FR Doc E6-21505

[Federal Register: December 20, 2006 (Volume 71, Number 244)]
[Rules and Regulations]
[Page 76487-76515]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de06-27]

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Part III

Department of Health and Human Services

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48 CFR Parts 301, 302 et al.

Acquisition Regulations; Final Rule

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

48 CFR Parts 301, 302, 303, 304, 305, 306, 307, 309, 311, 312, 314,
315, 316, 319, 323, 324, 325, 330, 332, 333, 334, 335, 339, 342,
352, and 370

Acquisition Regulations

AGENCY: Department of Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: The Department of Health and Human Services is amending its
acquisition regulations (HHSAR) to make administrative and editorial
changes to reflect organizational title changes resulting from Office
of the Secretary (OS) and Operating Division (OPDIV) reorganizations
and to update or remove outdated text and references. The intent of the
final rule is to bring the HHSAR up to date and to make the HHSAR
consistent with the latest amendments to the Federal Acquisition
Regulations (FAR).

DATES: Effective Date: December 20, 2006.

FOR FURTHER INFORMATION CONTACT: Katherine Hughes, Office of
Acquisition Management and Policy, telephone (202) 690-7079, e-mail:
Katherine.Hughes@hhs.gov.

SUPPLEMENTARY INFORMATION:

A. Background

The Department is not making significant amendments to the existing
HHSAR. The amendments to the HHSAR concern internal procedural matters
which are administrative in nature, and will not have a major effect on
the general public or on contractors or offerors supporting the
Department. The majority of the amendments address the following:
HHS organizational title changes resulting from agency
reorganizations.
Eliminating procedural guidance no longer deemed
necessary.
Changing contracting review and approval authorities to
situate them at levels more appropriate to simplification,
streamlining, and empowerment.
Updating the HHSAR to bring it in line with the latest
amendments made to the Federal Acquisition Regulation (FAR).
Clarifying authorities for selecting and terminating
Contracting Officers.
Establishing minimum training requirements for certain
positions.
Specifically referencing regulations of other Federal
agencies.
Updating the text of clauses required to be inserted in
solicitations and contracts.

B. Comments on the Notice of Proposed Rulemaking

The Department published a Notice of Proposed Rulemaking (NPRM) on
May 26, 2006 (70 FR 30520). The comment period closed on July 25, 2006.
The Department received one comment from the public regarding section
352.270-8. The commenter stated that the Office for Human Research
Protections (OHRP), which was cited as an office within the National
Institutes of Health (NIH), is now an office in the Office of Public
Health and Science (OPHS). Section 352.270-8 has been corrected in this
final rule to refer to the new office location.
In addition, the Department's internal review of the NPRM has
resulted in a number of editorial changes and corrections, none of
which are substantive.

C. Regulatory Flexibility Act

The Department of Health and Human Service certifies this
rulemaking will not have a significant economic effect on a substantial
number of small entities under the Regulatory Flexibility Act (5 U.S.C.
601 et seq.) because it does not impose any new requirements.
Therefore, no regulatory flexibility statement has been prepared. Since
this rule conveys existing acquisition policies or procedures and does
not promulgate any new policies or procedures that would impact the
public, it has been determined that this rule will not have a
significant economic effect on a substantial number of small entities,
and, thus, a regulatory flexibility analysis was not performed.

D. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to
the HHSAR do not impose any record keeping or information collection
requirements that require approval by the Office of Management and
Budget under 44 U.S.C. 3501, et seq. Existing approvals cited in 48 CFR
301.106 remain in effect. The provisions of this regulation are issued
under 5 U.S.C. 301; 40 U.S.C. 486(c).

E. Administrative Procedure Act Exception

This final rule imposes no new burdens on the public and merely
updates, corrects, or clarifies existing regulations. Therefore, good
cause exists under 5 U.S.C. 553(d) to dispense with the 30-day delay in
the effective date requirement, and the Department of Health and Human
Services is making the rule effective upon publication in the Federal
Register.

List of Subjects in 48 CFR Chapter 3

Government procurement.

Dated: September 21, 2006.
Joe W. Ellis,
Assistant Secretary for Administration and Management.

Editorial Note: This document was received in the Office of the
Federal Register on December 13, 2006.

0
Under the authority of 5 U.S.C. 301; 40 U.S.C. 486(c), the Department
of Health and Human Services amends 48 CFR Chapter 3 as set forth
below.

CHAPTER 3--HEALTH AND HUMAN SERVICES

0
1. The authority citation for 48 CFR chapter 3, parts 301 through 370
continues to read as follows:

Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

PART 301--HHS ACQUISITION REGULATION SYSTEM

0
2. Revise paragraph (b) of section 301.101 to read as follows:

301.101 Purpose.

* * * * *
(b) The HHSAR implements FAR policies and procedures and provides
additional policies and procedures that supplement the FAR to satisfy
the needs of HHS.
* * * * *

0
3. Revise section 301.270 to read as follows:

301.270 Executive Committee for Acquisition.

(a) The Deputy Assistant Secretary for Acquisition Management and
Policy has established the Executive Committee for Acquisition (ECA) to
assist and facilitate the planning and development of departmental
acquisition policies and procedures and to assist in responding to
other agencies and organizations concerning policies and procedures
impacting the Federal acquisition process.
(b) The ECA consists of members and alternates from the Division of
Acquisition Policy (DAP), Agency for Healthcare Research and Quality,
Centers for Medicare & Medicaid Services, Program Support Center,
Centers for Disease Control and Prevention, Food and Drug
Administration, Health Resources and Services Administration, Indian
Health Service, National Institutes of Health, and Substance Abuse and
Mental Health Services Administration. The ECA is

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chaired by the Director, Division of Acquisition Policy (DAP). All
meetings will be held at the call of the Chair, and all activities will
be carried out under the direction of the Chair.
(c) The purposes of the ECA are to:
(1) Advise and assist the Chair on major acquisition policy
matters;
(2) Review and evaluate the overall effectiveness of existing
policies and procedures and the impact of new acquisition policies,
procedures, and regulations on current acquisition policies and
procedures.
(d) The Chair will periodically issue a list of current members and
alternates, including each person's name, title, organization, address,
telephone number, and e-mail address. ECA members are responsible for
apprising the Chair of any changes to the list.

0
4. Revise section 301.403 to read as follows:

301.403 Individual deviations.

Requests for individual deviations to either the FAR or HHSAR shall
be prepared in accordance with 301.470 and forwarded to the Deputy
Assistant Secretary for Acquisition Management and Policy (DASAMP).

0
5. Revise section 301.404 to read as follows:

301.404 Class deviations.

Requests for class deviations to either the FAR or HHSAR shall be
prepared in accordance with 301.470 and forwarded to the Deputy
Assistant Secretary for Acquisition Management and Policy (DASAMP).

0
6. Amend section 301.470 by revising paragraph (a) to read as follows:

301.470 Procedure.

(a) Deviation requests shall be prepared in memorandum form and
forwarded through the Head of the Contracting Activity (HCA) to the
Director, Division of Acquisition Policy. A deviation may be requested
verbally in an exigency situation; however, the request must be
confirmed in writing as soon as possible.
* * * * *

0
7. Amend section 301.602-3 by revising paragraphs (b)(3), (e)(1), and
(e)(2) to read as follows:

301.602-3 Ratification of unauthorized commitments.

* * * * *
(b) * * *
(3) Ratification authority for actions up to $100,000 may be
redelegated by the HCA to the chief of the contracting office (CCO). No
other redelegations are authorized.
* * * * *
(e) Procedures. (1) The individual who made the unauthorized
contractual commitment shall furnish the reviewing Contracting Officer
all records and documents concerning the commitment and a complete
written statement of facts, including, a description of the
requirement, the estimated or agreed upon price, the funds citation, an
explanation of why the contracting office was not used and why the
proposed contractor was selected, a list of other sources considered,
and a statement as to whether the contractor has commenced work.
(2) The Contracting Officer will review the submitted material and
prepare it for ratification if it is determined that the commitment is
ratifiable. The Contracting Officer shall forward the ratification
document and the submitted material to the HCA or CCO with any comments
or information which should be considered in evaluation of the request
for ratification. If legal review is desirable, the HCA or CCO will
coordinate the request for ratification with the Office of General
Counsel, Business and Administrative Law Division.
* * * * *

0
8. Revise section 301.603 and 301.603-1 to read as follows:

301.603 Selection, appointment, and termination of appointment of
Contracting Officers/Contract Specialists.

301.603-1 General.

(a) The appointment, selection, and termination of appointment of
Contracting Officers/Contract Specialists shall be made by the HCA.
This authority is not delegable. The procedures for the selection and
appointment of Contracting Officers/Contract Specialists shall apply to
anyone seeking a Contracting Officer warrant. OPDIV procedures shall be
followed in the appointment and termination of Contracting Officers/
Contract Specialists in offices that have Contracting Officers/Contract
Specialists with dual signature warrants.
(b) Standard Form (SF) 1402, ``Certificate of Appointment,'' shall
be used to appoint personnel in the 1102 series as Contracting
Officers. It shall also be used for personnel in any other series who
will obligate the Government to the expenditure of funds in excess of
the micro-purchase threshold. The SF 1402 shall indicate the
Contracting Officer's warrant level and threshold and any other
limitations. The HCA may determine an alternate appointment document
for appointments at or below the micropurchase threshold level.
Contracting Officer warrants will be issued to civil service personnel
only. A delegation of procurement authority shall be set forth in a
memorandum that describes the spending limits and authority. Changes to
appointments shall be made by issuing a new appointment document. Each
appointment document shall be prepared and maintained in accordance
with FAR 1.603-1 and shall state the limits of the individual's
authority.
(c) An individual must be certified at the appropriate level as a
prerequisite to being appointed as a Contracting Officer with authority
to obligate funds in excess of the micro-purchase threshold (see
301.603-72). The HCA will determine and require training for
individuals appointed as Contracting Officers/Contract Specialists at
dollar levels below the micropurchase threshold. Individuals selected
for Contracting Officer warrant authority must meet the education,
training, and experience requirements that are established for the
warrant level. An individual shall be appointed as a Contracting
Officer only in instances where a valid organizational need is
demonstrated. Factors to be considered in assessing the need for an
appointment of a Contracting Officer include volume of actions,
complexity of work, and structure of the organization.
(d) Contracting Officers (GS-1102's) shall not sign contracts or
modifications to contracts which will result in the total amount of the
contract exceeding their delegated warrant authority (as specified on
the SF-1402). This includes Indefinite Delivery Indefinite Quantity
(IDIQ) contracts. However, orders placed against an IDIQ may be issued
by Contracting Officers up to their delegated authority provided that
each order is separate and distinct.
(e) Employees delegated warrant authority are the only individuals
legally authorized to bind the Government by executing contracts or
signing determinations and findings required by the FAR. The amount
specified on the warrant shall cover the estimated maximum contract
amount, including all option periods. For example, an employee with a
$500,000 Contracting Officer Certificate of Appointment may not award a
contract for a base year of $300,000 if the contract includes a one-
year option for an additional $300,000. In this case, the total
contract amount, including options, exceeds the amount stipulated in
the warrant. If a warrant is limited to $500,000 (for example), the
holder may not sign a contract for more than that amount, even if the
additional amount

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is subject to the availability of funds. Contracting Officers with
higher warrant levels may sign the action when modifications to orders
and contracts make the total amount of the contract exceed the
Contracting Officer's warrant limitation.

0
9. Revise section 301.603-2 to read as follows:

301.603-2 Selection of Contracting Officers.

When it has been determined that the appointment is in the best
interest of the OPDIV and/or Department and there is a demonstrated
need for the procurement authority requested, nominations for
appointment of Contracting Officers shall be submitted to the HCA
through appropriate organizational channels for review. The HCA is
responsible for appointing Contracting Officers in accordance with FAR
1.603. This authority is not delegable. The HCA will determine the
documentation required, consistent with FAR 1.603-2, when the resulting
appointment and authority will not exceed the micropurchase threshold.

0
10. Revise section 301.603-3 to read as follows:

301.603-3 Appointment of Contracting Officers.

(a) Appointing officials must ensure that a warrant candidate meets
the experience and education/training requirements listed in 301.603-
72.
(b) If it is essential to appoint an individual who does not fully
meet the certification requirements for the Contracting Officer
authority sought, an interim appointment may be granted by the HCA.
HCAs are responsible for ensuring that training requirements are met
within the specified time frame. Interim appointments may not exceed
one year in total, and shall not be granted unless the individual can
meet the certification requirements within one year from the date of
appointment. The HCA may extend an interim appointment by granting
additional time to complete the requirements of a permanent
appointment. If the certification requirements are not completed by the
extended date, the appointment will automatically terminate.

0
11. Revise section 301.603-4 to read as follows:

301.603-4 Termination or revocation of a Contracting Officer's
appointment.

Termination or revocation of Contracting Officer appointments shall
be accomplished in accordance with FAR 1.603-4.

0
12. Revise section 301.603-70 to read as follows:

301.603-70 Delegation of Contracting Officer responsibilities.

(a) Contracting Officer responsibilities which do not involve the
obligation or deobligation of funds or result in establishing or
modifying contractual provisions may be delegated by the Contracting
Officer by means of a written memorandum that clearly delineates the
delegation and its limits.
(b) Contracting Officers may designate individuals as ordering
officials to make purchases or place orders under blanket purchase
agreements, indefinite delivery contracts, or other preestablished
mechanisms. Ordering officials, including those under the National
Institutes of Health's (NIH) Delegated Acquisition Program (DELPRO),
are not Contracting Officers.

0
13. Add sections 301.603-71 through 301.603-76 to subpart 301.6 to read
as follows:

Subpart 301.6--Career Development, Contracting Authority, and
Responsibilities

* * * * *
301.603-71 Waivers to warrant standards.
301.603-72 Training and certification requirements for Contracting
Officers/Contract Specialists.
301.603-73 Earned value training requirement for Contracting
Officers/Contract Specialists who administer an IT contract.
301.603-74 Training policy exception.
301.603-75 Training requirement for purchase cardholders, Approving
Officials (AOs), and Agency/Organization Program Coordinators (A/
OPCs).
301.603-76 Requirement for certification retention and maintaining
currency of acquisition knowledge and skills for Contracting
Officers/Contract Specialists and purchasing agents.

Subpart 301.6--Career Development, Contracting Authority, and
Responsibilities

301.603-71 Waivers to warrant standards.

There may be an unusual circumstance that requires delegation of a
warrant to an employee who does not meet the warrant standards in of
the HHS Contracting Officer Warrant Program. Any requests for waivers
requesting deviations from the requirements and policies of the HHS
Contracting Officer Warrant Program shall be sent in writing to the SPE
for approval. The SPE will either approve or disapprove in writing the
request for a waiver to the warrant standards. The SPE may grant
waivers on a case-by-case basis in unique situations only.

301.603-72 Training and certification requirements for Contracting
Officers/Contract Specialists.

(a) Federal Acquisition Certification in Contracting (FAC-C)
certification is not mandatory for all GS-1102s; however, members of
the workforce issued new Contracting Officer (CO) warrants on or after
January 1, 2007, regardless of GS series, must be certified at an
appropriate level to support their warrant obligations, pursuant to
agency policy. New CO warrants are defined in OFPP Policy Letter 05-01
as warrants issued to employees for the first time at a department or
agency. FAC-C certification does not apply to:
(1) Senior level officials responsible for delegating procurement
authority;
(2) Non-1102s whose warrants are generally used to procure
emergency goods and services; or
(3) Non-1102s whose warrants are so limited as to be outside the
scope of this program, as determined by the Chief Acquisition Officer
(CAO).
(b) HHS requires a senior level FAC-C certification for any
employee issued an unlimited Contracting Officer's warrant on or after
January 1, 2007.
(c) Achievement of the FAC-C is based on three requirements:
education, training, and experience, and the requirements are
cumulative, (i.e., a person must meet the requirements of each previous
certification level).
(d) FAC-C training requirements are as follows:
(1) FAC-C Level I:
(i) CON 100 Shaping Smart Business Arrangements.
(ii) CON 110 Mission Support Planning.
(iii) CON 111 Mission Strategy Execution.
(iv) CON 112 Mission Performance Assessment.
(v) CON 120 Mission Focused Contracting.
(vi) 1 Elective.
(2) FAC-C Level II:
(i) CON 202 Intermediate Contracting.
(ii) CON 204 Intermediate Contract Pricing.
(iii) CON 210 Government Contract Law.
(iv) 2 Electives.
(3) FAC-C Level III:
(i) CON 353 Advanced Business Solutions for Mission Support.
(ii) 2 Electives.
(e) Those conducting simplified acquisitions from $2,500 to
$100,000 will need to be issued an HHS Simplified Acquisition
Certificate. Required training is as follows:
(1) HHS Simplified Acquisition Certificate A:
(ii) Basic Simplified Acquisition Procedures/DAU's CON 237.

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(iii) Advanced Simplified Acquisition Procedures or Appropriations
Law.
(2) HHS Simplified Acquisition Certificate B:
(i) Basic Simplified Acquisition Procedures/DAU's CON 237.
(ii) Advanced Simplified Acquisition Procedures or Appropriations
Law.
(iii) CON 100 (Shaping Smart Business Arrangements).
(iv) CON 110 (Mission Support Planning).
(f) For additional information, see http://www.knownet.hhs.gov/[fxsp0
]acquisition/[fxsp0]careerhandbookver.1.0.doc.

301.603-73 Earned value training requirement for Contracting Officers/
Contract Specialists who administer an IT contract.

All GS-1102s who administer an IT contract, regardless of dollar
threshold, are required to successfully complete the Department's
(offered through HHS University) one-day course entitled ``Early
Warning Project Management Systems Workshop,'' or an equivalent Earned
Value training course. Determination of course equivalency shall be
made jointly by the Office of Acquisition Management and Policy/ASAM
and the HHS Office of the Chief Information Officer.

301.603-74 Training policy exception.

In the event there is an urgent requirement for a Contracting
Officer/Contract Specialist to award or administer an IT contract, and
the Earned Value training requirement has not been met, the HCA (not
delegable) may waive the training requirement and authorize the
individual to perform the job duties, provided that the individual
attends the next scheduled ``Early Warning Project Management System
Workshop'' course, or an equivalent Earned Value course.

301.603-75 Training requirement for purchase cardholders, Approving
Officials (AOs), and Agency/Organization Program Coordinators (A/OPCs).

Training requirements for purchase cardholders, AOs, and A/OPCs are
listed in the following table:

------------------------------------------------------------------------
Program
Authority \a\ participant Required training \b\
------------------------------------------------------------------------
Up to $2,500................. Prospective/newly Basic purchase card
appointed course (HHS
purchase University 1-day
cardholders and course) or an
Approving equivalent course
Officials. that has been
approved by the HHS
Acquisition Training
Coordinator prior to
appointment. Training
will include green-
purchasing and
Section 508
requirements.
Purchase card Refresher purchase
holders and card training,
Approving including green-
Officials. purchasing training
and Section 508
training, every 2
years.
$2,501 to $25,000............ Prospective/newly Basic
appointed Purchase Card course.
purchase Basic
cardholders and Simplified
Approving Acquisition
Officials. Procedures/DAU's CON
237.
Advanced
Simplified
Acquisition
Procedures or
Appropriations Law.
Purchase card Refresher purchase
holders and card training,
Approving including green-
Officials. purchasing training
and Section 508
training, every 2
years.
$25,001 to $100,000.......... Prospective/newly Basic
appointed Purchase Card course.
purchase Basic
cardholders and Simplified
Approving Acquisition
Officials. Procedures/DAU's CON
237.
Advanced
Simplified
Acquisition
Procedures or
Appropriations Law.
CON 100
(Shaping Smart
Business
Arrangements).
CON 110
(Mission Support
Planning).
Purchase Refresher purchase
cardholders and card training,
Approving including green-
Officials. purchasing training
and Section 508
training, every 2
years.
Not applicable............... Prospective/newly Basic Purchase Card
appointed Agency/ course, Basic
Organization Simplified
Program Acquisition
Coordinators. Procedures or DAU's
CON 237, Advanced
Simplified
Acquisition
Procedures or
Appropriations Law,
CON 100 (Shaping
Smart Business
Arrangements), and
CON 110 (Mission
Support Planning).
Agency/ Refresher purchase
Organization card training,
Program including green-
Coordinators. purchasing training
and Section 508
training, every 2
years (attendance at
GSA's annual training
conference satisfies
refresher training).
------------------------------------------------------------------------
\a\ Cardholders and Approving Officials with authorized increases in DPA
have up to 6 months to complete the training requirements for the new
DPA.
\b\ CON 237, CON 100, and CON 110 are available at the DAU Web site at
http://www.dau.mil/registrar/enroll.asp CON 100 is also offered through HHS University (see Web site at: http://learning.hhs.gov.).

301.603-76 Requirement for certification retention and maintaining
currency of acquisition knowledge and skills for Contracting Officers/
Contract Specialists and purchasing agents.

To maintain a FAC-C, GS-1102s, including all warranted Contracting
Officers regardless of series, shall earn 80 continuous learning points
(CLPs) every two years beginning January 1, 2008. For GS-1105s and GS-
1106s, a minimum of forty (40) hours (or continuous learning points) is
required every two years after all mandatory training requirements have
been met. Certification will expire if the CLPs are not earned every
two years, and may result in a loss of warrant authority.

PART 302--DEFINITIONS OF WORDS AND TERMS

0
14. Revise section 302.101 to read as follows:

302.101 Definitions.

Agency head or head of the Agency, unless otherwise specified,
means the head of the Operating Division (OPDIV) for Agency for
Healthcare Research and Quality (AHRQ), Centers for Disease Control and
Prevention (CDC), Centers for Medicare & Medicaid Services (CMS), Food
and Drug Administration (FDA), Health Resources and Services
Administration (HRSA), Indian Health Service (IHS), National Institutes
of Health (NIH), Substance Abuse and Mental Health Services (SAMHSA),
and the Deputy Secretary for the Office of the Secretary (OS).
Chief of the Contracting Office (CCO) is typically a mid-level
management official, usually an office director, division director, or
branch chief, who manages and monitors the daily contract operations of
an OPDIV or major component of an OPDIV. The CCO is subordinate to the
Head of Contracting

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Activity (HCA), except where the HCA and CCO are the same individual.
Head of the contracting activity (HCA)--
(1) Occupies designated organization positions as follows:

ASAM-OS--Deputy Assistant Secretary for Acquisition Management and
Policy
AHRQ--Director, Division of Contracts Management
CMS--Director, Office of Acquisition and Grants Management
PSC--Director, Division of Acquisition Management
CDC--Director, Procurement and Grants Office
FDA--Director, Office of Acquisitions & Grant Services
HRSA--Director, Division of Procurement Management
IHS--Director, Division of Acquisition Policy
NIH--Director, Office of Acquisition Management and Policy
SAMHSA--Director, Division of Contracts Management

(2) Each HCA is responsible for conducting an effective and
efficient acquisition program. Adequate controls shall be established
to assure compliance with applicable laws, regulations, procedures, and
the dictates of good management practices. Periodic reviews shall be
conducted and evaluated by qualified personnel, preferably assigned to
positions other than in the contracting office being reviewed, to
determine the extent of adherence to prescribed policies and
regulations, and to detect a need for guidance and/or training.
(3) The heads of contracting activities may redelegate their HCA
authorities to the extent that redelegation is not prohibited by the
terms of their respective delegations of authority, by law, by the
Federal Acquisition Regulation, by the HHS Acquisition Regulation, or
by other regulations. However, HCA and other contracting approvals and
authorities shall not be redelegated below the levels specified in the
HHS Acquisition Regulation or, in the absence of coverage in the HHS
Acquisition Regulation, the Federal Acquisition Regulation. To ensure
proper control of redelegated acquisition authorities, HCAs shall
maintain a file containing successive delegations of HCA authority
through and including the Contracting Officer level. Personnel
delegated responsibility for acquisition functions must possess a level
of experience, training, and ability commensurate with the complexity
and magnitude of the acquisition actions involved.
Project Officer is a Federal employee who monitors contractor
performance and provides technical guidance to the Contract Specialist/
Contracting Officer. The Project Officer serves as the Contract
Specialist/Contracting Officer's authorized representative to monitor
specific aspects of the contract, thereby ensuring that the
contractor's performance meets the standards set forth in the contract,
the technical requirements under the contract are met by the delivery
date(s) and/or within the period of performance, and performance is
accomplished within the price or estimated cost stated in the contract.
A Project Officer is required to comply with HHS Project Management
Certification Program training requirements. The term ``Project
Officer'' is synonymous with Contracting Officer's Representative (COR)
and Contracting Officer's Technical Representative (COTR).

0
15. Revise section 302.201 to read as follows:

302.201 Contract clause.

The FAR clause, Definitions, at 52.202-1 shall be used as
prescribed in FAR 2.201, except as follows:
(a) In accordance with 52.202-1(a)(1), paragraph (a) at 352.202-1
shall be used in place of paragraph (a) of the FAR clause.
(b) In accordance with 52.202-1(a)(1), paragraph (h), or its
alternate, at 352.202-1 shall be added to the end of the FAR clause.
Use paragraph (h) when a fixed-priced contract is anticipated; use the
alternate to paragraph (h) when a cost-reimbursement contract is
anticipated. This is an authorized deviation.

PART 303--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF
INTEREST

0
16. Revise section 303.101-3 to read as follows:

303.101-3 Agency regulations.

(a)(3) The Department of Health and Human Services' Standards of
Conduct are prescribed in 45 CFR part 73.

0
17. Revise paragraph (a)(2)(i) of section 303.104-7 to read as follows:

303.104-7 Violations or possible violations of the Procurement
Integrity Act.

(a) * * *
(2) * * *
(i) Refer the matter immediately to the Deputy Assistant Secretary
for Acquisition Management and Policy (DASAMP), Assistant Secretary for
Administration and Management, Office of the Secretary, for review,
which may consult with the Office of General Counsel (OGC) and the
Office of Inspector General (OIG), as appropriate; and
* * * * *

0
18. Revise section 303.303 to read as follows:

303.303 Reporting suspected antitrust violations.

(h) A copy of the agency report of suspected antitrust violations
submitted to the Attorney General by the HCA shall also be submitted to
the Director, Office of Acquisition Management and Policy.

0
19. Revise section 303.405 to read as follows:

303.405 Misrepresentations or violations of the Covenant Against
Contingent Fees.

(a) Reports shall be made promptly to the Contracting Officer.
(b)(4) Suspected fraudulent or criminal matters to be reported to
the Department of Justice shall be prepared in letter format and
forwarded through acquisition channels to the head of the contracting
activity for signature. The letter must contain all pertinent facts and
background information considered by the Contracting Officer and chief
of the contracting office that led to the decision that fraudulent or
criminal matters may be present. A copy of the signed letter shall be
sent to the Director, Office of Acquisition Management and Policy.

0
20. Revise section 303.704 to read as follows:

303.704 Policy.

(a) For purposes of implementing FAR subpart 3.7, the authorities
granted to the ``agency head or designee'' shall be exercised by the
HCA (not delegable).

PART 304--ADMINISTRATIVE MATTERS

0
21. Revise section 304.602 to read as follows:

304.602 Federal Procurement Data System--Next Generation (FPDS-NG).

The Departmental Contracts Information System (DCIS) represents the
Department's implementation of the FPDS-NG. All departmental
contracting activities are required to use the DCIS and follow the
procedures stated in the Enhanced Departmental Contracts Information
System Manual, available at http://dcis.hhs.gov, and amendments to the

manual. The HCA (not delegable) shall ensure that all required contract
information is collected, submitted, and received into the DCIS on or
before the 15th of each month for all contracts and

[[Page 76493]]

contract modifications awarded in the previous month.

0
22. Amend 304.804-70 by revising paragraphs (a) and (b)(1) to read as
follows:

304.804-70 Contract closeout audits.

(a) Contracting Officers shall rely, to the maximum extent
possible, on single audits to close physically completed cost-
reimbursement contracts with colleges and universities, hospitals, non-
profit firms, and State and local governments. In addition, where
appropriate, a sample of these contractors may be selected for audit,
in accordance with paragraph (b) of this section.
(b) * * *
(1) The Office of the Inspector General (OIG) and ASAM's Deputy
Assistant Secretary for Acquisition Management and Policy in
conjunction with the OPDIV's cost advisory/audit focal point, determine
which contracts or contractors will be audited, which audit agency will
perform the audit, and the type and scope of closeout audit to be
performed. These decisions shall be based upon the needs of the
customer, risk analysis, return on investment, and the availability of
audit resources. When an audit is warranted prior to closing a
contract, the Contracting Officer shall submit the audit request to the
OIG's Office of Audit, via the OPDIV's cost advisory/audit focal point.
* * * * *

0
23. Revise paragraphs (b)(3), (b)(6), and (e) of section 304.7001 to
read as follows:

304.7001 Numbering acquisitions.

* * * * *
(b) * * *
(3) The three digit numeric identification code assigned by the
Deputy Assistant Secretary for Acquisition Management and Policy
(DASAMP) to the contracting office within the servicing agency;
* * * * *
(6) A one digit code describing the type of contract action:

A Commercial Item Acquisition
C New Definitive Contract
P Purchase Using Simplified Acquisition
I Indefinite Delivery Contract (IDIQ)
O Basic Ordering Agreement (BOA)
B Blanket Purchase Agreement (BPA)
F Facilities Contract
U Contracts placed with or through other Government departments, GSA
contracts, or against mandatory source contracts such as the National
Industries for the Blind (NIB), the National Industries for the
Severely Handicapped (NISH), and the Federal Prison Industries (UNICOR)
L Lease Agreement
W Government-wide Acquisition Contract (GWAC)
E Letter Contract
G Federal Supply Schedule
M Micropurchase

For example, the first contract for NIH, National Cancer Institute,
for fiscal year 2005 may be numbered HHSN261200500001C.
* * * * *
(e) Assignment of identification codes. Each contracting office of
the Department shall be assigned a three digit identification code by
the ASAM/OAMP. Requests for the assignment of codes for newly
established contracting offices shall be submitted by a headquarters
official from the new contracting office to the OAMP. A listing of the
contracting office identification codes currently in use is contained
in the Enhanced Departmental Contracts Information System Manual,
available at http://dcis.hhs.gov.

PART 305--PUBLICIZING CONTRACT ACTIONS

0
24. Revise section 305.202 to read as follows:

305.202 Exceptions.

(b) When a contracting office believes that it has a situation
where advance notice is not appropriate or reasonable, it shall prepare
a memorandum citing all pertinent facts and details and send it,
through normal acquisition channels, to the Deputy Assistant Secretary
for Acquisition Management and Policy (DASAMP) requesting relief from
synopsizing. The DASAMP shall review the request and decide whether an
exception to synopsizing is appropriate or reasonable. If it is, the
DASAMP shall take the necessary coordinating actions required by FAR
5.202(b). Whatever the decision is on the request, the DSAMP shall
promptly notify the contracting office when a determination has been
made.

0
25. Revise section 305.303 to read as follows:

305.303 Announcement of contract awards.

(a) Public announcement. Awards over $3.5 million, not otherwise
exempt under FAR 5.303, shall be reported by the Contracting Officer to
the Office of the Assistant Secretary for Legislation (Congressional
Liaison), Room 406G, Hubert H. Humphrey Building. Notification shall be
accomplished by providing a copy of the contract or award document face
page to the referenced office prior to the day of award, or in
sufficient time to allow for an announcement to be made by 5 p.m.
Washington, DC time on the day of award. Notification may also be
accomplished by e-mailing a copy of the contract or award document face
page to grantfax@hhs.gov, or faxing to (202) 205-2420.

0
26. Revise section 305.502 to read as follows:

305.502 Authority.

The Contracting Officer may advertise or place notices in
newspapers and periodicals to announce that proposals are being sought.

PART 306--COMPETITION REQUIREMENTS

0
27. Revise section 306.302-1 to read as follows:

306.302-1 Only one responsible source and no other supplies or
services will satisfy agency requirements.

(a)(2)(iv) Follow-on contracts for the continuation of major
research and development studies on long-term social and health
programs, major research studies, or clinical trials may be deemed to
be available only from the original source when it is likely that award
to any other source would result in unacceptable delays in fulfilling
the Department's or OPDIV's requirements.
(b) Application. (5) When the head of the program office has
determined that only specified makes and models of technical equipment
or parts must be obtained to meet the activity's program responsibility
to test and evaluate certain kinds and types of products, and only one
source is available. (This criterion is limited to testing and
evaluation purposes only and may not be used for initial outfitting or
repetitive acquisitions. Project officers should support the use of
this criterion with citations from their agency's legislation and the
technical rationale for the item of equipment required.)
0
28. Revise section 306.303-1 to read as follows:

306.303-1 Requirements.

(a)(1) The Program Office must provide a written justification
whenever it requests that certain goods or services be obtained without
full and open competition. The justification must explain why full and
open competition is not feasible and must be submitted with the
requisition or request for contract.
(i) Justifications in excess of the simplified acquisition
threshold shall be in the form of a separate, self-contained

[[Page 76494]]

document, prepared in accordance with FAR 6.303 and 306.303, and called
a ``JOFOC'' (Justification for Other Than Full and Open Competition).
Justifications at or below the simplified acquisition threshold may be
in the form of a paragraph or paragraphs contained in the requisition
or request for contract.
(ii) Justifications, whether over or under the simplified
acquisition threshold, shall fully describe what is to be acquired,
offer reasons which go beyond inconvenience, and explain why it is not
feasible to obtain competition. The justifications shall be supported
by verifiable facts rather than mere opinions. Documentation in the
justification should be sufficient to permit an individual with
technical competence in the area to follow the rationale.
(iii) Sole source justifications using the Federal Supply Schedule
shall include the content listed in FAR 6.303-2.
(b) Preliminary arrangements or agreements with the proposed
contractor shall have no effect on the rationale used to support an
acquisition for other than full and open competition.

0
29. Revise section 306.303-2 to read as follows:

306.303-2 Content.

(a)(1) Each justification shall include the name of the program
office; the name, address, and phone number of the Project Officer; and
project identification, such as the authorizing program legislation, to
include citations or other internal program identification data such as
title, contract number, etc.
(2) The description may be in the form of a statement of work,
purchase description, or specification. A statement is to be included
to explain whether the acquisition is an entity in itself, whether it
is one in a series, or part of a related group of acquisitions.
(c) JOFOCs shall be signed by the Project Officer, the Project
Officer's immediate supervisor, the Contracting Officer, and the
approving official (if the approving official is not the Contracting
Officer).

0
30. Revise section 306.304 to read as follows:

306.304 Approval of the justification.

(a)(2) The competition advocates are listed in 306.501. This
authority is not delegable.
(3) The competition advocate shall exercise this approval
authority, except where the individual designated as the competition
advocate does not meet the requirements of FAR 6.304 (a)(3)(ii). This
authority is not delegable.
(4) The senior procurement executive of the Department is the
Deputy Assistant Secretary for Acquisition Management and Policy. This
designation has been made pursuant to the OFPP Act (41 U.S.C.
414(c)(2)(B).
(c) A class justification shall be processed the same as an
individual justification.

0
31. Revise section 306.501 to read as follows:

306.501 Requirement.

The Department's competition advocate is the Director, Strategic
Acquisition Service, Program Support Center (PSC). The competition
advocates for each of the Department's contracting activities are as
follows:

AHRQ--Director, Office of Performance Accountability, Resources and
Technology
CDC--Chief Information Officer
CMS--Chief Operating Officer
FDA--Chief, Office of Shared Services
HRSA--Associate Administrator, Office of Administration and Financial
Management
IHS--Director, Office of Management Services
NIH--Senior Scientific Advisor for Extramural Research, Office of
Extramural Research (R&D) and Senior Advisor to the Director (Other
than R&D)
PSC--Director, Strategic Acquisition Service
SAMHSA--Executive Officer

PART 307--ACQUISITION PLANNING

0
32. Revise section 307.104 to read as follows:

307.104 General procedures.

(a) Each contracting activity shall prepare an Annual Acquisition
Plan (AAP). The AAP is a macro plan, containing a list of anticipated
contract actions over the simplified acquisition threshold and their
associated funding, as well as the aggregate planned dollars for
simplified acquisitions by quarter, developed for each fiscal year. The
AAP shall conform to reasonable budget expectations and shall be
reviewed at least quarterly and modified as appropriate. The HCA or the
CCO shall obtain this information from the program planning/budget
office of the contracting activity and use the AAP to provide necessary
reports and monitor the workload of the contracting office. For
contract actions, the plan shall contain, at a minimum:
(1) A brief description (descriptive title, perhaps one or two
sentences if necessary);
(2) Estimated award amount;
(3) Requested award date;
(4) Name and phone number of contact person (usually the Project
Officer);
(5) Other information required for OPDIV needs.
(b) Once the AAP is obtained from the program planning/budget
office, the Contracting Officer/Contract Specialist shall initiate
discussions with the assigned Project Officer for each planned
negotiated acquisition over $100,000 except for:
(1) Acquisitions made under interagency agreements, and
(2) Contract modifications which exercise options, make changes
authorized by the Changes clause, or add funds to an incrementally
funded contract. (The HCA may prescribe procedures for contract actions
not covered by this subpart.)
(c) The purpose of the discussions between the Contracting and
Project Officers is to develop an individual acquisition planning
schedule and to address areas that will need to be covered in the
request for contract (RFC), including clearances, acquisition strategy,
sources, etc. The Project Officer must either have a statement of work
(SOW) ready at this time or must discuss in more detail the nature of
the services/supplies that will be required.
(d) Standard lead-times for processing various types of
acquisitions and deadlines for submission of acceptable RFCs (that is,
RFCs which include all required elements such as clearances, funding
documents, and an acceptable SOW) for award in a given fiscal year
shall be established by the HCA or designee not lower than the CCO.
(e) The outcome of the discussions referenced in paragraph (c) of
this section between the Project Officer and the Contracting Officer/
Contract Specialist will be an agreement concerning the dates of
significant transaction-specific acquisition milestones, including the
date of submission of the RFC to the Contracting Officer. This
milestone schedule document will be prepared with those dates and will
be signed by the Project Officer and the Contracting Officer. The
milestones cannot be revised except by mutual agreement of these same
individuals. If the planning schedule indicates the need to obtain
approval of a Justification for Other than Full and Open Competition,
the HCA or CCO must sign the milestone agreement. This document shall
be retained in the contract file. All other considerations that will
affect the acquisition (technical, business, management) shall be
addressed in the RFC (see 307.71).

[[Page 76495]]

0
33. Revise section 307.170 to read as follows:

307.170 Program training requirements.

(a) HHS will maintain a program for certifying employees before
they may be considered eligible for appointment as a program/project
manager or COR/COTR.
(b) All HHS program/project managers, alternate program/project
managers, CORs/COTRs, alternate CORs/COTRs, and at least fifty percent
of the HHS program personnel performing the function of technical
proposal evaluator on a technical evaluation team or panel for a
competitively solicited HHS contract, shall have successfully completed
the Department's ``Basic Project Officer'' course, or an equivalent
course, before assuming the duties of their designated role, or take
the next available class. This requirement applies to the initial
technical proposal evaluation and any subsequent technical evaluations
that may be required. (*Peer and objective reviewers are excluded from
these requirements). Course equivalency for the ``Basic Project
Officer'' course will be determined by the ASAM/OAMP. The Contracting
Officer is responsible for ensuring that the program/project manager,
COR/COTR, and proposal evaluators have successfully completed the
required training. Non-information technology (IT) program/project
managers and non-IT CORs/COTRs who have successfully completed the
appropriate ``Basic Project Officer'' course, or an equivalent course,
are highly encouraged to take the Department's one-day course entitled
``Early Warning Project Management System Workshop,'' or an equivalent
Earned Value course. Program/Project managers and CORs/COTRs are highly
encouraged to take the Department's ``Writing Statements of Work''
course, or an equivalent course. Peer and objective reviewers are
excluded from these requirements. (*The peer review process pertains
specifically to NIH in the peer review of applications for grants and
contracts. Applications are evaluated by a peer review group composed
of scientists from the extramural research community.) All courses are
offered through HHS University.

0
34. Revise section 307.170-1 to read as follows:

307.170-1 Training policy exceptions.

In the event there is an urgent requirement for a specific
individual to serve as a program/project manager and COR/COTR (or
alternate program/project manager and alternate COR/COTR) and that
individual has not successfully completed the prerequisite training
course(s), the HCA (not delegable) may waive the training requirement
and authorize the individual to perform the project duties, provided
that:
(a) The individual first meets with the cognizant Contracting
Officer to review the HHS ``Project Officer's Contracting Handbook'' to
discuss the important aspects of the contracting-program office
relationship as appropriate to the circumstances; and
(b) The individual attends the next scheduled ``Basic Project
Officer'' course, or an equivalent course, and, for those current and
proposed IT program/project managers, as well as alternate IT program/
project managers and IT CORs/COTRs (as well as alternate CORs/COTRs)
assigned to HHS IT projects (including those designated as major or
tactical by HHS), the next ``Early Warning Project Management System
Workshop.''
0
35. Add sections 307.170-3 through 307.170-9 to subpart 307.1 to read
as follows:
Subpart 307.1--Acquisition Planning
307.170-3 Earned value training requirement for IT program/project
managers and IT CORs/COTRs.
307.170-4 Required training in HHS' portfolio management tool.
307.170-5 Maintenance/refresher training requirement for program/
project managers and CORs/COTRs.
307.170-6 Warranting of Other Transaction Officers for Other
Transactions.
307.170-7 Training Requirements for Other Transaction Officers.
307.170-8 Appointment of an Other Transaction Officer Technical
Representative for an Other Transaction.
307.170-9 Training requirement for an Other Transaction Officer
Technical Representative.

Subpart 307.1--Acquisition Planning

* * * * *

307.170-3 Earned value training requirement for IT program/project
managers and IT CORs/COTRs.

All current and proposed IT program/project managers, alternate IT
program/project managers, IT CORs/COTRs, and alternate CORs/COTRs
assigned to HHS IT projects (including those IT projects designated as
major or tactical), regardless of dollar threshold, must successfully
complete the Department's (offered through HHS University) one-day
course entitled ``Early Warning Project Management System Workshop,''
or an equivalent Earned Value training course. Course equivalency will
be determined jointly by the ASAM/OAMP and the HHS Office of the Chief
Information Officer.

307.170-4 Reqired training in HHS' portfolio management tool.

All current and proposed IT program/project managers, as well as
alternate IT program/project managers and IT CORs/COTRs (as well as
alternate IT CORs/COTRs), regardless of dollar threshold, must
successfully complete training in HHS' portfolio management tool
(contact the HHS Office of the Chief Information Officer for additional
information).

307.170-5 Maintenance/refresher training requirement for program/
project managers and CORs/COTRs.

Program/Project Managers and CORs/COTRs who monitor one or more
contracts are required to take 40 CLPs each year.

307.170-6 Warranting of Other Transaction Officers for Other
Transactions.

(a) Other Transaction (OT) Officers shall possess the
qualifications necessary to ensure that OTs are in compliance with
applicable laws and regulations. The ASAM/OAMP will have the sole
authority to warrant OT Officers at HHS. To receive a warrant as an HHS
OT Officer, the individual must be a Contracting Officer, preferably
with an unlimited warrant, with a Federal Acquisition Certification in
Contracting (FAC-C) Level III, or a Level III or IV certified Grants
Officer within HHS. Nominations for appointment of OT Officers shall be
submitted to the Head of Contracting Activity in writing through
appropriate organizational channels for review. The nomination package
shall include the following:
(1) A completed Appendix A (``OT Officer's Warrant Application
Form'') of HHS Other Transaction Authority Guidebook;
(2) A recommendation from the employee's immediate supervisor
providing justification for the appointment of an HHS OT Officer;
(3) Current resume/OF 612/SF 171 and/or other documentation
describing the employee's experience, education, and training relevant
to the position for which warrant authority is being sought;
(4) A copy of the employee's most recent performance appraisal;
(5) Type of work to be performed under the warrant, i.e., executing
OTs;
(6) A copy of the certificate issued under the HHS Acquisition
Certification Program indicating the employee's current certification
level and a copy of previous warrant certificate, if applicable; or a
copy of the certificate issued under the HHS Grants Certification
Program, if applicable; and
(7) Proof of successful completion of the ``Cooperative Agreements,
CRADAs

[[Page 76496]]

& Other Transactions'' course taught by Federal Publications Seminars,
or an equivalent course.
(b) For additional information, see http://www.knownet.hhs.gov/acquisition/hhs_epp_postings/HHSGuidebook1-OTAMarch2005.doc
.

307.170-7 Training Requirements for Other Transaction Officers.

OT Officers must successfully complete the ``Cooperative
Agreements, CRADAs & Other Transactions'' course, or an equivalent
course, prior to appointment as an OT Officer. Grants Officers who
serve as OT Officers are required to have successfully completed the
following courses: CON 110 (``Mission Support Planning''); CON 111
(``Mission Strategy Execution,''); CON 112 (``Mission Performance,'')
or CON 120 (``Mission Focused Contracting.''), or equivalent courses
prior to being appointed as an OT Officer. The HHS OTA Board will
determine course equivalency.

307.170-8 Appointment of an Other Transaction Officer Technical
Representative for an Other Transaction.

The program office nominates the Other Transaction Officer
Technical Representative (OTR). The OT Officer prepares an OTR
delegation memorandum that describes the OTR's authority and assigns
the OTR specific responsibilities, with limitations of authority, in
writing. The OTR represents the OT Officer only to the extent delegated
in the written appointment and does not have the authority to change
the terms and conditions of the OT.

307.170-9 Training requirement for an Other Transaction Officer
Technical Representative.

(a) Program personnel selected to serve as an OTR or an alternate
OTR assigned to an OT, and at least fifty percent of the technical
evaluators that review the initial and any subsequent proposals or
revisions thereof, shall successfully complete the Department's ``Basic
Project Officer'' course, or an equivalent course prior to being
appointed. Determination of course equivalency shall be made by the HHS
OTA Board.
(b) In addition to the Department's required ``Basic Project
Officer'' course, the OTR or alternate OTR assigned to an OT, and at
least fifty percent of the technical evaluators that review the initial
and any subsequent proposals or revisions thereof, shall successfully
complete the ``Cooperative Agreements, CRADAs & Other Transactions''
course, or an equivalent course, prior to being appointed and prior to
assuming job duties associated with the OT.
(c) Refresher training in the policies and procedures of awarding
cooperative agreements, CRADAs and OTs is required every three years.

307.302, 307.303, 307.304, and 307.307 [Removed]

0
36. Remove subpart 307.3 (sections 307.302, 307.303, 307.304, and
307.307).

0
37. Revise paragraph (b)(2) of section 307.7001 to read as follows:

307.7001 Distinction between acquisition and assistance.

* * * * *
(b) * * *
(2) The Department determines in a specific instance that the use
of a type of contract is appropriate. That is, it is determined in a
certain situation that specific needs can be satisfied best by using
the acquisition process. However, this authority does not permit
circumventing the criteria for use of acquisition or assistance
instruments. Use of this authority is restricted to extraordinary
circumstances and only with the prior approval of the Deputy Assistant
Secretary for Acquisition Management and Policy (DASAMP).
* * * * *

0
38. Revise section 307.7104 to read as follows:

307.7104 Transmittal.

The RFC must be conveyed to the contracting office by use of a
cover memorandum. The cover memorandum must be signed by the head of
the sponsoring program office and include both a statement attesting to
the conclusiveness of the review described in 307.7103(b) and a list
identifying all attachments to the RFC.

0
39. Amend section 307.7105 by revising the introductory text for the
section, the introductory text for paragraph (b)(4), and paragraphs
(b)(4)(i) and (b)(7) to read as follows:

307.7105 Format and content.

The Department is in the process of standardizing a format for the
RFC. In the interim, the information in paragraph (a) of this section
must be included. Paragraph (b) contains information that must also be
included if applicable.
* * * * *
(b) * * *
(4) Special program clearances or approvals. The following special
program clearances or approvals should be reviewed for applicability to
each acquisition. Those which are applicable should be addressed during
the planning discussions between the Project Officer and Contracting
Officer/Contract Specialist (see 307.104(c)) and immediate action
should be initiated by the Project Officer to obtain the necessary
clearances or approvals. The Contracting Officer/Contract Specialist
shall provide a comprehensive checklist of these and any OPDIV special
approvals, clearances, and requirements to the program office. If the
approval or clearance has been requested and is being processed at the
time of RFC submission, a footnote to this effect, including all
pertinent details, must be included in this section.
(i) Commercial activities. (OMB Circular No. A-76). An RFC must
contain a statement as to whether the proposed solicitation is or is
not to be used as part of an OMB Circular No. A-76 public-private cost
comparison. (See OMB Circular No. A-76, Performance of Commercial
Activities.)
* * * * *
(7) Special terms and conditions. Any suggested special terms and
conditions not already covered in the statement of work.
* * * * *

0
40. Amend section 307.7106 by revising paragraphs (a) and (d) to read
as follows:

307.7106 Statement of work.

(a) General. A statement of work (SOW) describes the work or
services to be performed in reaching an end result without describing
the method that will be used unless the method of performance is
critical or required in order to obtain successful performance. The SOW
should be clear and concise and must completely define the
responsibilities of both the contractor and the Government. The SOW
should be worded to make more than one interpretation virtually
impossible.
* * * * *
(d) Elements of the SOW. The elements of the SOW will vary with the
objective, complexity, size, and nature of the acquisition. In general,
it should include the following:
(1) Purpose of the project. This includes a general description of
the objectives of the project and the desired results.
(2) Background information. This includes a brief history of the
project and the importance of the project to the overall program
objectives.
(3) A detailed description of the technical requirements. The
statement of work should provide sufficient detail to accurately
reflect the Government's requirement. It should state what is to

[[Page 76497]]

be done without prescribing the method to be used and should include
performance standards. The statement of work may be broken down into
tasks and subtasks. The degree of breakout depends on the size and
complexity of the project. The statement of work should indicate
whether the tasks are sequential or concurrent.
(4) Reference material. All reference material to be used in the
conduct of the project that indicates how the work is to be carried out
must be identified. Applicability should be explained, and a statement
made as to where the material can be obtained.
(5) Level of effort. When a level of effort is required, the number
and type of personnel required should be stated. If known, the type and
degree of expertise should be specified.
(6) Special requirements. (as applicable). An unusual or special
contractual requirement, which would impact on contract performance,
should be included as a separate section.
(7) Deliverables reporting requirements. All deliverables and/or
reports must be clearly and completely described. Include the timeframe
for completion, the format, and the number of copies.

PART 309--CONTRACTOR QUALIFICATIONS

0
41. Revise section 309.403 to read as follows:

309.403 Definitions.

Acquiring agency's head or designee, as used in the FAR, shall
mean, unless otherwise stated in this subpart, the head of the
contracting activity. Acting in the capacity of the acquiring agency's
head, the head of the contracting activity may make the required
justifications or determinations, and take the necessary actions,
specified in FAR 9.405, 9.406, and 9.407 for his or her respective
activity, but only after obtaining the written approval of the
debarring or suspending official, as the case may be.
Debarring official means the Assistant Secretary for Administration
and Management, or his/her designee.
Initiating official means either the contracting officer, the head
of the contracting activity, the Deputy Assistant Secretary for
Acquisition Management and Policy, or the Inspector General.
Suspending official means the Assistant Secretary for
Administration and Management, or his/her designee.

0
42. Revise section 309.404 to read as follows:

309.404 List of parties excluded from Federal procurement and
nonprocurement programs.

(c) The Office of Acquisition Management and Policy (OAMP) shall
perform the actions required by FAR 9.404(c).
(4) OAMP shall maintain all documentation submitted by the
initiating official recommending the debarment or suspension action and
all correspondence and other pertinent documentation generated during
the OAMP review.

0
43. Amend section 309.405 by revising paragraph (a)(1) to read as
follows:

309.405 Effect of listing.

(a) * * *
(1) If a Contracting Officer considers it necessary to award a
contract, or consent to a subcontract with a debarred or suspended
contractor, the Contracting Officer shall prepare a determination,
including all pertinent documentation, and submit it through
acquisition channels to the head of the contracting activity. The
documentation must include the date by which approval is required and a
compelling reason for the proposed action. Compelling reasons for award
of a contract or consent to a subcontract with a debarred or suspended
contractor include:
(i) The property or services to be acquired are available only from
the listed contractor; or
(ii) The urgency of the requirement dictates that the Department
conduct business with the listed contractor.
* * * * *

0
44. Revise section 309.406-3 to read as follows:

309.406-3 Procedures.

(a) Investigation and referral. When an apparent cause for
debarment becomes known, the initiating official shall prepare a report
containing the information required by 309.470-2, along with a written
recommendation, and forward it through appropriate channels to the
debarring official. Reports shall be forwarded in accordance with
309.470-1. The debarring official, the Deputy Assistant Secretary for
Acquisition Management and Policy, shall initiate an investigation.
(b) Decision making process. The debarring official shall review
the results of the investigation, if any, and make a written
determination whether or not debarment procedures are to be commenced.
A copy of the determination shall be promptly sent through appropriate
channels to the initiating official and the Contracting Officer. If it
is determined that debarment procedures shall commence, the debarring
official shall consult with the Office of General Counsel and then
notify the contractor in accordance with FAR 9.406-3(c). If the
proposed action is not based on a conviction or judgment and the
contractor's submission in response to the notice raises a genuine
dispute over facts material to the proposed debarment, the debarring
official shall arrange for fact-finding hearings and take the necessary
action specified in FAR 9.406-3(b)(2). The debarring official shall
also ensure that written findings of facts are prepared, and shall base
the debarment decisions on the facts as found, after considering
information and argument submitted by the contractor and any other
information in the administrative record. The Office of the General
Counsel shall represent the Department at any fact-finding hearing and
may present witnesses for HHS and question any witnesses presented by
the contractor.

0
45. Revise section 309.407-3 to read as follows:

309.407-3 Procedures.

(a) Investigation and referral. When an apparent cause for
suspension becomes known, the initiating official shall prepare a
report containing the information required by 309.470-2 along with a
written recommendation and forward it through appropriate channels to
the suspending official. Reports shall be forwarded in accordance with
309.470-1. The suspending official shall initiate an investigation.
(b) Decision making process. The suspending official shall review
the results of the investigation, if any, and make a written
determination whether or not suspension should be imposed. A copy of
this determination shall be promptly sent through appropriate channels
to the initiating official and the Contracting Officer. If it is
determined that suspension shall be imposed, the suspending official
shall consult with the Office of General Counsel and then notify the
contractor in accordance with FAR 9.407-3(c). If the action is not
based on an indictment, and, subject to the provisions of FAR 9.407-
3(b)(2), the contractor's submission in response to the notice raises a
genuine dispute over facts material to the suspension, the suspending
official shall, after suspension has been imposed, arrange for fact-
finding hearings and take the necessary actions specified in FAR 9.407-
3(b)(2).

[[Page 76498]]

0
46. Amend section 309.470-1 by revising the introductory text to read
as follows:

309.470-1 Situations where reports are required.

A report incorporating the information required by 309.470-2 shall
be forwarded, in duplicate, by the Contracting Officer through
acquisition channels to OAMP when:
* * * * *

0
47. Add part 311 to read as follows:

PART 311--DESCRIBING AGENCY NEEDS

Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

311.003 Defining Electronic Information Technology (EIT) requirements.

HHS officials who are defining agency needs for EIT products and
services and performing market research to meet those needs can use the
Buy Accessible Wizard (http://www.buyaccessible.gov) managed by the

General Services Administration to document EIT requirements, identify
the applicable Section 508 standards, and document the market research.

0
48. Add part 312 to read as follows:

PART 312--ACQUISITION OF COMMERCIAL ITEMS

Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

Subpart 312.1--Acquisition of Commercial Items--General

312.101 Policy.

(a) It is HHS policy to maximize its buying power, reduce
acquisition administrative costs, and develop long-term, mutually
beneficial, open partnerships with best-in-class providers of products
and services. Accordingly, HHS has implemented a Strategic Sourcing
Program under which Indefinite-Delivery/Indefinite-Quantity contracts
(IDIQs) and Blanket Purchase Agreements (BPAs), known as HHS-wide
Acquisition Contracts (HWACs), are awarded to allow for savings for
commercial items and services across HHS and make the acquisition
process more efficient.
(b) If consideration is being given to soliciting or acquiring a
product or service from a source, other than HHS Contract Closeout
IDIQs or Strategic Sourcing BPAs, when the category of the current
requirement (e.g. Lab Supplies, Events Management) is encompassed in
the portfolio of existing IDIQ or BPA categories a waiver request must
be prepared and approved in advance of a purchase or processing of a
requirement.
(c) The instructions, including approval requirements, and waiver
form, are available at http://dbh.ogam2000.com/HHS_Strategic_Sourcing/Data_Collection/waiver.asp
.

The following links provide more detailed information regarding the
supplies, equipment, and services in each of the HWACs: the HHS
Acquisition Integration and Modernization Web site: http://intranet.hhs.gov/hwac/index.html
and the HHS Strategic Sourcing Web

site: http://intranet.hhs.gov/ssc/.

PART 314--SEALED BIDDING

0
49. Revise section 314.202-7 to read as follows:

314.202-7 Facsimile bids.

(c) If the HCA (not delegable) has determined that the contracting
activity will allow use of facsimile bids and proposals, the HCA shall
prescribe internal procedures, in accordance with the FAR, to ensure
uniform processing and control.

314.213 [Removed]

0
50. Remove section 314.213.

0
51. Revise section 314.404-1 to read as follows:

314.404-1 Cancellation of invitations after opening.

0
52. Revise section 314.407-3 to read as follows:

314.407-3 Other mistakes disclosed before award.

(e) Authority has been delegated to the Departmental Protest
Control Officer, Office of Acquisition Management and Policy, to make
administrative determinations in connection with mistakes in bid
alleged after opening and before award. This authority may not be
redelegated.
(f) Each proposed determination shall have the concurrence of the
Chief, General Law Division, Office of General Counsel.
(i) Doubtful cases shall not be submitted by the Contracting
Officer directly to the Comptroller General, but, instead, shall be
submitted to the Departmental Protest Control Officer.
0
53. Amend section 314.407-4 by revising paragraph (d) to read as
follows:

314.407-4 Mistakes after award.

* * * * *
(d) Each proposed determination shall have the concurrence of the
Chief, General Law Division, Office of General Counsel.

PART 315--CONTRACTING BY NEGOTIATION

0
54. Add section 315.204-1 to read as follows:

315.204-1 Uniform contract format.

(a) When preparing solicitations and resulting contracts,
Contracting Officers/Contract Specialists are strongly encouraged to
use as a guide the HHS Solicitation/Contract Structure Document found
at http://www.knownet.hhs.gov/acquisition/policy.htm.

315.204-5 [Removed]

0
55. Remove section 315.204-5.

315.209 [Amended]

0
56. Amend section 315.209 by removing paragraph (g).
0
57. Amend section 315.305 by revising paragraphs (a)(1), (a)(3)(i)(D),
(a)(3)(ii)(B), the introductory text of (a)(3)(ii)(E)(1),
(a)(3)(ii)(E)(4), (a)(3)(ii)(F)(2), and (a)(3)(ii)(F)(3) to read as
follows:

315.305 Proposal evaluation.

(a)(1) Cost or price evaluation. (i) The Contracting Officer shall
evaluate business proposals in accordance with the requirements set
forth in FAR 15.404. The extent of cost or price analysis in each case
depends on the contract type, the amount of the proposal, the technical
complexity, and related cost or price. The Project Officer shall be
requested to analyze the following elements, if applicable, to
determine if they are necessary and reasonable for efficient contract
performance:
(A) The number of labor hours proposed for the various labor
categories and the mix in relation to the technical requirements;
(B) Types, numbers and hours/days of proposed consultants;
(C) The kinds and quantities of material, equipment, supplies, and
services;
(D) Kinds and quantities of information technology;
(E) Logic of proposed subcontracting; and
(F) Travel proposed, including number of trips, locations, purpose,
and travelers.
(ii) The Project Officer shall provide written comments, including
the rationale for any exceptions to the elements. The Project Officer's

[[Page 76499]]

comments shall be used for negotiations or to support award without
discussions. The Contracting Officer should also request assistance of
a cost/price analyst, when necessary. The Contracting Officer's
negotiation memorandum must include the rationale used in determining
that the price or cost is fair and reasonable.
* * * * *
(3) Technical evaluation.
(i) * * *
(D) The technical evaluation plan shall be submitted to the
Contracting Officer for review and approval before the solicitation is
issued. The Contracting Officer shall make sure that the significant
factors and subfactors relating to the evaluation are reflected in the
evaluation criteria when conducting the review of the plan.
(ii) * * *
(B) Role of the Project Officer. (1) The Project Officer is the
Contracting Officer's technical representative for the acquisition
action. The Project Officer may be a voting member of the technical
evaluation panel, and may also serve as the chairperson of the panel,
unless prohibited by law or contracting activity procedures.
(2) The Project Officer is responsible for recommending panel
members who are knowledgeable in the technical aspects of the
acquisition and capable of identifying strengths and weaknesses in the
proposals received. Government employees serving as panel members must
be selected in accordance with the requirements set forth in 307.170.
(3) The Project Officer shall ensure that persons possessing
expertise and experience in addressing issues relative to sex, race,
national origin, and handicapped discrimination are included as panel
members for acquisitions in which such issues are applicable.
(4) The Project Officer shall submit the list of recommended panel
members to an official within the project office in a position at least
one level higher. This official will review the list and select the
chairperson.
(5) The Project Officer shall arrange for adequate and secure
working space for the panel.
* * * * *
(E) Continuity of evaluation process. (1) The technical evaluation
panel shall evaluate all original proposals, make recommendations to
the chairperson regarding strengths and weaknesses of proposals, and,
if required by the Contracting Officer, assist the Contracting Officer
during communications and discussions, and review supplemental, revised
and/or final proposal revisions. To the extent possible, the same
evaluators should be available throughout the entire evaluation and
selection process to ensure continuity and consistency in the treatment
of proposals. The following are examples of circumstances when it would
not be necessary for the technical evaluation panel to evaluate revised
proposals submitted during the acquisition:
* * * * *
(4) When continuity of the evaluation process is not possible, and
either new evaluators are selected or the size of the evaluation panel
is reduced, all proposals shall be reviewed by each panel member at the
current stage of the acquisition (i.e., initial proposal, final
proposal revisions, etc.). Also, guidance should be provided concerning
what to do if an unusually large number of proposals are received,
including how to determine what constitutes an unusually large number
of proposals.
(F) * * *
(2) Decisions to disclose proposals to evaluators outside of the
Government shall be made by the official responsible for appointing
panel members in accordance with operating division procedures. The
avoidance of organization conflict of interest and competitive
relationships must be taken into consideration when making the decision
to use outside evaluators.
(3) When it is determined to disclose a solicited proposal outside
the Government for evaluation purposes, the following or similar
conditions shall be included in the written agreement with evaluator(s)
prior to disclosure:

Conditions for Evaluating Proposals

The evaluator agrees to use the data (trade secrets, business
data, and technical data) contained in the proposal for evaluation
purposes only.
The foregoing requirement does not apply to data obtained from
another source without restriction.
Any notice or legend placed on the proposal by either the
Department or the submitter of the proposal shall be applied to any
reproduction or abstract provided to the evaluator or made by the
evaluator. Upon completion of the evaluation, the evaluator shall
return to the Government the furnished copy of the proposal or
abstract, and all copies thereof, to the Departmental office which
initially furnished the proposal for evaluation.
Unless authorized by the Department's initiating office, the
evaluator shall not contact the submitter of the proposal concerning
any aspects of its contents.
The evaluator's employees and subcontractors shall abide by
these conditions.
* * * * *

0
58. Amend section 315.371 by revising the introductory text of
paragraph (a) to read as follows:

315.371 Contract preparation and award.

(a) After details have been finalized with the selected offeror,
the Contracting Officer shall:
* * * * *

0
59. Amend section 315.372 by revising the introductory text and
paragraph (a) to read as follows:

315.372 Preparation of negotiation memorandum.

The negotiation memorandum or summary of negotiations is a complete
record of all actions leading to award of a contract and is prepared by
the Contracting Officer/Contract Specialist to support the source
selection decision discussed in FAR 15.308. It should be in sufficient
detail to explain and support the rationale, judgments, and authorities
upon which all actions were predicated. The memorandum will document
the negotiation process and reflect the negotiator's actions, skills,
and judgments in concluding a satisfactory agreement for the
Government. The negotiation memorandum shall address each item listed
below. If an item is not applicable, it shall be so stated in the
memorandum. Information already contained in the contract file may be
referenced rather than reiterated.
(a) Description of articles and services and period of performance.
A description of articles and services, quantity, unit price, total
contract amount, and period of contract performance should be set
forth.
* * * * *

0
60. Amend section 315.404-4 by revising paragraphs (b)(1), the
introductory text of (b)(1)(ii), (c), (d)(1)(i), (d)(1)(ii), the
introductory text of (d)(1)(iv), and (d)(3)(iv) to read as follows:

315.404-4 Profit.

(b) Policy. (1) The structured approach for determining profit or
fee (hereafter called profit) provides a technique for establishing a
profit objective for negotiation. A profit objective is that part of
the estimated contract price objective or value which, in the judgment
of the Contracting Officer, constitutes an appropriate amount of profit
for the acquisition being considered. This technique allows for
consideration of the profit factors described in paragraph (d) of this
section. The Contracting Officer's analysis of these factors is based
on available information such as proposals, audit data, assessment
reports, preaward

[[Page 76500]]

surveys, etc. The structured approach provides a basis for documenting
the profit objective. Any significant departure from this objective
shall be explained. The amount of documentation depends on the dollar
value and complexity of the proposed acquisition. The profit objective
is a part of the overall negotiation objective and is directly related
to the cost objective and any proposed sharing arrangement. The profit
objective should be negotiated at the same time as the other cost
items. The profit objective should be negotiated as a whole and not as
individual profit factors.
(ii) The profit analysis factors in FAR 15.404-4(d) shall be used
in lieu of the structured approach in the following circumstances.
Factors considered inapplicable to the acquisition shall be excluded
from the profit objective. Documentation shall be provided which
includes the profit factor breakdown.
* * * * *
(c) Contracting Officer responsibilities. The Contracting Officer
shall develop the profit objective. This objective shall realistically
reflect the total overall task to be performed and the requirements
placed on the contractor. The Contracting Officer shall not begin to
develop the profit objective until a thorough review of proposed
contract work has been made; a review of all available knowledge
regarding the contractor pursuant to FAR subpart 9.1, including audit
data, preaward survey reports and financial statements, as appropriate,
has been conducted; and an analysis of the contractor's cost estimate
and comparison with the Government's estimate or projection of cost has
been made.
(d) * * *
(1) * * *
(i) The Contracting Officer shall measure ``Contractor Effort'' by
assigning a profit percentage within the designated weight range to
each element of contract cost. The categories listed are for reference
purposes only, but are broad and basic enough to provide guidance to
other elements of cost. Facilities capital cost of money is not to be
included. A total dollar profit shall be computed for ``Contractor
Effort.''
(ii) The Contracting Officer shall use the total dollar profit for
the ``Contractor Effort'' to calculate specific profit dollars for
``Other Factors''--cost risk, investment, performance, socioeconomic
programs, and special situations. The Contracting Officer shall
multiply the total dollar profit for the ``Contractor Effort'' by the
weight assigned to each of the elements in the ``Other Factors''
category. Facilities capital cost of money is not included. Form HHS-
674, Structured Approach Profit/Fee Objective, should be used. Form
HHS-674 is illustrated in 353.370-674.
* * * * *
(iv) The structured approach was designed for arriving at profit
objectives for other than nonprofit organizations. However, the
structured approach can be used for nonprofit organizations if
appropriate adjustments are made. The Contracting Officer shall use the
modified structured approach in paragraph (d)(1)(iv)(B) of this section
to establish profit objectives for nonprofit organizations.
* * * * *
(3) * * *
(iv) Federal socioeconomic programs. This factor, which may apply
to special circumstances or particular acquisitions, relates to the
extent of a contractor's successful participation in Government
sponsored programs such as small business, small disadvantaged
business, women-owned small business, service-disabled veterans,
handicapped sheltered workshops, and energy conservation efforts. The
contractor's policies and procedures which energetically support
Government socioeconomic programs and achieve successful results should
be given positive considerations. Conversely, failure or unwillingness
on the part of the contractor to support Government socioeconomic
programs should be viewed as evidence of poor performance for the
purpose of establishing a profit objective.
* * * * *

0
61. Amend section 315.606 by revising paragraph (b) to read as follows:

315.606 Agency procedures.

* * * * *
(b) The HCA or the HCA's designee shall be the point of contact for
coordinating the receipt and handling of unsolicited proposals.

0
62. Amend section 315.609 by revising the introductory text to read as
follows:

315.609 Limited use of data.

The legend, Use and Disclosure of Data, prescribed in FAR 15.609(a)
is to be used by the offeror to restrict the use of data for evaluation
purposes only. However, data contained within the unsolicited proposal
may have to be disclosed as a result of a request submitted pursuant to
the Freedom of Information Act. Because of this possibility, the
following notice shall be provided to all prospective offerors of
unsolicited proposals:
* * * * *

PART 316--TYPES OF CONTRACTS

0
63. Add section 316.505 to read as follows:

316.505 Ordering.

(b)(5) The Department's task-order and delivery-order ombudsman is
the Director, Strategic Acquisition Service, Program Support Center
(PSC). The task-order and delivery-order ombudsmen for each of the
Department's contracting activities are as follows:

AHRQ--Director, Office of Performance Accountability, Resources and
Technology
CDC--Chief Information Officer
CMS--Chief Operating Officer
FDA--Director, Office of Acquisitions and Grants Services
HRSA--Associate Administrator, Office of Administration and Financial
Management
Indian Health Service--Director, Office of Management Services
NIH--Senior Scientific Advisor for Extramural Research, Office of
Extramural Research (R&D) and Senior Advisor to the Director (Other
than R&D)
PSC--Director, Strategic Acquisition Service
SAMHSA--Executive Officer

0
64. Revise section 316.603-3 to read as follows:

316.603-3 Limitations.

An official one level above the Contracting Officer shall make the
written determination.

316.770-1 [Removed]

0
65. Remove section 316.770-1.

PART 319--SMALL BUSINESS PROGRAMS

0
66. Amend section 319.201 by revising paragraph (e) to read as follows:

319.201 General policy.

* * * * *
(e)(1) The Department's Small Business Program shall be carried out
by appointed small business specialists (SBS) co-located within the
OPDIVs. Appointments, and termination of appointments, shall be made in
writing by the Director, Office of Small and Disadvantaged Business
Utilization (OSDBU). The Director, OSDBU, will exercise full management
authority over small business specialists.
(2) One or more qualified SBS shall be appointed in the following
activities:

[[Page 76501]]

Agency for Healthcare Research and Quality (AHRQ), Centers for Medicare
& Medicaid Services (CMS), Substance Abuse and Mental Health Services
Administration (SAMHSA), Food and Drug Administration (FDA), Health
Resources and Services Administration (HRSA), Indian Health Service
(IHS), National Institutes of Health (NIH), Centers for Disease Control
(CDC), Program Support Center (PSC), and the Office of the Secretary
(OS).

0
67. Revise section 319.501 to read as follows:

319.501 General.

(e) Subsequent to the Contracting Officer's recommendation on Form
HHS-653, Small Business Set-Aside Review Form, the SBS shall review
each proposed acquisition strategy and either concur or non-concur with
the Contracting Officer's recommendation. The Small Business
Administration's Procurement Center Representative (SBA/PCR) shall also
review the acquisition strategy and either concur or non-concur with
the Contracting Officer's recommendation. If the Contracting Officer
disapproves the SBS's and/or the SBA PCR's set-aside recommendation,
the reasons must be documented on the Form HHS-653, and the form placed
in the contract file. The Contracting Officer will make the final
determination as to whether the proposed acquisition will be set-aside
or not.

0
68. Revise the heading of part 323 to read as follows:

PART 323--ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE
ENERGY TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE

PART 324--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION

0
69. Amend section 324.103 by revising paragraphs (a), (b), and (c) to
read as follows:

324.103 Procedures.

(a) All requests for contract shall be reviewed by the contracting
officer to determine whether the Privacy Act requirements are
applicable. The Privacy Act requirements are applicable when the
contract will require the contractor to design, develop, or operate any
Privacy Act system of records on individuals to accomplish an agency
function. When applicable, the contracting officer shall include the
solicitation notification and contract clause required by FAR 24.104 in
the solicitation, and the contract clause in the resultant contract. In
addition, the contracting officer shall ensure that the solicitation
notification, contract clause, and other pertinent information
specified in this subpart are included in any contract modification
which results in the Privacy Act requirements becoming applicable to a
contract.
(b)(1) The Contracting Officer shall identify in the contract work
statement the system(s) of records to which the Privacy Act and the
implementing regulations are applicable.
(2) The Contracting Officer shall include the clause specified in
352.270-11 in Section H of any RFP or resulting contract to notify the
contractor that it and its employees are subject to criminal penalties
for violations of the Act (5 U.S.C. 552a(i)) to the same extent as HHS
employees. The clause also requires that the contractor ensure that
each of its employees knows the prescribed rules of conduct and each
contractor employee is aware that he/she is subject to criminal
penalties for violations of the Act. These provisions also apply to all
subcontracts awarded under the contract which require the design,
development or operation of a system of records. The Contracting
Officer shall send the contractor a copy of 45 CFR part 5b, which
includes the rules of conduct and other Privacy Act requirements.
(c) The Contracting Officer shall specify in the contract work
statement and award the disposition to be made of the system(s) of
records upon completion of contract performance. The contract work
statement may require the contractor to destroy the records, remove
personal identifiers, or turn the records over to the Contracting
Officer. If there is a legitimate need for a contractor to keep copies
of the records after completion of a contract, the contractor must take
measures, as approved by the Contracting Officer, to keep the records
confidential and protect the individuals' privacy.
* * * * *

324.202 [Redesignated as 324.203]

0
70-A. Redesignate section 324.202 as section 324.203.
0
70-B. Amend section 324.203 by revising paragraph (b) to read as
follows:

324.203 Policy.

* * * * *
(b) The Contracting Officer, upon receiving a Freedom of
Information Act (FOIA) request, shall follow Department and OPDIV
procedures. As necessary, actions should be coordinated with the
cognizant Freedom of Information (FOI) Officer and the General Law
Division of the Office of General Counsel. The Contracting Officer must
remember that only the FOI Officer has the authority to release or deny
release of records. While the Contracting Officer should be familiar
with the entire FOIA regulation in 45 CFR part 5, particular attention
should be focused on Sec. Sec. 5.65 and 5.66; also of interest are
Sec. Sec. 5.32, 5.33, and 5.35.

PART 325--[REMOVED]

0
71. Remove part 325.

PART 330--COST ACCOUNTING STANDARDS

0
72. Revise section 330.201-5 to read as follows:

330.201-5 Waiver.

(c) The requirements of FAR 30.201-5 shall be exercised by the
Director, Division of Acquisition Policy (DAP). Requests shall be
forwarded through normal acquisition channels to the DAP.

PART 332--CONTRACT FINANCING

0
73. Revise section 332.402 to read as follows:

332.402 General.

(e) The HCA shall determine whether an advance payment is in the
public interest in accordance with FAR 32.402(c)(1)(iii)(A). This
authority is non delegable.

0
74. Amend section 332.407 by revising the introductory text of
paragraph (d) to read as follows:

332.407 Interest.

(d) The HCA (not delegable) is authorized to make the
determinations in FAR 32.407(d) and as follows. Interest-free advance
payments may also be approved for educational institutions and other
nonprofit organizations, whether public or private, performing work
under nonprofit contracts (without fee) involving health services,
educational programs, or social service programs, such as:
* * * * *

0
75. Revise section 332.501-2 to read as follows:

332.501-2 Unusual progress payments.

(a)(3) The approval of an unusual progress payment shall be made by
the HCA (not delegable).

0
76. Revise section 332.702 to read as follows:

332.702 Policy.

An incrementally funded contract is a multiple year contract in
which funds are allocated to cover specific phases or increments of
performance.

[[Page 76502]]

(a) Incremental funding may be used in cost-reimbursement type
contracts for the acquisition of severable services. It shall not be
used in contracts for construction or architect-engineer services.
Incremental funding allows severable cost-reimbursement type contracts
awarded for more than one year to be funded from succeeding fiscal
years.
(b) It is Departmental policy that multiple year contracts be fully
funded whenever possible. However, incrementally funded contracts may
be used when:
(1) A project, which is part of an approved program, is anticipated
to be of multiple year duration, but funds are not currently available
to cover the entire project;
(2) The project represents a valid need for the fiscal year in
which the contract is awarded and for the succeeding fiscal years of
the project's duration;
(3) The project is so significant to the approved program that
there is reasonable assurance that it will command a high priority for
proposed appropriations to cover the entire multiple year duration; and
(4) The statement of work is specific and is defined by separate
phases or increments so that, at the completion of each, progress can
be effectively measured.

0
77. Revise section 332.703-1 to read as follows:

332.703-1 General.

(b) The following general guidelines are applicable to
incrementally funded contracts:
(1) The estimated total cost of the project (all planned phases or
increments) is to be taken into consideration when determining the
requirements which must be met before entering into the contract; i.e.,
justification for noncompetitive acquisition, approval of award, etc.
(2) The RFP and resultant contract are to include a statement of
work which describes the total project covering the proposed multiple
year period of performance and indicating timetables consistent with
planned phases or increments and corresponding allotments of funds.
(3) Offerors' technical and cost proposals must include the entire
project and shall show distinct phases or increments and the multiple
year period of performance.
(4) Negotiations will be conducted based upon the total project,
including all planned phases or increments, and the multiple year
period of performance.
(5) Sufficient funds must be obligated under the basic contract to
cover no less than the first year of performance, unless the
Contracting Officer determines it is advantageous to the Government to
fund the contract for a lesser period. In that event, the Contracting
Officer shall ensure that the obligated funds are sufficient to cover a
complete phase or increment of performance representing a material and
measurable part of the total project and the period of time that the
funds cover shall be stated in the contract.
(6) An incrementally funded contract must contain precise
requirements for progress reports to be sent to the Project and
Contracting Officers. These reports will enable the contract to be
effectively monitored. The Project Officer shall prepare periodic
performance evaluation reports and provide them to the Contracting
Officer.

0
78. Revise section 332.704 to read as follows:

332.704 Limitation of cost or funds.

See subpart 342.71, ``Administrative Actions for Cost Overruns,''
for procedures for handling anticipated cost overruns.

332.705 [Removed]

0
79. Remove section 332.705.

332.902 [Removed]

0
80. Remove section 332.902.

PART 333--PROTESTS, DISPUTES, AND APPEALS

333.102 [Amended]

0
81. Amend section 333.102 by removing paragraph (a).

0
82. Amend section 333.103 by revising paragraph (f)(3) to read as
follows:

333.103 Protests to the agency.

(f) * * *
(3) Protests received after award shall be treated as indicated in
FAR 33.103(f)(3).

0
83. Revise section 333.104 to read as follows:

333.104 Protests to GAO.

(a) General procedures. (3)(ii) The DPCO shall process protests
filed with GAO, whether pre- or post award. Protest files shall be
prepared by the contracting office and distributed as follows: Two
copies to the DPCO, one copy to the contracting activity's protest
control officer, and one copy to OGC-GLD. In addition to the items
listed in 33.104(a)(3)(ii)(A) through (G), the protest file shall
include the following documents:
(H) The current status of award. When award has been made, this
shall include whether performance has commenced, shipment or delivery
has been made, or a stop work order has been issued.
(I) A copy of any mutual agreement to suspend work on a no-cost
basis, when appropriate (see FAR 33.104(c)(4)).
(J) Copies of the notice of protest given offerors and other
parties when the notice is appropriate (see FAR 33.104(a)(2)).
(K) A copy of the negotiation memorandum, when applicable.
(L) The name and telephone number of the person in the contracting
office who may be contacted for information relevant to the protest.
(M) A copy of the competitive range memorandum.
(N) The contracting officer's statement of facts and circumstances,
including a discussion of the merits of the protest, and conclusions
and recommendations, including documentary evidence on which they are
based. The files shall be assembled in an orderly manner and shall have
an index of enclosures and any document referred to therein.
(4) The DPCO is responsible for making the necessary distributions
referenced in FAR 33.104(a)(4).
(5) The Contracting Officer shall furnish the protest file
containing the documentation specified in paragraph (a)(3)(ii) of this
section (with the exception of the contracting officer statement of
facts and circumstances) and FAR 33.104(a)(3)(ii)(A) through (G) to the
DPCO within fourteen (14) calendar days from receipt of the protest.
The contracting officer shall submit the contracting officer's
statement of facts and circumstances within twenty-one (21) calendar
days from receipt of the protest. Since the statute allows only a short
time period in which to respond to protests lodged with GAO, the
Contracting Officer shall handle each protest on a priority basis. The
DPCO shall submit copies of the protest file to GAO, the protestor, and
any intervenors in accordance with FAR 33.104(a)(4)(i).
(6) Since the DPCO will furnish the protest file to GAO, the
protestor, and any intervenors, comments on the file from the protestor
and any intervenors will be sent to the DPCO.
(7) The DPCO, Division of Acquisition Policy (DAP), shall serve as
the GAO point of contact for protests lodged with GAO.
(b) Protests before award. (1) To make an award notwithstanding a
protest, the Contracting Officer shall prepare a finding using the
criteria in FAR 33.104(b)(1), have it executed by the HCA (not
delegable), and forward it, along with a written request for approval
to make the award, to the

[[Page 76503]]

Deputy Assistant Secretary for Acquisition Management and Policy
(DASAMP).
(2) If the request to make an award notwithstanding the protest is
approved by the Deputy Assistant Secretary for Acquisition Management
and Policy (DASAMP), the DPCO shall notify GAO. Whether the request is
approved or not, the DPCO shall telephonically notify the contracting
activity's protest control officer of the decision of the Deputy
Assistant Secretary for Acquisition Management and Policy (DASAMP), and
the contracting activity's protest control officer shall immediately
notify the Contracting Officer. The DPCO shall confirm the decision by
memorandum to the contracting activity's protest control officer.
(c) Protests after award. (2) If the Contracting Officer believes
performance should be allowed to continue notwithstanding the protest,
a finding shall be prepared by the Contracting Officer using the
criteria in FAR 33.104(c)(2), executed by the HCA (not delegable), and
forwarded, along with a written request for approval, to the Deputy
Assistant Secretary for Acquisition Management and Policy (DASAMP). The
same procedures for notification stated in paragraph (b)(2) of this
section shall be followed.
(d) Findings and notice. The written notice required by FAR
33.104(d) shall be provided to the protestor and any intervenors by the
DPCO.
(g) Notice to GAO. The Deputy Assistant Secretary for Acquisition
Management and Policy (DASAMP) shall be the official to comply with the
requirements of FAR 33.104(g).

0
84. Revise section 333.203 to read as follows:

333.203 Applicability.

(c) The Secretary has designated the Armed Services Board of
Contract Appeals (ASBCA) as the authorized ``Board'' to hear and
determine disputes for the Department.

0
85. Revise section 333.211 to read as follows:

333.211 Contracting officer's decision.

(a)(2) The contracting officer shall refer a proposed final
decision to the Office of General Counsel-General Law Division (OGC-
GLD), for advice as to the legal sufficiency and format before sending
the final decision to the contractor. The contracting officer shall
provide OGC-GLD with the pertinent documents with the submission of
each proposed final decision.
(a)(4)(v) When using the paragraph in FAR 33.211 (a)(4)(v), the
contracting officer shall insert the words ``Armed Services'' before
each mention of the term ``Board of Contract Appeals''.
(h) At any time within the period of appeal, the contracting
officer may modify or withdraw his/her final decision. If an appeal
from the final decision has been taken to the ASBCA, the contracting
officer will forward his/her recommended action to OGC-GLD with the
supplement to the contract file which supports the recommended
correction or amendment.

0
86. Revise section 333.212 to read as follows:

333.212 Contracting officer's duties upon appeal.

(a) Appeals shall be governed by the rules set forth in the ``Rules
of the Armed Services Board of Contract Appeals,'' or by the rules
established by the U.S. Court of Federal Claims, as appropriate.
(b) The Office of General Counsel-General Law Division (OGC-GLD) is
designated as the Government Trial Attorney to represent the Government
in the defense of appeals before the ASBCA. A decision by the ASBCA
will be transmitted by the Government Trial Attorney to the appropriate
contracting officer for compliance in accordance with the ASBCA's
decision.
(c) If an appeal is filed with the ASBCA, the contracting officer
shall assemble a file within 30 days of receipt of an appeal, or advice
that an appeal has been filed, that consists of all documents pertinent
to the appeal, including:
(1) The decision and findings of fact from which the appeal is
taken;
(2) The contract, including specifications and pertinent
modifications, plans and drawings;
(3) All correspondence between the parties pertinent to the appeal,
including the letter or letters of claim in response to which the
decision was issued;
(4) Transcripts of any testimony taken during the course of
proceedings, and affidavits or statements of any witness on the matter
in dispute made prior to the filing of the notice of appeal with the
Board; and
(5) Any additional information considered pertinent. The
contracting officer shall furnish the appeal file to the Government
Trial Attorney for review and approval. After approval, the contracting
officer shall prepare four copies of the file, one for the ASBCA, one
for the appellant, one for the Government Trial Attorney, and one for
the contracting office.
(d) At all times after the filing of an appeal, the contracting
officer shall render whatever assistance is requested by the Government
Trial Attorney. When an appeal is set for hearing, the concerned
contracting officer shall be responsible for providing Government
witnesses and specified physical and documentary evidence to the Trial
Attorney. The Trial Attorney shall ensure the presence of all witnesses
and documentary evidence at both the pre-hearing conference and
hearing.
(e) If a contractor which has filed an appeal with the ASBCA elects
to accept fully the decision from which the appeal was taken, or any
modification to it, and gives written notification of acceptance to the
Government Trial Attorney or the concerned contracting officer, the
Government Trial Attorney will notify the ASBCA of the disposition of
the dispute in accordance with Rule 27 of the ASBCA.
(f) If the contractor has elected to appeal to the U.S. Court of
Federal Claims, the U.S. Department of Justice will represent the
Department. However, the contracting officer shall still coordinate all
actions through OGC-GLD.

0
87. Amend section 333.212-70 by revising paragraph (a) to read as
follows:

333.212-70 Formats.

(a) The following format is suggested for use in transmitting
appeal files to the ASBCA:

Your reference:
(Docket No.)
(Name)
Recorder, Armed Services Board of Contract Appeals
Skyline Six 5109 Leesburg Pike
Falls Church, Virginia 22041

Dear (Name):
Transmitted herewith are documents relative to the appeal under
Contract No. ---- with the ------------
(Name of contractor)
in accordance with the procedures under Rule 4. The Government Trial
Attorney for this case is
(Insert General Law Division, Office of General Counsel, Department
of Health and Human Services, 330 Independence Avenue, SW.,
Washington, DC 20201).
The request for payment of charges resulting from the processing of
this appeal should be addressed to:
(Insert name and address of cognizant finance office.)

Sincerely yours,

Contracting Officer
Enclosures
* * * * *

PART 334--[REMOVED]

0
88. Remove part 334.

[[Page 76504]]

PART 335--RESEARCH AND DEVELOPMENT CONTRACTING

0
89. Amend section 335.070-2 by revising the introductory text and
paragraph (a) to read as follows:

335.070-2 Amount of cost-sharing.

When cost-sharing is appropriate, use the following guidelines to
determine the amount of cost participation by the contractor:
(a) The amount of cost participation should depend on the extent to
which the research effort or results are likely to enhance the
performing organization's capability, expertise, or competitive
position, and the value of this enhancement to the performing
organization. It should be recognized that those organizations which
are predominantly engaged in research and development have little or no
production or other service activities and may not be in a favorable
position to derive a monetary benefit from their research under Federal
agreements. Therefore, contractor cost participation could reasonably
range from as little as 1 percent or less of the total project cost, to
more than 50 percent of the total project cost. Ultimately, the
Contracting Officer should bear in mind that cost-sharing is a
negotiable item. As such, the amount of cost-sharing should be
proportional to the anticipated value of the contractor's gain.
* * * * *

0
90. Add part 339 to read as follows:

PART 339--ACQUISITION OF INFORMATION TECHNOLOGY

Authority: 5 U.S.C. 301; 40 U.S.C. 486(c).

339.201-10 Clarification.

FAR Subpart 39.2, Electronic and Information Technology, requires
Federal agencies to ensure that, when acquiring EIT, Federal employees
with disabilities and members of the public with disabilities have
access to and use of information and data that is comparable to
individuals without disabilities. This EIT access requirement does not
apply to a contractor's internal workplaces. EIT that is not used nor
accessed by Federal employees or members of the public is not subject
to the Architectural and Transportation Barriers Compliance Board
(Access Board) standards. Contractors in their professional capacity
are not members of the public for purposes of Section 508.

339.201-70 Required provision and contract clause.

When acquiring EIT, the Contracting Officer shall insert the
provision at 352.270-19(a) in solicitations and the clause in 352.270-
19(b) in contracts and orders for projects that will develop, purchase,
maintain, or use electronic and information technology (EIT), unless
these EIT products and/or services are incidental to the project.
(Note: Other exceptions to this requirement can be found at FAR
39.204.)

PART 342--CONTRACT ADMINISTRATION

0
91. Revise section 342.705 to read as follows:

342.705 Final indirect cost rates.

(a) The Director, Division of Cost Allocation of the Program
Support Center, within each servicing HHS regional office, has been
delegated the authority to establish indirect cost rates, research
patient care rates, and, as necessary, fringe benefit, computer, and
other special costing rates for use in contracts and grants awarded to
State and local governments, colleges and universities, hospitals, and
other nonprofit organizations.
(b) The Division of Financial Advisory Services of the National
Institutes of Health has the authority to establish indirect cost
rates, fringe benefit rates, etc., for use in contracts and grants
awarded to commercial organizations.
0
92. Revise section 342.7001 to read as follows:

342.7001 Purpose.

Contract monitoring is an essential element of contract
administration and is performed jointly by the Project Officer and the
Contracting Officer. This subpart describes the Department's operating
concepts.

0
93. Revise section 342.7002 to read as follows:

342.7002 Contract monitoring responsibilities.

(a) The contract establishes the obligations of both the Government
and the contractor. The Contracting Officer is the only person
authorized to make changes to the contract. The Contracting Officer
must confirm all changes in writing.
(b) The Contracting Officer is responsible for assuring compliance
with all the terms and conditions of the contract. The Contracting
Officer shall inform the contractor by letter (if not already
stipulated in the contract) of the authorities and responsibilities of
the Government personnel involved with the contract.
(c) The Contracting Officer must depend on program, technical, and
other personnel for assistance and advice in monitoring the
contractor's performance, and in other areas of postaward
administration. The Contracting Officer must assure that these
individuals understand and carry out their assigned responsibilities.
The individual roles and corresponding responsibilities typically
involve, but are not limited to, the following:
(1) The role of program and technical personnel in monitoring the
contract is to assist and/or advise the Contracting Officer or act as
his/her representative when so designated by the Contracting Officer.
Activities may include:
(i) Providing technical monitoring during contract performance, and
issuing letters to the contractor and Contracting Officer relating to
delivery, acceptance, or rejection in accordance with the terms of the
contract;
(ii) Assessing contractor performance, including inspection and
testing of products and evaluation of reports and data;
(iii) Recommending necessary changes to the schedule of work and
period of performance in order to accomplish the objectives of the
contract. Program officials must provide the Contracting Officer a
written request along with an appropriate justification and a funding
document if additional funds are needed;
(iv) Reviewing invoices/vouchers and recommending approval/
disapproval action by the Contracting Officer, to include comments
regarding anything unusual discovered in the review;
(v) Reviewing and recommending approval or disapproval of
subcontractors, overtime, travel, and key personnel changes; and
(vi) Participating, as necessary, in various phases of the contract
closeout process.
(2) The role of the Project Officer in monitoring the contract
includes the applicable activities set forth in paragraph (c)(1) of
this section. The Project Officer also shall do the following:
(i) Submit periodic reports to the Contracting Officer that
concisely explain the status of the contract, and include recommended
actions for any problems reported. Provide the Contracting Officer with
written notification of evaluation and approval/disapproval of contract
deliverables and of completion of tasks or phases. The Contracting
Officer or designee will provide the contractor with written

[[Page 76505]]

notification of approval or disapproval and include a copy in the
contract file;
(ii) Monitor the technical aspects of the contract, identify
existing and potential problems that threaten performance, and
immediately inform the Contracting Officer of deviations from contract
objectives or from any technical or delivery requirements;
(iii) Immediately notify the head of the program office whenever it
is determined that objectives are not being met and provide specific
recommendations of actions to be taken. The Contracting Officer shall
receive a copy of the Project Officer's report and recommendations;
(iv) Within 120 days after contract completion, submit a final
written assessment report to the Contracting Officer. The report should
include analysis of the contractor's performance, including the
contract and program objectives achieved and missed. A copy of the
final assessment report shall be forwarded to the head of the program
office responsible for the program for management review and follow-up,
as necessary; and
(v) Accompany and/or provide, when requested, technical support to
the HHS auditor in the conduct of visual inspections.
(3) The roles of the contract administrator, auditor, cost analyst,
and property administrator are to assist and/or advise the Contracting
Officer in postaward administration activities such as:
(i) Evaluation of contractor systems and procedures, to include
accounting policies and procedures, purchasing policies and practices,
property accounting and control, wage and salary plans and rate
structures, personnel policies and practices, etc.;
(ii) Processing of disputes under the Disputes clause and any
resultant appeals;
(iii) Modification or termination of the contract; and
(iv) Determination of the allowability of cost charges to incentive
or cost-reimbursement type contracts and progress payments under fixed-
price contracts. This is especially important when award is made to new
organizations or those with financial weaknesses.
(d) The Contracting Officer is responsible for assuring that
contractor performance and contract monitoring conform with contract
terms. If performance is not satisfactory or if problems are
anticipated, it is essential that the Contracting Officer take
immediate action to protect the Government's rights under the contract.
The Contracting Officer shall notify his/her immediate supervisor of
problems that cannot be resolved within contract limitations and
whenever contract or program objectives are not met. The notification
shall include a statement of action being taken by the Contracting
Officer.

0
94. Revise section 342.7003-1 to read as follows:

Sec. 342.7003-1 Policy.

(a) All solicitations and resultant contracts (other than awards
made using simplified acquisition procedures) shall contain the
withholding of contract payments clause at 352.232-9, and an excusable
delays clause, or a clause which incorporates the definition of
excusable delays. Use the excusable delays clause at 352.249-14 when
the solicitation and resultant contract (other than purchase orders)
does not contain a default or other excusable delays clause.
(b) When appropriate, the Contracting Officer may withhold any
contract payment when a required report is overdue, or the contractor
fails to perform or deliver required work or services.

0
95. Revise section 342.7003-2 to read as follows:

Sec. 342.7003-2 Procedures.

(a) The Contracting Officer is responsible for initiating immediate
action to protect the Government's rights whenever the contractor fails
to comply with either the delivery or reporting terms of the contract.
Compliance with the reporting terms includes those reports to be
submitted directly to the payment office. The payment office shall
notify the Contracting Officer promptly when such a report is not
submitted on time.
(b) When the contract contains a termination for default clause,
the contractor's failure to submit any report, perform services, or
deliver work when required by the contract is considered a default in
performance. The Contracting Officer shall immediately issue a formal
ten-day cure notice pursuant to FAR 49.607. The notice shall include a
statement to the effect that payments will be withheld if the default
is not cured within the time frame specified in the notice or if the
default is not determined to be excusable.
(1) If the default is cured or is determined to be excusable, the
Contracting Officer shall not initiate the withholding action.
(2) If the default is not determined to be excusable or a response
is not received within the allotted time, the Contracting Officer shall
initiate withholding action on all contract payments and shall
determine whether termination for default or other action would be in
the best interest of the Government.
(c) When the contract does not contain a termination for default
clause, the contractor's failure to submit any required report, perform
services, or deliver work when required by the contract shall be
considered a failure to perform. The Contracting Officer shall
immediately issue a written notice to the contractor specifying the
failure and providing a ten-day period (or longer period if the
Contracting Officer deems it necessary) in which the contractor shall
cure the failure or provide reasons for an excusable delay. The notice
shall include a statement to the effect that payments will be withheld
if the default is not cured within the time specified in the notice or
if the default is not determined to be excusable.
(1) If the failure is cured or is determined to be excusable, the
Contracting Officer shall not initiate the withholding action.
(2) If the failure is not determined to be excusable or a response
is not received within the allotted time, the Contracting Officer shall
initiate withholding action on all contract payments and shall
determine whether termination for convenience or other action would be
in the best interest of the Government.
(d) The Contracting Officer should consult FAR subpart 49.4 for
further guidance before taking any of the actions described in this
section.

0
96. Revise section 342.7003-3 to read as follows:

Sec. 342.7003-3 Withholding payments.

(a) When making the determination that contract payments should be
withheld in accordance with the Withholding of Contract Payments
clause, the Contracting Officer shall immediately notify the servicing
finance office in writing of the determination to withhold payments.
The notice of suspension shall contain all information necessary for
the finance office to identify the contract, i.e., contract number,
task/delivery order number, contractor name and address, etc.
(b) The Contracting Officer shall immediately notify the contractor
in writing that payments have been suspended until the default or
failure is cured.
(c) When the contractor cures the default or