instances where (1) the description of the end item contains "brand name or equal" purchase descriptions or component parts or of accesories related to the end item and (2) the clause in § 1-1.307-6(a) (2) was applicable to such component parts or accessories (see § 1-1.307-6(b)).

§ 1-1.307-8 Procedure for negotiated procurements and small purchases. (a) The policies and procedures prescribed in §§ 1-1.307-6 and 1-1.307-7 for formally advertised procurements shall be generally applicable to negotiated procurements.

(b) The clause in § 1-1.307-6(a) (2) may be adapted for use in negotiated procurements. If use of the clause is not practicable (as may be the case in exigency purchases), suppliers shall be suitably informed that proposals offering products different from the products referenced by brand name will be considered if the contracting officer determines that such offered products are equal in all significant and material respects to the products referenced.

(c) In small purchases within openmarket limitations, such policies and procedures shall be applicable to the extent practicable.

§ 1-1.307-9 Inspection and acceptance.

Inspection and acceptance of deliveries shall be made on the basis of the item described in the notice of award and/or contract.

selves, who may suffer hardship, sometimes even business failure, as a result of defaults, deductions, and rejections because of inability to meet contract requirements. Moreover, such awards are unfair to other competing bidders, capable of performance, and discourage them from bidding on future procurements. It is essential, therefore, that precautions be taken to award contracts only to reliable and capable bidders who can reasonably be expected to comply with contract requirements.

§ 1-1.310-3 Applicability.

This § 1-1.310 is applicable to all procurements made by executive agencies in the United States, its possessions, and Puerto Rico and, to the extent practicable, in other places. It is not applicable to orders placed under existing Government contracts, or to procurements from: (a) other governments (foreign, State, or local) or their instrumentalities; (b) other United States Government departments and agencies or their instrumentalities (such as Federal Prison Industries, Inc.); and (c) National Industries for the Blind.

§ 1-1.310-4 General policy.

It is the policy that contracts shall be awarded only to responsible prospective contractors. A "responsible prospective contractor" is one which is found by the contracting officer to meet the minimum standards set forth in § 1-1.310-5 and such additional standards as may be prescribed for specific procurements by the agency concerned.

(a) In order to qualify as responsible, a prospective contractor must, in the opinion of the contracting officer, meet the following standards as they relate to the particular procurement under consideration:

(1) Has adequate financial resources for performance, or has the ability to obtain such resources as required during performance;

(2) Has the necessary experience, organization, technical qualifications, skills, and facilities, or has the ability to obtain them (including probable subcontractor arrangements);

(3) Is able to comply with the proposed or required time of delivery or performance schedule;

(4) Has a satisfactory record of integrity, judgment, and performance (contractors which are seriously delinquent in current contract performance, considering the number of contracts and the extent of delinquencies of each, shall, in the absence of evidence to the contrary or compelling circumstances, be presumed to be unable to fulfill this requirement);

(5) Appear to be able to conform to the requirements of the Equal Opportunity Clause (see § 1-12.803-2);

(6) Is otherwise qualified and eligible to receive an award under applicable laws and regulations; e.g., Subpart 1-12.6.

(b) Acceptable evidence of "ability to obtain" financial resources, experience, organization, technical qualifications, skills, and facilities (see (a) (1) and (2) of this § 1-1.310-5), generally shall be a firm commitment or arrangement for the rental, purchase, or other acquisition thereof.

§ 1-1.310-6 Determination of responsibility.

(a) No contract shall be awarded to any person or firm unless the contracting officer has first determined that such person or firm is responsible within the meaning of §§ 1-1.310-4 and 1-1.310-5. The signing of a contract shall be deemed to be a certification by the contracting officer that he has determined that the prospective contractor is responsible with respect to that contract.

(b) In any case where the procurement exceeds $10,000 and the contracting officer (or contracting agency) considers such a statement advisable for justification or other reasons, the contracting officer shall prepare, sign, and place in the contract file a statement of the facts on which the determination of responsibility was based. Relevant factors for consideration in determining whether such a statement is advisable would include the value, importance, or technical aspects of the procurement, or the fact that a pre-award on-site evaluation was considered necessary and that it was made. Any supporting documents or reports, including reports of preaward on-site evaluation and any information to support determinations of responsibility of subcontractors, should be filed with the statement.

§ 1-1.310-7 Information regarding responsibility.

Before making a determination of responsibility, the contracting officer shall have sufficient current information to satisfy himself that the prospective contractor meets the standards in § 11.310-5. Information from the following sources should be utilized before considering making a pre-award on-site evaluation:

(a) Information from the prospective contractor, including representations and other data contained in bids and proposals, or other written statements or commitments, such as financial assistance and subcontracting arrangements.

(b) Other existing information within the agency, including financial data, the list of debarred and ineligible bidders (see Subpart 1-1.6), and records concerning contractor performance.

(c) Publications, including credit ratings and trade and financial journals.

(d) Other sources, including banks, other financial companies, and Government departments and agencies.

§ 1-1.310-8 Capacity and credit small business concerns.

of

In the case of a prospective contractor which is a small business concern, if the contracting officer is not satisfied that the prospective contractor meets the standards in § 1-1.310-5 only because of the lack of adequate capacity or credit, he shall, before making a responsibility determination, comply with the requirements concerning Certificates of Competency issued by the Small Business Administration (see Subpart 1-1.7).

§ 1-1.310-9 Pre-award on-site evaluation.

(a) A pre-award on-site evaluation is an inspection of facilities and equipment with which a prospective contractor proposes to perform a contract, including interviews with contractor personnel. It is made at the direction of the contracting officer, generally by Government specialists, to provide needed responsibility information.

award on-site evaluations are not necessary in connection with contracts of less than $10,000.

(c) Pre-award on-site evaluations shall cover only those standards or portions thereof concerning which information available (from the sources listed in § 1-1.310-7) appears to be not current, sufficient, or reliable.

§ 1-1.310-10 Performance records.

Such records of contractor past performance shall be maintained as are considered necessary for the use of contracting officers in placing new procurements. Records in more complete detail should be maintained on contractors which have indicated by past actions that the character of their performance on contracts is questionable, and on new contractors whose reliability has not been established. § 1-1.310-11 bility.

Subcontractor

responsi

Generally, the evaluation of the qualifications of subcontractors is a function of the prime contractor. However, to the extent that a prospective contractor cannot meet the standard in § 1-1.310-5 (a) (2) except by means of proposed subcontracting, the prospective prime contractor shall not be considered to be responsible unless recent performance history indicates an acceptable purchasing and subcontracting system or prospective major subcontractors are determined by the contracting officer to satisfy that standard.

§ 1-1.311 Priorities, allocations, and allotments.

In the interest of maintaining a minimum priorities and allocations system as a mobilization preparedness measure, agencies shall require contractors to use ratings and allotment authority to support defense needs to the extent required by regulations of the Business and Defense Services Administration, Department of Commerce.

a summary statement of such undocumented actions should be prepared promptly and be retained in the contract file.

§ 1-1.314

Solicitations

for informa. tional or planning purposes.

It is the general policy of the Government to solicit bids, proposals, or quotations only where there is a definite intention to award a contract. However, in some cases requests for informational or planning purposes may be justified. In such cases the request shall clearly state its purpose, explaining that the Government does not intend to award & contract on the basis of the request, or otherwise pay for the information solicited; but such statement does not prohibit the allowance, in accordance with § 1-15.205-3, of the cost of preparing such quotations.

§ 1-1.315 Use of liquidated damages provisions in procurement contracts.

§ 1-1.315-1 General.

This 1-1.315 prescribes (a) policy which shall govern executive agencies in the use of liquidated damages provisions in contracts for supplies and services, including construction, entered into by formal advertising or by negotiation, and (b) a provision which shall be inserted in contracts for supplies and services, other than construction, when liquldated damages are stipulated.

§ 1-1.315-2 Policy.

provisions

(a) Liquidated damages may be used only where both (1) the time of delivery or performance is such an important factor in the award of the contract that the Government may reasonably expect to suffer damage if the delivery or performance is delinquent, and (2) the extent or amount of such damage would be difficult or impossible of ascertainment or proof.

(b) In making decisions as to whether liquidated damages provisions are to be used, consideration should be given to their probable effect on such matters as pricing, competition, and the costs and difficulties of contract administration, as well as the availability of provision elsewhere in the contract for recovery of excess costs in termination cases.

(c) The rate of liquidated damages stipulated must be reasonable in relation to anticipated damages, considered on a case-by-case basis, since liquidated dam

ages fixed without any reasonable reference to probable damages may be held to be not compensation for anticipated damages caused by delay, but a penalty, and therefore unenforceable.

(d) Where a liquidated damages provision is included in a contract and a basis for termination for default exists, appropriate action should be taken expeditiously by the Government to obtain performance by the contractor or to exercise its right to terminate as provided in the contract. If delivery or performance is desired after termination for default, efforts must be made to obtain either delivery or performance elsewhere within a reasonable time. Efficient administration of contracts containing liquidated damages provisions is imperaEtive to prevent undue loss to defaulting contractors and to protect the interests of the Government.

(e) Whenever any contract includes a provision for liquidated damages for delay, the Comptroller General, on the recommendation of the head of the agency concerned, is authorized and empowered, by law, to remit the whole or any part of such damages as in his discretion may be just and equitable.

§ 1-1.315-3 Contract provisions.

(a) Contracts for supplies or services. When a liquidated damages provision is to be used in a contract which is for supplies or services and which includes Standard Form 32, General Provisions (Supply Contract), the following provision shall be inserted in the invitation for bids and an appropriate rate(s) of liquidated damages (determined pursuant to § 1-1.315-2) shall be stipulated:

LIQUIDATED DAMAGES

Article 11(f) of Standard Form 32, General Provisions (Supply Contract), is redesignated as Article 11(g) and the following is inserted as Article 11(f):

(f) (1) In the event the Government exercises its right of termination as provided in paragraph (a) above, the Contractor shall be llable to the Government for excess costs as provided in paragraph (b) above and, in addition, for liquidated damages, in the amount set forth elsewhere in this contract, 5 as fixed, agreed, and liquidated damages for each calendar day of delay, until such time as the Government may reasonably obtain delivery or performance of similar supplies or services.

(11) If the contract is not so terminated, notwithstanding delay as provided in paragraph (a) above, the Contractor shall con

tinue performance and be liable to the Government for such liquidated damages for each calendar day of delay until the supplies are delivered or services performed.

(iii) The Contractor shall not be liable for liquidated damages for delays due to causes which would relieve him from liability for excess costs as provided in paragraph (c) of

this clause.

(b) Contracts for construction. Liquidated damages provisions for construction contracts are contained in the Termination for Default-Damages for Delay-Time Extensions clauses of both Standard Form 19, Invitation, Bid, and Award (Construction, Alteration or Repair), and Standard Form 23A, General Provisions (Construction Contract). To make such provisions operative, an appropriate rate (s) of liquidated damages (determined pursuant to § 1-1.315-2) must be stipulated in the invitation for bids.

§ 1-1.316 Time of delivery or perform

(a) The time of delivery or of performance is an important element of a contract and must be clearly set forth in invitations for bids and requests for proposals. Time schedules for delivery or performance shall be designed to meet the requirements of the particular procurement, all relevant factors considered (see § 1-1.316-3), and must be realistic. Schedules which are unreasonably tight or difficult of attainment tend to restrict competition, are inconsistent with small business policies, and may result in higher contract prices. Therefore, before issuing an invitation for bids or request for proposals, the contracting officer shall question any delivery or performance schedule which appears unrealistic and, if necessary, initiate action to make appropriate adjustments.

(b) Where timely delivery or performance is unusually important to the Government, a liquidated damages pro

86-086 O-68-3

vision may be used as provided for in § 1-1.315.

(c) Invitations for bids and requests for proposals shall, when appropriate, inform bidders or offerors of the basis on which their bids or proposals will be evaluated with respect to time of delivery or performance.

§ 1-1.316-3

Factors to be considered.

Factors to be considered in establishing delivery or performance schedules may include one or more of the following: (a) Urgency of need for the property or services.

(b) Production time due to quantity, complexity of design, etc.

(c) Market conditions.
(d) Transportation time.
(e) Industry practices.

(f) Capabilities of small business concerns.

(g) Time for obtaining and evaluating bids or offers, and for awarding contracts.

(h) Time for contractors to comply with any conditions precedent to performance.

(i) Time for the Government to perform its obligations under the contract (e.g., furnishing of Government property to the contractor, approval of preproduction samples, and inspection). § 1-1.316-4

Terms.

(a) Delivery schedules may be expressed in terms of

(1) Specific calendar dates (e.g., on or before July 1, 1960);

(2) Specified periods from date of contract (i.e., from date of award or acceptance by the Government, or from date shown on contract document as effective date of contract); or

(3) Specified periods from date of receipt by contractor of notice of award or acceptance by the Government (including notice by receipt of contract document executed by the Government). The full period which the Government holds out as being available for contract performance should not be curtailed to the prejudice of the contractor by delay in giving notice of award. Accordingly, one of the provisions in (b) or (c) of this § 1-1.316-4 shall be used in advertised procurements and may be suitably modified and used as appropriate in negotiated procurements.

(b) Where the delivery schedule is expressed in terms of specific calendar dates (see (a) (1) of this § 1-1.316-4), invitations for bids shall include one of the following provisions:

(1) The foregoing delivery requirements are based on the assumption that the Government will make award by (procuring activity insert calendar date). Each delivery date in the delivery schedule set forth herein will be extended by the number of calendar days after the above date that the contract is in fact awarded. Attention is directed to paragraph 8(d) of the Terms and Conditions of the Invitation for Bids, which provides that a written award mailed or otherwise furnished to the successful bidder results in a binding contract. Therefore, in computing the available time for performance, the bidder should take into consideration the time required for notice of award to arrive through the ordinary mails.

(2) The foregoing delivery requirements are based on the assumption that the successful bidder will receive the notice of award by (procuring activity insert calendar date). The Government will extend each delivery date in the delivery schedule set forth herein by the number of calendar days after the above date that the contractor receives notice of award, if the contractor promptly acknowledges such receipt.

(c) Where the delivery schedule is based on the date of contract (see (a) (2) of this § 1-1.316-4), the invitations for bids shall include the following provision:

Attention is directed to paragraph 8(d) of the Terms and Conditions of the Invitation for Bids, which provides that a written award mailed or otherwise furnished to the successful bidder results in a binding contract. Any award hereunder, or a preliminary notice thereof, will be mailed or otherwise furnished to the bidder the day the award is dated. Therefore, in computing the time available for performance, the bidder should take into consideration the time required for the notice of award to arrive through the ordinary mails. However, a bid offering delivery based on date of receipt by the contractor of the contract or notice of award (rather than contract date) will be evaluated by adding the maximum number of days normally required for delivery of the award through the ordinary mails. If, as so computed, the delivery date offered is later than the delivery date required in the invitation, the bid will be considered nonresponsive and rejected.

(d) Where the delivery schedule is based on the date of the contract (see (a) (2) and (c) of this § 1-1.316-4), the contract, notice of award, acceptance of