FEDERAL ACQUISITION CIRCULAR · (c) Each numbered unit or segment (e.g., part, subpart, sec-tion,...

FEDERAL ACQUISITION CIRCULAR July 22, 2013 Number 2005-67

Effective July 22, 2013 Revised pages

Federal Acquisition Circular (FAC) 2005-67 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration. Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2005-67 is effective June 21, 2013 except for items I, II, III, IV, VI, VIII, and X which are effective July 22, 2013.

(BLANK PAGE)

FAC 2005-67 FILING INSTRUCTIONS

Revised pages NOTE: The following pages reflect FAR amendments. Please do not

file these pages until their effective date of July 22, 2013.

Remove Pages

Insert Pages

1.1-3 and 1.1-4 1.1-3 and 1.1-4 1.6-1 and 1.6-2 1.6-1 and 1.6-2 2.1-3 thru 2.1-16 2.1-3 thru 2.1-16 Part 4 TOC Part 4 TOC pp. 4-1 and 4-2 pp. 4-1 and 4-2 4.2-1 and 4.2-2 4.2-1 and 4.2-2 4.6-1 thru 4.6-4 4.6-1 thru 4.6-4 4.9-1 and 4.9-2 4.9-1 and 4.9-2 4.11-1 and 4.11-2 4.11-1 and 4.11-2 4.12-1 and 4.12-2 4.12-1 and 4.12-2 7.1-3 and 7.1-4 7.1-3 and 7.1-4 8.4-1 and 8.4-2 8.4-1 and 8.4-2 Part 9 TOC Part 9 TOC pp. 9-1 and 9-2 pp. 9-1 and 9-2 9.1-3 and 9.1-4 9.1-3 and 9.1-4 9.2-3 and 9.2-4 9.2-3 and 9.2-4 9.4-1 thru 9.4-4 9.4-1 thru 9.4-4 12.3-1 and 12.3-2 12.3-1 and 12.3-2 13.1-3 and 13.1-4 13.1-3 and 13.1-4 13.2-1 and 13.2-2 13.2-1 and 13.2-2 15.4-3 and 15.4-4 15.4-3 and 15.4-4 16.5-5 and 16.5-6 16.5-5 and 16.5-6 17.2-1 and 17.2-2 17.2-1 and 17.2-2 17.7-1 and 17.7-2 17.7-1 and 17.7-2 Part 18 TOC Part 18 TOC pp. 18-1 and 18-2 pp. 18-1 and 18-2 18.1-1 and 18.1-2 18.1-1 and 18.1-2

19.3-7 and 19.3-8 19.3-7 and 19.3-8 19.7-3 and 19.7-4 19.7-3 and 19.7-4 19.15-1 and 19.15-2 19.15-1 and 19.15-2 22.10-13 and 22.10-14 22.10-13 and 22.10-14 Part 25 TOC Part 25 TOC pp. 25-1 and 25-2 pp. 25-1 and 25-2 25.1-1 thru 25.1-8 25.1-1 thru 25.1-8 25.3-1 and 25.3-2 25.3-1 thru 25.3-4 25.7-3 and 25.7-4 25.7-3 and 25.7-4 26.2-1 and 26.2-2 26.2-1 and 26.2-2 28.2-3 and 28.2-4 28.2-3 and 28.2-4 31.2-9 thru 31.2-14.2 31.2-9 thru 31.2-14.2 32.8-1 and 32.8-2 32.8-1 and 32.8-2 32.9-3 and 32.9-4 32.9-3 and 32.9-4 32.11-1 thru 32.11-4 32.11-1 thru 32.11-4 44.2-1 and 44.2-2 44.2-1 and 44.2-2 44.3-1 and 44.3-2 44.3-1 and 44.3-2 Part 52 TOC pp. Part 52 TOC pp. 52-1 and 52-2 pp. 52-1 and 52-2 pp. 52-5 thru 52-10 pp. 52-5 thru 52-10 52.2-11 thru 52.2-12.6 52.2-11 thru 52.2-12.6 52.2-19 thru 52.2-20.2 52.2-19 thru 52.2-20.2 52.2-27 thru 52.2-42.2 52.2-27 thru 52.2-42.2 52.2-93 thru 52.2-96.2 52.2-93 thru 52.2-96.2 52.2-101 thru 52.2-104.2 52.2-101 thru 52.2-104.2 52.2-152.9 thru 52.2-152.12 52.2-152.9 thru 52.2-152.14 52.2-217 thru 52.2-224 52.2-217 thru 52.2-224 52.2-231 thru 52.2-236 52.2-231 thru 52.2-236 52.2-263 thru 52.2-266 52.2-263 thru 52.2-266 Matrix Matrix 52.3-3 and 52.3-4 52.3-3 and 52.3-4 52.3-17 and 52.3-18 52.3-17 and 52.3-18 52.3-23 and 52.3-24 52.3-23 and 52.3-24

SUBPART 1.1—PURPOSE, AUTHORITY, ISSUANCE 1.106

1.1-3

1.104 Applicability.The FAR applies to all acquisitions as defined in Part 2 of

the FAR, except where expressly excluded.

1.105 Issuance.

1.105-1 Publication and code arrangement.(a) The FAR is published in—

(1) The daily issue of the Federal Register;(2) Cumulated form in the Code of Federal Regulations

(CFR); and(3) A separate loose-leaf edition.

(b) The FAR is issued as Chapter 1 of Title 48, CFR. Sub-sequent chapters are reserved for agency acquisition regula-tions that implement or supplement the FAR (seeSubpart 1.3). The CFR Staff will assign chapter numbers torequesting agencies.

(c) Each numbered unit or segment (e.g., part, subpart, sec-tion, etc.) of an agency acquisition regulation that is codifiedin the CFR shall begin with the chapter number. However, thechapter number assigned to the FAR will not be included inthe numbered units or segments of the FAR.

1.105-2 Arrangement of regulations.(a) General. The FAR is divided into subchapters, parts

(each of which covers a separate aspect of acquisition), sub-parts, sections, and subsections.

(b) Numbering.(1) The numbering system permits the dis-crete identification of every FAR paragraph. The digits to theleft of the decimal point represent the part number. The num-bers to the right of the decimal point and to the left of the dashrepresent, in order, the subpart (one or two digits), and the sec-tion (two digits). The number to the right of the dash repre-sents the subsection. Subdivisions may be used at the sectionand subsection level to identify individual paragraphs. Thefollowing example illustrates the make-up of a FAR numbercitation (note that subchapters are not used with citations):

(2) Subdivisions below the section or subsection levelconsist of parenthetical alpha numerics using the followingsequence:

(a)(1)(i)(A)(1)(i)

(c) References and citations.(1) Unless otherwise stated,cross-references indicate parts, subparts, sections, subsec-tions, paragraphs, subparagraphs, or subdivisions of thisregulation.

(2) This regulation may be referred to as the FederalAcquisition Regulation or the FAR.

(3) Using the FAR coverage at 9.106-4(d) as a typicalillustration, reference to the—

(i) Part would be “FAR part 9” outside the FAR and“part 9” within the FAR.

(ii) Subpart would be “FAR subpart 9.1” outside theFAR and “subpart 9.1’’ within the FAR.

(iii) Section would be “FAR 9.106” outside the FARand “9.106” within the FAR.

(iv) Subsection would be “FAR 9.106-4” outside theFAR and “9.106-4” within the FAR.

(v) Paragraph would be “FAR 9.106-4(d)” outsidethe FAR and “9.106-4(d)” within the FAR.

(4) Citations of authority (e.g., statutes or Executiveorders) in the FAR shall follow the Federal Register formguides.

1.105-3 Copies.Copies of the FAR in Federal Register, loose-leaf,

CD-ROM, and CFR form may be purchased from the—

Superintendent of DocumentsGovernment Printing Office (GPO)Washington, DC 20402.

1.106 OMB approval under the Paperwork Reduction Act.The Paperwork Reduction Act of 1980 (Pub. L. 96-511)

imposes a requirement on Federal agencies to obtain approvalfrom the Office of Management and Budget (OMB) beforecollecting information from 10 or more members of the pub-lic. The information collection and recordkeeping require-ments contained in this regulation have been approved by theOMB. The following OMB control numbers apply:

PartSubpartSectionSubsection

25.108-2

FAR segment OMB Control Number3.103 9000-00183.11 9000-01813.4 9000-00034.102 9000-00334.14 9000-01774.5 9000-01374.605 9000-01454.607 9000-01454.7 9000-00344.9 9000-00975.405 9000-00367.2 9000-00828.5 9000-01139.1 9000-00119.2 9000-002014.201 9000-003414.202-4 9000-004014.202-5 9000-003914.205 9000-003714.407 9000-0038

(FAC 2005–67)

1.106 FEDERAL ACQUISITION REGULATION

1.1-4

14.5 9000-004115.2 9000-003715.209 9000-003415.4 9000-001315.404-1(f) 9000-008015.407-2 9000-007815.408 9000-011519.7 9000-0006 and

9000-000719.12 9000-015022.103 9000-006522.8 1215-007222.11 9000-006622.12 1235-0007 and

1235-002522.13 1293-0005 and

1215-007222.14 1215-007222.16 1215-020923.602 9000-010725.302 9000-018427.2 9000-009627.3 9000-009527.4 9000-009028.1 9000-004528.2 9000-004529.304 9000-005930.6 9000-012931.205-46 9000-007931.205-46(a)(3) 9000-008832 9000-003532.000 9000-013832.1 9000-0070 and

9000-013832.2 9000-013832.4 9000-007332.5 9000-0010 and

9000-013832.7 9000-007432.9 9000-010232.10 9000-013833 9000-003536.213-2 9000-003736.603 9000-015741.202(c) 9000-012542.7 9000-001342.12 9000-007642.13 9000-007645 9000-007546 9000-007747 9000-0061

FAR segment OMB Control Number47.208 9000-005648 9000-002749 9000-002850 9000-002951.1 9000-003151.2 9000-003252.203-2 9000-001852.203-7 9000-009152.203-16 9000-018152.204-3 9000-009752.204-6 9000-014552.204-7 9000-015952.204-10 9000-017752.204-12 9000-014552.204-13 9000-015952.207-3 9000-011452.208-8 9000-011352.208-9 9000-011352.209-1(b) 9000-002052.209-1(c) 9000-008352.209-5 9000-009452.209-6 9000-009452.209-7 9000-017452.209-9 9000-017452.211-8 9000-004352.211-9 9000-004352.212-1(k) 9000-015952.212-3 9000-013652.212-4(t) 9000-015952.214-14 9000-004752.214-15 9000-004452.214-16 9000-004452.214-21 9000-003952.214-26 9000-003452.214-28 9000-001352.215-2 9000-003452.215-1(c)(2)(iv) 9000-004852.215-1(d) 9000-004452.215-6 9000-004752.215-9 9000-007852.215-12 9000-001352.215-13 9000-001352.215-14 9000-008052.215-19 9000-011552.215-20 9000-001352.215-21 9000-001352.215-22 9000-017352.215-23 9000-017352.216-2 9000-006852.216-3 9000-006852.216-4 9000-0068

FAR segment OMB Control Number

FAC 2005–67 JULY 22, 2013

SUBPART 1.6—CAREER DEVELOPMENT, CONTRACTING AUTHORITY, AND RESPONSIBILITIES 1.602-3

1.6-1

Subpart 1.6—Career Development, Contracting Authority, and Responsibilities

1.601 General.(a) Unless specifically prohibited by another provision of

law, authority and responsibility to contract for authorizedsupplies and services are vested in the agency head. Theagency head may establish contracting activities and delegatebroad authority to manage the agency’s contracting functionsto heads of such contracting activities. Contracts may beentered into and signed on behalf of the Government only bycontracting officers. In some agencies, a relatively small num-ber of high level officials are designated contracting officerssolely by virtue of their positions. Contracting officers belowthe level of a head of a contracting activity shall be selectedand appointed under 1.603.

(b) Agency heads may mutually agree to—(1) Assign contracting functions and responsibilities

from one agency to another; and(2) Create joint or combined offices to exercise acqui-

sition functions and responsibilities.

1.602 Contracting officers.

1.602-1 Authority.(a) Contracting officers have authority to enter into, admin-

ister, or terminate contracts and make related determinationsand findings. Contracting officers may bind the Governmentonly to the extent of the authority delegated to them. Contract-ing officers shall receive from the appointing authority (see1.603-1) clear instructions in writing regarding the limits oftheir authority. Information on the limits of the contractingofficers’ authority shall be readily available to the public andagency personnel.

(b) No contract shall be entered into unless the contractingofficer ensures that all requirements of law, executive orders,regulations, and all other applicable procedures, includingclearances and approvals, have been met.

1.602-2 Responsibilities.Contracting officers are responsible for ensuring perfor-

mance of all necessary actions for effective contracting,ensuring compliance with the terms of the contract, and safe-guarding the interests of the United States in its contractualrelationships. In order to perform these responsibilities, con-tracting officers should be allowed wide latitude to exercisebusiness judgment. Contracting officers shall—

(a) Ensure that the requirements of 1.602-1(b) have beenmet, and that sufficient funds are available for obligation;

(b) Ensure that contractors receive impartial, fair, and equi-table treatment;

(c) Request and consider the advice of specialists in audit,law, engineering, information security, transportation, andother fields, as appropriate; and

(d) Designate and authorize, in writing and in accordancewith agency procedures, a contracting officer’s representative(COR) on all contracts and orders other than those that are

firm-fixed price, and for firm-fixed-price contracts and ordersas appropriate, unless the contracting officer retains and exe-cutes the COR duties. See 7.104(e). ��COR—

(1) Shall be a Government employee, unless otherwiseauthorized in agency regulations;

(2) Shall be certified and maintain certification in accor-dance with the current Office of Management and Budgetmemorandum on the Federal Acquisition Certification forContracting Officer Representatives (FAC-COR) guidance,or for DoD, in accordance with the current applicable DoDpolicy guidance;

(3) Shall be qualified by training and experience com-mensurate with the responsibilities to be delegated in accor-dance with agency procedures;

(4) May not be delegated responsibility to perform func-tions that have been delegated under 42.202 to a contractadministration office, but may be assigned some duties at42.302 by the contracting officer;

(5) Has no authority to make any commitments orchanges that affect price, quality, quantity, delivery, or otherterms and conditions of the contract nor in any way direct thecontractor or its subcontractors to operate in conflict with thecontract terms and conditions;

(6) Shall be nominated either by the requiring activityor in accordance with agency procedures; and

(7) Shall be designated in writing, with copies furnishedto the contractor and the contract administration office—

(i) Specifying the extent of the COR’s authority toact on behalf of the contracting officer;

(ii) Identifying the limitations on the COR’s author-ity;

(iii) Specifying the period covered by the designa-tion;

(iv) Stating the authority is not redelegable; and(v) Stating that the COR may be personally liable for

unauthorized acts.

1.602-3 Ratification of unauthorized commitments.(a) Definitions.“Ratification,” as used in this subsection, means the act of

approving an unauthorized commitment by an official whohas the authority to do so.

“Unauthorized commitment,” as used in this subsection,means an agreement that is not binding solely because theGovernment representative who made it lacked the authorityto enter into that agreement on behalf of the Government.

(b) Policy.(1) Agencies should take positive action to pre-clude, to the maximum extent possible, the need for ratifica-tion actions. Although procedures are provided in this sectionfor use in those cases where the ratification of an unauthorizedcommitment is necessary, these procedures may not be usedin a manner that encourages such commitments being madeby Government personnel.

(2) Subject to the limitations in paragraph (c) of thissubsection, the head of the contracting activity, unless ahigher level official is designated by the agency, may ratify anunauthorized commitment.

FAC 2005–67 JULY 22, 2013


1.6-2

(3) The ratification authority in paragraph (b)(2) of thissubsection may be delegated in accordance with agency pro-cedures, but in no case shall the authority be delegated belowthe level of chief of the contracting office.

(4) Agencies should process unauthorized commit-ments using the ratification authority of this subsectioninstead of referring such actions to the Government Account-ability Office for resolution. (See 1.602-3(d).)

(5) Unauthorized commitments that would involveclaims subject to resolution under the Contract Disputes Actof 1978 should be processed in accordance with Subpart 33.2,Disputes and Appeals.

(c) Limitations. The authority in paragraph (b)(2) of thissubsection may be exercised only when—

(1) Supplies or services have been provided to andaccepted by the Government, or the Government otherwisehas obtained or will obtain a benefit resulting from perfor-mance of the unauthorized commitment;

(2) The ratifying official has the authority to enter intoa contractual commitment;

(3) The resulting contract would otherwise have beenproper if made by an appropriate contracting officer;

(4) The contracting officer reviewing the unauthorizedcommitment determines the price to be fair and reasonable;

(5) The contracting officer recommends payment andlegal counsel concurs in the recommendation, unless agencyprocedures expressly do not require such concurrence;

(6) Funds are available and were available at the timethe unauthorized commitment was made; and

(7) The ratification is in accordance with any other lim-itations prescribed under agency procedures.

(d) Nonratifiable commitments. Cases that are not ratifi-able under this subsection may be subject to resolution as rec-ommended by the Government Accountability Office underits claim procedure (GAO Policy and Procedures Manual forGuidance of Federal Agencies, Title 4, Chapter 2), or asauthorized by FAR Subpart 50.1. Legal advice should beobtained in these cases.

1.603 Selection, appointment, and termination of appointment for contracting officers.

1.603-1 General.Subsection 414(4) of Title 41, United States Code,

requires agency heads to establish and maintain a procure-ment career management program and a system for the selec-tion, appointment, and termination of appointment ofcontracting officers. Agency heads or their designees mayselect and appoint contracting officers and terminate theirappointments. These selections and appointments shall beconsistent with Office of Federal Procurement Policy’s(OFPP) standards for skill-based training in performing con-tracting and purchasing duties as published in OFPP Policy

Letter No. 05-01, Developing and Managing the AcquisitionWorkforce, April 15, 2005.

1.603-2 Selection.In selecting contracting officers, the appointing official

shall consider the complexity and dollar value of the acquisi-tions to be assigned and the candidate’s experience, training,education, business acumen, judgment, character, and reputa-tion. Examples of selection criteria include—

(a) Experience in Government contracting and administra-tion, commercial purchasing, or related fields;

(b) Education or special training in business administra-tion, law, accounting, engineering, or related fields;

(c) Knowledge of acquisition policies and procedures,including this and other applicable regulations;

(d) Specialized knowledge in the particular assigned fieldof contracting; and

(e) Satisfactory completion of acquisition training courses.

1.603-3 Appointment.(a) Contracting officers shall be appointed in writing on an

SF 1402, Certificate of Appointment, which shall state anylimitations on the scope of authority to be exercised, otherthan limitations contained in applicable law or regulation.Appointing officials shall maintain files containing copies ofall appointments that have not been terminated.

(b) Agency heads are encouraged to delegate micro-pur-chase authority to individuals who are employees of an exec-utive agency or members of the Armed Forces of the UnitedStates who will be using the supplies or services being pur-chased. Individuals delegated this authority are not required tobe appointed on an SF 1402, but shall be appointed in writingin accordance with agency procedures.

1.603-4 Termination.Termination of a contracting officer appointment will be

by letter, unless the Certificate of Appointment contains otherprovisions for automatic termination. Terminations may befor reasons such as reassignment, termination of employment,or unsatisfactory performance. No termination shall operateretroactively.

1.604 Contracting Officer’s Representative (COR).A contracting officer’s representative (COR) assists in the

technical monitoring or administration of a contract (see1.602-2(d)). The COR shall maintain a file for each assignedcontract. The file must include, at a minimum�

(a) A copy of the contracting officer’s letter of designationand other documents describing the COR’s duties and respon-sibilities;

(b) A copy of the contract administration functions dele-gated to a contract administration office which may not be del-egated to the COR (see 1.602-2(d)(4)); and

(c) Documentation of COR actions taken in accordancewith the delegation of authority.

(FAC 2005–67)

SUBPART 2.1—DEFINITIONS 2.101

2.1-3

(ii) An order placed against an indefinite quantitycontract under a—

(A) Federal Supply Schedule contract; or(B) Task-order contract or delivery-order con-

tract awarded by another agency (i.e., Governmentwideacquisition contract or multi-agency contract).

(4) This definition does not apply to a contract that willbe awarded and performed entirely outside of the UnitedStates.

“Business unit” means any segment of an organization, oran entire business organization that is not divided intosegments.

“Certified cost or pricing data” means “cost or pricingdata” that were required to be submitted in accordance withFAR 15.403-4 and 15.403-5 and have been certified, or isrequired to be certified, in accordance with 15.406-2. Thiscertification states that, to the best of the person’s knowledgeand belief, the cost or pricing data are accurate, complete, andcurrent as of a date certain before contract award. Cost or pric-ing data are required to be certified in certain procurements(10 U.S.C. 2306a and 41 U.S.C. 254b).

“Change-of-name agreement” means a legal instrumentexecuted by the contractor and the Government that recog-nizes the legal change of name of the contractor without dis-turbing the original contractual rights and obligations of theparties.

“Change order” means a written order, signed by the con-tracting officer, directing the contractor to make a change thatthe Changes clause authorizes the contracting officer to orderwithout the contractor’s consent.

“Chief Acquisition Officer” means an executive levelacquisition official responsible for agency performance ofacquisition activities and acquisition programs created pursu-ant to the Services Acquisition Reform Act of 2003, Section1421 of Public Law 108-136.

“Chief of mission” means the principal officer in charge ofa diplomatic mission of the United States or of a United Statesoffice abroad which is designated by the Secretary of State asdiplomatic in nature, including any individual assigned undersection 502(c) of the Foreign Service Act of 1980 (Public Law96-465) to be temporarily in charge of such a mission oroffice.

“Claim” means a written demand or written assertion byone of the contracting parties seeking, as a matter of right, thepayment of money in a sum certain, the adjustment or inter-pretation of contract terms, or other relief arising under orrelating to the contract. However, a written demand or writtenassertion by the contractor seeking the payment of moneyexceeding $100,000 is not a claim under the Contract Dis-putes Act of 1978 until certified as required by the Act. Avoucher, invoice, or other routine request for payment that isnot in dispute when submitted is not a claim. The submission

may be converted to a claim, by written notice to the contract-ing officer as provided in 33.206(a), if it is disputed either asto liability or amount or is not acted upon in a reasonable time.

“Classified acquisition” means an acquisition in which off-erors must have access to classified information to properlysubmit an offer or quotation, to understand the performancerequirements, or to perform the contract.

“Classified contract” means any contract in which the con-tractor or its employees must have access to classified infor-mation during contract performance. A contract may be aclassified contract even though the contract document itself isunclassified.

“Classified information” means any knowledge that can becommunicated or any documentary material, regardless of itsphysical form or characteristics, that—

(1)(i) Is owned by, is produced by or for, or is under thecontrol of the United States Government; or

(ii) Has been classified by the Department of Energyas privately generated restricted data following the proceduresin 10 CFR 1045.21; and

(2) Must be protected against unauthorized disclosureaccording to Executive Order 12958, Classified NationalSecurity Information, April 17, 1995, or classified in accor-dance with the Atomic Energy Act of 1954.

“Cognizant Federal agency” means the Federal agencythat, on behalf of all Federal agencies, is responsible for estab-lishing final indirect cost rates and forward pricing rates, ifapplicable, and administering cost accounting standards forall contracts in a business unit.

“Combatant commander” means the commander of a uni-fied or specified combatant command established in accor-dance with 10 U.S.C. 161.

“Commercial component” means any component that is acommercial item.

“Commercial computer software” means any computersoftware that is a commercial item.

“Commercial item” means—(1) Any item, other than real property, that is of a type

customarily used by the general public or by non-governmen-tal entities for purposes other than governmental purposes,and—

(i) Has been sold, leased, or licensed to the generalpublic; or

(ii) Has been offered for sale, lease, or license to thegeneral public;

(2) Any item that evolved from an item described inparagraph (1) of this definition through advances in technol-ogy or performance and that is not yet available in the com-mercial marketplace, but will be available in the commercialmarketplace in time to satisfy the delivery requirements undera Government solicitation;

(3) Any item that would satisfy a criterion expressed inparagraphs (1) or (2) of this definition, but for—

FAC 2005–67 JULY 22, 2013


2.1-4

(i) Modifications of a type customarily available inthe commercial marketplace; or

(ii) Minor modifications of a type not customarilyavailable in the commercial marketplace made to meet Fed-eral Government requirements. Minor modifications meansmodifications that do not significantly alter the nongovern-mental function or essential physical characteristics of an itemor component, or change the purpose of a process. Factors tobe considered in determining whether a modification is minorinclude the value and size of the modification and the com-parative value and size of the final product. Dollar values andpercentages may be used as guideposts, but are not conclusiveevidence that a modification is minor;

(4) Any combination of items meeting the requirementsof paragraphs (1), (2), (3), or (5) of this definition that are ofa type customarily combined and sold in combination to thegeneral public;

(5) Installation services, maintenance services, repairservices, training services, and other services if—

(i) Such services are procured for support of an itemreferred to in paragraph (1), (2), (3), or (4) of this definition,regardless of whether such services are provided by the samesource or at the same time as the item; and

(ii) The source of such services provides similar ser-vices contemporaneously to the general public under termsand conditions similar to those offered to the FederalGovernment;

(6) Services of a type offered and sold competitively insubstantial quantities in the commercial marketplace based onestablished catalog or market prices for specific tasks per-formed or specific outcomes to be achieved and under stan-dard commercial terms and conditions. For purposes of theseservices—

(i) “Catalog price” means a price included in a cata-log, price list, schedule, or other form that is regularly main-tained by the manufacturer or vendor, is either published orotherwise available for inspection by customers, and statesprices at which sales are currently, or were last, made to a sig-nificant number of buyers constituting the general public; and

(ii) “Market prices” means current prices that areestablished in the course of ordinary trade between buyers andsellers free to bargain and that can be substantiated throughcompetition or from sources independent of the offerors.

(7) Any item, combination of items, or service referredto in paragraphs (1) through (6) of this definition, notwith-standing the fact that the item, combination of items, or ser-vice is transferred between or among separate divisions,subsidiaries, or affiliates of a contractor; or

(8) A nondevelopmental item, if the procuring agencydetermines the item was developed exclusively at privateexpense and sold in substantial quantities, on a competitivebasis, to multiple State and local governments.

“Commercially available off-the-shelf (COTS)” item—

(1) Means any item of supply (including constructionmaterial) that is—

(i) A commercial item (as defined in paragraph (1) ofthe definition in this section);

(ii) Sold in substantial quantities in the commercialmarketplace; and

(iii) Offered to the Government, under a contract orsubcontract at any tier, without modification, in the same formin which it is sold in the commercial marketplace; and

(2) Does not include bulk cargo, as defined in section 3of the Shipping Act of 1984 (46 U.S.C. App. 1702), such asagricultural products and petroleum products.

“Common item” means material that is common to theapplicable Government contract and the contractor’s otherwork.

“Component” means any item supplied to the Governmentas part of an end item or of another component, except that foruse in—

(1) Part 25, see the definition in 25.003;(2) 52.225-1 and 52.225-3, see the definition in

52.225-1(a) and 52.225-3(a);(3) 52.225-9 and 52.225-11, see the definition in

52.225-9(a) and 52.225-11(a); and(4) 52.225-21 and 52.225-23, see the definition in

52.225-21(a) and 52.225-23(a).“Computer database” or “database” means a collection of

recorded information in a form capable of, and for the purposeof, being stored in, processed, and operated on by a computer.The term does not include computer software.

“Computer software” —(1) Means (i) Computer pro-grams that comprise a series of instructions, rules, routines, orstatements, regardless of the media in which recorded, thatallow or cause a computer to perform a specific operation orseries of operations; and

(ii) Recorded information comprising source codelistings, design details, algorithms, processes, flow charts,formulas, and related material that would enable the computerprogram to be produced, created, or compiled.

(2) Does not include computer databases or computersoftware documentation.

“Computer software documentation” means owner’s man-uals, user’s manuals, installation instructions, operatinginstructions, and other similar items, regardless of storagemedium, that explain the capabilities of the computer soft-ware or provide instructions for using the software.

“Consent to subcontract” means the contracting officer’swritten consent for the prime contractor to enter into a partic-ular subcontract.

“Construction” means construction, alteration, or repair(including dredging, excavating, and painting) of buildings,structures, or other real property. For purposes of thisdefinition, the terms “buildings, structures, or other realproperty” include, but are not limited to, improvements of all

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types, such as bridges, dams, plants, highways, parkways,streets, subways, tunnels, sewers, mains, power lines,cemeteries, pumping stations, railways, airport facilities,terminals, docks, piers, wharves, ways, lighthouses, buoys,jetties, breakwaters, levees, canals, and channels.Construction does not include the manufacture, production,furnishing, construction, alteration, repair, processing, orassembling of vessels, aircraft, or other kinds of personalproperty (except that for use in subpart 22.5, see the definitionat 22.502).

“Contiguous United States (CONUS)” means the48 contiguous States and the District of Columbia.

“Contingency operation” (10 U.S.C. 101(a)(13)) means amilitary operation that—

(1) Is designated by the Secretary of Defense as an oper-ation in which members of the armed forces are or maybecome involved in military actions, operations, or hostilitiesagainst an enemy of the United States or against an opposingmilitary force; or

(2) Results in the call or order to, or retention on, activeduty of members of the uniformed services undersections 688, 12301(a), 12302, 12304, 12304(a), 12305, or12406 of title 10 of the United States Code, Chapter 15 of title10 of the United States Code, or any other provision of lawduring a war or during a national emergency declared by thePresident or Congress.

“Continued portion of the contract” means the portion of acontract that the contractor must continue to perform follow-ing a partial termination.

“Contract” means a mutually binding legal relationshipobligating the seller to furnish the supplies or services (includ-ing construction) and the buyer to pay for them. It includes alltypes of commitments that obligate the Government to anexpenditure of appropriated funds and that, except as other-wise authorized, are in writing. In addition to bilateral instru-ments, contracts include (but are not limited to) awards andnotices of awards; job orders or task letters issued under basicordering agreements; letter contracts; orders, such as purchaseorders, under which the contract becomes effective by writtenacceptance or performance; and bilateral contract modifica-tions. Contracts do not include grants and cooperative agree-ments covered by 31 U.S.C. 6301, et seq. For discussion ofvarious types of contracts, see Part 16.

“Contract administration office” means an office that per-forms—

(1) Assigned postaward functions related to the admin-istration of contracts; and

(2) Assigned preaward functions.“Contract clause” or “clause” means a term or condition

used in contracts or in both solicitations and contracts, andapplying after contract award or both before and after award.

“Contract modification” means any written change in theterms of a contract (see 43.103).

“Contracting” means purchasing, renting, leasing, or oth-erwise obtaining supplies or services from nonfederalsources. Contracting includes description (but not determina-tion) of supplies and services required, selection and solicita-tion of sources, preparation and award of contracts, and allphases of contract administration. It does not include makinggrants or cooperative agreements.

“Contracting activity” means an element of an agency des-ignated by the agency head and delegated broad authorityregarding acquisition functions.

“Contracting office” means an office that awards or exe-cutes a contract for supplies or services and performs post-award functions not assigned to a contract administrationoffice (except for use in Part 48, see also 48.001).

“Contracting officer” means a person with the authority toenter into, administer, and/or terminate contracts and makerelated determinations and findings. The term includes certainauthorized representatives of the contracting officer actingwithin the limits of their authority as delegated by the con-tracting officer. “Administrative contracting officer (ACO)”refers to a contracting officer who is administering contracts.“Termination contracting officer (TCO)” refers to a contract-ing officer who is settling terminated contracts. A single con-tracting officer may be responsible for duties in any or all ofthese areas. Reference in this regulation (48 CFR Chapter 1)to administrative contracting officer or termination contract-ing officer does not—

(1) Require that a duty be performed at a particularoffice or activity; or

(2) Restrict in any way a contracting officer in the per-formance of any duty properly assigned.

“Contracting officer’s representative (COR)” means anindividual, including a contracting officer’s technical repre-sentative (COTR), designated and authorized in writing by thecontracting officer to perform specific technical or adminis-trative functions.

“Conviction” means a judgment or conviction of a criminaloffense by any court of competent jurisdiction, whetherentered upon a verdict or a plea, and includes a convictionentered upon a plea of nolo contendere. For use inSubpart 23.5, see the definition at 23.503.

“Cost or pricing data” (10 U.S.C. 2306a(h)(1) and41 U.S.C. 254b) means all facts that, as of the date of priceagreement, or, if applicable, an earlier date agreed uponbetween the parties that is as close as practicable to the dateof agreement on price, prudent buyers and sellers would rea-sonably expect to affect price negotiations significantly. Costor pricing data are factual, not judgmental; and are verifiable.While they do not indicate the accuracy of the prospectivecontractor’s judgment about estimated future costs or projec-tions, they do include the data forming the basis for that judg-ment. Cost or pricing data are more than historical accountingdata; they are all the facts that can be reasonably expected to

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contribute to the soundness of estimates of future costs and tothe validity of determinations of costs already incurred. Theyalso include, but are not limited to, such factors as—

(1) Vendor quotations;(2) Nonrecurring costs;(3) Information on changes in production methods and

in production or purchasing volume;(4) Data supporting projections of business prospects

and objectives and related operations costs;(5) Unit-cost trends such as those associated with labor

efficiency;(6) Make-or-buy decisions;(7) Estimated resources to attain business goals; and(8) Information on management decisions that could

have a significant bearing on costs.“Cost realism” means that the costs in an offeror’s

proposal—(1) Are realistic for the work to be performed;(2) Reflect a clear understanding of the requirements;

and(3) Are consistent with the various elements of the off-

eror’s technical proposal.“Cost sharing” means an explicit arrangement under which

the contractor bears some of the burden of reasonable, alloca-ble, and allowable contract cost.

“Customs territory of the United States” means the50 States, the District of Columbia, and Puerto Rico.

“Data other than certified cost or pricing data” means pric-ing data, cost data, and judgmental information necessary forthe contracting officer to determine a fair and reasonable priceor to determine cost realism. Such data may include the iden-tical types of data as certified cost or pricing data, consistentwith Table 15-2 of 15.408, but without the certification. Thedata may also include, for example, sales data and any infor-mation reasonably required to explain the offeror’s estimatingprocess, including, but not limited to–

(1) The judgmental factors applied and the mathematicalor other methods used in the estimate, including those used inprojecting from known data; and

(2) The nature and amount of any contingencies includedin the proposed price.

“Data Universal Numbering System (DUNS) number”means the 9-digit number assigned by Dun and Bradstreet,Inc. (D&B), to identify unique business entities, which is usedas the identification number for Federal contractors.

“Data Universal Numbering System +4 (DUNS+4) num-ber” means the DUNS number assigned by D&B plus a4-character suffix that may be assigned by a business concern.(D&B has no affiliation with this 4-character suffix.) This4-character suffix may be assigned at the discretion of thebusiness concern to establish additional System for AwardManagement records for identifying alternative Electronic

Funds Transfer (EFT) accounts (see Subpart 32.11) for thesame concern.

“Day” means, unless otherwise specified, a calendar day.“Debarment” means action taken by a debarring official

under 9.406 to exclude a contractor from Government con-tracting and Government-approved subcontracting for a rea-sonable, specified period; a contractor that is excluded is“debarred.”

“Delivery order” means an order for supplies placedagainst an established contract or with Government sources.

“Depreciation” means a charge to current operations thatdistributes the cost of a tangible capital asset, less estimatedresidual value, over the estimated useful life of the asset in asystematic and logical manner. It does not involve a processof valuation. Useful life refers to the prospective period ofeconomic usefulness in a particular contractor’s operations asdistinguished from physical life; it is evidenced by the actualor estimated retirement and replacement practice of thecontractor.

“Descriptive literature” means information provided by anofferor, such as cuts, illustrations, drawings, and brochures,that shows a product’s characteristics or construction of aproduct or explains its operation. The term includes only thatinformation needed to evaluate the acceptability of the prod-uct and excludes other information for operating or maintain-ing the product.

“Design-to-cost” means a concept that establishes cost ele-ments as management goals to achieve the best balancebetween life-cycle cost, acceptable performance, and sched-ule. Under this concept, cost is a design constraint during thedesign and development phases and a management disciplinethroughout the acquisition and operation of the system orequipment.

“Designated operational area” means a geographic areadesignated by the combatant commander or subordinate jointforce commander for the conduct or support of specified mil-itary operations.

“Direct cost” means any cost that is identified specificallywith a particular final cost objective. Direct costs are not lim-ited to items that are incorporated in the end product as mate-rial or labor. Costs identified specifically with a contract aredirect costs of that contract. All costs identified specificallywith other final cost objectives of the contractor are directcosts of those cost objectives.

“Direct acquisition” means a type of interagency acquisi-tion where a requesting agency places an order directlyagainst a servicing agency’s indefinite-delivery contract. Theservicing agency manages the indefinite-delivery contract butdoes not participate in the placement or administration of anorder.

“Disaster Response Registry” means a voluntary registryof contractors who are willing to perform debris removal, dis-tribution of supplies, reconstruction, and other disaster or

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emergency relief activities established in accordance with6 U.S.C. 796, Registry of Disaster Response Contractors.The Registry contains information on contractors who arewilling to perform disaster or emergency relief activitieswithin the United States and its outlying areas. The Registryis accessed via https://www.acquisition.gov and alternatelythrough the FEMA website at http://www.fema.gov/business/index.shtm. (See 26.205.)

“Drug-free workplace” means the site(s) for the perfor-mance of work done by the contractor in connection with aspecific contract where employees of the contractor are pro-hibited from engaging in the unlawful manufacture, distribu-tion, dispensing, possession, or use of a controlled substance.

“Earned value management system” means a project man-agement tool that effectively integrates the project scope ofwork with cost, schedule and performance elements for opti-mum project planning and control. The qualities and operat-ing characteristics of an earned value management system aredescribed in American National Standards Institute /Electron-ics Industries Alliance (ANSI/EIA) Standard-748, EarnedValue Management Systems. (See OMB Circular A-11,Part 7.)

“Economically disadvantaged women-owned small busi-ness (EDWOSB) concern”—(see definition of “Women-Owned Small Business (WOSB) Program” in this section).

“Effective date of termination” means the date on whichthe notice of termination requires the contractor to stop per-formance under the contract. If the contractor receives the ter-mination notice after the date fixed for termination, then theeffective date of termination means the date the contractorreceives the notice.

“Electronic and information technology (EIT)” has thesame meaning as “information technology” except EIT alsoincludes any equipment or interconnected system or sub-system of equipment that is used in the creation, conversion,or duplication of data or information. The term EIT, includes,but is not limited to, telecommunication products (such astelephones), information kiosks and transaction machines,worldwide websites, multimedia, and office equipment (suchas copiers and fax machines).

“Electronic commerce” means electronic techniques foraccomplishing business transactions including electronic mailor messaging, World Wide Web technology, electronic bulle-tin boards, purchase cards, electronic funds transfer, and elec-tronic data interchange.

“Electronic data interchange (EDI)” means a technique forelectronically transferring and storing formatted informationbetween computers utilizing established and published for-mats and codes, as authorized by the applicable Federal Infor-mation Processing Standards.

“Electronic Funds Transfer (EFT)” means any transfer offunds, other than a transaction originated by cash, check, orsimilar paper instrument, that is initiated through an electronic

terminal, telephone, computer, or magnetic tape, for the pur-pose of ordering, instructing, or authorizing a financial insti-tution to debit or credit an account. The term includesAutomated Clearing House transfers, Fedwire transfers, andtransfers made at automatic teller machines and point-of-saleterminals. For purposes of compliance with 31 U.S.C. 3332and implementing regulations at 31 CFR Part 208, the term“electronic funds transfer” includes a Governmentwide com-mercial purchase card transaction.

“End product” means supplies delivered under a line itemof a Government contract, except for use in Part 25 and theassociated clauses at 52.225-1, 52.225-3, and 52.225-5, seethe definitions in 25.003, 52.225-1(a), 52.225-3(a), and52.225-5(a).

“Energy-efficient product”— (1) Means a product that—(i) Meets Department of Energy and Environmental

Protection Agency criteria for use of the Energy Star trade-mark label; or

(ii) Is in the upper 25 percent of efficiency for allsimilar products as designated by the Department of Energy’sFederal Energy Management Program.

(2) As used in this definition, the term “product” doesnot include any energy-consuming product or systemdesigned or procured for combat or combat-related missions(42 U.S.C. 8259b).

“Energy-efficient standby power devices” means productsthat use—

(1) External standby power devices, or that contain aninternal standby power function; and

(2) No more than one watt of electricity in their standbypower consuming mode or meet recommended low standbylevels as designated by the Department of Energy FederalEnergy Management Program.

“Energy-savings performance contract” means a contractthat requires the contractor to—

(1) Perform services for the design, acquisition, financ-ing, installation, testing, operation, and where appropriate,maintenance and repair, of an identified energy conservationmeasure or series of measures at one or more locations;

(2) Incur the costs of implementing the energy savingsmeasures, including at least the cost (if any) incurred in mak-ing energy audits, acquiring and installing equipment, andtraining personnel in exchange for a predetermined share ofthe value of the energy savings directly resulting from imple-mentation of such measures during the term of the contract;and

(3) Guarantee future energy and cost savings to theGovernment.

“Environmentally preferable” means products or servicesthat have a lesser or reduced effect on human health and theenvironment when compared with competing products or ser-vices that serve the same purpose. This comparison may con-sider raw materials acquisition, production, manufacturing,

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packaging, distribution, reuse, operation, maintenance, or dis-posal of the product or service.

“Excess personal property” means any personal propertyunder the control of a Federal agency that the agency headdetermines is not required for its needs or for the discharge ofits responsibilities.

“Executive agency” means an executive department, a mil-itary department, or any independent establishment within themeaning of 5 U.S.C. 101, 102, and 104(1), respectively, andany wholly owned Government corporation within the mean-ing of 31 U.S.C. 9101.

“Facilities capital cost of money” means “cost of money asan element of the cost of facilities capital” as used at48 CFR 9904.414—Cost Accounting Standard—Cost ofMoney as an Element of the Cost of Facilities Capital.

“Facsimile” means electronic equipment that communi-cates and reproduces both printed and handwritten material. Ifused in conjunction with a reference to a document;e.g., facsimile bid, the terms refers to a document (in theexample given, a bid) that has been transmitted to andreceived by the Government via facsimile.

“Federal agency” means any executive agency or any inde-pendent establishment in the legislative or judicial branch ofthe Government (except the Senate, the House of Represen-tatives, the Architect of the Capitol, and any activities underthe Architect’s direction).

“Federally-controlled facilities” means—(1) Federally-owned buildings or leased space, whether

for single or multi-tenant occupancy, and its grounds andapproaches, all or any portion of which is under the jurisdic-tion, custody or control of a department or agency;

(2) Federally-controlled commercial space shared withnon-government tenants. For example, if a department oragency leased the 10th floor of a commercial building, theDirective applies to the 10th floor only;

(3) Government-owned, contractor-operated facilities,including laboratories engaged in national defense researchand production activities; and

(4) Facilities under a management and operating con-tract, such as for the operation, maintenance, or support of aGovernment-owned or Government-controlled research,development, special production, or testing establishment.

“Federally-controlled information system” means aninformation system (44 U.S.C. 3502(8) used or operated by aFederal agency, or a contractor or other organization on behalfof the agency (44 U.S.C. 3544(a)(1)(A)).

“Federally Funded Research and Development Centers(FFRDC’s)” means activities that are sponsored under a broadcharter by a Government agency (or agencies) for the purposeof performing, analyzing, integrating, supporting, and/ormanaging basic or applied research and/or development, and

that receive 70 percent or more of their financial support fromthe Government; and—

(1) A long-term relationship is contemplated;(2) Most or all of the facilities are owned or funded by

the Government; and(3) The FFRDC has access to Government and supplier

data, employees, and facilities beyond that common in a nor-mal contractual relationship.

“Final indirect cost rate” means the indirect cost rate estab-lished and agreed upon by the Government and the contractoras not subject to change. It is usually established after the closeof the contractor’s fiscal year (unless the parties decide upona different period) to which it applies. For cost-reimbursementresearch and development contracts with educational institu-tions, it may be predetermined; that is, established for a futureperiod on the basis of cost experience with similar contracts,together with supporting data.

“First article” means a preproduction model, initial pro-duction sample, test sample, first lot, pilot lot, or pilot models.

“First article testing” means testing and evaluating the firstarticle for conformance with specified contract requirementsbefore or in the initial stage of production.

“F.o.b.” means free on board. This term is used in conjunc-tion with a physical point to determine—

(1) The responsibility and basis for payment of freightcharges; and

(2) Unless otherwise agreed, the point where title forgoods passes to the buyer or consignee.

“F.o.b. destination” means free on board at destination;i.e., the seller or consignor delivers the goods on seller’s orconsignor’s conveyance at destination. Unless the contractprovides otherwise, the seller or consignor is responsible forthe cost of shipping and risk of loss. For use in the clause at52.247-34, see the definition at 52.247-34(a).

“F.o.b. origin” means free on board at origin; i.e., the selleror consignor places the goods on the conveyance. Unless thecontract provides otherwise, the buyer or consignee is respon-sible for the cost of shipping and risk of loss. For use in theclause at 52.247-29, see the definition at 52.247-29(a).

“F.o.b.”…(For other types of F.o.b., see 47.303).“Forward pricing rate agreement” means a written agree-

ment negotiated between a contractor and the Government tomake certain rates available during a specified period for usein pricing contracts or modifications. These rates representreasonable projections of specific costs that are not easily esti-mated for, identified with, or generated by a specific contract,contract end item, or task. These projections may include ratesfor such things as labor, indirect costs, material obsolescenceand usage, spare parts provisioning, and material handling.

“Forward pricing rate recommendation” means a rate setunilaterally by the administrative contracting officer for useby the Government in negotiations or other contract actionswhen forward pricing rate agreement negotiations have not

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2.1-8.1

been completed or when the contractor will not agree to a for-ward pricing rate agreement.

“Freight” means supplies, goods, and transportableproperty.

“Full and open competition,” when used with respect to acontract action, means that all responsible sources are permit-ted to compete.

“General and administrative (G&A) expense” means anymanagement, financial, and other expense which is incurredby or allocated to a business unit and which is for the generalmanagement and administration of the business unit as awhole. G&A expense does not include those managementexpenses whose beneficial or causal relationship to costobjectives can be more directly measured by a base other thana cost input base representing the total activity of a businessunit during a cost accounting period.

“Governmentwide acquisition contract (GWAC)” means atask-order or delivery-order contract for information technol-ogy established by one agency for Governmentwide use thatis operated—

(1) By an executive agent designated by the Office ofManagement and Budget pursuant to 40 U.S.C. 11302(e); or

(2) Under a delegation of procurement authority issuedby the General Services Administration (GSA) prior toAugust 7, 1996, under authority granted GSA by former sec-tion 40 U.S.C. 759, repealed by Pub. L. 104-106. The Econ-omy Act does not apply to orders under a Governmentwideacquisition contract.

“Governmentwide point of entry (GPE)” means the singlepoint where Government business opportunities greater than$25,000, including synopses of proposed contract actions,solicitations, and associated information, can be accessedelectronically by the public. The GPE is located at http://www.fedbizopps.gov.

“Head of the agency” (see “agency head”).“Head of the contracting activity” means the official who

has overall responsibility for managing the contractingactivity.

“Historically black college or university” means an insti-tution determined by the Secretary of Education to meet therequirements of 34 CFR 608.2. For the Department ofDefense, the National Aeronautics and Space Administration,and the Coast Guard, the term also includes any nonprofitresearch institution that was an integral part of such a collegeor university before November 14, 1986.

“HUBZone” means a historically underutilized businesszone that is an area located within one or more qualified cen-sus tracts, qualified nonmetropolitan counties, lands withinthe external boundaries of an Indian reservation, qualifiedbase closure areas, or redesignated areas, as defined in 13 CFR126.103.

“HUBZone contract” means a contract awarded to a“HUBZone small business” concern through any of the fol-lowing procurement methods:

(1) A sole source award to a HUBZone small businessconcern.

(2) Set-aside awards based on competition restricted toHUBZone small business concerns.

(3) Awards to HUBZone small business concernsthrough full and open competition after a price evaluationpreference in favor of HUBZone small business concerns.

“HUBZone small business concern” means a small busi-ness concern that appears on the List of Qualified HUBZoneSmall Business Concerns maintained by the Small BusinessAdministration (13 CFR 126.103).

“Humanitarian or peacekeeping operation” means a mili-tary operation in support of the provision of humanitarian orforeign disaster assistance or in support of a peacekeepingoperation under Chapter VI or VII of the Charter of the UnitedNations. The term does not include routine training, forcer o t a t i o n , o r s t a t i o n i n g ( 1 0 U . S . C . 2 3 0 2 ( 8 ) a n d41 U.S.C. 259(d)).

“In writing,” “writing,” or “written” means any worded ornumbered expression that can be read, reproduced, and latercommunicated, and includes electronically transmitted andstored information.

“Indirect cost” means any cost not directly identified witha single final cost objective, but identified with two or morefinal cost objectives or with at least one intermediate costobjective.

“Indirect cost rate” means the percentage or dollar factorthat expresses the ratio of indirect expense incurred in a givenperiod to direct labor cost, manufacturing cost, or anotherappropriate base for the same period (see also “final indirectcost rate”).

“Ineligible” means excluded from Government contract-ing (and subcontracting, if appropriate) pursuant to statutory,Executive order, or regulatory authority other than this regu-lation (48 CFR Chapter 1) and its implementing and supple-menting regulations; for example, pursuant to the Davis-Bacon Act and its related statutes and implementing regula-tions, the Service Contract Act, the Equal EmploymentOpportunity Acts and Executive orders, the Walsh-HealeyPublic Contracts Act, the Buy American Act, or the Environ-mental Protection Acts and Executive orders.

“Information security” means protecting information andinformation systems from unauthorized access, use, disclo-sure, disruption, modification, or destruction in order to pro-vide—

(1) Integrity, which means guarding against improperinformation modification or destruction, and includes ensur-ing information nonrepudiation and authenticity;

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(2) Confidentiality, which means preserving authorizedrestrictions on access and disclosure, including means for pro-tecting personal privacy and proprietary information; and

(3) Availability, which means ensuring timely and reli-able access to, and use of, information.

“Information technology” means any equipment, or inter-connected system(s) or subsystem(s) of equipment, that isused in the automatic acquisition, storage, analysis, evalua-tion, manipulation, management, movement, control, display,switching, interchange, transmission, or reception of data orinformation by the agency.

(1) For purposes of this definition, equipment is used byan agency if the equipment is used by the agency directly oris used by a contractor under a contract with the agency thatrequires—

(i) Its use; or(ii) To a significant extent, its use in the performance

of a service or the furnishing of a product.(2) The term “information technology” includes com-

puters, ancillary equipment (including imaging peripherals,input, output, and storage devices necessary for security andsurveillance), peripheral equipment designed to be controlledby the central processing unit of a computer, software, firm-ware and similar procedures, services (including support ser-vices), and related resources.

(3) The term “information technology” does not includeany equipment that—

(i) Is acquired by a contractor incidental to a con-tract; or

(ii) Contains imbedded information technology thatis used as an integral part of the product, but the principal

function of which is not the acquisition, storage, analysis,evaluation, manipulation, management, movement, control,display, switching, interchange, transmission, or reception ofdata or information. For example, HVAC (heating, ventila-tion, and air conditioning) equipment, such as thermostats ortemperature control devices, and medical equipment whereinformation technology is integral to its operation, are notinformation technology.

“Inherently governmental function” means, as a matter ofpolicy, a function that is so intimately related to the publicinterest as to mandate performance by Government employ-ees. This definition is a policy determination, not a legal deter-mination. An inherently governmental function includesactivities that require either the exercise of discretion in apply-ing Government authority, or the making of value judgmentsin making decisions for the Government. Governmental func-tions normally fall into two categories: the act of governing,i.e., the discretionary exercise of Government authority, andmonetary transactions and entitlements.

(1) An inherently governmental function involves,among other things, the interpretation and execution of thelaws of the United States so as to—

(i) Bind the United States to take or not to take someaction by contract, policy, regulation, authorization, order, orotherwise;

(ii) Determine, protect, and advance United Stateseconomic, political, territorial, property, or other interests bymilitary or diplomatic action, civil or criminal judicial pro-ceedings, contract management, or otherwise;

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(iii) Significantly affect the life, liberty, or propertyof private persons;

(iv) Commission, appoint, direct, or control officersor employees of the United States; or

(v) Exert ultimate control over the acquisition, use,or disposition of the property, real or personal, tangible orintangible, of the United States, including the collection, con-trol, or disbursement of Federal funds.

(2) Inherently governmental functions do not normallyinclude gathering information for or providing advice, opin-ions, recommendations, or ideas to Government officials.They also do not include functions that are primarily ministe-rial and internal in nature, such as building security, mail oper-ations, operation of cafeterias, housekeeping, facilitiesoperations and maintenance, warehouse operations, motorvehicle fleet management operations, or other routine electri-cal or mechanical services.

“Inspection” means examining and testing supplies or ser-vices (including, when appropriate, raw materials, compo-nents, and intermediate assemblies) to determine whetherthey conform to contract requirements.

“Insurance” means a contract that provides that for a stip-ulated consideration, one party undertakes to indemnifyanother against loss, damage, or liability arising from anunknown or contingent event.

“Interagency acquisition” means a procedure by which anagency needing supplies or services (the requesting agency)obtains them from another agency (the servicing agency), byan assisted acquisition or a direct acquisition. The termincludes—

(1) Acquisitions under the Economy Act (31 U.S.C. 1535);and

(2) Non-Economy Act acquisitions completed under otherstatutory authorities, (e.g., General Services AdministrationFederal Supply Schedules in subpart 8.4 and Government-wide acquisition contracts (GWACs)).

“Invoice” means a contractor’s bill or written request forpayment under the contract for supplies delivered or servicesperformed (see also “proper invoice”).

“Irrevocable letter of credit” means a written commitmentby a federally insured financial institution to pay all or part ofa stated amount of money, until the expiration date of the let-ter, upon the Government’s (the beneficiary) presentation ofa written demand for payment. Neither the financial institu-tion nor the offeror/contractor can revoke or condition the let-ter of credit.

“Labor surplus area” means a geographical area identifiedby the Department of Labor in accordance with20 CFR Part 654, Subpart A, as an area of concentratedunemployment or underemployment or an area of laborsurplus.

“Labor surplus area concern” means a concern thattogether with its first-tier subcontractors will perform sub-

stantially in labor surplus areas. Performance is substantiallyin labor surplus areas if the costs incurred under the contracton account of manufacturing, production, or performance ofappropriate services in labor surplus areas exceed 50 percentof the contract price.

“Latent defect” means a defect that exists at the time ofacceptance but cannot be discovered by a reasonableinspection.

“Major system” means that combination of elements thatwill function together to produce the capabilities required tofulfill a mission need. The elements may include hardware,equipment, software, or any combination thereof, but excludeconstruction or other improvements to real property. A systemis a major system if—

(1) The Department of Defense is responsible for thesystem and the total expenditures for research, development,test, and evaluation for the system are estimated to be morethan $189.5 million or the eventual total expenditure for theacquisition exceeds $890 million;

(2) A civilian agency is responsible for the system andtotal expenditures for the system are estimated to exceed $2million or the dollar threshold for a “major system” estab-lished by the agency pursuant to Office of Management andBudget Circular A-109, entitled “Major System Acquisi-tions,” whichever is greater; or

(3) The system is designated a “major system” by thehead of the agency responsible for the system(10 U.S.C. 2302 and 41 U.S.C. 403).

“Make-or-buy program” means that part of a contractor’swritten plan for a contract identifying those major items to beproduced or work efforts to be performed in the prime con-tractor’s facilities and those to be subcontracted.

“Market research” means collecting and analyzing infor-mation about capabilities within the market to satisfy agencyneeds.

“Master solicitation” means a document containing specialclauses and provisions that have been identified as essentialfor the acquisition of a specific type of supply or service thatis acquired repetitively.

“May” denotes the permissive. However, the words “noperson may…” mean that no person is required, authorized, orpermitted to do the act described.

“Micro-purchase” means an acquisition of supplies or ser-vices using simplified acquisition procedures, the aggregateamount of which does not exceed the micro-purchasethreshold.

“Micro-purchase threshold” means $3,000, except itmeans—

(1) For acquisitions of construction subject to theDavis-Bacon Act, $2,000;

(2) For acquisitions of services subject to the ServiceContract Act, $2,500; and

(FAC 2005–67)


2.1-10

(3) For acquisitions of supplies or services that, as deter-mined by the head of the agency, are to be used to support acontingency operation or to facilitate defense against orrecovery from nuclear, biological, chemical, or radiologicalattack, as described in 13.201(g)(1), except for constructionsubject to the Davis-Bacon Act (41 U.S.C. 428a)—

(i) $15,000 in the case of any contract to be awardedand performed, or purchase to be made, inside the UnitedStates; and

(ii) $30,000 in the case of any contract to be awardedand performed, or purchase to be made, outside the UnitedStates.

“Minority Institution” means an institution of higher edu-cation meeting the requirements of Section 365(3) of theHigher Education Act of 1965 (20 U.S.C. 1067k), including aHispanic-serving institution of higher education, as defined inSection 502(a) of the Act (20 U.S.C. 1101a).

“Multi-agency contract (MAC)” means a task-order ordelivery-order contract established by one agency for use byGovernment agencies to obtain supplies and services, consis-tent with the Economy Act (see 17.502-2). Multi-agency con-tracts include contracts for information technologyestablished pursuant to 40 U.S.C. 11314(a)(2).

“Must” (see “shall”).“National defense” means any activity related to programs

for military or atomic energy production or construction, mil-itary assistance to any foreign nation, stockpiling, or space,except that for use in Subpart 11.6, see the definition in11.601.

“Neutral person” means an impartial third party, whoserves as a mediator, fact finder, or arbitrator, or otherwisefunctions to assist the parties to resolve the issues in contro-versy. A neutral person may be a permanent or temporaryofficer or employee of the Federal Government or any otherindividual who is acceptable to the parties. A neutral personmust have no official, financial, or personal conflict of interestwith respect to the issues in controversy, unless the interest isfully disclosed in writing to all parties and all parties agree thatthe neutral person may serve (5 U.S.C. 583).

“Nondevelopmental item” means—(1) Any previously developed item of supply used

exclusively for governmental purposes by a Federal agency,a State or local government, or a foreign government withwhich the United States has a mutual defense cooperationagreement;

(2) Any item described in paragraph (1) of this defini-tion that requires only minor modification or modifications ofa type customarily available in the commercial marketplace inorder to meet the requirements of the procuring department oragency; or

(3) Any item of supply being produced that does notmeet the requirements of paragraphs (1) or (2) solely becausethe item is not yet in use.

“Novation agreement” means a legal instrument—

(1) Executed by the—(i) Contractor (transferor);(ii) Successor in interest (transferee); and(iii) Government; and

(2) By which, among other things, the transferor guar-antees performance of the contract, the transferee assumes allobligations under the contract, and the Government recog-nizes the transfer of the contract and related assets.

“Offer” means a response to a solicitation that, if accepted,would bind the offeror to perform the resultant contract.Responses to invitations for bids (sealed bidding) are offerscalled “bids” or “sealed bids”; responses to requests for pro-posals (negotiation) are offers called “proposals”; however,responses to requests for quotations (simplified acquisition)are “quotations,” not offers. For unsolicited proposals, seeSubpart 15.6.

“Offeror” means offeror or bidder.“Office of Small and Disadvantaged Business Utilization”

means the Office of Small Business Programs when referringto the Department of Defense.

“Option” means a unilateral right in a contract by which,for a specified time, the Government may elect to purchaseadditional supplies or services called for by the contract, ormay elect to extend the term of the contract.

“Organizational conflict of interest” means that because ofother activities or relationships with other persons, a person isunable or potentially unable to render impartial assistance oradvice to the Government, or the person’s objectivity in per-forming the contract work is or might be otherwise impaired,or a person has an unfair competitive advantage.

“Outlying areas” means—(1) Commonwealths.(i) Puerto Rico.

(ii) The Northern Mariana Islands;(2) Territories.(i) American Samoa.

(ii) Guam.(iii) U.S. Virgin Islands; and

(3) Minor outlying islands.(i) Baker Island.(ii) Howland Island.(iii) Jarvis Island.(iv) Johnston Atoll.(v) Kingman Reef.(vi) Midway Islands.(vii) Navassa Island.(viii) Palmyra Atoll.(ix) Wake Atoll.

“Overtime” means time worked by a contractor’semployee in excess of the employee’s normal workweek.

“Overtime premium” means the difference between thecontractor’s regular rate of pay to an employee for the shiftinvolved and the higher rate paid for overtime. It does notinclude shift premium, i.e., the difference between the con-tractor's regular rate of pay to an employee and the higher ratepaid for extra-pay-shift work.

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“Ozone-depleting substance” means any substance theEnvironmental Protection Agency designates in40 CFR Part 82 as—

(1) Class I, including, but not limited to, chlorofluoro-carbons, halons, carbon tetrachloride, and methyl chloroform;or

(2) Class II, including, but not limited to,hydrochlorofluorocarbons.

“Partial termination” means the termination of a part, butnot all, of the work that has not been completed and acceptedunder a contract.

“Past performance” means an offeror’s or contractor’s per-formance on active and physically completed contracts (see4.804-4).

“Performance-based acquisition (PBA)” means an acqui-sition structured around the results to be achieved as opposedto the manner by which the work is to be performed.

“Performance Work Statement (PWS)” means a statementof work for performance-based acquisitions that describes therequired results in clear, specific and objective terms withmeasurable outcomes.

“Personal property” means property of any kind or interestin it except real property, records of the Federal Government,and naval vessels of the following categories:

(1) Battleships;(2) Cruisers;(3) Aircraft carriers;(4) Destroyers; and(5) Submarines.

“Personal services contract” means a contract that, by itsexpress terms or as administered, makes the contractor per-sonnel appear to be, in effect, Government employees (see37.104).

“Plant clearance officer” means an authorized representa-tive of the contracting officer, appointed in accordance withagency procedures, responsible for screening, redistributing,and disposing of contractor inventory from a contractor’splant or work site. The term “Contractor’s plant” includes, butis not limited to, Government-owned contractor-operatedplants, Federal installations, and Federal and non-Federalindustrial operations, as may be required under the scope ofthe contract.

“Pollution prevention” means any practice that—(1)(i) Reduces the amount of any hazardous substance,

pollutant, or contaminant entering any waste stream or other-wise released into the environment (including fugitive emis-sions) prior to recycling, treatment, or disposal; and

(ii) Reduces the hazards to public health and theenvironment associated with the release of such substances,pollutants, and contaminants;

(2) Reduces or eliminates the creation of pollutantsthrough increased efficiency in the use of raw materials,energy, water, or other resources; or

(3) Protects natural resources by conservation.

“Power of attorney” means the authority given one personor corporation to act for and obligate another, as specified inthe instrument creating the power; in corporate suretyship, aninstrument under seal that appoints an attorney-in-fact to actin behalf of a surety company in signing bonds (see also“attorney-in-fact” at 28.001).

“Preaward survey” means an evaluation of a prospectivecontractor’s capability to perform a proposed contract.

“Preponderance of the evidence” means proof by informa-tion that, compared with that opposing it, leads to the conclu-sion that the fact at issue is more probably true than not.

“Pricing” means the process of establishing a reasonableamount or amounts to be paid for supplies or services.

“Principal” means an officer, director, owner, partner, or aperson having primary management or supervisory responsi-bilities within a business entity (e.g., general manager; plantmanager; head of a division or business segment; and similarpositions).

“Procurement” (see “acquisition”).“Procuring activity” means a component of an executive

agency having a significant acquisition function and desig-nated as such by the head of the agency. Unless agency regu-lations specify otherwise, the term “procuring activity” issynonymous with “contracting activity.”

“Projected average loss” means the estimated long-termaverage loss per period for periods of comparable exposure torisk of loss.

“Proper invoice” means an invoice that meets the mini-mum standards specified in 32.905(b).

“Purchase order,” when issued by the Government, meansan offer by the Government to buy supplies or services,including construction and research and development, uponspecified terms and conditions, using simplified acquisitionprocedures.

“Qualification requirement” means a Government require-ment for testing or other quality assurance demonstration thatmust be completed before award of a contract.

“Qualified products list (QPL)” means a list of productsthat have been examined, tested, and have satisfied all appli-cable qualification requirements.

“Receiving report” means written evidence that indicatesGovernment acceptance of supplies delivered or services per-formed (see Subpart 46.6). Receiving reports must meet therequirements of 32.905(c).

“Recovered material” means waste materials and by-prod-ucts recovered or diverted from solid waste, but the term doesnot include those materials and by-products generated from,and commonly reused within, an original manufacturing pro-cess. For use in Subpart 11.3 for paper and paper products, seethe definition at 11.301.

“Registered in the System for Award Management (SAM)database” means that—

(1) The Contractor has entered all mandatory informa-tion, including the DUNS number or the DUNS+4 number,

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2.1-12

the Contractor and Government Entity (CAGE) code, as wellas data required by the Federal Funding Accountability andTransparency Act of 2006 (see subpart 4.14), into the SAMdatabase;

(2) The Contractor has completed the Core, Assertions,Representations and Certifications, and Points of Contact sec-tions of the registration in the SAM database;

(3) The Government has validated all mandatory datafields, to include validation of the Taxpayer IdentificationNumber (TIN) with the Internal Revenue Service (IRS). Thecontractor will be required to provide consent for TIN valida-tion to the Government as a part of the SAM registration pro-cess; and

(4) The Government has marked the record Active.“Renewable energy” means energy produced by solar,

wind, geothermal, biomass, landfill gas, ocean (includingtidal, wave, current, and thermal), municipal solid waste, ornew hydroelectric generation capacity achieved fromincreased efficiency or additions of new capacity at an exist-ing hydroelectric project (Energy Policy Act of 2005, 42U.S.C. 15852).

“Renewable energy technology” means—(1) Technologies that use renewable energy to provide

light, heat, cooling, or mechanical or electrical energy for usein facilities or other activities; or

(2) The use of integrated whole-building designs thatrely upon renewable energy resources, including passive solardesign.

“Requesting agency” means the agency that has therequirement for an interagency acquisition.

“Residual value” means the proceeds, less removal anddisposal costs, if any, realized upon disposition of a tangiblecapital asset. It usually is measured by the net proceeds fromthe sale or other disposition of the asset, or its fair value if theasset is traded in on another asset. The estimated residualvalue is a current forecast of the residual value.

“Responsible audit agency” means the agency that isresponsible for performing all required contract audit servicesat a business unit.

“Responsible prospective contractor” means a contractorthat meets the standards in 9.104.

(3) “Scrap” means personal property that has no value except

its basic metallic, mineral, or organic content.“Segment” means one of two or more divisions, product

departments, plants, or other subdivisions of an organizationreporting directly to a home office, usually identified withresponsibility for profit and/or producing a product or service.The term includes—

(1) Government-owned contractor-operated (GOCO)facilities; and

(2) Joint ventures and subsidiaries (domestic and for-eign) in which the organization has—

(i) A majority ownership; or

(ii) Less than a majority ownership, but over whichit exercises control.

“Self-insurance” means the assumption or retention of therisk of loss by the contractor, whether voluntarily or involun-tarily. Self-insurance includes the deductible portion of pur-chased insurance.

“Senior procurement executive” means the individualappointed pursuant to section 16(3) of the Office of FederalProcurement Policy Act (41 U.S.C. 414(3)) who is responsi-ble for management direction of the acquisition system of theexecutive agency, including implementation of the uniqueacquisition policies, regulations, and standards of the execu-tive agency.

“Service-disabled veteran-owned small businessconcern”—

(1) Means a small business concern—(i) Not less than 51 percent of which is owned by one

or more service-disabled veterans or, in the case of any pub-licly owned business, not less than 51 percent of the stock ofwhich is owned by one or more service-disabled veterans; and

(ii) The management and daily business operationsof which are controlled by one or more service-disabled vet-erans or, in the case of a service-disabled veteran with perma-nent and severe disability, the spouse or permanent caregiverof such veteran.

(2) Service-disabled veteran means a veteran, asdefined in 38 U.S.C. 101(2), with a disability that is service-connected, as defined in 38 U.S.C. 101(16).

“Servicing agency” means the agency that will conduct anassisted acquisition on behalf of the requesting agency.

“Shall” means the imperative.“Shipment” means freight transported or to be transported.“Shop drawings” means drawings submitted by the con-

struction contractor or a subcontractor at any tier or requiredunder a construction contract, showing in detail either or bothof the following:

(1) The proposed fabrication and assembly of structuralelements.

(2) The installation (i.e., form, fit, and attachmentdetails) of materials or equipment.

“Should” means an expected course of action or policy thatis to be followed unless inappropriate for a particularcircumstance.

“Signature” or “signed” means the discrete, verifiablesymbol of an individual that, when affixed to a writing withthe knowledge and consent of the individual, indicates apresent intention to authenticate the writing. This includeselectronic symbols.

“Simplified acquisition procedures” means the methodsprescribed in Part 13 for making purchases of supplies orservices.

“Simplified acquisition threshold” means $150,000,except for acquisitions of supplies or services that, as deter-mined by the head of the agency, are to be used to support acontingency operation or to facilitate defense against or

FAC 2005–67 JULY 22, 2013

(FAC 2005-67)


2.1-13

recovery from nuclear, biological, chemical, or radiologicalattack (41 U.S.C. 428a), the term means—

(1) $300,000 for any contract to be awarded and per-formed, or purchase to be made, inside the United States; and

(2) $1 million for any contract to be awarded and per-formed, or purchase to be made, outside the United States.

“Single, Governmentwide point of entry,” means the onepoint of entry to be designated by the Administrator of OFPPthat will allow the private sector to electronically access pro-curement opportunities Governmentwide.

“Small business concern” means a concern, including itsaffiliates, that is independently owned and operated, not dom-inant in the field of operation in which it is bidding on Gov-ernment contracts, and qualified as a small business under thecriteria and size standards in 13 CFR part 121 (see 19.102).Such a concern is “not dominant in its field of operation”when it does not exercise a controlling or major influence ona national basis in a kind of business activity in which a num-ber of business concerns are primarily engaged. In determin-ing whether dominance exists, consideration must be given toall appropriate factors, including volume of business, numberof employees, financial resources, competitive status or posi-tion, ownership or control of materials, processes, patents,license agreements, facilities, sales territory, and nature ofbusiness activity. (See 15 U.S.C. 632.)

“Small business subcontractor” means a concern, includ-ing affiliates, that for subcontracts valued at—

(1) $10,000 or less, does not have more than500 employees; and

(2) More than $10,000, does not have employees oraverage annual receipts exceeding the size standard in13 CFR Part 121 (see 19.102) for the product or service it isproviding on the subcontract.

“Small disadvantaged business concern” (except for52.212-3(c)(4) and 52.219-1(b)(2) for general statistical pur-poses and 52.212-3(c)(9)(ii), 52.219-22(b)(2),52.219-22(b)(1)(C), and 52.219-23(a)(3) for joint venturesunder the price evaluation adjustment for small disadvantagedbusiness concerns), consistent with 13 CFR 124.1002, meansan offeror, that is a small business under the size standardapplicable to the acquisition; and either—

(1) It has received certification as a small disadvantagedbusiness concern consistent with 13 CFR Part 124,Subpart B; and

(i) No material change in disadvantaged ownershipand control has occurred since its certification;

(ii) Where the concern is owned by one or more dis-advantaged individuals, the net worth of each individual uponwhom the certification is based does not exceed $750,000after taking into account the applicable exclusions set forth at13 CFR 124.104(c)(2); and

(iii) It is identified, on the date of its representation,as a certified small disadvantaged business concern in theDynamic Small Business Search data base maintained by theSmall Business Administration;

(2) For a prime contractor, it has submitted a completedapplication to the Small Business Administration or a privatecertifier to be certified as a small disadvantaged business con-cern in accordance with 13 CFR Part 124, Subpart B, and adecision on that application is pending, and that no materialchange in disadvantaged ownership and control has occurredsince it submitted its application. In this case, a contractormust receive

FEDERAL ACQUISITION CIRCULAR · (c) Each numbered unit or segment (e.g., part, subpart, sec-tion,...

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