership, management oversight, and
to achieve procurement reform, including, but not lim-
                                                               policy direction to implement electronic commerce in
ited to:
                                                               the executive branch through the following actions:
  (a) Coordinating Government-wide efforts;                      (a) by March 1994, define the architecture for the Gov-
  (b) Assisting executive agencies in streamlining guid-       ernment-wide electronic commerce acquisition system
ance for procurement processes;                                and identify executive departments or agencies respon-
  (c) Identifying desirable Government-wide procure-           sible for developing, implementing, operating, and
ment system criteria; and                                      maintaining the Federal electronic system;
  (d) Identifying major inconsistencies in law and poli-         (b) by September 1994, establish an initial electronic
cies relating to procurement that impose unnecessary           commerce capability to enable the Federal Government
burdens on the private sector and Federal procurement          and private vendors to electronically exchange stand-
officials, and, following coordination with executive          ardized requests for quotations, quotes, purchase or-
agencies, submitting necessary legislative initiatives         ders, and notice of awards and begin Government-wide
to the Office of Management and Budget for the resolu-         implementation;
tion of such inconsistencies.                                    (c) by July 1995, implement a full scale Federal elec-
  SEC. 4. Executive Order No. 12352 is revoked.                tronic commerce system that expands initial capabili-
                                   WILLIAM J. CLINTON.         ties to include electronic payments, document inter-
                                                               change, and supporting databases; and
               EXECUTIVE ORDER NO. 12969                         (d) by January 1997, complete Government-wide im-
                                                               plementation of electronic commerce for appropriate
  Ex. Ord. No. 12969, Aug. 8, 1995, 60 F.R. 40989, which
                                                               Federal purchases, to the maximum extent possible.
provided for Federal agencies to contract with compa-            This implementation schedule should be accelerated
nies that report in a public manner on toxic chemicals         where practicable.
released to the environment, was revoked by Ex. Ord.             The head of each executive department or agency
No. 13148, § 901, Apr. 21, 2000, 65 F.R. 24604, formerly set   shall:
out as a note under section 4321 of Title 42, The Public         (a) ensure that budgetary resources are available,
Health and Welfare.                                            within approved budget levels, for electronic commerce
  STREAMLINING PROCUREMENT THROUGH ELECTRONIC                  implementation in each respective department or agen-
                                                               cy;
                   COMMERCE
                                                                 (b) assist the President’s Management Council in im-
  Memorandum of President of the United States, Oct.           plementing the electronic commerce system as quickly
28, 1993, 58 F.R. 58095, provided:                             as possible in accordance with the schedules estab-
  Memorandum for the Heads of Executive Depart-                lished herein; and
ments and Agencies [and] the President’s Management              (c) designate one or more senior level employees to
Council                                                        assist the President’s Management Council and serve as
  The Federal Government spends $200 billion annually          a point of contact for the development and implemen-
buying goods and services. Unfortunately, the red tape         tation of the Federal electronic commerce system
and burdensome paperwork of the current procurement            within each respective department or agency.
system increases costs, produces unnecessary delays,             3. NO PRIVATE RIGHTS CREATED.
and reduces Federal work force productivity. Moving to           This directive is for the internal management of the
                                                               executive branch and does not create any right or bene-
an electronic commerce system to simplify and stream-
                                                               fit, substantive or procedural, enforceable by a party
line the purchasing process will promote customer
                                                               against the United States, its agencies or instrumen-
service and cost-effectiveness. The electronic exchange
                                                               talities, its officers or employees, or any other person.
of acquisition information between the private sector            The Director of the Office of Management and Budget
and the Federal Government also will increase com-             is authorized and directed to publish this memorandum
petition by improving access to Federal contracting op-        in the Federal Register.
portunities for the more than 300,000 vendors currently
                                                                                                  WILLIAM J. CLINTON.
doing business with the Government, particularly
small businesses, as well as many other vendors who            § 403. Definitions
find access to bidding opportunities difficult under the
current system. For these reasons, I am committed to             As used in this chapter:
Page 115                         TITLE 41—PUBLIC CONTRACTS                                         § 403

   (1) The term ‘‘executive agency’’ means—         gether to produce the capabilities required to
     (A) an executive department specified in       fulfill a mission need, which elements may in-
   section 101 of title 5;                          clude hardware, equipment, software or any
     (B) a military department specified in sec-    combination thereof, but excludes construc-
   tion 102 of such title;                          tion or other improvements to real property;
     (C) an independent establishment as de-        and
   fined in section 104(1) of such title; and          (B) a system shall be considered a major sys-
     (D) a wholly owned Government corpora-         tem if (i) the Department of Defense is respon-
   tion fully subject to the provisions of chap-    sible for the system and the total expenditures
   ter 91 of title 31.                              for research, development, test and evaluation
                                                    for the system are estimated to be more than
   (2) The term ‘‘procurement’’ includes all        $75,000,000 (based on fiscal year 1980 constant
 stages of the process of acquiring property or     dollars) or the eventual total expenditure for
 services, beginning with the process for deter-    procurement of more than $300,000,000 (based
 mining a need for property or services and         on fiscal year 1980 constant dollars); (ii) a ci-
 ending with contract completion and closeout.      vilian agency is responsible for the system and
   (3) The term ‘‘procurement system’’ means        total expenditures for the system are esti-
 the integration of the procurement process,        mated to exceed $750,000 (based on fiscal year
 the professional development of procurement        1980 constant dollars) or the dollar threshold
 personnel, and the management structure for        for a ‘‘major system’’ established by the agen-
 carrying out the procurement function.             cy pursuant to Office of Management and
   (4) The term ‘‘standards’’ means the criteria    Budget (OMB) Circular A–109, entitled ‘‘Major
 for determining the effectiveness of the pro-      Systems Acquisitions’’, whichever is greater;
 curement system by measuring the perform-          or (iii) the system is designated a ‘‘major sys-
 ance of the various elements of such system.       tem’’ by the head of the agency responsible for
   (5) The term ‘‘competitive procedures’’          the system.
 means procedures under which an agency en-            (10) The term ‘‘item’’, ‘‘item of supply’’, or
 ters into a contract pursuant to full and open     ‘‘supplies’’ means any individual part, compo-
 competition.                                       nent, subassembly, assembly, or subsystem in-
   (6) The term ‘‘full and open competition’’,      tegral to a major system, and other property
 when used with respect to a procurement,           which may be replaced during the service life
 means that all responsible sources are per-        of the system, and includes spare parts and re-
 mitted to submit sealed bids or competitive        plenishment spare parts, but does not include
 proposals on the procurement.                      packaging or labeling associated with ship-
   (7) The term ‘‘responsible source’’ means a      ment or identification of an ‘‘item’’.
 prospective contractor who—                           (11) The term ‘‘simplified acquisition thresh-
     (A) has adequate financial resources to        old’’ means $100,000.
   perform the contract or the ability to obtain       (12) The term ‘‘commercial item’’ means any
   such resources;                                  of the following:
     (B) is able to comply with the required or          (A) Any item, other than real property,
   proposed delivery or performance schedule,          that is of a type customarily used by the
   taking into consideration all existing com-         general public or by nongovernmental enti-
                                                       ties for purposes other than governmental
   mercial and Government business commit-
                                                       purposes, and that—
   ments;                                                   (i) has been sold, leased, or licensed to
     (C) has a satisfactory performance record;          the general public; or
     (D) has a satisfactory record of integrity             (ii) has been offered for sale, lease, or li-
   and business ethics;                                  cense to the general public.
     (E) has the necessary organization, experi-
   ence, accounting and operational controls,           (B) Any item that evolved from an item
   and technical skills, or the ability to obtain     described in subparagraph (A) through ad-
   such organization, experience, controls, and       vances in technology or performance and
   skills;                                            that is not yet available in the commercial
     (F) has the necessary production, con-           marketplace, but will be available in the
   struction, and technical equipment and fa-         commercial marketplace in time to satisfy
   cilities, or the ability to obtain such equip-     the delivery requirements under a Federal
   ment and facilities; and                           Government solicitation.
                                                        (C) Any item that, but for—
     (G) is otherwise qualified and eligible to
                                                          (i) modifications of a type customarily
   receive an award under applicable laws and           available in the commercial marketplace,
   regulations.                                         or
   (8) The term ‘‘technical data’’ means re-              (ii) minor modifications made to meet
 corded information (regardless of the form or          Federal Government requirements,
 method of the recording) of a scientific or          would satisfy the criteria in subparagraph
 technical nature (including computer software        (A) or (B).
 documentation) relating to supplies procured           (D) Any combination of items meeting the
 by an agency. Such term does not include             requirements of subparagraph (A), (B), (C),
 computer software or financial, administra-          or (E) that are of a type customarily com-
 tive, cost or pricing, or management data or         bined and sold in combination to the general
 other information incidental to contract ad-         public.
 ministration.                                          (E) Installation services, maintenance
   (9)(A) The term ‘‘major system’’ means a           services, repair services, training services,
 combination of elements that will function to-       and other services if—
§ 403                               TITLE 41—PUBLIC CONTRACTS                                          Page 116

          (i) the services are procured for support          that must be created, developed, dem-
        of an item referred to in subparagraph (A),          onstrated, and evaluated;
        (B), (C), or (D), regardless of whether such            (ii) the description of requirements to
        services are provided by the same source             satisfy agency needs;
        or at the same time as the item; and                    (iii) solicitation and selection of sources;
          (ii) the source of the services provides              (iv) award of contracts;
        similar services contemporaneously to the               (v) contract performance;
        general public under terms and conditions               (vi) contract financing;
        similar to those offered to the Federal                 (vii) management and measurement of
        Government.                                          contract performance through final deliv-
                                                             ery and payment; and
      (F) Services offered and sold competi-                    (viii) technical and management func-
    tively, in substantial quantities, in the com-
                                                             tions directly related to the process of ful-
    mercial marketplace based on established
                                                             filling agency requirements by contract.
    catalog or market prices for specific tasks
    performed or specific outcomes to be                   (17) The term ‘‘Federal Acquisition Regu-
    achieved and under standard commercial               latory Council’’ means the Federal Acquisi-
    terms and conditions.                                tion Regulatory Council established under sec-
      (G) Any item, combination of items, or             tion 421 of this title.
    service referred to in subparagraphs (A)           (Pub. L. 93–400, § 4, Aug. 30, 1974, 88 Stat. 797;
    through (F) notwithstanding the fact that          Pub. L. 96–83, § 3, Oct. 10, 1979, 93 Stat. 649; Pub.
    the item, combination of items, or service is      L. 98–191, § 4, Dec. 1, 1983, 97 Stat. 1326; Pub. L.
    transferred between or among separate divi-        98–369, div. B, title VII, § 2731, July 18, 1984, 98
    sions, subsidiaries, or affiliates of a contrac-
                                                       Stat. 1195; Pub. L. 98–577, title I, § 102, Oct. 30,
    tor.
                                                       1984, 98 Stat. 3067; Pub. L. 100–679, § 3(c), Nov. 17,
      (H) A nondevelopmental item, if the pro-
    curing agency determines, in accordance            1988, 102 Stat. 4056; Pub. L. 101–510, div. A, title
    with conditions set forth in the Federal Ac-       VIII, § 806(a)(1), Nov. 5, 1990, 104 Stat. 1592; Pub.
    quisition Regulation, that the item was de-        L. 103–355, title IV, § 4001, title VIII, § 8001, Oct.
    veloped exclusively at private expense and         13, 1994, 108 Stat. 3338, 3384; Pub. L. 104–106, div.
    has been sold in substantial quantities, on a      D, title XLII, § 4204, Feb. 10, 1996, 110 Stat. 655;
    competitive basis, to multiple State and           Pub. L. 106–65, div. A, title VIII, § 805, Oct. 5,
    local governments.                                 1999, 113 Stat. 705; Pub. L. 108–136, div. A, title
                                                       XIV, §§ 1411, 1433, Nov. 24, 2003, 117 Stat. 1663,
   (13) The term ‘‘nondevelopmental item’’             1673; Pub. L. 108–375, div. A, title VIII, § 807(b),
  means any of the following:                          Oct. 28, 2004, 118 Stat. 2011.)
     (A) Any commercial item.
     (B) Any previously developed item of sup-                           REFERENCES IN TEXT
   ply that is in use by a department or agency           This chapter, referred to in text, was in the original
   of the United States, a State or local gov-         ‘‘this Act’’, meaning Pub. L. 93–400, which is classified
   ernment, or a foreign government with               principally to this chapter. For complete classification
   which the United States has a mutual de-            of this Act to the Code, see Short Title note set out
   fense cooperation agreement.                        under section 401 of this title and Tables.
     (C) Any item of supply described in sub-                                CODIFICATION
   paragraph (A) or (B) that requires only
                                                         Section 2731 of Pub. L. 98–369 directed in part that
   minor modification or modification of the           this section be redesignated as section 4 of Pub. L.
   type customarily available in the commer-           93–400 to correct an inconsistency in the language of
   cial marketplace in order to meet the re-           the amendment by Pub. L. 98–191, which amended this
   quirements of the procuring department or           section generally but referred to it as ‘‘Sec. 3’’. Since
   agency.                                             this section was enacted as section 4 of Pub. L. 93–400
     (D) Any item of supply currently being            no change was required.
   produced that does not meet the require-                                  AMENDMENTS
   ments of subparagraph (A), (B), or (C) solely
   because the item is not yet in use.                   2004—Par. (17). Pub. L. 108–375 added par. (17).
                                                         2003—Par. (12)(F). Pub. L. 108–136, § 1433, inserted ‘‘or
    (14) The term ‘‘component’’ means any item         specific outcomes to be achieved’’ after ‘‘performed’’.
  supplied to the Federal Government as part of          Par. (16). Pub. L. 108–136, § 1411, added par. (16).
  an end item or of another component.                   1999—Par. (12)(E). Pub. L. 106–65 amended subpar. (E)
    (15) The term ‘‘commercial component’’             generally. Prior to amendment, subpar. (E) read as fol-
                                                       lows: ‘‘Installation services, maintenance services, re-
  means any component that is a commercial
                                                       pair services, training services, and other services if
  item.                                                such services are procured for support of an item re-
    (16) The term ‘‘acquisition’’—                     ferred to in subparagraph (A), (B), (C), or (D) and if the
      (A) means the process of acquiring, with         source of such services—
    appropriated funds, by contract for purchase           ‘‘(i) offers such services to the general public and
    or lease, property or services (including con-       the Federal Government contemporaneously and
    struction) that support the missions and             under similar terms and conditions; and
    goals of an executive agency, from the point           ‘‘(ii) offers to use the same work force for providing
    at which the requirements of the executive           the Federal Government with such services as the
                                                         source uses for providing such services to the general
    agency are established in consultation with
                                                         public.’’
    the chief acquisition officer of the executive       1996—Par. (12)(F). Pub. L. 104–106 inserted ‘‘or mar-
    agency; and                                        ket’’ after ‘‘catalog’’.
      (B) includes—                                      1994—Pub. L. 103–355, § 8001(b)(1), substituted ‘‘this
         (i) the process of acquiring property or      chapter:’’ for ‘‘this chapter—’’ in introductory provi-
      services that are already in existence, or       sions.
Page 117                                 TITLE 41—PUBLIC CONTRACTS                                                 § 405

  Pars. (1) to (3). Pub. L. 103–355, § 8001(b)(2), (3), sub-    economy, efficiency, and effectiveness in the
stituted ‘‘The term’’ for ‘‘the term’’ and period for           procurement of property and services by the ex-
semicolon at end.                                               ecutive branch of the Federal Government.
  Par. (4). Pub. L. 103–355, § 8001(b)(2), (4), substituted
                                                                  (b) There shall be at the head of the Office an
‘‘The term’’ for ‘‘the term’’ and period for ‘‘; and’’ at
end.                                                            Administrator for Federal Procurement Policy
  Pars. (5) to (9). Pub. L. 103–355, § 8001(b)(2), (3), sub-    (hereinafter referred to as the ‘‘Administrator’’),
stituted ‘‘The term’’ for ‘‘the term’’ and period for           who shall be appointed by the President, by and
semicolon at end.                                               with the advice and consent of the Senate.
  Par. (10). Pub. L. 103–355, § 8001(b)(2), (4), substituted
‘‘The term’’ for ‘‘the term’’ and period for ‘‘; and’’ at
                                                                (Pub. L. 93–400, § 5, Aug. 30, 1974, 88 Stat. 797;
end.                                                            Pub. L. 104–106, div. D, title XLIII, § 4305(a)(1),
  Par. (11). Pub. L. 103–355, § 8001(b)(2), which directed      Feb. 10, 1996, 110 Stat. 665.)
substitution of ‘‘The term’’ for ‘‘the term’’ in par. (11),                          AMENDMENTS
could not be executed because phrase ‘‘the term’’ did
not appear subsequent to amendment by Pub. L.                     1996—Subsec. (a). Pub. L. 104–106 amended subsec. (a)
103–355, § 4001. See below.                                     generally. Prior to amendment, subsec. (a) read as fol-
  Pub. L. 103–355, § 4001, amended par. (11) generally.         lows: ‘‘There is established in the Office of Manage-
Prior to amendment, par. (11) read as follows: ‘‘the            ment and Budget an office to be known as the Office of
term ‘small purchase threshold’ means $25,000, adjusted         Federal Procurement Policy (hereinafter referred to as
on October 1 of each year divisible by 5 to the amount          the ‘Office’).’’
equal to $25,000 in constant fiscal year 1990 dollars                    EFFECTIVE DATE OF 1996 AMENDMENT
(rounded to the nearest $1,000).’’
  Pars. (12) to (15). Pub. L. 103–355, § 8001(a), added pars.     For effective date and applicability of amendment by
(12) to (15).                                                   Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set
  1990—Par. (11). Pub. L. 101–510 added par. (11).              out as a note under section 251 of this title.
  1988—Pars. (4) to (11). Pub. L. 100–679 redesignated
pars. (5) to (11) as (4) to (10), respectively, and struck      § 405. Authority and functions of the Adminis-
out former par. (4) which defined ‘‘single system of                trator
Government-wide procurement regulations’’ for pur-              (a) Development of procurement policy; leader-
poses of this chapter.                                              ship
  1984—Pars. (6) to (8). Pub. L. 98–369 added pars. (6) to
(8).                                                              The Administrator shall provide overall direc-
  Pars. (9) to (11). Pub. L. 98–577 added pars. (9) to (11).    tion of procurement policy and leadership in the
  1983—Pub. L. 98–191 amended section generally, re-            development of procurement systems of the ex-
stating definitions of ‘‘executive agency’’ and ‘‘procure-      ecutive agencies. To the extent that the Admin-
ment’’ and inserting definitions of ‘‘procurement sys-          istrator considers appropriate, in carrying out
tem’’, ‘‘single-system of Government-wide procurement
regulations’’, and ‘‘standards’’.
                                                                the policies and functions set forth in this chap-
  1979—Pub. L. 96–83 designated existing provisions as          ter, and with due regard for applicable laws and
subsec. (a) and added subsec. (b).                              the program activities of the executive agencies,
                                                                the Administrator may prescribe Government-
          EFFECTIVE DATE OF 1996 AMENDMENT                      wide procurement policies. These policies shall
  For effective date and applicability of amendment by          be implemented in a single Government-wide
Pub. L. 104–106, see section 4401 of Pub. L. 104–106, set       procurement regulation called the Federal Ac-
out as a note under section 251 of this title.                  quisition Regulation and shall be followed by ex-
          EFFECTIVE DATE OF 1994 AMENDMENT
                                                                ecutive agencies in the procurement of—
                                                                    (1) property other than real property in
  For effective date and applicability of amendment by            being;
Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set          (2) services, including research and develop-
out as a note under section 251 of this title.
                                                                  ment; and
          EFFECTIVE DATE OF 1979 AMENDMENT                          (3) construction, alteration, repair, or main-
                                                                  tenance of real property.
  Amendment by Pub. L. 96–83 effective Oct. 1, 1979, see
section 12 of Pub. L. 96–83, set out as a note under sec-       (b) Government-wide procurement regulations
tion 401 of this title.                                           In any instance in which the Administrator
 MODIFICATION OF FEDERAL ACQUISITION REGULATIONS                determines that the Department of Defense, the
                                                                National Aeronautics and Space Administra-
   Section 2752 of Pub. L. 98–369 provided that: ‘‘Not          tion, and the General Services Administration
later than March 31, 1985, the single Government-wide
procurement regulation referred to in section 4(4)(A) of
                                                                are unable to agree on or fail to issue Govern-
the Office of Federal Procurement Policy Act (41 U.S.C.         ment-wide regulations, procedures and forms in
403(4)(A)) shall be modified to conform to the require-         a timely manner, including any such regula-
ments of this title [title VII of Pub. L. 98–369,               tions, procedures, and forms as are necessary to
§§ 2701–2753, July 18, 1984, 98 Stat. 1175–1203] and the        implement prescribed policy initiated by the
amendments made by this title [see Short Title of 1984          Administrator under subsection (a) of this sec-
Amendment note set out under section 251 of this                tion, the Administrator shall, with due regard
title].’’                                                       for applicable laws and the program activities of
§ 404. Establishment of Office of Federal Procure-              the executive agencies and consistent with the
    ment Policy; appointment of Administrator                   policies and functions set forth in this chapter,
                                                                prescribe Government-wide regulations, proce-
  (a) There is in the Office of Management and                  dures and forms which shall be followed by exec-
Budget an Office of Federal Procurement Policy                  utive agencies in the procurement of—
(hereinafter referred to as the ‘‘Office’’) to pro-                 (1) property other than real property in
vide overall direction of Government-wide pro-                    being;
curement policies, regulations, procedures, and                     (2) services, including research and develop-
forms for executive agencies and to promote                       ment; and
§ 405                              TITLE 41—PUBLIC CONTRACTS                                    Page 118

    (3) construction, alteration, repair, or main-          (F) develop instructional materials for ac-
  tenance of real property.                               quisition personnel in coordination with pri-
(c) Noninterference with executive agencies               vate and public acquisition colleges and
  The authority of the Administrator under this           training facilities;
chapter shall not be construed to—                          (G) evaluate the effectiveness of training
    (1) impair or interfere with the determina-           and career development programs for acqui-
  tion by executive agencies of their need for, or        sition personnel;
  their use of, specific property, services, or con-        (H) promote the establishment and utiliza-
  struction, including particular specifications          tion of academic programs by colleges and
  therefor; or                                            universities in acquisition fields;
    (2) interfere with the determination by exec-           (I) facilitate, to the extent requested by
  utive agencies of specific actions in the award         agencies, interagency intern and training
  or administration of procurement contracts.             programs; and
(d) Enumeration of included functions                       (J) perform other career management or
                                                          research functions as directed by the Admin-
  The functions of the Administrator shall in-            istrator;
clude—
    (1) providing leadership and ensuring action           (6) administering the provisions of section
  by the executive agencies in the establish-            433 of this title;
  ment, development and maintenance of the                 (7) establishing criteria and procedures to
  single system of simplified Government-wide            ensure the effective and timely solicitation of
  procurement regulations and resolving dif-             the viewpoints of interested parties in the de-
  ferences among the executive agencies in the           velopment of procurement policies, regula-
  development of simplified Government-wide              tions, procedures, and forms;
  procurement regulations, procedures and                  (8) developing standard contract forms and
  forms;                                                 contract language in order to reduce the Gov-
    (2) coordinating the development of Govern-          ernment’s cost of procuring property and serv-
  ment-wide procurement system standards that            ices and the private sector’s cost of doing busi-
  shall be implemented by the executive agen-            ness with the Government;
  cies in their procurement systems;                       (9) providing for a Government-wide award
    (3) providing leadership and coordination in         to recognize and promote vendor excellence;
  the formulation of the executive branch posi-            (10) providing for a Government-wide award
  tion on legislation relating to procurement;           to recognize and promote excellence in officers
    (4)(A) providing for and directing the activi-       and employees of the Federal Government
  ties of the computer-based Federal Procure-            serving in procurement-related positions;
  ment Data System (including recommending                 (11) developing policies, in consultation with
  to the Administrator of General Services a             the Administrator of the Small Business Ad-
  sufficient budget for such activities), which          ministration, that ensure that small busi-
  shall be located in the General Services Ad-           nesses, qualified HUBZone small business con-
  ministration, in order to adequately collect,          cerns (as defined in section 632(p) of title 15),
  develop, and disseminate procurement data;             small businesses owned and controlled by so-
  and                                                    cially and economically disadvantaged indi-
    (B) ensuring executive agency compliance             viduals, and small businesses owned and con-
  with the record requirements of section 417 of         trolled by women are provided with the maxi-
  this title;                                            mum practicable opportunities to participate
    (5) providing for and directing the activities       in procurements that are conducted for
  of the Federal Acquisition Institute (including        amounts below the simplified acquisition
  recommending to the Administrator of Gen-              threshold;
  eral Services a sufficient budget for such ac-           (12) developing policies that will promote
  tivities), which shall be located in the General       achievement of goals for participation by
  Services Administration, in order to—                  small businesses, qualified HUBZone small
      (A) foster and promote the development of          business concerns (as defined in section 632(p)
    a professional acquisition workforce Govern-         of title 15), small businesses owned and con-
    ment-wide;                                           trolled by socially and economically disadvan-
      (B) promote and coordinate Government-             taged individuals, and small businesses owned
    wide research and studies to improve the             and controlled by women; and
    procurement process and the laws, policies,            (13) completing action, as appropriate, on
    methods, regulations, procedures, and forms          the recommendations of the Commission on
    relating to acquisition by the executive             Government Procurement.
    agencies;
                                                       (e) Consultation; assistance of existing executive
      (C) collect data and analyze acquisition
                                                           agencies; advisory committees and inter-
    workforce data from the Office of Personnel
                                                           agency groups
    Management, the heads of executive agen-
    cies, and, through periodic surveys, from in-        In carrying out the functions set forth in sub-
    dividual employees;                                section (d) of this section, the Administrator—
      (D) periodically analyze acquisition career          (1) shall consult with the affected executive
    fields to identify critical competencies, du-        agencies, including the Small Business Admin-
    ties, tasks, and related academic pre-               istration;
    requisites, skills, and knowledge;                     (2) may, with the concurrence of the heads of
      (E) coordinate and assist agencies in iden-        affected executive agencies, designate an exec-
    tifying and recruiting highly qualified can-         utive agency or executive agencies to assist in
    didates for acquisition fields;                      the performance of such functions; and
Page 119                                  TITLE 41—PUBLIC CONTRACTS                                         § 405

     (3) may establish advisory committees or          of the past contract performance of offerors in
   other interagency groups to assist in providing     awarding contracts. The guidance shall in-
   for the establishment, development, and main-       clude—
   tenance of a single system of simplified Gov-           (A) standards for evaluating past perform-
   ernment-wide procurement regulations and to           ance with respect to cost (when appropriate),
   assist in the performance of any of the other         schedule, compliance with technical or func-
   functions which the Administrator considers           tional specifications, and other relevant per-
   appropriate.                                          formance factors that facilitate consistent and
(f) Oversight of regulations promulgated by              fair evaluation by all executive agencies;
     other agencies relating to procurement                (B) policies for the collection and mainte-
   The Administrator, with the concurrence of            nance of information on past contract per-
the Director of the Office of Management and             formance that, to the maximum extent prac-
Budget, and with consultation with the head of           ticable, facilitate automated collection, main-
the agency or agencies concerned, may deny the           tenance, and dissemination of information and
promulgation of or rescind any Government-               provide for ease of collection, maintenance,
wide regulation or final rule or regulation of           and dissemination of information by other
any executive agency relating to procurement if          methods, as necessary;
the Administrator determines that such rule or             (C) policies for ensuring that—
regulation is inconsistent with any policies, reg-           (i) offerors are afforded an opportunity to
ulations, or procedures issued pursuant to sub-            submit relevant information on past con-
section (a) of this section.                               tract performance, including performance
(g) Assignment, delegation, or transfer of func-           under contracts entered into by the execu-
     tions prohibited                                      tive agency concerned, contracts entered
                                                           into by other departments and agencies of
   Except as otherwise provided by law, no du-             the Federal Government, contracts entered
ties, functions, or responsibilities, other than           into by agencies of State and local govern-
those expressly assigned by this chapter, shall            ments, and contracts entered into by com-
be assigned, delegated, or transferred to the Ad-          mercial customers; and
ministrator.                                                 (ii) such information submitted by offerors
(h) Real property procurement; Office of Man-              is considered; and
     agement and Budget
                                                           (D) the period for which information on past
   Nothing in this chapter shall be construed to—        performance of offerors may be maintained
     (1) impair or affect the authorities or re-
                                                         and considered.
   sponsibilities conferred by the Federal Prop-
   erty and Administrative Services Act of 1949 1        (2) In the case of an offeror with respect to
   with respect to the procurement of real prop-       which there is no information on past contract
   erty; or                                            performance or with respect to which informa-
     (2) limit the current authorities and respon-     tion on past contract performance is not avail-
   sibilities of the Director of the Office of Man-    able, the offeror may not be evaluated favorably
   agement and Budget.                                 or unfavorably on the factor of past contract
(i) Recipients of Federal grants or assistance         performance.
   (1) With due regard to applicable laws and the      (k) Annual reporting requirement
program activities of the executive agencies ad-         The Administrator shall submit to Congress,
ministering Federal programs of grants or as-          on an annual basis, an assessment of the
sistance, the Administrator may prescribe Gov-         progress made in executive agencies in imple-
ernment-wide policies, regulations, procedures,        menting the policy regarding major acquisitions
and forms which the Administrator considers            that is stated in section 263(a) of this title. The
appropriate and which shall be followed by such        Administrator shall use data from existing man-
executive agencies in providing for the procure-       agement systems in making the assessment.
ment, to the extent required under such pro-
grams, of property or services referred to in          (Pub. L. 93–400, § 6, Aug. 30, 1974, 88 Stat. 797;
clauses (1), (2), and (3) of subsection (a) of this    Pub. L. 96–83, § 4, Oct. 10, 1979, 93 Stat. 649; Pub.
section by recipients of Federal grants or assist-     L. 98–191, § 5, Dec. 1, 1983, 97 Stat. 1326; Pub. L.
ance under such programs.                              98–369, div. B, title VII, § 2732(b)(1), July 18, 1984,
   (2) Nothing in paragraph (1) shall be construed     98 Stat. 1199; Pub. L. 100–679, § 3(a), Nov. 17, 1988,
to—                                                    102 Stat. 4055; Pub. L. 103–355, title I, § 1091(b)(2),
     (A) permit the Administrator to authorize         title V, §§ 5051(b), 5091, title VII, § 7108, Oct. 13,
   procurement or supply support, either directly      1994, 108 Stat. 3272, 3351, 3361, 3378; Pub. L.
   or indirectly, to recipients of Federal grants      104–106, div. D, title XLIII, §§ 4307(b), 4321(h)(1),
   or assistance; or                                   (2), 4322(a)(1), div. E, title LVI, § 5607(d), Feb. 10,
     (B) authorize any action by such recipients       1996, 110 Stat. 668, 675, 677, 702; Pub. L. 104–201,
   contrary to State and local laws, in the case of    div. A, title X, § 1074(f)(1), Sept. 23, 1996, 110 Stat.
   programs to provide Federal grants or assist-       2661; Pub. L. 105–85, div. A, title VIII, § 851(b),
   ance to States and political subdivisions.          title X, § 1073(g)(2)(B), Nov. 18, 1997, 111 Stat.
(j) Policy regarding consideration of contractor       1851, 1906; Pub. L. 105–135, title VI, § 604(f)(1), Dec.
     past performance                                  2, 1997, 111 Stat. 2634.)
   (1) The Administrator shall prescribe for exec-                       REFERENCES IN TEXT
utive agencies guidance regarding consideration          The Federal Property and Administrative Services
                                                       Act of 1949, referred to in subsec. (h)(1), is act June 30,
 1 See   References in Text note below.                1949, ch. 288, 63 Stat. 377, as amended. Except for title
§ 405                                     TITLE 41—PUBLIC CONTRACTS                                                  Page 120

III of the Act, which is classified generally to sub-                Subsec. (d)(8), (9). Pub. L. 103–355, § 5091, added pars.
chapter IV (§ 251 et seq.) of chapter 4 of this title, the        (8) and (9) at end. Former par. (8) redesignated (12).
Act was repealed and reenacted by Pub. L. 107–217, §§ 1,             Subsec. (d)(10), (11). Pub. L. 103–355, § 7108(a), added
6(b), Aug. 21, 2002, 116 Stat. 1062, 1304, as chapters 1 to       pars. (10) and (11).
11 of Title 40, Public Buildings, Property, and Works.               Subsec. (d)(12). Pub. L. 103–355, § 5091(2), redesignated
                                                                  pars. (8) and (12).
                        AMENDMENTS                                   Subsec. (j). Pub. L. 103–355, § 1091(b)(2), added subsec.
   1997—Subsec. (d)(5)(J). Pub. L. 105–85, § 1073(g)(2)(B)(i),    (j).
substituted semicolon for period at end.                             Subsec. (k). Pub. L. 103–355, § 5051(b), added subsec.
   Subsec. (d)(6). Pub. L. 105–85, § 1073(g)(2)(B)(ii), re-       (k).
aligned margins.                                                     1988—Subsec. (a). Pub. L. 100–679, § 3(a)(1), substituted
   Subsec. (d)(11). Pub. L. 105–135, § 604(f)(1)(A), inserted     ‘‘procurement policies. These policies shall be imple-
‘‘qualified HUBZone small business concerns (as de-               mented in a single Government-wide procurement regu-
fined in section 632(p) of title 15),’’ after ‘‘ensure that       lation called the Federal Acquisition Regulation and
small businesses,’’.                                              shall be’’ for ‘‘procurement policies which shall be im-
   Subsec. (d)(12). Pub. L. 105–135, § 604(f)(1)(B), inserted     plemented in the single system of Government-wide
‘‘qualified HUBZone small business concerns (as de-               procurement regulations and shall be’’.
fined in section 632(p) of title 15),’’ after ‘‘participation        Subsec. (b). Pub. L. 100–679, § 3(a)(2), inserted
by small businesses,’’.                                           ‘‘, including any such regulations, procedures, and
   Pub. L. 105–85, § 1073(g)(2)(B)(iii), substituted ‘‘small      forms as are necessary to implement prescribed policy
businesses’’ for ‘‘small business’’ after ‘‘individuals,          initiated by the Administrator under subsection (a) of
and’’.                                                            this section,’’ after ‘‘timely manner’’ and substituted
   Subsec. (k). Pub. L. 105–85, § 851(b), inserted ‘‘regard-      ‘‘Administrator shall’’ for ‘‘Administrator may’’.
ing major acquisitions that is’’ after ‘‘implementing                Subsec. (d)(4). Pub. L. 100–679, § 3(a)(3), added par. (4)
the policy’’.                                                     and struck out former par. (4) which read as follows:
   1996—Subsec. (b). Pub. L. 104–106, § 4322(a)(1), struck        ‘‘providing for a computer-based Federal Procurement
out second comma after ‘‘subsection (a) of this sec-              Data System which shall be located in the General
tion’’.                                                           Services Administration (acting as executive agent for
   Subsec. (d)(5)(A). Pub. L. 104–106, § 4307(b)(2)(A), sub-      the Administrator) and shall collect, develop, and dis-
stituted ‘‘the development of a professional acquisition          seminate procurement data;’’.
workforce Government-wide’’ for ‘‘Government-wide                    Subsec. (d)(5). Pub. L. 100–679, § 3(a)(3), added par. (5)
career management programs for a professional pro-                and struck out former par. (5) which read as follows:
curement work force’’.                                            ‘‘providing for a Federal Acquisition Institute which
   Subsec. (d)(5)(B). Pub. L. 104–106, § 4307(b)(2)(B)(i), sub-   shall be located in the General Services Administration
stituted ‘‘acquisition by the’’ for ‘‘procurement by              (acting as executive agent for the Administrator) and
the’’.                                                            shall—
   Subsec.     (d)(5)(C)    to   (J).   Pub.     L.    104–106,        ‘‘(A) foster and promote Government-wide career
§ 4307(b)(2)(B)(ii), (iii), added subpars. (C) to (J) and            management programs for a professional procure-
struck out former subpar. (C) which read as follows:                 ment work force; and
‘‘establish policies and procedures for the establish-                 ‘‘(B) promote and coordinate Government-wide re-
ment and implementation of education and training                    search and studies to improve the procurement proc-
programs authorized by this chapter, including the es-               ess and the laws, policies, methods, regulations, pro-
tablishment and implementation of training, in con-                  cedures, and forms relating to procurement by the ex-
junction with the General Services Administration, for               ecutive agencies;’’.
critical procurement personnel designed to increase the              Subsec. (f). Pub. L. 100–679, § 3(a)(4), substituted ‘‘The
participation of small business concerns owned and                Administrator, with the concurrence of the Director of
controlled by so