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Proposed Rule2026-19158

Federal Acquisition Regulation: Revolutionary Federal Acquisition Regulation Overhaul Parts 14, 28, 36, and 52

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Published

September 18, 2026

Issuing agencies

Management and Budget OfficeFederal Procurement Policy OfficeDefense DepartmentGeneral Services AdministrationNational Aeronautics and Space Administration

Abstract

OFPP, DoD, GSA, and NASA (collectively referred to as the Federal Acquisition Regulatory Council or FAR Council) are proposing to amend the Federal Acquisition Regulation (FAR) to implement Executive Order (E.O.) 14275, Restoring Common Sense to Federal Procurement. The E.O. directs the elimination of excessive acquisition regulations to stop the inefficient use of American taxpayer dollars. The FAR Council is issuing twelve proposed rules that collectively will streamline the FAR in its entirety. This rule proposes revisions to FAR parts 14, 28, 36, and 52.

Full Text

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<title>Federal Register, Volume 91 Issue 180 (Friday, September 18, 2026)</title>
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[Federal Register Volume 91, Number 180 (Friday, September 18, 2026)]
[Proposed Rules]
[Pages 59534-59582]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19158]

[[Page 59533]]

Vol. 91

Friday,

No. 180

September 18, 2026

Part VI

Office of Management and Budget

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Office of Federal Procurement Policy

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Department of Defense

General Services Administration

National Aeronautics and Space Administration

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48 CFR Parts 14, 28, et al.

Federal Acquisition Regulation: Revolutionary Federal Acquisition
Regulation Overhaul Parts 14, 28, 36, and 52; Proposed Rule

Federal Register / Vol. 91, No. 180 / Friday, September 18, 2026 /
Proposed Rules

[[Page 59534]]

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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 14, 28, 36, and 52

[FAR Case 2026-010, Docket No. FAR-2026-0010, Sequence No. 1]
RIN 9000-AO83

Federal Acquisition Regulation: Revolutionary Federal Acquisition
Regulation Overhaul Parts 14, 28, 36, and 52

AGENCY: Office of Federal Procurement Policy (OFPP), Office of
Management and Budget (OMB); Department of Defense (DoD); General
Services Administration (GSA); and National Aeronautics and Space
Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: OFPP, DoD, GSA, and NASA (collectively referred to as the
Federal Acquisition Regulatory Council or FAR Council) are proposing to
amend the Federal Acquisition Regulation (FAR) to implement Executive
Order (E.O.) 14275, Restoring Common Sense to Federal Procurement. The
E.O. directs the elimination of excessive acquisition regulations to
stop the inefficient use of American taxpayer dollars. The FAR Council
is issuing twelve proposed rules that collectively will streamline the
FAR in its entirety. This rule proposes revisions to FAR parts 14, 28,
36, and 52.

DATES: Interested parties should submit written comments to the
Regulatory Secretariat Division at the address shown below on or before
October 19, 2026, to be considered in the formation of the final rule.

ADDRESSES: Submit comments in response to FAR Case 2026-010 to the
Federal eRulemaking portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the
instructions for sending comments.
Instructions: Please submit comments only and cite ``FAR Case 2026-
010'' in all correspondence related to this case. Include your name,
company name (if any), and ``FAR Case 2026-010'' on any attached
document. Comments received generally will be posted without change to
<a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal and/or business
confidential information provided. Public comments may be submitted as
an individual, as an organization, or anonymously (see frequently asked
questions at <a href="https://www.regulations.gov/faq">https://www.regulations.gov/faq</a>). To confirm receipt of
your comment(s), please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
approximately two to three days after submission to verify posting.
Docket: For access to the docket to read background documents or
comments received, go to <a href="https://www.regulations.gov/FAR-2026-010">https://www.regulations.gov/FAR-2026-010</a>.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
<a href="/cdn-cgi/l/email-protection#0f494e5d7f6063666c764f687c6e21686079">[email&#160;protected]</a> or call 202-969-4075 and cite ``FAR Case 2026-010.''
For information pertaining to status, publication schedules, or
alternate instructions for submitting comments if <a href="https://www.regulations.gov">https://www.regulations.gov</a> cannot be used, contact the Regulatory Secretariat
Division at 202-501-4755 or <a href="/cdn-cgi/l/email-protection#d691859784b3b185b3b596b1a5b7f8b1b9a0">[email&#160;protected]</a>. Please cite ``FAR Case
2026-010.''

SUPPLEMENTARY INFORMATION:

I. Background

E.O. 14275, Restoring Common Sense to Federal Procurement (April
15, 2025), resets the foundation for Federal buying by requiring the
FAR Council to produce a streamlined FAR that is simpler, clearer, and
structured for speed. According to the E.O., the FAR has evolved from
its original purpose (i.e., to establish uniform procedures across
executive departments and agencies), into an excessive and
overcomplicated regulatory framework and bureaucracy. While meant to
``deliver, on a timely basis, the best value product or service to the
customer, while maintaining the public's trust and fulfilling public
policy objectives,'' the FAR has become an expensive barrier to
achieving those objectives. As a result, the E.O. directed the FAR
Council and OMB to create an agile, effective, and efficient regulation
that contains only provisions required by statute or essential to sound
procurement.
To implement E.O. 14275, OMB issued Memorandum M-25-26, Overhauling
the Federal Acquisition Regulation, which announced the ``Revolutionary
FAR Overhaul'' (RFO) and created a roadmap for producing simpler
regulation aligned to statute, rewritten in plain language, and
including nonstatutory requirements that are necessary to conducting a
sound procurement. The memorandum described a new streamlined vision
for the FAR, to be maintained alongside nonregulatory governmentwide
guidance to provide a common-sense authoritative foundation for nimble
response and delivery of mission capability.
This new vision represents a paradigm shift where over-engineered
regulations designed for paperwork and compliance are replaced with
streamlined regulations focused on core stewardship principles and
nonregulatory guidance that will be used in concert with the
streamlined FAR focused on proven buying strategies, critical thinking,
market awareness (including to expand awareness of goods, products, and
materials offered in the United States), and risk literacy to enhance
workforce problem-solving. The significant reduction of unnecessary
mandates is intended to clarify and reinforce the contracting officer's
discretion to determine the best way to apply policies and practices.
The newly established, nonregulatory guidance, which has been inspired
by acquisition innovation advocates, category managers, other
experienced practitioners, and many years of feedback from the
contractor community--is expected to facilitate contracting officers'
use of their discretion more efficiently and effectively to make
smarter buying decisions.
OMB Memorandum M-25-26 also directed the FAR Council to complete
the regulatory overhaul in two phases, each with robust public input.
The FAR Council conducted its phase one effort in fiscal year 2025 by
issuing model class deviations to replace each part in the FAR until
such time as formal rulemaking occurred. This proposed rule is one of a
series that constitute the FAR Council's phase two effort to obtain
public comment through formal rulemaking.

II. Discussion and Analysis

A summary of proposed changes to existing FAR parts 14, 28, and 36
and their corresponding provisions and clauses in part 52 follows:

A. General

1. General RFO Updates
This proposed rule generally reorganizes the FAR parts into phases
of acquisition and simplifies the text into plain language, where
possible. The plain language efforts include changes to active voice,
edits to improve readability, and reorganization to present information
more logically. None of the plain language edits are intended to change
existing FAR requirements. The rewriting of the entire FAR also
required edits to

[[Page 59535]]

harmonize the changes being proposed such as updating the cross-
references. This aligns with the Federal plain language guidelines as
directed by the Plain Writing Act of 2010 (5 U.S.C. 301 note).
2. Standardization of Prescriptions
This rule proposes revisions to standardize prescriptions for
provisions and clauses. These changes are intended to provide better
clarity around the applicability of provisions and clauses such as
whether they apply to commercial products and services.
3. Use of ``Must'' Instead of ``Shall''
Additional revisions are being proposed throughout the FAR text and
FAR provisions and clauses to replace the use of the term ``shall''
with ``must'' or ``will,'' as appropriate, to impose requirements.
4. Non-Statutory Requirements
Section 4 of the E.O. required amendments to the FAR to ensure it
contains only provisions that are required by statute or that are
otherwise necessary to support simplicity and usability, strengthen the
efficacy of the procurement system, or protect economic or national
security. The FAR Council reviewed all non-statutory requirements to
determine if they are still relevant and essential to sound procurement
in today's contracting environment based on the criteria from section 4
of the E.O. The proposed rule retains non-statutory requirements that
further one or more of the elements of sound procurements, including
those requirements that serve as guardrails to protecting taxpayer
interests and promote taxpayer confidence in the procurement system.
Non-statutory requirements that were beneficial but not essential were
retained in the non-regulatory guidance documents. Other non-statutory
requirements that did not meet these standards, were removed. The
Council considered the extent to which regulation is the most efficient
means for capturing the benefit of the policy. For example, most ``how
to'' requirements were found to be more appropriately suited for non-
regulatory coverage which better enables a contracting officer to use
discretion in determining the application of a strategy to a given
situation and limits the risk of overapplication, which can create
wasteful burden on the contracting parties.
As part of the RFO, the FAR Council has created a number of non-
regulatory resources, including the FAR Companion, which provides
insight from experienced practitioners across the government on using
more streamlined practices and processes. The migration of significant
coverage to non-regulatory guidance is intended to ensure that the
benefits of the policy are not outweighed by the compliance burden of a
more rigidly written regulation that is prone to application in an
overly broad manner. This approach was explained to the public in a set
of ``frequently asked questions'' that were posted on the Revolutionary
FAR Overhaul homepage shortly after the initiative was launched.

B. Summary of Changes to FAR Part 14, Sealed Bidding

The proposed rule, if finalized, would revise FAR part 14 to
simplify and streamline the policies and procedures pertaining to
sealed bidding. These proposed revisions align with the broader RFO
initiatives and do not substantively change the policy or procedures in
the part. Several types of streamlining are highlighted below with
specific examples for further illustration.
1. Restructuring and Eliminating Redundancy
The proposed rule, if finalized, would remove the general uniform
contract format text since it was duplicative of existing text in FAR
part 15 but it would retain use instructions for sealed bidding; it
would move the text regarding publicizing contract actions to FAR part
5; it would move the text regarding protests against award to FAR part
33; it would remove permissive, nonstatutory price-related factors; and
it would remove outdated regulations regarding facsimile bids and bid
envelopes.
2. Pre-Bid Conference
The proposed rule, if finalized, would remove the text permitting
pre-bid conferences at FAR 14.207. While pre-bid conferences are value
added in certain circumstances, it is unnecessary for the FAR to give
permission to the contracting officer to use a pre-bid conference or
define its purpose.

C. Summary of Changes to FAR part 28, Bonds and Insurance

The proposed rule, if finalized, would revise FAR part 28 to
simplify and make administrative corrections. The proposed revisions
align with the broader RFO initiatives and would not substantively
change policy or procedures.

D. Summary of Changes to FAR part 36, Construction and Architect-
Engineering Contracts

The proposed rule, if finalized, would revise FAR part 36 to
simplify and streamline the policies and procedures pertaining to
construction contracting and architect-engineering contracting. The
proposed revisions align with the broader RFO initiatives. Several
types of streamlining are highlighted below with specific examples for
further illustration.
1. Restructuring
In addition to the acquisition lifecycle phasing, the proposed rule
includes extensive restructuring to improve readability. The existing
FAR part 36 text originated from 1946 committee recommendations to
standardize acquisition policies and procedures between departments. As
such, many of the regulations for construction contracts and architect-
engineer contracts were comingled. As part of the restructuring, the
proposed rule would separate construction regulations from architect-
engineer regulations. Further proposed revisions include the removal of
duplicative text and removal of unnecessary provisions and clauses. For
example, the proposed rule would remove the existing FAR text regarding
publicizing contract actions from FAR part 36 and would point the
contracting officer to FAR part 5.
2. Eliminating Extraneous Content
Several paragraphs within FAR part 36 contained nonstatutory
suggestive or permissive text. For example, the text at FAR 36.212
provides suggestive/permissive guidance that the contracting officer
may conduct a preconstruction conference. Removal of this text and the
associated clause at FAR 52.236-26, Preconstruction Conference, would
not prohibit nor limit the contracting officer from establishing a
requirement for an optional or mandatory preconstruction conference;
rather, it would shift the requirement to the solicitation stage. By
identifying the requirement for a preconstruction conference within the
invitation for bid, the Government would be providing industry with the
clarity needed to accurately estimate administrative costs. The FAR
Council has recommended this removed text for inclusion in the
reference FAR Companion guide.
The proposed rule would also remove FAR provision 52.236-1,
Performance of Work by the Contractor. The E.O. 14275, Restoring Common
Sense to Federal Procurement, directs the removal of regulations
restricting competition. This

[[Page 59536]]

clause is proposed for removal as it is believe to restrict competition
on fixed-price contracts because not all construction prime contractors
perform certain scopes of work.
In addition, the proposed rule would remove the clause FAR 52.236-
4, Physical Data, because the intent of the clause is served by the FAR
clause 52.236-3, Site Investigation and Conditions Affecting the Work.
The identification of data provided to bidders should already be
included within the invitation for bid. The text of FAR clause 52.236-3
states, ``. . .including all exploratory work done by the Government,
as well as from the drawings and specifications made a part of this
contract'', which further supports the data provided by the Government
should already be part of the invitation for bid.
The proposed rule would remove nonstatutory text at FAR 36.519 and
the associated FAR clause 52.236-19, Organization and Direction of the
Work. Additionally, the mandate for full-time resident direction by an
owner or senior officer represents a nonstatutory overreach. While
contractors may currently seek approval for alternative oversight,
Government intervention in internal organizational structures remains
unnecessary and contradicts FAR 52.236-6, Superintendence by the
Contractor.
The existing FAR text at 36.210 provides the contracting officer
the opportunity to plan for prospective bidders to inspect the work
site, examine data provided by the Government, etc., for the purposes
of preparing and submitting a more informed and complete and accurate
bid. Since there is no statute prohibiting such action, there is no
need for the permissive text in the regulation. Further, the associated
provision at FAR 52.236-27, Site Visit, is also unnecessary as the
invitation for bid can clearly articulate the same information. The
proposed removal of this text and the associated provision would not
prohibit nor limit the contracting officer from providing the
opportunity or requirement for offerors to visit the site or examine
Government provided information.
The proposed rule would also remove FAR 36.520 and the associated
provision at FAR 52.236-28, Preparation of Offers--Construction. This
provision is redundant as it merely instructs offerors to comply with
the solicitation terms to avoid rejection--a fundamental requirement
already established in the invitation for bid and general procurement
law.

E. Summary of Changes to FAR Part 52, Contract Clauses

1. Plain Language Update
As part of the broader plain language initiative, the term
``shall'' has been replaced with ``must'' throughout all affected
clauses and prescriptions in this rulemaking to promote clarity and
consistency. These updates will streamline contract drafting and
compliance, reduce ambiguity, and save time for both contracting
officers and contractors.
2. Clarification of FAR Clause Applicability to Commercial Products and
Commercial Services
This rule clarifies the applicability of FAR part 52 clause
prescriptions to commercial acquisitions to ensure consistent treatment
across the FAR. Conforming revisions were made to prescriptions
associated with FAR parts 14, 28, and 36 to accurately reflect when
clauses apply to commercial products and commercial services. Affected
prescriptions include those at 14.207, 14.208, 28.102-3, 28.103-4,
28.106-4, 28.203-4, 28.204-4, 28.309, 28.311-1, 28.312, 28.313, and
36.101-7.
3. Part 52 Renumbering
As a result of the RFO, the FAR Council is considering establishing
a new FAR subpart in part 52 and relocating and renumbering all
provisions and clauses under this new subpart. This means, if FAR
subpart 52.4 was used, all provisions and clauses would begin with 52.4
instead of 52.2. This change is anticipated to prevent confusion and
increase compliance by creating a clear distinction between versions of
a provision or clause prior to the RFO. Other benefits include avoiding
potential clause numbering conflicts and information system and data
collection impacts. The FAR Council welcomes comments on the potential
impact of such a change on contractors, Government personnel, and other
stakeholders.

III. Applicability to Contracts and Subcontracts Valued at or Below the
Simplified Acquisition Threshold and for Commercial Products and
Commercial Services

The following sections address the applicability of provisions and
clauses prescribed in FAR parts 14, 28, and 36 to solicitations and
contracts valued at or below the simplified acquisition threshold (SAT)
and those for the acquisition of commercial products, commercially
available off-the-shelf (COTS) items, and commercial services.
Prescriptions for provisions and clauses in these parts have been
updated to reflect applicability to commercial acquisitions.

A. Contracts and Subcontracts Valued at or Below the Simplified
Acquisition Threshold

This proposed rule, if finalized, does not alter the prescriptions
of provisions and clauses included in this proposed rule to change
their applicability to contracts and subcontracts valued at or below
the SAT.

B. Contracts and Subcontracts for Commercial Products, Commercially
Available Off-The-Shelf Items, and Commercial Services.

41 U.S.C. 1906 governs the applicability of laws to contracts for
the acquisition of commercial products and commercial services and
gives the FAR Council the authority to determine to apply a law to
contracts or subcontracts for the acquisition of commercial products
and commercial services. 41 U.S.C. 1907 exempts contracts for
commercially available off-the-shelf (COTS) items from certain
provisions of law unless the Administrator for Federal Procurement
Policy determines that doing so would not be in the best interest of
the Federal Government.
Section 839 of the John S. McCain National Defense Authorization
Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232) required the FAR
Council and the Administrator of Federal Procurement Policy to review
prior determinations under 41 U.S.C. 1906 and 41 U.S.C. 1907, as well
as the applicability of provisions and clauses to contracts and
subcontracts for commercial products, COTS items, and commercial
services that do not implement statute or Executive order, and propose
amendments to the FAR to eliminate or exempt such requirements from
commercial acquisitions, unless there are specific reasons to retain
particular requirements.
In accordance with section 839 of the NDAA for FY 2019 and their
authorities under 41 U.S.C. 1906 and 1907, the FAR Council reviewed the
applicability of the provisions and clauses associated with the FAR
parts covered by this proposed rule.
The following table reflects the FAR Council and Administrator of
Federal Procurement Policy's proposed determination regarding the
applicability of the provisions and clauses to solicitations and
contracts for commercial products, COTS items, and/or commercial
services. In making proposed applicability determinations, the FAR
Council considered factors

[[Page 59537]]

such as whether the provision or clause advances national security or
economic security, contributes to the resilience of contractors and
subcontractors in the Federal marketplace, or advances uniformity and
clarity in the performance of basic functions that are essential to
sound procurement.
Accordingly, this proposed rule, if finalized, would revise
provision and clause prescriptions to clearly reflect applicability to
commercial acquisitions as outlined in the table. An ``X'' in the
following table indicates the provision or clause will apply to that
category of commercial acquisition, as prescribed:

----------------------------------------------------------------------------------------------------------------
Commercial Commercial
Provision/clause No. Title products services COTS items
----------------------------------------------------------------------------------------------------------------
52.214-3.......................... Amendments to Invitations X X X
for Bids.
52.214-4.......................... False Statements in Bids. X X X
52.214-5.......................... Submission of Bids....... X X X
52.214-6.......................... Explanation to X X X
Prospective Bidders.
52.214-7.......................... Late Submissions, X X X
Modifications, and
Withdrawals of Bids.
52.214-10......................... Contract Award-Sealed X X X
Bidding.
52.214-12......................... Preparation of Bids...... X X X
52.214-14......................... Place of Performance- X X X
Sealed Bidding.
52.214-15......................... Period for Acceptance of X X X
Bids.
52.214-16......................... Minimum Bid Acceptance X X X
Period.
52.214-18......................... Preparation of Bids- ............... X ...............
Construction.
52.214-19......................... Contract Award-Sealed ............... X ...............
Bidding-Construction.
52.214-20......................... Bid Samples.............. X X X
52.214-20 Alt I................... Bid Samples.............. X X X
52.214-20 Alt II.................. Bid Samples.............. X X X
52.214-21......................... Descriptive Literature... X X X
52.214-21 Alt I................... Descriptive Literature... X X X
52.214-22......................... Evaluation of Bids for X X X
Multiple Awards.
52.214-23......................... Late Submissions, ............... ............... ...............
Modifications,
Revisions, and
Withdrawals of Technical
Proposals under Two-Step
Sealed Bidding.
52.214-24......................... Multiple Technical ............... ............... ...............
Proposals.
52.214-25......................... Step Two of Two-Step ............... ............... ...............
Sealed Bidding.
52.214-26......................... Audit and Records-Sealed ............... ............... ...............
Bidding.
52.214-27......................... Price Reduction for X X ...............
Defective Certified Cost
or Pricing Data-
Modifications-Sealed
Bidding.
52.214-28......................... Subcontractor Certified ............... ............... ...............
Cost or Pricing Data-
Modifications-Sealed
Bidding.
52.214-28 Alt I................... Subcontractor Certified ............... ............... ...............
Cost or Pricing Data-
Modifications-Sealed
Bidding.
52.214-29......................... Order of Precedence- ............... ............... ...............
Sealed Bidding.
52.214-34......................... Submission of Offers in X X X
the English Language.
52.214-35......................... Submission of Offers in X X X
U.S. Currency.
52.228-1.......................... Bid Guarantee............ X X X
52.228-2.......................... Additional Bond Security. X X ...............
52.228-3.......................... Workers' Compensation ............... X ...............
Insurance (Defense Base
Act).
52.228-4.......................... Workers' Compensation and ............... ............... ...............
War-Hazard Insurance
Overseas.
52.228-5.......................... Insurance-Work on a ............... ............... ...............
Government Installation.
52.228-7.......................... Insurance-Liability to ............... ............... ...............
Third Persons.
52.228-8.......................... Liability and Insurance- X X ...............
Leased Motor Vehicles.
52.228-9.......................... Cargo Insurance.......... ............... X ...............
52.228-10......................... Vehicular and General ............... X ...............
Public Liability
Insurance.
52.228-11......................... Individual Surety--Pledge X X ...............
of Assets.
52.228-12......................... Prospective Subcontractor ............... X ...............
Requests for Bonds.
52.228-13......................... Alternative Payment ............... X ...............
Protections.
52.228-14......................... Irrevocable Letter of X X ...............
Credit.
52.228-15......................... Performance and Payment ............... X ...............
Bonds-Construction.
52.228-16......................... Performance and Payment X X ...............
Bonds-Other Than
Construction.
52.228-16 Alt I................... Performance and Payment X X ...............
Bonds-Other Than
Construction.
52.228-17......................... Individual Surety--Pledge X X ...............
of Assets (Bid
Guarantee).
52.236-2.......................... Differing Site Conditions ............... X ...............
52.236-3.......................... Site Investigation and ............... X ...............
Conditions Affecting the
Work.
52.236-5.......................... Material and Workmanship. ............... X ...............
52.236-6.......................... Superintendence by the ............... X ...............
Contractor.
52.236-7.......................... Permits and ............... X ...............
Responsibilities.
52.236-8.......................... Other Contracts.......... ............... X ...............
52.236-9.......................... Protection of Existing ............... X ...............
Vegetation, Structures,
Equipment, Utilities,
and Improvements.
52.236-10......................... Operations and Storage ............... X ...............
Areas.
52.236-11......................... Use and Possession Prior ............... X ...............
to Completion.
52.236-12......................... Cleaning Up.............. ............... X ...............
52.236-13......................... Accident Prevention...... ............... X ...............
52.236-13 Alt I................... Accident Prevention...... ............... X ...............
52.236-14......................... Availability and Use of ............... X ...............
Utility Services.
52.236-15......................... Schedules for ............... X ...............
Construction Contracts.
52.236-16......................... Quantity Surveys......... ............... X ...............
52.236-16 Alt I................... Quantity Surveys......... ............... X ...............

[[Page 59538]]

52.236-17......................... Layout of Work........... ............... X ...............
52.236-18......................... Work Oversight in Cost- ............... ............... ...............
Reimbursement
Construction Contracts.
52.236-21......................... Specifications and ............... X ...............
Drawings for
Construction.
52.236-21 Alt I................... Specifications and ............... X ...............
Drawings for
Construction.
52.236-21 Alt II.................. Specifications and ............... X ...............
Drawings for
Construction.
52.236-22......................... Design Within Funding ............... ............... ...............
Limitations.
52.236-23......................... Responsibility of the ............... ............... ...............
Architect-Engineer
Contractor.
52.236-24......................... Work Oversight in ............... ............... ...............
Architect-Engineer
Contracts.
52.236-25......................... Requirements for ............... ............... ...............
Registration of
Designers.
----------------------------------------------------------------------------------------------------------------

The FAR Council also reviewed subcontract flow down requirements in
clauses associated with the FAR parts covered by this proposed rule.
The following table reflects the FAR Council and Administrator of
Federal Procurement Policy's proposal regarding whether those clauses
flow down to subcontracts for commercial products, COTS items, and/or
commercial services. This proposed rule, if finalized, would revise the
subcontract paragraphs in these clauses to clearly state whether the
clause flows down to commercial subcontracts, as outlined in the table.
An ``X'' in the following table indicates the provision or clause will
apply to subcontracts for that category of commercial subcontracts, as
described in the clause:

----------------------------------------------------------------------------------------------------------------
Commercial Commercial
Clause No. Title products services COTS items
----------------------------------------------------------------------------------------------------------------
52.214-26......................... Audit and Records-Sealed ............... ............... ...............
Bidding.
52.214-28......................... Subcontractor Certified ............... ............... ...............
Cost or Pricing Data-
Modifications.
52.214-28 Alt I................... Subcontractor Certified ............... ............... ...............
Cost or Pricing Data-
Modifications.
52.228-3.......................... Workers' Compensation ............... X ...............
Insurance (Defense Base
Act).
52.228-4.......................... Workers' Compensation and ............... ............... ...............
War-Hazard Insurance
Overseas.
52.228-5.......................... Insurance-Work on a ............... ............... ...............
Government Installation.
52.236-13......................... Accident Prevention...... ............... X ...............
52.236-13 Alt I................... Accident Prevention...... ............... X ...............
----------------------------------------------------------------------------------------------------------------

IV. Expected Impact of the Rule

The intended impact of the RFO, as stated in E.O. 14275, is to
restore the Government's ability to ``deliver on a timely basis the
best value product or service to the customer, while maintaining the
public's trust and fulfilling public policy objectives.'' Each of the
RFO rulemakings is designed to contribute to this impact by emphasizing
mission first, by aligning acquisition activities directly to achieving
the agency's overarching objectives and serving the public interest and
elevating the importance of fiscal responsibility. The proposed RFO
rules focus on three goals in particular: (1) timely acquisition and
delivery, (2) lower cost and accountability in all spending, and (3)
increased competition.
Timeliness. Timely acquisition and delivery are essential for
mission success. To this end, RFO rules propose to eliminate mandates
that unnecessarily interfere with agency discretion to determine the
best way to procure products and services. The proposed RFO rules
highlight more clearly streamlined and simplified authorities that
allow buyers to use their time more efficiently and are expected to
reduce time between solicitation and award. The proposed RFO rules are
expected to make it easier for contracting officers to leverage
commercial practices that are familiar to the commercial marketplace.
This is expected to make it easier for sellers to engage and respond to
Government solicitations more rapidly.
Lower cost. E.O. 14271, Ensuring Commercial, Cost-Effective
Solutions in Federal Contracts (April 15, 2025), directs the Government
to utilize, to the maximum extent practicable, the commercial
marketplace and the innovations of private enterprise to provide
better, more cost-effective services to taxpayers, as envisioned by the
Federal Acquisition Streamlining Act. The procurement of custom
products and services where a suitable or superior commercial solution
would have fulfilled the Government's needs has resulted in avoidable
waste to the detriment of American taxpayers.
To address these concerns, consistent with associated
responsibilities in section 839 of the John S. McCain National Defense
Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232),
the FAR Council reviewed prescriptions for provisions and clauses to
ensure all prescriptions are clear regarding their applicability to
acquisitions for commercial products and services. Currently, many
prescriptions do not specify applicability to commercial acquisitions
and leave the applicability determination to contracting officer
interpretation. By specifically stating when a provision or clause can
be applied to commercial acquisitions, proposed RFO rules should
decrease the likelihood of inclusion of provisions and clauses in
commercial acquisitions that are not required by law and drive greater
consistency in the terms and conditions used in these contracts. In
turn, these changes should increase the participation of commercial
sellers, who are unwilling or unable to manage the cost of complying
with noncommercial requirements, and also improve taxpayer access to
affordable commercial solutions.
Some RFO rules propose to delete requirements placed on commercial
or noncommercial sellers that are not related to performance of the
contract, drive up cost without attendant performance benefits, and may
misdirect efforts away from innovation, investment and economic growth.
Greater emphasis on timeliness should reduce bidders' carrying costs,
enabling them to pass those savings on to customers through lower
prices.
Increased competition. Since enactment of the Competition in

[[Page 59539]]

Contracting Act of 1984 (Title VII of Pub. L. 98-369), competition has
been the cornerstone of the Federal acquisition system. The benefits of
competition are well established: competition saves money for the
taxpayer, improves contractor performance, curbs fraud, and promotes
accountability for results. Competition also drives contractor
resilience and positions the U.S. market to develop a strategic
advantage for the nation.
According to data in the System for Award Management, roughly 45
percent of contract dollars were awarded in FY 2025 either without
competition or with competition that received only one offer. Of equal
concern, the Federal marketplace has seen a significant decline over
the past 20 years in the number of businesses--especially small
businesses--participating in the Federal supplier base. Studies suggest
that high compliance costs lead to the misallocation of resources away
from more profitable activities and discourage innovation, investment,
and economic growth (Council of Economic Advisers, Executive Office of
the President. June 2025. The Economic Benefits of Current Deregulatory
Policies. <a href="https://www.whitehouse.gov/wp-content/uploads/2025/03/The-Economic-Benefits-of-Current-Deregulatory-Efforts.pdf">https://www.whitehouse.gov/wp-content/uploads/2025/03/The-Economic-Benefits-of-Current-Deregulatory-Efforts.pdf</a>). This may
shelter incumbent contractors and stifle competition, reducing startup
activity and job formation.
The RFO rules seek to increase participation in agency competitions
and the resilience of the Federal supplier base which includes
commercial entities, small businesses, manufacturers, and
nontraditional suppliers. The RFO will achieve this outcome by removing
regulatory mandates that are not rooted in statute or essential to
sound procurement, promoting greater reliance on practices that reduce
transaction costs, and improving the quality of communications with
offerors and potential offerors. Access to a broader range of solutions
in a more dynamic marketplace will drive better return for each
taxpayer dollar spent and increase taxpayer confidence in the Federal
acquisition system.
The Government has conducted a regulatory impact analysis (RIA) for
the RFO rulemaking inclusive of this proposed rule for FAR parts 14,
28, and 36. The RIA includes a discussion of the anticipated effects of
the rulemakings as follows:
1. FAR Part 14
The changes to FAR part 14 are not expected to have a significant
impact on contractors or subcontractors. The proposed changes to FAR
part 14 are primarily internal Government procedures.
This proposed rule simplifies and streamlines the sealed bidding
policies without changing fundamental requirements. The consolidation
of content and elimination of redundant and permissive text will reduce
the time contracting officers spend navigating regulations.
These proposed revisions will reduce administrative burden through
clearer, more concise regulations; potentially faster processing of
sealed bidding acquisitions; eventually reduced risk of procedural
errors.
While the changes are primarily internal to Government, industry
may experience ancillary benefits associated with Government process
improvements (e.g., increased shared understanding through plain
language adjustments, faster processing with improved clarity).
For these reasons, this proposed rule is expected to make it
somewhat less burdensome on contracting officers and industry once they
have after the initial learning curve. Ultimately, the changes should
make sealed bidding acquisitions easier.
2. FAR Part 28
The changes to FAR part 28 are not expected to have a significant
impact on contractors or subcontractors. The proposed changes to FAR
part 28 are primarily internal Government procedures and implement
administrative corrections that align with the broader RFO initiatives.
3. FAR Part 36
The proposed changes to FAR part 36 simplify and streamline
construction and architect-engineer policies without changing
fundamental requirements. This reorganization, consolidation of
content, and elimination of redundant and unnecessary text will reduce
the time contracting officers spend navigating regulations and will
also promote competition.
The proposed rule removes the non-statutory FAR clause 52.236-1,
Performance of Work by the Contractor. This clause restricts
competition because not all contractors self-perform work. By removing
this competition restricting clause, the Government should eventually
experience greater competition, which should result in lower prices.
This proposed rule removes the duplicative text regarding
publicizing contract actions throughout the existing FAR part 36 text
and now points the contracting officer to FAR part 5. By removing this
existing duplicative text and consolidating it to FAR part 5, the
Government will eliminate time spent by contracting officers bouncing
between the two parts.
The proposed rule removes non-statutory text at FAR 36.519 and the
associated clause 52.236-19, Organization and Direction of the Work.
This clause imposes an unnecessary burden by requiring contractors to
establish and maintain project specific organizational. Additionally,
the mandate for full-time resident direction by an owner or senior
officer represents a non-statutory overreach. While contractors may
currently seek approval for alternative oversight, Government
intervention in internal organizational structures remains unnecessary
and contradicts FAR 52.236-6, Superintendence by the Contractor.
Removing this clause eliminates the unnecessary costs associated with
unnecessary project specific reports and eliminates potential cost-
padding for senior leadership oversight and streamlines contractor
operations.
The proposed rule removes the permissive text at FAR 36.522 and its
associated clause, 52.236-26, Preconstruction Conference. This removal
does not impede a contracting officer's authority to mandate such a
conference; rather, it shifts the requirement to the solicitation
stage. By identifying the need for a preconstruction conference within
the invitation for bid, the Government provides industry with the
clarity needed to accurately estimate administrative costs. This
ensures the Government pays only for defined requirements rather than
anticipatory contingencies.
The proposed rule further eliminates the permissive language at FAR
36.210 and the associated provision 52.236-27, Site Visit. Because no
statute prohibits contracting officers from allowing site inspections
or data examinations, the existing regulatory text is redundant; the
authority to offer these opportunities exists inherently. Removing this
provision does not restrict a contracting officer's ability to mandate
or facilitate site visits but rather removes unnecessary verbiage that
merely restates an existing authority.
The proposed rule removes FAR 36.520 and the associated provision
52.236-28, Preparation of Offers--Construction. This provision is
redundant as it merely instructs offerors to comply with the
solicitation terms to avoid rejection--a fundamental requirement
already established in the invitation for bid and general procurement
law. Eliminating this text

[[Page 59540]]

streamlines the regulation by removing unnecessary restatements of the
requirement for bid responsiveness.
The proposed rule reduces administrative burden through clearer,
more concise regulations; potentially faster processing of construction
and architect-engineer contract awards; and reduced risk of procedural
errors.
For these reasons, this rule is expected to make it easier for
contracting officers to accomplish award of construction and architect-
engineer contracts. However, this change is not expected to create
measurable direct cost savings for the Government or contractors as
these proposed changes to FAR part 36 are primarily internal Government
procedures.

V. Executive Orders 12866 and 13563

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
the costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under Section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993.

VI. Executive Order 14192

This rule is subject to E.O. 14192, Unleashing Prosperity Through
Deregulation. This proposed rule, if finalized as proposed, is
anticipated to be an E.O. 14192 deregulatory action. See discussion in
the ``Expected Impact of the Rule'' section of this preamble.

VII. Regulatory Flexibility Act

This proposed rule, if finalized, may have a significant economic
impact on a substantial number of small entities within the meaning of
the Regulatory Flexibility Act 5 U.S.C. 601-612. However, an Initial
Regulatory Flexibility Analysis (IRFA) is as follows:
1. Reasons for the action.
Executive Order (E.O.) 14275, Restoring Common Sense to Federal
Procurement, directs the elimination of excessive acquisition
regulations to stop the inefficient use of American taxpayer dollars.
The E.O. directs the first comprehensive end-to-end overhaul of the FAR
in its 40-year history. The E.O. establishes the policy that the FAR
should ``contain only provisions that are required by statute or that
are otherwise necessary to support simplicity and usability, strengthen
the efficacy of the procurement system, or protect economic or national
security interests.'' In response to E.O. 14275, the Office of
Management and Budget issued memorandum M-25-26, Overhauling the
Federal Acquisition Regulation. The Memo directed the FAR Council to
complete a ``revolutionary overhaul'' of the FAR. Therefore, the FAR
Council is issuing twelve proposed rules that collectively will
streamline the FAR in its entirety.
2. Objectives of, and legal basis for, the rule.
The revolutionary FAR overhaul (RFO) rewrite represents a paradigm
shift in Federal acquisition. It emphasizes streamlining, clarity, and
accessibility, while ensuring that the regulation focuses only on
statutory mandates and foundational procurement principles. The RFO is
designed to simplify compliance for contracting professionals, improve
acquisition speed and agility, and reinforce mission outcomes over
process formalities.
The basis for the RFO is E.O. 14275. The authority for promulgation
of the FAR is 41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C. chapter 4
and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and
51 U.S.C. 20113.
3. Description of and an estimate of the number of small entities
to which the rule will apply.
All small entities who want to contract with the Federal Government
will have to familiarize themselves with the reorganized, streamlined,
and revised FAR, including the content of this rulemaking. As of
January 2026, there are 401,196 entities registered in the System for
Award Management (SAM) that were small for at least one North American
Industry Classification System (NAICS) code they had selected.
a. FAR Part 14
The proposed revisions to FAR part 14 simplify and streamline the
policies and procedures pertaining to sealed bidding by reorganizing
the text into the acquisition lifecycle, and by removing or relocating
FAR text that is outdated, redundant, or otherwise unnecessary. These
revisions align with the broader RFO initiatives and do not
substantively change the policy or procedures in the part.
b. FAR Part 28
The proposed revision to FAR part 28 simplifies and makes
administrative corrections. These revisions align with the broader RFO
initiatives and do not substantively change policy or procedures.
c. FAR Part 36
The proposed revisions to FAR part 36 simplify, streamline,
restructure, and remove extraneous policies and procedures pertaining
to construction contracting and architect-engineering contracting. The
revisions align with the broader RFO initiatives.
d. FAR Part 52
This change clarifies the applicability of provisions and clauses
to commercial applications in clauses associated with updates to
prescriptions in FAR parts 14, 28, and 36. In addition to these
clarifications, the rule includes plain language edits, such as
improvements to readability, updates to active voice, and replacement
of the term ``shall'' with ``must,'' to promote consistency across
prescriptions and clauses. Any costs are negligible and limited to
internal policy updates. Therefore, the changes are not expected to
have a significant economic impact on a substantial number of small
entities.
4. Description of projected reporting, recordkeeping, and other
compliance requirements of the rule.
This proposed rule, if finalized, does not contain any new
reporting, recordkeeping or other compliance requirements.
a. FAR Part 14
This proposed rule does not contain any new reporting,
recordkeeping, or other compliance requirements under FAR part 14. The
revisions are structural and editorial in nature and do not impose
additional compliance obligations on contractors. Small entities may
need to review the reorganized content and update internal procedures,
but no new reporting or recordkeeping requirements are introduced.
b. FAR Part 28
This proposed rule does not contain any new reporting,
recordkeeping, or other compliance requirements under FAR part 28. The
revisions do not create new compliance obligations; they simply improve
clarity and eliminate redundancy.
c. FAR Part 36

This proposed rule does not contain any new reporting,
recordkeeping, or other compliance requirements under FAR part 36. The
revisions reduce administrative burden by simplifying documentation
requirements and do not introduce new compliance activities.

[[Page 59541]]

d. FAR Part 52
This proposed rule does not contain any new reporting,
recordkeeping, or other compliance requirements under FAR part 52. The
updates clarify the applicability of prescriptions and clauses to
commercial acquisitions and make conforming revisions to clauses
associated with FAR parts 14, 28, and 36. These changes are editorial
and organizational in nature and do not impose new compliance
obligations.
5. Relevant Federal rules which may duplicate, overlap, or conflict
with the rule.
The proposed rule, if finalized, would not duplicate, overlap, or
conflict with other Federal rules.
6. Description of any significant alternatives to the rule which
accomplish the stated objectives of applicable statutes, and which
minimize any significant economic impact of the rule on small entities.
The FAR Council has not, at this stage, identified any significant
alternatives that would minimize the impact of the rule on small
entities, while also implementing the requirements of E.O. 14275. The
FAR Council will consider any significant alternatives identified by
commenters for the final rule.
The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. The FAR Council invites comments from small
business concerns and other interested parties on the expected impact
of this proposed rule on small entities.
The FAR Council will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite ``5 U.S.C. 610 (FAR Case 2026-
010)'' in correspondence.

VIII. Paperwork Reduction Act

This rule includes information collections under the Paperwork
Reduction Act (44 U.S.C. 3501-3521). Following are the specific
collections associated with each FAR part in this rule as previously
approved by OMB followed by how each collection would be affected by
the proposed rule. If a FAR part is not listed below, then there are no
information collections associated with the part.

A. FAR Part 14

<bullet> OMB Control No. 9000-0013, Certified Cost or Pricing Data
and Data Other Than Certified Cost or Pricing Data--FAR Sections
Affected: 52.214-28, 52.215-12, 52.215-13, 52.215-20, and 52.215-21.
The changes under this proposed rule, if finalized, would not affect
the information collection or the paperwork burden previously approved
by OMB. The collection would remain unchanged.
<bullet> OMB Control No. 9000-0034, Examination of Records by
Comptroller General and Contract Audit--FAR Section(s) Affected:
52.212-5(d), 52.214-26, 52.215-2. The changes under this proposed rule,
if finalized, would not affect the information collection or the
paperwork burden previously approved by OMB. The collection would
remain unchanged.
<bullet> OMB Control No. 9000-0037, Presolicitation Notice and
Response--FAR Sections Affected: 14.205; 15.201(c); and 36.213-2. The
changes under this proposed rule, if finalized, would remove the
information collection in its entirety. The collection would be
discontinued.
<bullet> OMB Control No. 9000-0047, Place of Performance--FAR
Sections Affected: 52.214-14, and 52.215-6. The changes under this
proposed rule, if finalized, would not affect the information
collection or the paperwork burden previously approved by OMB. The
collection would remain unchanged.

B. FAR Part 28

<bullet> OMB Control No. 9000-0001, Certain Federal Acquisition
Regulation Part 28 Requirements (SF 24, 25, 25-A, 25-B, 28, 34, 35,
273, 274, 275, 1414 through 1418; Sections: 52.228-1, 52.228-2, 52.228-
11, 52.228-13 through 52.228-17). The changes under this proposed rule,
if finalized, would not affect the information collection or the
paperwork burden previously approved by OMB. The collection would
remain unchanged.
<bullet> OMB Control No. 9000-0135, Prospective Subcontractor
Requests for Bonds; FAR 52.228-12. The changes under this proposed
rule, if finalized, would not affect the information collection or the
paperwork burden previously approved by OMB. The collection would
remain unchanged.

C. FAR Part 36

<bullet> OMB Control No. 9000-0037, Presolicitation Notice and
Response. See details in section VIII.A of this preamble.
<bullet> OMB Control No. 9000-0064, Certain Federal Acquisition
Regulation Part 36 Construction Contract Requirements; FAR Sections
Affected: 52.236-5, 52.236-15, and 52.236-19. The changes under this
proposed rule, if finalized, would revise this information collection
and the paperwork burden previously approved by OMB due to the removal
of the clause at FAR 52.236-19.
The revised annual burden is estimated as follows:
Respondents: 3,762.
Total Annual Responses: 13,258.
Total Burden Hours: 21,331.
<bullet> OMB Control No. 9000-0157, Architect-Engineer
Qualifications (SF 330). The changes under this proposed rule, if
finalized, would not affect the information collection or the paperwork
burden previously approved by OMB. The collection would remain
unchanged.

D. Comments Regarding Paperwork Burden.

The FAR Council will publish a separate first notice in accordance
with the Paperwork Reduction Act seeking comments on the changes to
these collections of information affected by this rule.

IX. Severability

If any portion (e.g., section, clause, sentence) of this rule is
held to be invalid or unenforceable facially, or as applied to any
entity or circumstance, it shall be severable from the remainder of
this rule, and shall not affect the remainder thereof, or its
application to entities not similarly situated or to other dissimilar
circumstances. The various portions of this rule are independent and
serve distinct purposes. Even if one aspect were rendered invalid, the
other benefits of the rule would still be applicable.

List of Subjects in 48 CFR 14, 28, 36, and 52

Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, OFPP, DoD, GSA, and NASA propose amending 48 CFR parts
14, 28, 36, and 52 as set forth below:

0
1. Revise parts 14, 28, and 36 to read as follows:

PART 14--SEALED BIDDING

Sec.
14.000 Scope of part.
14.001 Definitions.
Subpart 14.1--General
14.101 Using sealed bidding.

[[Page 59542]]

Subpart 14.2--Presolicitation
14.201 Preparation of invitations for bids.
14.201-1 Format.
14.202 Uniform contract format.
14.202-1 Part I-Schedule.
14.202-2 Part II Contract Clauses.
14.202-3 Part III Documents, exhibits, and other attachments.
14.202-4 Part IV Representations and instructions.
14.203 Requirements.
14.204 Economic purchase quantities (supplies).
14.205 Bid samples.
14.206 Descriptive literature.
14.207 Solicitation provisions.
14.208 Contract clauses.
14.209 Soliciting bids.
14.210 Submission of bids.
14.211 Two-Step sealed bidding.
14.211-1 General.
14.211-2 Conditions for use.
14.211-3 Procedures.
Subpart 14.3--Evaluation and award
14.301 Submission, modification, or withdrawal of bids.
14.302 Receipt of an unreadable electronic bid.
14.303 Bid opening.
14.304 Mistakes in bids.
14.304-1 General.
14.304-2 Apparent clerical mistakes.
14.304-3 Other mistakes disclosed before award.
14.305 Cancellation of invitations after opening.
14.306 Evaluation.
14.306-1 Responsiveness of bids.
14.306-2 Responsible bidder--reasonableness of price.
14.306-3 Rejection of individual bids.
14.306-4 Rejection of all bids.
14.306-5 Restrictions on disclosure of descriptive literature.
14.306-6 All or none qualifications.
14.306-7 Minor informalities or irregularities in bids.
14.306-8 Prompt payment discounts.
14.306-9 Economic price adjustment.
14.307 Award.
14.308 Award of equal low bids.
14.309 Information to bidders.
14.309-1 Award of unclassified contracts.
14.309-2 Award of classified contracts.
Subpart 14.4--Postaward
14.401 Mistakes after award.
14.402 Pricing modifications.

Authority: 41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C.
chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C.
3016); and 51 U.S.C. 20113.

14.000 Scope of part.

This part prescribes--
(a) The basic requirements of contracting for supplies and services
(including construction) by sealed bidding;
(b) The information to be included in the invitation for bids
(IFB);
(c) Procedures concerning the submission of bids;
(d) Requirements for opening bids, evaluating bids, awarding
contracts; and
(e) Procedures for two-step sealed bidding.

14.001 Definitions.

As used in this part:
Acceptable evidence means a verifiable record, either physical or
electronic, that provides a clear and authenticated account of the
exact time a submission was received by the Government, which includes:
(1) The time/date stamp of that installation on the bid wrapper;
(2) Other documentary evidence of receipt maintained by the
installation (e.g., receiving reports, mailroom logs, or internal
logs);
(3) Oral testimony or statements of Government personnel; or
(4) Electronic metadata, electronic audit trails, server gateway
logs, or delivery receipts generated by the bidder's or the
Government's email system.
Government control means the point at which a bid has been
delivered, either physically or electronically, into the custody of the
Government, such that the bidder can no longer modify or exercise
dominion over the submission.

Subpart 14.1--General.

14.101 Using sealed bidding.

(a) Sealed bidding is a method of contracting that employs
competitive bids, public opening of bids, and awards.
(b) Use sealed bidding whenever the conditions in 6.101(b)(1) are
met.
(c) Use firm-fixed-price contracts when using sealed bidding or
fixed-price contracts with economic price adjustment clauses when some
flexibility is necessary and feasible.

Subpart 14.2--Presolicitation.

14.201 Preparation of invitations for bids.

14.201-1 Format.

(a) Prepare IFB and contracts using parts I, II, III, and IV of the
uniform contract format (see 15.109) to the maximum extent practicable.
(b) The uniform contract format is not required when contracting
for--
(1) Construction (see part 36);
(2) Shipbuilding (including design, construction, and conversion),
ship overhaul, and ship repair;
(3) Subsistence items;
(4) Supplies or services requiring special contract forms
prescribed elsewhere in this regulation that are inconsistent with the
uniform contract format; or
(5) Firm-fixed-price or fixed-price with economic price adjustment
acquisitions that use the simplified contract format.
(c)(1) The contracting officer may use the simplified contract
format in lieu of the uniform contract format.
(2) The contracting officer has flexibility in preparation and
organization of the simplified contract format. The following format
should be used to the maximum extent practicable:
(i) Use Standard Form (SF) 1447, Solicitation/Contract, as the
first page of the IFB.
(ii) Include the following for each line item:
(A) Line item number.
(B) Description of supplies or services, or data sufficient to
identify the requirement.
(C) Quantity and unit of issue.
(D) Unit price and amount.
(E) Packaging and marking requirements.
(F) Inspection and acceptance, quality assurance, and reliability
requirements.
(G) Place of delivery, performance and delivery dates, period of
performance, and f.o.b. point.
(H) Other item-peculiar information as necessary (e.g., individual
fund citations).
(iii) Include the clauses required by this regulation. Additional
clauses must be incorporated only when necessary to the particular
acquisition.
(iv) List of documents and attachments (include if necessary).
(v) Representations and instructions:
(A) Insert the IFB provisions that require representations,
certifications, or the submission of other information by offerors.
(B) Insert the IFB provisions required by 14.207. Include any other
information/instructions necessary to guide offerors.
(C) Insert all price related factors and any significant price
related subfactors for award.
(D) Upon award, retain the representations and instructions in the
contract file.

14.202 Uniform contract format.

14.202-1 Part I-Schedule.

Prepare the Schedule as follows:
(a) Section A, Solicitation/contract form.
(1) For sealed bidding the SF 33 or the SF 1447 may be used. When
the SF 1447 is used as the IFB document, insert the information in
subdivisions (a)(2)(i) and (a)(2)(iv) of this section in block 9 of the
SF 1447.
(2) If the SF 33 or the SF 1447 are not used, include the following
on the first page of the IFB:

[[Page 59543]]

(i) Name, address, and location of issuing activity, including room
and building where bids must be submitted.
(ii) Invitation for bids number.
(iii) Date of issuance.
(iv) Time specified for receipt of bids.
(v) Number of pages.
(vi) Requisition or other purchase authority.
(vii) Requirement for a bidder to provide its name and complete
address, including street, city, county, State, and ZIP code.
(viii) A statement that bidders should include in the bid the
address to which payment should be mailed, if that address is different
from that of the bidder.
(b) Section B, Supplies or services and prices.
(1) See 15.109-1(b)
(2) Optional Form 336, Continuation Sheet, may be used.
(c) Section C, Description/specifications.
See 15.109-1(c).
(d) Section D, Packaging and marking.
See 15.109-1(d).
(e) Section E, Inspection and acceptance.
See 15.109-1(e).
(f) Section F, Deliveries or performance.
See 15.109-1(f).
(g) Section G, Contract administration data.
See 15.109-1(g).
(h) Section H, Special contract requirements.
See 15.109-1(h).

14.202-2 Part II Contract Clauses.

Section I, Contract clauses (see 15.109-2).

14.202-3 Part III Documents, exhibits, and other attachments.

Section J, List of documents, exhibits, and other attachments (see
15.109-3).

14.202-4 Part IV Representations and instructions.

Prepare the representations and instructions as follows:
(a) Section K, Representations, certifications, and other
statements of bidders (see 15.109-4(a)).
(b) Section L, Instructions, conditions, and notices to bidders
(see 15.109-4(b)). Insert in this section solicitation provisions,
other information, instructions not required elsewhere to guide
bidders, include the time and place for bid openings.
(c) Section M, Factors for award. Identify the price related
factors other than the bid price that will be considered in evaluating
bids and awarding the contract.

14.203 Requirements.

(a) An IFB must clearly, accurately, and completely describe the
Government requirements.
(b) Restrictive specifications or requirements that might unduly
limit the number of bidders are prohibited.
(c) Include all documents and information (whether attached or
incorporated by reference) prospective bidders will need for the
purpose of bidding.
(d) State in the IFB that bids will be evaluated without
discussions (see 52.214-10 and, for construction contracts, 52.214-19).
(e) When considering establishing qualification requirements, see
and follow subpart 9.2.

14.204 Economic purchase quantities (supplies).

Comply with the economic purchase quantity planning requirements
for supplies in part 7. See part 7 for instructions regarding use of
the provision at 52.207-4, Economic Purchase Quantity--Supplies, and
for guidance on handling responses to that provision.

14.205 Bid samples.

(a) Do not require bidders to furnish bid samples unless--
(1) Characteristics of the product cannot be described adequately
in the specification or purchase description;
(2) Necessary to determine the responsiveness of the bid. Do not
use samples to determine a bidder's ability to produce the required
items; and
(3) Products must be suitable from the standpoint of balance,
facility of use, general ``feel'', color, pattern, or other
characteristics that cannot be described adequately in the
specification.
(b) If the contracting officer requires bid samples, the IFB must
state--
(1) The number and, if appropriate, size, and description of the
bid samples required; and
(2) List all the characteristics for which the bid samples will be
examined.
(c)(1) Contracting officers may waive bid sample requirements when
a bidder offers a product previously or currently contracted for or
tested by the Government and found to comply with specification
requirements conforming in every material respect with those in the
current IFB. (See 14.207(j)(2)).
(2) Where samples required by a Federal, Military, or other formal
specification are not considered necessary and a waiver of the sample
requirements of the specification is authorized, include a statement in
the invitation that notwithstanding the requirements of the
specification, samples are not required.
(d) Bid samples furnished with a bid that are not required by the
invitation generally will not be considered as qualifying the bid and
will be disregarded. However, the bid sample will not be disregarded if
it is clear from the bid or accompanying papers that the bidder's
intention was to qualify the bid. If the qualification does not conform
to the IFB, see 14.306-3(d).
(e)(1) Return samples that are not destroyed in testing to bidders
at their request and expense, unless otherwise specified in the
invitation.
(2) Request disposition instructions from bidders.
(3) Samples are ordinarily returned collect to the address from
which received if disposition instructions are not received within 30
days. Small items may be returned by mail, postage prepaid.
(4) Transmit samples that are intended for inspection purposes in
connection with deliveries to the inspecting activity concerned, with
instructions to retain the sample until completion of the contract or
until disposition instructions are furnished.
(5) Where samples are consumed or their usefulness is impaired by
tests, dispose as scrap unless the bidder requests their return.

14.206 Descriptive literature.

(a) Do not require bidders to furnish descriptive literature unless
it is needed before award to determine whether the products offered
meet the specification and to establish exactly what the bidder
proposes to furnish.
(b) Document in the contract file the justification why product
acceptability cannot be determined without the submission of
descriptive literature, except when the contract specifications require
submission.
(c)(1) If the invitation will require descriptive literature, the
IFB must clearly state--
(i) What descriptive literature the bidders must furnish;
(ii) The purpose for requiring the literature;
(iii) The extent of its consideration in the evaluation of bids;
and
(iv) The rules that will apply if a bidder fails to furnish the
literature before bid opening or if the literature provided does not
comply with the requirements of the invitation.
(2) If bidders must furnish descriptive literature, see 14.207(k).
(d)(1) The contracting officer may waive the requirement for
descriptive literature if--
(i) The bidder states in the bid that the product being offered is
the same as a

[[Page 59544]]

product previously or currently being furnished to the contracting
activity; and
(ii) The contracting officer determines that the product offered
complies with the specification requirements of the current IFB. When
the contracting officer waives the requirement, see 14.207(k)(2).
(2) When descriptive literature is not necessary and a waiver of
literature requirements of a specification has been authorized, include
a statement in the invitation that, despite the requirements of the
specifications, descriptive literature is not required.
(3) If the IFB provides for a waiver, a bidder may submit a bid on
the basis of either the descriptive literature furnished with the bid
or a previously furnished product. If the bid is submitted on one
basis, the bidder may not have it considered on the other basis after
bids are opened.
(e) If descriptive literature is furnished when it is not required
by the IFB, follow the procedures at 14.205(d).

14.207 Solicitation provisions.

(a) The provisions prescribed in this section apply to preparation
and submission of bids in general. See other FAR parts for provisions
and clauses related to specific acquisition requirements.
(b) Insert in all IFBs, including those for commercial products and
commercial services, the provisions at--
(1) 52.214-3, Amendments to Invitations for Bids; and
(2) 52.214-4, False Statements in Bids.
(3) 52.214-5, Submission of Bids.
(4) 52.214-6, Explanation to Prospective Bidders.
(5) 52.214-7, Late Submissions, Modifications, and Withdrawals of
Bids.
(c) Insert the provision at 52.214-10, Contract Award--Sealed
Bidding in IFBs, including those for commercial products and commercial
services, but excluding those for construction.
(d) Insert the provision at 52.214-12, Preparation of Bids in IFBs
to which the uniform contract format applies, including those for
commercial products and commercial services.
(e) Insert the provision at 52.214-14, Place of Performance--Sealed
Bidding, in IFBs, including those for commercial products and
commercial services but excluding those in which the place of
performance is specified by the Government.
(f) Insert the provision at 52.214-15, Period for Acceptance of
Bids, in IFBs, including those for commercial products and commercial
services, that are not issued on SF 33 or SF 1447 except IFBs--
(1) For construction work, which includes construction that is a
commercial service; or
(2) That the Government specifies a minimum acceptance period.
(g) Insert the provision at 52.214-16, Minimum Bid Acceptance
Period, in IFBs, including those for commercial products and commercial
services, except for construction, if the contracting officer
determines that a minimum acceptance period must be specified.
(h) Insert the provision at 52.214-18, Preparation of Bids--
Construction, in IFBs for construction contracts, including those for
construction that is a commercial service.
(i) Insert the provision at 52.214-19, Contract Award--Sealed
Bidding--Construction, in IFBs for construction work, including for
construction that is a commercial service.
(j)(1) Insert the provision at 52.214-20, Bid Samples, in IFBs,
including those for commercial products and commercial services, if bid
samples are required.
(2) If it appears that the conditions in 14.205(c)(1) will apply
and the contracting officer anticipates granting waivers and--
(i) If the nature of the required product does not necessitate
limiting the grant of a waiver to a product produced at the same plant
in which the product previously acquired or tested was produced, use
the provision with its Alternate I; or
(ii) If the nature of the required product necessitates limiting
the grant of a waiver to a product produced at the same plant in which
the product previously acquired or tested was produced, use the
provision with its Alternate II.
(3) See 14.205(c)(2) regarding waiving the requirement for all
bidders.
(k)(1) Insert the provision at 52.214-21, Descriptive Literature,
in IFBs including those for commercial products and commercial
services, if--
(i) Descriptive literature is required to evaluate the technical
acceptability of an offered product and
(ii) The required information will not be readily available unless
it is submitted by bidders.
(2) Use the basic clause with its Alternate I if the possibility
exists that the contracting officer may waive the requirement for
furnishing descriptive literature for a bidder offering a previously
supplied product that meets specification requirements of the current
IFB.
(3) See 14.206(d)(2) regarding waiving the requirement for all
bidders.
(l) Insert the provision at 52.214-22, Evaluation of Bids for
Multiple Awards, in IFBs, including those for commercial products and
commercial services, if the contracting officer determines that
multiple awards might be made if doing so is economically advantageous
to the Government.
(m) Insert the provision at 52.214-23, Late Submissions,
Modifications, Revisions, and Withdrawals of Technical Proposals under
Two-Step Sealed Bidding, other than those for commercial products or
commercial services, in solicitations for technical proposals in step
one of two-step sealed bidding.
(n) Insert the provision at 52.214-24, Multiple Technical
Proposals, other than those for commercial products or commercial
services, in solicitations for technical proposals in step one of two-
step sealed bidding if the contracting officer permits the submission
of multiple technical proposals.
(o) Insert the provision at 52.214-25, Step Two of Two-Step Sealed
Bidding, in IFBs, other than those for commercial products or
commercial services, issued under step two of two-step sealed bidding.
(p) Insert the provision at 52.214-34, Submission of Offers in the
English Language, in solicitations that include any of the clauses
prescribed in part 25, including those for commercial products and
commercial services. It may be included in other solicitations when the
contracting officer decides that it is necessary.
(q) Insert the provision at 52.214-35, Submission of Offers in U.S.
Currency, in solicitations, including those for commercial products and
commercial services, that include any of the clauses prescribed in part
25, unless the contracting officer includes the clause at 52.225-17,
Evaluation of Foreign Currency Offers, as prescribed in part 25. It may
be included in other solicitations when the contracting officer decides
that it is necessary.

14.208 Contract clauses.

(a) Insert the clause at 52.214-26, Audit and Records--Sealed
Bidding, in solicitations and contracts, other than those for
commercial products and commercial services, if the contract amount is
expected to exceed the threshold at part 15 for submission of certified
cost or pricing data.
(b)(1) Insert the clause at 52.214-27, Price Reduction for
Defective Certified Cost or Pricing Data--Modifications--Sealed
Bidding, in solicitations and contracts, including those for commercial
products (other than commercially available off-the-shelf

[[Page 59545]]

items) and commercial services, if the contract amount is expected to
exceed the threshold for submission of certified cost or pricing data
at part 15.
(2) In exceptional cases, the head of the contracting activity may
waive the requirement for inclusion of the clause in a contract with a
foreign government or agency of that government. The authorizations for
the waiver and the reasons for granting it must be in writing.
(c) Insert the clause at 52.214-28, Subcontractor Certified Cost or
Pricing Data--Modifications--Sealed Bidding, in solicitations and
contracts, other than those for commercial products and commercial
services, if the contract amount is expected to exceed the threshold
for submission of certified cost or pricing data at part 15.
(1) This clause may also be included upon request of a contractor
in connection with a prime contract entered into before July 1, 2018 by
modifying the contract without requiring consideration to replace
clause 52.214-28, Subcontractor Certified Cost or Pricing Data--
Modifications--Sealed Bidding, with its Alternate I.
(2) In exceptional cases, the head of the contracting activity may
waive the requirement for inclusion of the clause in a contract with a
foreign government or agency of that government. The authorizations for
the waiver and the reasons for granting it must be in writing.
(d) Insert the clause at 52.214-29, Order of Precedence--Sealed
Bidding, in solicitations and contracts, other than those for
commercial products and commercial services, to which the uniform
contract format applies.

14.209 Soliciting bids.

(a) See subpart 5.1 for presolicitation notices.
(b) See subpart 5.2 for publicizing the IFB.
(c) Specify in the IFB whether bids will be accepted by paper
submission, or electronic transmission method, or both.
(d) If the IFB has been issued and it becomes necessary to make
changes in quantity, specifications, delivery schedules, opening dates,
etc., or to make a correction, such changes must be accomplished by
amendment of the IFB using Standard Form 30, Amendment of Solicitation/
Modification of Contract. Amendments must--
(1) Be issued before the time set for bid opening;
(2) If determined necessary by the contracting officer, consider
the amount of time remaining until bid opening and the need for an
extension to the bid opening date;
(3) Be published in the GPE, if the IFB was published in the GPE,
as a solicitation amendment;
(4) If applicable, be displayed in the bid room;
(5) Provide all prospective bidders equal access to the amendment
providing the information necessary to submit bids; and
(6) Require acknowledgment of each amendment within each bidder's
bid.
(e) When electronic bids are specified, include in the IFB the
acceptable methods and the necessary information that allows bidders to
submit bids that are compatible with Government systems.
(f) When a contracting office is located in the United States, any
IFB sent to a prospective bidder located outside the United States must
be sent by electronic data interchange or air mail if security
classification permits.
(g)(1) The master IFB is provided to potential sources who are
requested to retain it for continued and repetitive use.
(2) Subsequent individual IFB must reference the date of the
current master IFB and identify any changes.
(3) When using a master IFB--
(i) Make available copies of the master IFB on request; and
(ii) Provide the cognizant contract administration activity a
current copy of the master IFB.
(h) Retain records of IFB and records of bids as a record of each
invitation a contracting office issues and each abstract or record of
bids. The file for each invitation must show the--
(1) Distribution that was made;
(2) Date the invitation was issued; and
(3) Names and addresses of prospective bidders who requested the
invitation and were not included on the original IFB list must be added
to the list and made a part of the record.
(i) An IFB may be cancelled by the contracting officer when clearly
in the public interest;
(1) Where there is no longer a requirement for the supplies or
services; or
(2) Where amendments to the IFB would be of such magnitude that a
new IFB is desirable.
(j) If an IFB is cancelled prior to the date and time specified in
14.301--
(1) Identify the IFB number and short title or subject matter;
(2) Briefly explain the reason for the cancellation; and
(3) Where appropriate, assure prospective bidders that they will be
given an opportunity to bid on any resolicitation of bids or any future
requirements for the type of supplies or services involved.

14.210 Submission of bids.

(a) Allow prospective bidders a reasonable time to prepare and
submit bids in response to all invitations, consistent with the needs
of the Government.
(b) Provide at least 30 calendar days when a presolicitation notice
is required (see subpart 5.1).
(c) Require bidders to submit sealed bids to be opened publicly at
the time and place stated in the IFB.

14.211 Two-Step sealed bidding.

14.211-1 General.

Two-step sealed bidding is a combination of competitive procedures
designed to obtain the benefits of sealed bidding when adequate
specifications are not available. The objective is to permit the
development of a sufficiently descriptive and not unduly restrictive
statement of the Government's requirements, including an adequate
technical data package, so that subsequent acquisitions may use
conventional sealed bidding methods. This two-step method is especially
useful in acquisitions requiring technical proposals, particularly
those for complex items.
(a) Step one consists of the request for submission, evaluation,
and (if necessary) discussion of a technical proposal. No pricing is
submitted with step one. The objective is to determine the
acceptability of the supplies or services offered. As used in this
context, the word technical has a broad connotation and includes, among
other things, the engineering approach, special manufacturing
processes, and special testing techniques. It is the proper step for
clarification of questions relating to technical requirements.
Conformity to the technical requirements is resolved in this step, but
not responsibility as defined in part 9.
(b) Step two involves the submission of sealed priced bids by those
who submitted acceptable technical proposals in step one. Bids
submitted in step two are evaluated and the awards made in accordance
with subpart 14.3.

14.211-2 Conditions for use.

(a) Unless other factors require the use of sealed bidding, the
contracting officer may use two-step sealed bidding rather than
negotiation when all of the following conditions are present:
(1) Available specifications or purchase descriptions are not
definite or complete or may be too restrictive

[[Page 59546]]

without technical evaluation, and any necessary discussion, of the
technical aspects of the requirement to ensure mutual understanding
between each source and the Government.
(2) Definite criteria exist for evaluating technical proposals.
(3) More than one technically qualified source is expected to be
available.
(4) There is sufficient time to use the two-step method.
(5) The contracting officer intends to award a firm-fixed-price
contract or a fixed-price contract with economic price adjustment.
(b) None of the following precludes the use of two-step sealed
bidding:
(1) Multiyear contracting;
(2) Government property to be made available to the successful
bidder;
(3) A total small business set-aside (see part 19);
(4) The use of a set-aside or price evaluation preference for
HUBZone small business concerns (see part 19);
(5) The use of a set-aside for service-disabled veteran-owned small
business concerns (see part 19);
(6) The use of a set-aside for economically disadvantaged women-
owned small business concerns and women-owned small business concerns
eligible under the Women-Owned Small Business Program (see part 19); or
(7) A first or subsequent production quantity is being acquired
under a performance specification.

14.211-3 Procedures.

(a) Step one.
(1) Post a presolicitation notice for technical proposals in
accordance with part 5. The request must include, as a minimum, the
following:
(i) A description of the supplies or services required.
(ii) A statement of intent to use the two-step method.
(iii) The requirements of the technical proposal.
(iv) The evaluation criteria, to include all factors and any
significant subfactors.
(v) A statement that the technical proposals must not include
prices or pricing information.
(vi) The date, or date and hour, by which the technical proposal
must be received.
(vii) A statement that, in the second step--
(A) The contracting officer will consider awards based upon bids
that have acceptable technical proposals, either initially or as a
result of discussions; and
(B) Each bid must be based on the bidder's own technical proposals.
(viii) A statement that--
(A) Bidders should submit technical proposals that are acceptable
without additional explanation or information;
(B) The Government may make a final determination regarding a
technical proposal's acceptability solely on the basis as submitted;
and
(C) The Government may proceed with the second step without
requesting further information from any bidder; however, the Government
may request additional information from bidders about their technical
proposals that it considers reasonably susceptible of being made
acceptable and may discuss bids with their bidders.
(ix) A statement that a notice of unacceptability will be forwarded
to the bidder upon completion of the technical proposal evaluation and
final determination of unacceptability.
(x) A statement either that each bidder may only submit one
technical proposal or, if authorized, multiple technical proposals.
When specifications permit different technical approaches, it is
generally in the Government's interest to authorize multiple technical
proposals. If multiple technical proposals are authorized, see
14.207(n).
(2) Include information on delivery or performance requirements
that may assist bidders in determining whether or not to submit a
technical proposal. Indicate that the information is not binding on the
Government and that the invitation issued under step two will include
actual delivery or performance requirements.
(3) Upon receipt--
(i) Safeguard technical proposals against disclosure to
unauthorized persons;
(ii) Accept and handle data marked in accordance with part 15 and
27; and
(iii) Remove any reference to price or cost.
(4) Establish a time period for evaluating technical proposals. The
period may vary with the complexity and number of technical proposals
involved. However, the evaluation should be completed quickly.
(5)(i) Base evaluations on the criteria in the request for
technical proposals but not consideration of responsibility as defined
in part 9. Categorize technical proposals as--
(A) Acceptable;
(B) Reasonably susceptible of being made acceptable; or
(C) Unacceptable.
(ii) Categorize any proposal that modifies, or fails to conform to
the essential requirements or specifications of, the request for
technical proposals as unacceptable.
(6)(i) The contracting officer may proceed directly with step two
if there are sufficient acceptable proposals to ensure adequate price
competition under step two, and if further time, effort and delay to
make additional technical proposals acceptable and thereby increase
competition would not be in Government's interest. If this is not the
case, request bidders whose technical proposals may be made acceptable
to submit additional clarifying or supplementing information. Identify
the nature of the deficiencies in the technical proposal or the nature
of the additional information required. The contracting officer may
also arrange negotiations for this purpose. Do not discuss a technical
proposal with any bidder other than the submitter.
(ii) When requesting additional information, establish an
appropriate time for bidders to conclude discussions, if any, submit
all additional information, and incorporate such additional information
as part of their technical proposals. The contracting officer may
extend the due date for such submissions at their discretion. If the
additional information is incorporated into a technical proposal within
the established time, and the contracting officer determines that the
technical proposal is acceptable, update its category to acceptable.
(7) When a technical proposal is found unacceptable (either
initially or after negotiations), promptly notify the bidder of the
basis of the determination and that a revision of the technical
proposal will not be considered. Upon written request, debrief
unsuccessful bidders (see 15.206).
(8) Late technical proposals are governed by 14.301.
(9) If it is necessary to discontinue two-step sealed bidding,
include a statement of the facts and circumstances in the contract
file. Notify each bidder in writing. When step one results in no
acceptable technical proposals or only one acceptable technical
proposal, the acquisition may be continued by negotiation.
(b) Step two.
(1) Follow sealed bidding procedures except that IFB in step two
must--
(i) Be issued only to those bidders that submitted acceptable
technical proposals in step one;
(ii) Include the provision prescribed in 14.207(o);
(iii) Clearly state that the bidder must comply with the
specifications and the bidder's technical proposal; and
(iv) Not be solicited through the Governmentwide point of entry
(GPE) as an acquisition opportunity nor publicly posted.

[[Page 59547]]

(2) List the names of firms that submitted acceptable proposals in
step one through the GPE for the benefit of prospective subcontractors
(see 5.101).

Subpart 14.3--Evaluation and award

14.301 Submission, modification, or withdrawal of bids.

(a) Bidders are responsible for submitting bids, and any
modifications or withdrawals not later than the exact time set for
opening of bids. If no time is specified in the IFB, the time for
receipt is 4:30 p.m., local time, for the designated Government office
on the date that bids are due.
(b) Bids may be modified or withdrawn by any method authorized by
the IFB.
(c) The receiving official receiving a paper bid submission,
modification or withdrawal must--
(1) Write on the envelope--
(i) The date and time of receipt and by whom; and
(ii) The IFB number; and
(2) Sign the envelope.
(3) Not disclose bid information before the time set for bid
opening. See part 3 for requirements for protecting information
including access to and disclosure thereof.
(d) A bidder or its authorized representative may withdraw a paper
bid submission in person if, before the exact time set for opening of
bids, the identity of the persons requesting withdrawal is established
and that person signs a receipt for the bid.
(e) A bidder may withdraw an electronically submitted bid if notice
is received in the office designated in the IFB not later than the
exact time set for opening of bids. Upon withdrawal of an
electronically transmitted bid, the data received must not be viewed
and, to the maximum extent practical, must be purged from primary and
backup data storage systems.
(f)(1) Any bid, modification, or withdrawal of a bid received at
the Government office designated in the IFB after the exact time
specified for receipt of bids is ``late'' and will not be considered
unless--
(i) It is received before award is made; and
(ii) The contracting officer determines that accepting the late bid
is in the Government's best interest and would not unduly delay the
acquisition; and--
(A) If it was transmitted through an electronic commerce method
authorized by the IFB, it was received at the initial point of entry to
the Government infrastructure not later than 5:00 p.m. one working day
prior to the date specified for receipt of bids; or
(B) There is acceptable evidence to establish that it was received
at the Government installation designated for receipt of bids and was
under the Government's control prior to the time set for receipt of
bids.
(2) The contracting officer will consider and may accept, a late
modification of an otherwise successful bid, that makes its terms more
favorable to the Government, at any time it is received.
(g) If an emergency or unanticipated event (e.g., weather
emergencies, government-wide or agency-specific network outages, server
crashes, or cybersecurity-related blocking of authorized file types)
interrupts normal Government processes so that bids cannot be received
at the Government office designated for receipt of bids by the exact
time specified in the IFB, and urgent Government requirements preclude
amendment of the bid opening date, the time specified for receipt of
bids will be deemed to be extended to the same time of day specified in
the IFB on the first work day on which normal Government processes
resume.
(h) Promptly notify any bidder if its bid, modification, or
withdrawal was received late, and must inform the bidder whether its
bid will be considered, unless contract award is imminent, and the
notices prescribed in 14.309 would suffice.
(i) Late bids and modifications that are not considered must be
held unopened, unless opened for identification, until after award and
then retained with other unsuccessful bids. However, any bid bond or
guarantee must be returned.
(j) If available, the following must be included in the contract
files for each late bid, modification, or withdrawal:
(1) The date and hour of receipt.
(2) A statement, with supporting rationale, regarding whether the
bid was considered for award.
(3) The envelope, wrapper, or other evidence of the date of
receipt.

14.302 Receipt of an unreadable electronic bid.

If a bid received at the Government facility by electronic data
interchange is unreadable to the degree that conformance to the
essential requirements of the IFB cannot be ascertained, immediately
notify the bidder that the bid will be rejected unless the bidder
provides clear and convincing evidence--
(a) Of the content of the bid as originally submitted; and
(b) That the unreadable condition of the bid was caused by
Government software or hardware error, malfunction, or other Government
mishandling.

14.303 Bid opening.

(a) All bids (including modifications) received before the time set
for the opening of bids must be secured in a locked bid box, a safe, or
in a secure restricted-access electronic bid box (i.e., secure password
protected file folder on a controlled access Government computer
network).
(b) The bid opening officer must inform those present at the public
bid opening that the time set for the opening of bids has arrived.
(c)(1) The bid opening officer must personally and publicly open
all bids received before the exact time set for opening of bids and if
practical, read the bids aloud to all present.
(2) The public may not attend bid openings for classified
acquisitions. No public record must be made of bids or bid prices
received in response to classified IFB.
(d) The contracting officer may postpone the public bid opening if
determined in writing that there is reason to believe--
(1) An important segment of bidders has been delayed in the mail;
(2) That there are delays in the communications system specified
for transmission of bids;
(3) That circumstances beyond the control of the bidders have
delayed their timely submission, (e.g., flood, fire, accident, weather,
strikes, or Government equipment blackout or malfunction); or
(4) That emergency or unanticipated events has interrupted normal
Governmental processes so that the scheduled opening of bids is
impractical.
(e) Publicly post a determination to postpone a bid opening under
paragraph (d) of this section. If practical before issuance of a formal
amendment of the invitation, communicate the determination to the
prospective bidders likely to attend the scheduled bid opening.
(f) In the case of paragraph (d)(4) of this section, and when
urgent Government requirements preclude amendment of the IFB, the time
specified for opening of bids will be deemed to be extended to the same
time of day specified in the IFB on the first workday on which normal
Government processes resume. In such cases, the time of actual bid
opening must be deemed to be the time set for bid opening for the
purpose of determining ``late bids'' under section 14.301. A note
should be made on the abstract of bids

[[Page 59548]]

or otherwise added to the file explaining the circumstances of the
postponement.
(g) The bid opening officer must complete and certify the accuracy
of the Standard Form 1409, Abstract of Offers, or Optional Form 1419,
Abstract of Offers--Construction (or automated equivalent) as soon
after bid opening as practicable. Where bid items are too numerous to
warrant complete recording of all bids, abstract entries for individual
bids may be limited to item numbers and bid prices. The contracting
activity may use the extra columns and SF 1410, Abstract of Offers--
Continuation, and OF 1419A, Abstract of Offers--Construction,
Continuation Sheet, to label and record such information as necessary.
(h) Abstracts of offers for unclassified acquisitions must be
available for public inspection.

14.304 Mistakes in bids.

14.304-1 General.

(a) After the opening of bids, examine all bids for mistakes.
(b) The authority to permit correction of bids is limited to bids
that, as submitted, are responsive to the invitation. The authority
does not permit correction of bids to make them responsive.
(c) If the contracting officer identifies an apparent mistake or
has reason to believe that a mistake exists request the bidder verify
its bid, calling attention to the suspected mistake.
(d) If the bidder asserts a mistake in its bid, the matter must be
processed in accordance with this section and 14.304. Such actions must
be taken before award.

14.304-2 Apparent clerical mistakes.

The contracting officer may correct any clerical mistake, apparent
on its face in the bid, before award. The contracting officer first
must obtain from the bidder a verification of the bid intended.
Examples of apparent mistakes are obvious--
(a) Misplacement of a decimal point;
(b) Incorrect discounts (for example, 1 percent 10 days, 2 percent
20 days, 5 percent 30 days);
(c) Reversal of the price f.o.b. destination and price f.o.b.
origin; and
(d) Mistake in designation of unit.

14.304-3 Other mistakes disclosed before award.

(a) A bidder may request in writing permission from the contracting
officer to correct a mistake after providing clear and convincing
evidence that establishes both the existence of the mistake, and the
bid actually intended.
(1) If the contracting officer accepts the clear and convincing
evidence and the correction does not cause the bidder to outbid other
lower bids, the contracting officer may allow the correction.
(2) If the correction causes the bidder to outbid one or more
otherwise lower bids, the head of the agency may make a determination
to permit the correction only if the mistake and intended bid are
obvious from the final bid documents.
(b) If a bidder requests permission to withdraw a bid rather than
correct it, the evidence is clear and convincing both as to the
existence of a mistake and as to the bid actually intended, and the
bid, both as uncorrected and as corrected, is the lowest received, the
head of the agency may make a determination to correct the bid and not
permit its withdrawal.
(c) If, under paragraph (a) or (b) of this section--
(1) The evidence of a mistake is clear and convincing only as to
the mistake but not as to the intended bid, or
(2) The evidence reasonably supports the existence of a mistake but
is not clear and convincing, an official above the contracting officer,
unless otherwise provided by agency procedures, may make a
determination permitting the bidder to withdraw the bid.
(d) If the evidence does not warrant a determination under
paragraph (a), (b), or (c) of this section, the head of the agency may
make a determination that the bid be neither withdrawn nor corrected.
(e) Heads of agencies may delegate their authority to make the
determinations under paragraphs (a), (b), (c), and (d) of this section
to a central authority, or a limited number of authorities as
necessary, in their agencies, without power of redelegation.
(f) Before issuance of the determinations in this section, legal
counsel within the respective agency must provide concurrence.
(g) Process Government suspected or alleged mistakes in bids as
follows:
(1) A mere statement by the administrative officials that they are
satisfied that an error was made is insufficient.
(2) Immediately request that the bidder verify its bid.
(i) Actions taken to verify bids must be sufficient to reasonably
assure the contracting officer that the bid as confirmed is without
error, or to elicit the allegation of a mistake by the bidder.
(ii) To assure that the bidder will be put on notice of a suspected
mistake by the contracting officer, the bidder should be advised as
appropriate--
(A) That its bid is so much lower than the other bids or the
Government's estimate as to indicate a possibility of error;
(B) Of important or unusual characteristics of the specifications;
(C) Of changes in requirements from previous purchases of a similar
item; or
(D) Of any other information, proper for disclosure, that leads the
contracting officer to believe that there is a mistake in bid.
(3) If the bid is verified, consider the bid as originally
submitted.
(4) If the time for acceptance of bids is likely to expire before a
decision can be made, request all bidders whose bids may become
eligible for award to extend the time for acceptance of their bids.
(5) If the bidder whose bid is believed erroneous does not (or
cannot) grant an extension of time, the bid must be considered as
originally submitted (but see paragraph (g)(8) of this section).
(6) If the bidder alleges a mistake, advise the bidder to make a
written request to withdraw or modify the bid. The request must be
supported by statements (sworn statements, if possible) and must
include all pertinent evidence such as the bidder's file copy of the
bid, the original worksheets and other data used in preparing the bid,
subcontractors' quotations, if any, published price lists, and any
other evidence that establishes the existence of the error, the manner
in which it occurred, and the bid actually intended.
(7) When the bidder furnishes evidence supporting an alleged
mistake, refer the case to the appropriate authority together with the
following data:
(i) A signed copy of the bid involved.
(ii) A copy of the IFB and any specifications or drawings relevant
to the alleged mistake.
(iii) An abstract or record of the bids received.
(iv) The bidder's written request to withdraw or modify the bid,
together with the bidder's written statement and supporting evidence.
(v) A written statement by the contracting officer providing--
(A) A description of the supplies or services involved;
(B) The expiration date of the bid in question and of the other
bids submitted;
(C) Specific information as to how and when the mistake was
alleged;
(D) A summary of the evidence submitted by the bidder;
(E) In the event only one bid was received, a quotation of the most
recent contract price for the supplies or services involved or, in the
absence of a recent comparable contract, the

[[Page 59549]]

contracting officer's estimate of a fair price for the supplies or
services;
(F) Any additional pertinent evidence; and
(G) A recommendation to consider the bid as submitted or to
authorize the bidder to withdraw or modify its bid.
(8) Where the bidder fails or refuses to furnish evidence in
support of a suspected or alleged mistake, consider the bid as
submitted unless--
(i) The amount of the bid is so far out of line with the amounts of
other bids received, or with the amount estimated by the agency or
determined by the contracting officer to be reasonable; or
(ii) There are other indications of error which are so clear, as to
reasonably justify the conclusion that acceptance of the bid would be
unfair to the bidder or to other bona fide bidders. Document all
attempts made to obtain the information required and the action taken
with respect to correct the bid.
(h) Each agency must maintain records of all determinations made in
accordance with this section, the facts involved, and the action taken
in each case. Include copies of all such determinations in the file.
(i) Nothing contained in this section prevents an agency from
submitting doubtful cases to the Comptroller General for advance
decision.

14.305 Cancellation of invitations after opening.

(a) Unless there is a compelling reason to reject all bids and
cancel the invitation after the opening, award to the responsible
bidder who submitted the lowest responsive bid.
(b) Invitations may be cancelled after opening when, consistent
with paragraph (a) of this section, the agency head determines in
writing that--
(1) Inadequate or ambiguous specifications were cited in the
invitation;
(2) Specifications have been revised;
(3) The supplies or services being contracted for are no longer
required;
(4) The invitation did not provide for consideration of all factors
of cost to the Government, such as cost of transporting Government-
furnished property to bidders' plants;
(5) Bids received indicate that the needs of the Government can be
satisfied by a less expensive article differing from that for which the
bids were invited;
(6) All otherwise acceptable bids received are at unreasonable
prices, or only one bid is received and the contracting officer cannot
determine the reasonableness of the bid price;
(7) The bids were not independently arrived at in open competition,
were collusive, or were submitted in bad faith (see part 3 for reports
to be made to the Department of Justice);
(8) No responsive bid has been received from a responsible bidder;
(9) A cost comparison as prescribed in OMB Circular A-76 shows that
performance by the Government is more economical; or
(10) For other reasons, cancellation is clearly in the public's
interest.
(c) If award is delayed beyond the bidders' acceptance periods,
request bidders extend in writing the bid acceptance period (with
consent of sureties, if any) in order to avoid the need for
resoliciting.
(d) Under some circumstances, completion of the acquisition after
cancellation of the IFB may be appropriate.
(1) If the IFB has been cancelled for the reasons specified in
paragraphs (b)(6) through (8) of this section, and the agency head has
authorized, in the determination in paragraph (b) of this section, the
completion of the acquisition through negotiation, proceed in
accordance with paragraph (e) of this section.
(2) If the IFB has been cancelled for the reasons specified in
paragraphs (b)(1), (2), (4), (5), or (10) of this section, or for the
reasons in paragraphs (b)(6), (7), or (8) of this section and
completion through negotiation is not authorized under paragraph (d)(1)
of this section, proceed with a new acquisition.
(e) When the agency head has determined, in accordance with
paragraph (d)(1) of this section, that an IFB should be canceled and
that use of negotiation is in the Government's interest, the
contracting officer may negotiate (in accordance with part 15, as
appropriate) and make award without issuing a new IFB provided--
(1) Each responsible bidder in the sealed bid acquisition has been
given notice that negotiations will be conducted and has been given an
opportunity to participate in negotiations; and
(2) The award is made to the responsible bidder offering the lowest
negotiated price.

14.306 Evaluation.

14.306-1 Responsiveness of bids.

(a) To be considered for award, a bid must comply in all material
respects with the IFB.
(b) Bids must be filled out, executed, and submitted in accordance
with the instructions in the invitation. If a bidder uses its own bid
form or a letter to submit a bid, the bid may be considered only if--
(1) The bidder accepts all the terms and conditions of the
invitation; and
(2) Award on the bid would result in a binding contract with terms
and conditions that do not vary from the terms and conditions of the
invitation.
(c) Bids submitted by electronic commerce may be considered only if
the electronic commerce method was specifically stipulated or permitted
by the IFB.
(d) If any sample fails to conform to the characteristics listed in
the invitation, the respective bid will be rejected as nonresponsive.

14.306-2 Responsible bidder--reasonableness of price.

(a) Prior to award determine that--
(1) The apparent awardee(s) is responsible (see subpart 9.1); and
(2) The prices offered are reasonable and not materially
unbalanced.
(b) The price analysis techniques in part 15 should be used as
guidelines for determining reasonableness and if prices offered are
materially unbalanced.
(c) In each case the determination must be made in the light of all
prevailing circumstances. Particular care must be taken in cases where
only a single bid is received.

14.306-3 Rejection of individual bids.

(a) Reject bids that fail to conform to the basic requirements of
the IFB.
(b) Unless the invitation authorized the submission of alternate
bids and the supplies offered as alternates meet the requirements
specified in the invitation, reject bids that do not conform to the
requirements.
(c) Reject bids that fail to conform to the delivery schedule or
permissible alternates stated in the invitation.
(d) If the bidder imposes conditions that would modify requirements
of the invitation or limit the bidder's liability to the Government,
reject the bid. For example, bids must be rejected in which the
bidder--
(1) Protects against future changes in conditions, such as
increased costs, if total possible costs to the Government cannot be
determined;
(2) Fails to state a price and indicates that price will be the
price in effect at time of delivery;
(3) States a price but qualifies it as being subject to the price
in effect at time of delivery;
(4) When not authorized by the invitation, conditions or qualifies
a bid by stipulating that it is to be considered only if, before date
of award, the bidder receives (or does not receive) award under a
separate IFB;
(5) Requires the Government to determine that the bidder's product

[[Page 59550]]

meets applicable Government specifications; or
(6) Limits rights of the Government under any contract clause.
(e) A low bidder may be requested to delete objectionable
conditions from a bid provided the conditions do not go to the
substance, as distinguished from the form, of the bid, or work an
injustice on other bidders. A condition goes to the substance of a bid
where it affects price, quantity, quality, or delivery of the items
offered.
(f) The contracting officer may reject any bid if they determine in
writing that it is unreasonable as to the total price of the bid or the
prices for individual line items as well.
(g) The contracting officer may reject any bid if the prices for
any line items or subline items are materially unbalanced (see 15.404-
6).
(h) Reject any bid received from a person or concern that is
suspended, debarred, proposed for debarment, or declared ineligible as
of the bid opening date unless determined in writing that there is a
compelling reason for such action (see subpart 9.4).
(i) Unless a bid is received from a small business concern (see
part 19 with respect to certificates of competency), reject low bids
received from concerns determined to be not responsible pursuant to
part 9.
(j) Reject a bid when a bid guarantee is required and a bidder
fails to furnish the guarantee in accordance with the requirements of
the IFB, except as otherwise provided in part 28.
(k) Preserve the originals of all rejected bids, and any written
findings with respect to such rejections with the contract file.
(l) After submitting a bid, if all of a bidder's assets or that
part related to the bid are transferred during the period between the
bid opening and the award, the transferee may not be able to take over
the bid. Reject the bid unless the transfer is effected by merger,
operation of law, or other means not barred by 41 U.S.C. 6305 or 31
U.S.C. 3727.

14.306-4 Rejection of all bids.

When it is determined necessary to reject all bids, notify each
bidder that all bids have been rejected and provide the reason for such
action.

14.306-5 Restrictions on disclosure of descriptive literature.

When a bid is accompanied by descriptive literature, and the bidder
imposes a restriction that prevents the public disclosure of such
literature, the restriction may render the bid nonresponsive. The
restriction renders the bid nonresponsive if it prohibits the
disclosure of sufficient information to permit competing bidders to
know the essential nature and type of the products offered or those
elements of the bid that relate to quantity, price, and delivery terms.
The provisions of this paragraph do not apply to unsolicited
descriptive literature submitted by a bidder if such literature does
not qualify the bid.

14.306-6 All or none qualifications.

Except where prohibited by the IFB, an `all or none' qualification
by a bidder does not render the bid nonresponsive. Do not permit
bidders to withdraw or modify all or none qualifications after bid
opening since such qualifications are substantive and affect the rights
of other bidders.

14.306-7 Minor informalities or irregularities in bids.

A minor informality or irregularity is merely a matter of form and
not of substance or some immaterial defect in a bid or variation of a
bid from the exact requirements of the invitation that can be corrected
or waived without being prejudicial to other bidders. The defect or
variation is immaterial when the effect on price, quantity, quality, or
delivery is negligible when contrasted with the total cost or scope of
the supplies or services being acquired. Either give the bidder an
opportunity to cure any deficiency resulting from a minor informality
or irregularity in a bid or waive the deficiency, whichever is to the
advantage of the Government. Examples of minor informalities or
irregularities include failure of a bidder to--
(a) Return the number of copies of signed bids required by the
invitation;
(b) Furnish required information concerning the number of its
employees;
(c) Sign its bid, but only if--
(1) The unsigned bid is accompanied by other material indicating
the bidder's intention to be bound by the unsigned bid (such as the
submission of a bid guarantee or a letter signed by the bidder, with
the bid, referring to and clearly identifying the bid itself); or
(2) The firm submitting a bid has formally adopted or authorized,
before the date set for opening of bids, the execution of documents by
written, printed, or stamped signature and submits evidence of such
authorization and the bid carries such a signature;
(d) Acknowledge receipt of an amendment to an IFB, but only if--
(1) The bid received clearly indicates that the bidder received the
amendment, such as where the amendment added another item to the
invitation and the bidder submitted a bid on the item; or
(2) The amendment involves only a matter of form or has either no
effect or merely a negligible effect on price, quantity, quality, or
delivery of the item bid upon.

14.306-8 Prompt payment discounts.

Prompt payment discounts must not be considered in the evaluation
of bids.

14.306-9 Economic price adjustment.

(a) Bidder proposed economic price adjustment.
(1) When an IFB does not contain an economic price adjustment
clause but a bidder proposes one with a ceiling that the price will not
exceed, evaluate the bid on the basis of the maximum possible economic
price adjustment of the quoted base price.
(2) If the bid is eligible for award, request the bidder to agree
to the inclusion in the award of an approved economic price adjustment
clause (see part 16) that is subject to the same ceiling. If the bidder
will not agree to an approved clause, the contracting officer may award
based on the bid as originally submitted.
(3) Reject bids that contain economic price adjustments with no
ceiling unless a clear basis for evaluation exists.
(b)(1) When an invitation contains a Government proposed economic
price adjustment clause and no bidder takes exception to the
provisions, evaluate bids on the basis of the quoted prices without the
allowable economic price adjustment being added.
(2) Reject a bid as nonresponsive if a bidder increases the maximum
percentage of economic price adjustment stipulated in the invitation or
limits the downward economic price adjustment provisions of the
invitation.
(3) Reject a bid as nonresponsive if a bid indicates deletion of
the economic price adjustment clause because the downward economic
price adjustment provisions are thereby limited.
(4) When a bidder decreases the maximum percentage of economic
price adjustment stipulated in the invitation, evaluate the bid at the
base price on an equal basis with bids that do not reduce the
stipulated ceiling. However, after evaluation, if the bidder offering
the lower ceiling is in a position to receive the award, the award must
reflect the lower ceiling.

14.307 Award.

(a) Make contract award--
(1) By written or electronic notice,
(2) Within the time for acceptance specified in the bid or an
extension, and
(3) To that responsible bidder whose bid, conforming to the
invitation, will be most advantageous to the

[[Page 59551]]

Government, considering only price and the price-related factors
included in the invitation.
(b) When more than one award results from any single IFB, separate
award documents must be executed.
(c) When an award is made to a bidder for less than all of the
items that may be awarded to that bidder and additional items are being
withheld for subsequent award, the IFB and award document must state
that the Government may make subsequent awards for those additional
items within the bid acceptance period.
(d) All provisions of the IFB, including any acceptable additions
or changes made by a bidder in the bid, must be clearly and accurately
set forth (either expressly or by reference) in the award document.
(e)(1) Award is generally made by using the Award portion of
Standard Form (SF) 33, Solicitation, Offer, and Award, or SF 1447,
Solicitation/Contract. If an offer on an SF 33 leads to further
changes, the resulting contract must be prepared as a bilateral
document on SF 26, Award/Contract.
(2) Use of the Award portion of SF 33, SF 26, or SF 1447, does not
preclude the additional use of informal documents, including electronic
communications, as notices of awards.
(3) Do not physically include Part IV in the contract. Award by
acceptance of a bid on the award portion of Standard Form 33,
Solicitation Offer and Award (SF 33), Standard Form 26, Award/Contract
(SF 26), or Standard Form 1447, Solicitation/Contract (SF 1447),
incorporates Section K, Representations, certifications, and other
statements of bidders, in the resultant contract even though not
physically attached.
(f) Any discount offered will form a part of the award and will be
taken by the payment center if payment is made within the discount
period specified by the bidder.
(1) As an alternative to indicating a discount in conjunction with
the offer, bidders may prefer to offer discounts on individual
invoices.
(2) See part 32, which prescribes the contract clause at 52.232-8,
Discounts for Prompt Payment.

14.308 Award of equal low bids.

(a) Award contracts in the following order of priority when two or
more low bids are equal in all respects:
(1) Small business concerns that are also labor surplus area
concerns.
(2) Other small business concerns.
(3) Other business concerns.
(b) If two or more bidders remain equally eligible after
application of paragraph (a) of this section, conduct a drawing,
limited to those bidders. If time permits, give the bidders involved an
opportunity to attend the drawing. The drawing must be witnessed by at
least three persons, and the contract file must contain the names and
addresses of the witnesses and the person supervising the drawing.
(c) When an award is to be made by using the priorities under this
section, include a written agreement in the contract that the
contractor will perform, or cause to be performed, the contract in
accordance with the circumstances justifying the priority used to break
the tie or select bids for a drawing by lot.

14.309 Information to bidders.

14.309-1 Award of unclassified contracts.

(a) At a minimum (subject to any restrictions in part 9)--
(1) Notify each unsuccessful bidder in writing or electronically
within three days after contract award, that its bid was not accepted.
``Day,'' for purposes of the notification process, means calendar day,
except that the period will run until a day which is not a Saturday,
Sunday, or legal holiday; and
(2) When award is made to other than a low bidder, state the reason
for rejection in the notice to each of the unsuccessful low bidders.
(b) For acquisitions covered by the World Trade Organization
Government Procurement Agreement or a Free Trade Agreement (see part
25), agencies must include in notices given unsuccessful bidders from
World Trade Organization Government Procurement Agreement or Free Trade
Agreement countries--
(1) The dollar amount of the successful bid; and
(2) The name and address of the successful bidder.

14.309-2 Award of classified contracts.

In addition to 14.309-1, if classified information was furnished or
created in connection with the IFB, advise the unsuccessful bidders,
including any who did not bid, to take disposition action in accordance
with agency procedures. The contracting officer may provide the name of
the successful bidder and the contract price to unsuccessful bidders
upon request. Information regarding a classified award must not be
provided by telephone.

Subpart 14.4--Postaward

14.401 Mistakes after award.

If a contractor's discovery and request for correction of a mistake
in bid is not made until after the award, process the request using the
procedures of part 33 and the following:
(a) When a mistake in a contractor's bid is not discovered until
after award, correct the mistake by contract modification if it would
be favorable to the Government without changing the essential
requirements of the specifications.
(b) In addition to the cases contemplated in paragraph (a) of this
section or as otherwise authorized by law, agencies are authorized to
make a determination--
(1) To rescind a contract;
(2) To reform a contract to--
(i) Delete the items involved in the mistake; or
(ii) Increase the price if the contract price, as corrected, does
not exceed that of the next lowest acceptable bid under the original
IFB; or
(3) That no change will be made in the contract as awarded, if the
evidence does not warrant a determination under paragraphs (1) or (2).
(c) Make determinations under paragraphs (b)(1) and (2) on the
basis of clear and convincing evidence that a mistake in bid was made.
In addition, it must be clear that the mistake was--
(1) Mutual, or
(2) If unilaterally made by the contractor, so apparent as to have
charged the contracting officer with notice of the probability of the
mistake.
(d) Each proposed determination must be coordinated with legal
counsel in accordance with agency procedures.
(e) Process mistakes alleged or disclosed after award as follows:
(1) Request the contractor to support the alleged mistake by
submission of written statements and pertinent evidence, such as--
(i) The contractor's file copy of the bid,
(ii) The contractor's original worksheets and other data used in
preparing the bid,
(iii) Subcontractors' and suppliers' quotations, if any,
(iv) Published price lists, and
(v) Any other evidence that will serve to establish the mistake,
the manner in which the mistake occurred, and the bid actually
intended.
(2) The case file concerning an alleged mistake must contain the
following:
(i) All evidence furnished by the contractor in support of the
alleged mistake.
(ii) A signed statement by the contracting officer--
(A) Describing the supplies or services involved;
(B) Specifying how and when the mistake was alleged or disclosed;
(C) Summarizing the evidence submitted by the contractor and any
additional evidence considered pertinent;

[[Page 59552]]

(D) Quoting, in cases where only one bid was received, the most
recent contract price for the supplies or services involved, or in the
absence of a recent comparable contract, the contracting officer's
estimate of a fair price for the supplies or services and the basis for
the estimate;
(E) Setting forth the contracting officer's opinion whether a bona
fide mistake was made and whether the contracting officer was, or
should have been, on constructive notice of the mistake before the
award, together with the reasons for, or data in support of, such
opinion;
(F) Setting forth the course of action with respect to the alleged
mistake that the contracting officer considers proper on the basis of
the evidence, and if other than a change in contract price is
recommended, the manner by which the supplies or services will
otherwise be acquired; and
(G) Disclosing the status of performance and payments under the
contract, including contemplated performance and payments.
(iii) A signed copy of the bid involved.
(iv) A copy of the IFB and any specifications or drawings relevant
to the alleged mistake.
(v) An abstract of written record of the bids received.
(vi) A written request by the contractor to reform or rescind the
contract, and copies of all other relevant correspondence between the
contracting officer and the contractor concerning the alleged mistake.
(vii) A copy of the contract and any related change orders or
supplemental agreements.
(f) Each agency must include in the contract file a record of--
(1) All determinations made in accordance with this 14.401;
(2) the facts involved, and
(3) the action taken in each case.

14.402 Pricing modifications.

See subpart 15.4 for cost and price negotiation policies and
procedures.

PART 28--BONDS AND INSURANCE

Sec.
28.000 Scope of part.
28.001 Definitions.
Subpart 28.1--Bonds and Other Financial Protections
28.100 Scope of subpart.
28.101 Bid guarantees.
28.101-1 Policy on use.
28.101-2 Solicitation provision or contract clause.
28.101-3 Authority of an attorney-in-fact for a bid bond.
28.101-4 Noncompliance with bid guarantee requirements.
28.102 Performance and payment bonds and alternative payment
protections for construction contracts.
28.102-1 General.
28.102-2 Amount required.
28.102-3 Contract clauses.
28.103 Performance and payment bonds for other than construction
contracts.
28.103-1 General.
28.103-2 Performance bonds.
28.103-3 Payment bonds.
28.103-4 Contract clause.
28.104 Annual performance bonds.
28.105 Other types of bonds.
28.105-1 Advance payment bonds.
28.105-2 Patent infringement bonds.
28.106 Administration.
28.106-1 Bonds and bond related forms.
28.106-2 Substitution of surety bonds.
28.106-3 Additional bond and security.
28.106-4 Contract clause.
28.106-5 Consent of surety.
28.106-6 Furnishing information.
28.106-7 Withholding contract payments.
28.106-8 Payment to subcontractors or suppliers.
Subpart 28.2--Sureties and Other Security for Bonds
28.200 Scope of subpart.
28.201 Requirements for security.
28.202 Acceptability of corporate sureties.
28.203 Individual sureties.
28.203-1 Acceptability of individual sureties.
28.203-2 Substitution of assets.
28.203-3 Release of security interest.
28.203-4 Solicitation provision and contract clause.
28.203-5 Exclusion of individual sureties.
28.204 Alternatives in lieu of corporate or individual sureties.
28.204-1 United States bonds or notes.
28.204-2 Certified or cashier's checks, bank drafts, money orders,
or currency.
28.204-3 Irrevocable letter of credit.
28.204-4 Contract clause.
Subpart 28.3--Insurance
28.301 Policy.
28.302 Notice of cancellation or change.
28.303 Insurance against loss of or damage to Government property.
28.304 Risk-pooling arrangements.
28.305 Overseas workers' compensation and war-hazard insurance.
28.306 Insurance under fixed-price contracts.
28.307 Insurance under cost-reimbursement contracts.
28.307-1 Group insurance plans.
28.307-2 Liability.
28.308 Self-insurance.
28.309 Contract clauses for workers' compensation insurance.
28.310 Contract clause for work on a Government installation.
28.311 Solicitation provision and contract clause on liability
insurance under cost-reimbursement contracts.
28.311-1 Contract clause.
28.311-2 Agency solicitation provisions and contract clauses.
28.312 Contract clause for insurance of leased motor vehicles.
28.313 Contract clauses for insurance of transportation or
transportation-related services.

Authority: 41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C.
chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C.
3016); and 51 U.S.C. 20113.

28.000 Scope of part.

This part prescribes requirements for obtaining financial
protection against losses under contracts that result from the use of
the sealed bid or negotiated methods. It covers bid guarantees, bonds,
alternative payment protections, security for bonds, and insurance.

28.001 Definitions.

As used in this part--
Attorney-in-fact means an agent, independent agent, underwriter, or
any other company or individual holding a power of attorney granted by
a surety.
Bid means any response to a solicitation, including a proposal
under a negotiated acquisition.
Bidder means any entity that is responding or has responded to a
solicitation, including an offeror under a negotiated acquisition.
Bid guarantee means a form of security assuring that the bidder (1)
will not withdraw a bid within the period specified for acceptance, and
(2) will execute a written contract and furnish required bonds,
including any necessary coinsurance or reinsurance agreements, within
the time specified in the bid, unless a longer time is allowed, after
receipt of the specified forms.
Bond means a written instrument executed by a bidder or contractor
(the ``principal''), and a second party (``the surety'' or
``sureties'') (except as provided in 28.204), to assure fulfillment of
the principal's obligations to a third party (the ``obligee'' or
``Government''), identified in the bond. If the principal's obligations
are not met, the bond assures payment, to the extent stipulated, of any
loss sustained by the obligee. The types of bonds and related documents
are as follows:
(1) An advance payment bond secures fulfillment of the contractor's
obligations under an advance payment provision.
(2) An annual bid bond is a single bond furnished by a bidder, in
lieu of separate bid bonds, which secures all bids (on other than
construction contracts) requiring bonds submitted during a specific
Government fiscal year.
(3) An annual performance bond is a single bond furnished by a
contractor, in lieu of separate performance bonds, to secure
fulfillment of the contractor's obligations under contracts (other than

[[Page 59553]]

construction contracts) requiring bonds entered into during a specific
Government fiscal year.
(4) A patent infringement bond secures fulfillment of the
contractor's obligations under a patent provision.
(5) A payment bond assures payments as required by law to all
persons supplying labor or material in the prosecution of the work
provided for in the contract.
(6) A performance bond secures performance and fulfillment of the
contractor's obligations under the contract.
Consent of surety means an acknowledgment by a surety that its bond
given in connection with a contract continues to apply to the contract
as modified.
Penal sum or penal amount means the amount of money specified in a
bond (or a percentage of the bid price in a bid bond) as the maximum
payment for which the surety is obligated or the amount of security
required to be pledged to the Government in lieu of a corporate or
individual surety for the bond.
Reinsurance means a transaction which provides that a surety, for a
consideration, agrees to indemnify another surety against loss which
the latter may sustain under a bond which it has issued.

Subpart 28.1--Bonds and Other Financial Protections

28.100 Scope of subpart.

This subpart prescribes requirements and procedures for the use of
bonds, alternative payment protections, and all types of bid
guarantees.

28.101 Bid guarantees.

28.101-1 Policy on use.

(a) Do not require a bid guarantee unless a performance bond or a
performance and payment bond is also required (see 28.102 and 28.103).
Except as provided in paragraph (c) of this subpart, bid guarantees
must be required whenever a performance bond or a performance and
payment bond is required.
(b) All types of bid guarantees are acceptable for supply or
service contracts (see annual bid bonds and annual performance bonds
coverage in 28.001). Only separate bid guarantees are acceptable in
connection with construction contracts. Agencies may specify that only
separate bid bonds are acceptable in connection with construction
contracts.
(c) The chief of the contracting office may waive the requirement
to obtain a bid guarantee when a performance bond or a performance and
payment bond is required if it is determined that a bid guarantee is
not in the best interest of the Government for a specific acquisition
(e.g., overseas construction, emergency acquisitions, sole-source
contracts). Class waivers may be authorized by the agency head or
designee.

28.101-2 Solicitation provision or contract clause.

(a) Insert a provision or clause substantially the same as the
provision at 52.228-1, Bid Guarantee, in solicitations or contracts,
including those for commercial products and commercial services, that
require a bid guarantee or similar guarantee. For example, the
contracting officer may modify this provision--
(1) For use in connection with construction solicitations when the
agency has specified that only separate bid bonds are acceptable in
accordance with 28.101-1(b);
(2) For use in solicitations for negotiated contracts; or
(3) For use in service contracts containing options for extended
performance.
(b) Determine the amount of the bid guarantee, at least 20 percent
of the bid price and must not exceed $3 million, for insertion in the
provision at 52.228-1 (see 28.102-2(a)). The amount must be adequate to
protect the Government from loss should the successful bidder fail to
execute further contractual documents and bonds as required. When the
penal sum is expressed as a percentage, a maximum dollar limitation may
be stated.

28.101-3 Authority of an attorney-in-fact for a bid bond.

(a) Any person signing a bid bond as an attorney-in-fact must
include with the bid bond evidence of authority to bind the surety.
(b) An original, or a photocopy or facsimile of an original, power
of attorney is sufficient evidence of such authority.
(c) For purposes of this section, electronic, mechanically-applied
and printed signatures, seals and dates on the power of attorney must
be considered original signatures, seals and dates, without regard to
the order in which they were affixed.
(d) The contracting officer must--
(1) Treat the failure to provide a signed and dated power of
attorney at the time of bid opening as a matter of responsiveness; and
(2) Treat questions regarding the authenticity and enforceability
of the power of attorney at the time of bid opening as a matter of
responsibility. These questions are handled after bid opening.
(e)(1) If the contracting officer contacts the surety to validate
the power of attorney, document the file providing, at a minimum, the
following information:
(i) Name of person contacted.
(ii) Date and time of contact.
(iii) Response of the surety.
(2) If, upon investigation, the surety declares the power of
attorney to have been valid at the time of bid opening, the contracting
officer may require correction of any technical error.
(3) If the surety declares the power of attorney to have been
invalid, do not allow the bidder to substitute a replacement power of
attorney or a replacement surety.
(f) Determinations of non-responsibility based on the
unacceptability of a power of attorney are not subject to the
Certificate of Competency process of part 19 if the surety has
disavowed the validity of the power of attorney.

28.101-4 Noncompliance with bid guarantee requirements.

(a) In sealed bidding, noncompliance with a solicitation
requirement for a bid guarantee requires rejection of the bid, except
in the situations described in paragraph (c) of this subsection when
the noncompliance must be waived.
(b) In negotiation, noncompliance with a solicitation requirement
for a bid guarantee requires rejection of an initial proposal as
unacceptable, if a determination is made to award the contract based on
initial proposals without discussion, except in the situations
described in paragraph (c) of this subsection when noncompliance must
be waived. (See part 15 for conditions regarding making awards based on
initial proposals.) If the conditions for awarding based on initial
proposals are not met, deficiencies in bid guarantees submitted by
offerors determined to be in the competitive range must be addressed
during discussions and the offeror must be given an opportunity to
correct the deficiency.
(c) Noncompliance with a solicitation requirement for a bid
guarantee must be waived in the following circumstances unless the
contracting officer determines in writing that acceptance of the bid
would be detrimental to the Government's interest when--
(1) Only one offer is received. In this case, the contracting
officer may require the furnishing of the bid guarantee before award;
(2) The amount of the bid guarantee submitted is less than
required, but is

[[Page 59554]]

equal to or greater than the difference between the offer price and the
next higher acceptable offer;
(3) The amount of the bid guarantee submitted, although less than
that required by the solicitation for the maximum quantity offered, is
sufficient for a quantity for which the offeror is otherwise eligible
for award. Any award to the offeror must not exceed the quantity
covered by the bid guarantee;
(4) The bid guarantee is received late, and late receipt is waived
under part 14;
(5) A bid guarantee becomes inadequate as a result of the
correction of a mistake under part 14 (but only if the bidder will
increase the bid guarantee to the level required for the corrected
bid);
(6) An otherwise acceptable bid bond was submitted with a signed
offer, but the bid bond was not signed by the offeror;
(7) An otherwise acceptable bid bond is erroneously dated or bears
no date at all; or
(8) A bid bond does not list the United States as obligee, but
correctly identifies the offeror, the solicitation number, and the name
and location of the project involved, so long as it is acceptable in
all other respects.

28.102 Performance and payment bonds and alternative payment
protections for construction contracts.

28.102-1 General.

(a) 40 U.S.C. chapter 31, subchapter III, Bonds (formerly known as
the Miller Act), requires performance and payment bonds for any
construction contract exceeding $150,000, except that this requirement
may be waived--
(1) By the contracting officer for as much of the work as is to be
performed in a foreign country upon finding that it is impracticable
for the contractor to furnish such bonds; or
(2) As otherwise authorized by the Bonds statute or other law.
(b)(1) Pursuant to 40 U.S.C. 3132, for construction contracts
greater than $35,000, but not greater than $150,000, select two or more
of the following payment protections, giving particular consideration
to inclusion of an irrevocable letter of credit as one of the selected
alternatives:
(i) A payment bond.
(ii) An irrevocable letter of credit (ILC).
(iii) A tripartite escrow agreement. The prime contractor
establishes an escrow account in a federally insured financial
institution and enters into a tripartite escrow agreement with the
financial institution, as escrow agent, and all of the suppliers of
labor and material. The escrow agreement must establish the terms of
payment under the contract and of resolution of disputes among the
parties. The Government makes payments to the contractor's escrow
account, and the escrow agent distributes the payments in accordance
with the agreement or triggers the disputes resolution procedures if
required.
(iv) Certificates of deposit. The contractor deposits certificates
of deposit from a federally insured financial institution with the
contracting officer, in an acceptable form, executable by the
contracting officer.
(v) A deposit of the types of security listed in 28.204-1 and
28.204-2.
(2) The contractor must submit to the Government one of the payment
protections selected by the contracting officer.
(c) The contractor must furnish all bonds or alternative payment
protection, including any necessary reinsurance agreements, before
receiving a notice to proceed with the work or being allowed to start
work.

28.102-2 Amount required.

(a) Definition. As used in this subsection--
Original contract price means the award price of the contract; or,
for requirements contracts, the price payable for the estimated total
quantity; or, for indefinite-quantity contracts, the price payable for
the specified minimum quantity. Original contract price does not
include the price of any options, except those options exercised at the
time of contract award.
(b) Contracts exceeding $150,000.
(1) Performance bonds. Unless the contracting officer determines
that a lesser amount is adequate for the protection of the Government,
the penal amount of performance bonds must equal--
(i) 100 percent of the original contract price; and
(ii) If the contract price increases, an additional amount equal to
100 percent of the increase.
(2) Payment bonds.
(i) Unless the contracting officer makes a written determination
supported by specific findings that a payment bond in this amount is
impractical, the amount of the payment bond must equal--
(A) 100 percent of the original contract price; and
(B) If the contract price increases, an additional amount equal to
100 percent of the increase.
(ii) The amount of the payment bond must be no less than the amount
of the performance bond.
(c) Contracts exceeding $35,000 but not exceeding $150,000. Unless
the contracting officer determines that a lesser amount is adequate for
the protection of the Government, the penal amount of the payment bond
or the amount of alternative payment protection must equal--
(1) 100 percent of the original contract price; and
(2) If the contract price increases, an additional amount equal to
100 percent of the increase.
(d) Securing additional payment protection. If the contract price
increases, the Government must secure any needed additional protection
by directing the contractor to--
(1) Increase the penal sum of the existing bond;
(2) Obtain an additional bond; or
(3) Furnish additional alternative payment protection.
(e) Reducing amounts. The contracting officer may reduce the amount
of security to support a bond, subject to the conditions of 28.203-3(c)
or 28.204(b).

28.102-3 Contract clauses.

(a) Insert a clause substantially the same as the clause at 52.228-
15, Performance and Payment Bonds--Construction, in solicitations and
contracts for construction, including those for construction that is a
commercial service, but excluding those for commercial products, that
contain a requirement for performance and payment bonds if the
resultant contract is expected to exceed $150,000. The contracting
officer may revise paragraphs (b)(1) and/or (b)(2) of the clause to
establish a lower percentage in accordance with 28.102-2(b). If the
provision at 52.228-1 is not included in the solicitation, set a period
of time for return of executed bonds.
(b) Insert the clause at 52.228-13, Alternative Payment
Protections, in solicitations and contracts for construction, including
those for construction that is a commercial service, when the estimated
or actual value exceeds $35,000 but does not exceed $150,000. Complete
the clause by specifying the payment protections selected (see 28.102-
1(b)(1)) and the deadline for submission. The contracting officer may
revise paragraph (b) of the clause to establish a lower percentage in
accordance with 28.102-2(c).

28.103 Performance and payment bonds for other than construction
contracts.

28.103-1 General.

(a) Generally, agencies must not require performance and payment
bonds

[[Page 59555]]

for other than construction contracts. However, performance and payment
bonds may be used as permitted in 28.103-2 and 28.103-3.
(b) The contractor must furnish all bonds before receiving a notice
to proceed with the work.
(c) No bond must be required after the contract has been awarded if
it was not specifically required in the contract, except as may be
determined necessary for a contract modification.

28.103-2 Performance bonds.

(a) Performance bonds may be required for contracts exceeding the
simplified acquisition threshold when necessary to protect the
Government's interest. The following situations may warrant a
performance bond:
(1) Government property or funds are to be provided to the
contractor for use in performing the contract or as partial
compensation (as in retention of salvaged material).
(2) A contractor sells assets to or merges with another concern,
and the Government, after recognizing the latter concern as the
successor in interest, desires assurance that it is financially
capable.
(3) Substantial progress payments are made before delivery of end
items starts.
(4) Contracts are for dismantling, demolition, or removal of
improvements.
(b) The Government may require additional performance bond
protection when a contract price is increased.
(c) Determine the contractor's responsibility (see part 9) even
though a bond has been or can be obtained.

28.103-3 Payment bonds.

(a) A payment bond is required only when a performance bond is
required, and if the use of payment bond is in the Government's
interest.
(b) When a contract price is increased, the Government may require
additional bond protection in an amount adequate to protect suppliers
of labor and material.

28.103-4 Contract clause.

Insert a clause substantially the same as the clause at 52.228-16,
Performance and Payment Bonds--Other than Construction, in
solicitations and contracts, including those for commercial products
(other than commercially available off-the-shelf items) and commercial
services, that contain a requirement for both payment and performance
bonds. Determine the amount of each bond for insertion in the clause.
The amount must be adequate to protect the interest of the Government.
Set a period of time (normally 10 days) for return of executed bonds.
Use Alternate I when only performance bonds are required.

28.104 Annual performance bonds.

(a) Annual performance bonds only apply to nonconstruction
contracts. They must provide a gross penal sum applicable to the total
amount of all covered contracts.
(b) When the penal sums obligated by contracts are approximately
equal to or exceed the penal sum of the annual performance bond, an
additional bond will be required to cover additional contracts.

28.105 Other types of bonds.

The head of the contracting activity may approve using other types
of bonds in connection with acquiring particular supplies or services.
These types include advance payment bonds and patent infringement
bonds.

28.105-1 Advance payment bonds.

Advance payment bonds may be required only when the contract
contains an advance payment provision, and a performance bond is not
furnished. Determine the amount of the advance payment bond necessary
to protect the Government

28.105-2 Patent infringement bonds.

(a) Contracts providing for patent indemnity may require these
bonds only if--
(1) A performance bond is not furnished; and
(2) The financial responsibility of the contractor is unknown or
doubtful.
(b) The contracting officer must determine the penal sum.

28.106 Administration.

28.106-1 Bonds and bond related forms.

The following Standard Forms (SF's) and Optional Forms (OF's) must
be used, except in foreign countries, when a bid bond, performance or
payment bond, or an individual surety is required. The bond forms must
be used as indicated in the instruction portion of each form.
(a) SF 24, Bid Bond (see 28.101).
(b) SF 25, Performance Bond (see 28.102-1 and 28.106-3(b)).
(c) SF 25A, Payment Bond (see 28.102-1 and 28.106-3(b)).
(d) SF 25B, Continuation Sheet (for SFs 24, 25, and 25A).
(e) SF 28, Affidavit of Individual Surety (see 28.203).
(f) SF 34, Annual Bid Bond (see 28.001).
(g) SF 35, Annual Performance Bond (see 28.104).
(h) SF 273, Reinsurance Agreement for a Bonds Statute Performance
Bond (see 28.202(a)(4)).
(i) SF 274, Reinsurance Agreement for a Bonds Statute Payment Bond
(see 28.202(a)(4)).
(j) SF 275, Reinsurance Agreement in Favor of the United States
(see 28.202(a)(4)).
(k) SF 1414, Consent of Surety (see 28.106-5).
(l) SF 1415, Consent of Surety and Increase of Penalty (see 28.106-
3).
(m) SF 1416, Payment Bond for Other Than Construction Contracts
(see 28.103-3 and 28.106-3(b)).
(n) SF 1418, Performance Bond for Other Than Construction Contracts
(see 28.103-2 and 28.106-3(b)).
(o) OF 91, Release of Personal Property from Escrow (see 28.203-3).

28.106-2 Substitution of surety bonds.

(a) A new surety bond covering all or part of the obligations on a
bond previously approved may be substituted for the original bond if
approved by the head of the contracting activity, or as otherwise
specified in agency regulation.
(b) When a new surety bond is approved, notify the principal and
surety of the original bond of the effective date of the new bond.

28.106-3 Additional bond and security.

(a) When additional bond coverage is required and is secured in
whole or in part by the original surety or sureties, agencies must use
Standard Form 1415, Consent of Surety and Increase of Penalty. Standard
Form 1415 is authorized for local reproduction.
(b) When additional bond coverage is required and is secured in
whole or in part by a new surety or by one of the alternatives
described in 28.204 in lieu of corporate or individual surety, agencies
must use Standard Form 25, Performance Bond; Standard Form 1418,
Performance Bond for Other Than Construction Contracts; Standard Form
25A, Payment Bond; or Standard Form 1416, Payment Bond for Other Than
Construction Contracts.

28.106-4 Contract clause.

(a) Insert the clause at 52.228-2, Additional Bond Security, in
solicitations and contracts, including those for commercial products
(other than commercially available off-the-shelf items) and commercial
services, when bonds are required.
(b) In accordance with section 806(a)(3) of Public Law 102-190, as
amended by sections 2091 and 8105 of Public Law 103-355 (10 U.S.C. 4601
note prec.), insert the clause at 52.228-

[[Page 59556]]

12, Prospective Subcontractor Requests for Bonds, in solicitations and
contracts other than those for commercial products and commercial
services, except for construction that is a commercial service, when a
payment bond will be furnished pursuant to 40 U.S.C. chapter 31,
subchapter III, Bonds (see 28.102-1).

28.106-5 Consent of surety.

(a) When any contract is modified, obtain the consent of surety
if--
(1) An additional bond is obtained from other than the original
surety;
(2) No additional bond is required and--
(i) The modification is for new work beyond the scope of the
original contract; or
(ii) The modification does not change the contract scope but
changes the contract price (upward or downward) by more than 25 percent
or $50,000; or
(3) Consent of surety is required for a novation agreement (see
part 42).
(b) When a contract for which performance or payment is secured by
any of the types of security listed in 28.204 is modified as described
in paragraph (a) of this subsection, no consent of surety is required.
(c) Agencies must use Standard Form 1414, Consent of Surety, for
all types of contracts.

28.106-6 Furnishing information.

(a) The surety on the bond, upon its written request, may be
furnished information on the progress of the work, payments, and the
estimated percentage of completion, concerning the contract for which
the bond was furnished.
(b) When a payment bond has been provided, upon request, furnish
the name and address of the surety or sureties to any subcontractor or
supplier who has furnished or been requested to furnish labor or
material for the contract. In addition, general information concerning
the work progress, payments, and the estimated percentage of completion
may be furnished to persons who have provided labor or materials and
have not been paid.
(c) When a payment bond has been provided for a contract, the head
of the agency or designee must furnish a certified copy of the bond and
the contract for which it was given to any person who makes a request
therefor and who furnishes an affidavit that the requestor has supplied
labor or materials for such work and payment therefor has not been made
or that the requestor is being sued on such bond. The person who makes
the request must be required to pay such costs of preparation as
determined by the head of the agency or designee to be reasonable and
appropriate (see 40 U.S.C. 3133).
(d) Section 806(a)(2) of Public Law 102-190, as amended by sections
2091 and 8105 of Public Law 103-355 (10 U.S.C. 4601 note prec.),
requires that the Federal Government provide information to
subcontractors on payment bonds under contracts, including contracts
for construction that is a commercial service. Upon the written or oral
request of a subcontractor/supplier, or prospective subcontractor/
supplier, under a contract with respect to which a payment bond has
been furnished pursuant to the Bonds statute, promptly provide to the
requester, either orally or in writing, as appropriate, any of the
following:
(1) Name and address of the surety or sureties on the payment bond.
(2) Penal amount of the payment bond.
(3) Copy of the payment bond. The contracting officer may impose
reasonable fees to cover the cost of copying and providing a copy of
the payment bond.

28.106-7 Withholding contract payments.

(a) During contract performance, agencies must not withhold
payments due contractors or assignees because subcontractors or
suppliers have not been paid.
(b) If, after completion of the contract work, the Government
receives written notice from the surety regarding the contractor's
failure to meet its obligation to its subcontractors or suppliers,
withhold final payment. However, the surety must agree to hold the
Government harmless from any liability resulting from withholding the
final payment. The contracting officer will authorize final payment
upon agreement between the contractor and surety or upon a judicial
determination of the rights of the parties.
(c) For any withholding incident to the labor standards provisions
of the contract, see part 22.

28.106-8 Payment to subcontractors or suppliers.

The contracting officer will only authorize payment to
subcontractors or suppliers from an ILC (or any other cash equivalent
security) upon a judicial determination of the rights of the parties, a
signed notarized statement by the contractor that the payment is due
and owed, or a signed agreement between the parties as to amount due
and owed.

Subpart 28.2--Sureties and Other Security for Bonds

28.200 Scope of subpart.

This subpart prescribes procedures for the use of sureties and
other security to protect the Government from financial losses.

28.201 Requirements for security.

(a) Agencies must obtain adequate security for bonds (including
coinsurance and reinsurance agreements) required or used with a
contract for supplies or services (including construction). Acceptable
forms of security include--
(1) Corporate or individual sureties; or
(2) Any of the types of security authorized in lieu of sureties by
28.204.
(b) Solicitations must not preclude offerors from using the types
of surety or other security permitted by this subpart, unless
prohibited by law or regulation.

28.202 Acceptability of corporate sureties.

(a)(1) Corporate sureties offered for bonds furnished with
contracts performed in the United States or its outlying areas must
appear on the list contained in the Department of the Treasury's
Listing of Approved Sureties (Treasury Department Circular 570),
``Companies Holding Certificates of Authority as Acceptable Sureties on
Federal Bonds and as Acceptable Reinsuring Companies.''
(2) The penal amount of the bond should not exceed the surety's
underwriting limit stated in the Treasury Department Circular 570. If
the penal amount exceeds the underwriting limit, the bond will be
acceptable only if--
(i) The amount which exceeds the specified limit is coinsured or
reinsured; and
(ii) The amount of coinsurance or reinsurance does not exceed the
underwriting limit of each coinsurer or reinsurer.
(3) Coinsurance or reinsurance agreements must conform to the
Department of the Treasury (Treasury) regulations in 31 CFR 223.10 and
223.11. When reinsurance is contemplated, require reinsurance
agreements to be executed and submitted with the bonds before making a
final determination on the bonds.
(4) When specified in the solicitation, the contracting officer may
accept a bond from the direct writing company in satisfaction of the
total bond requirement of the contract. This is permissible until
necessary reinsurance agreements are executed, even though the total
bond requirement may exceed

[[Page 59557]]

the insurer's underwriting limitation. The contractor must execute and
submit necessary reinsurance agreements to the contracting officer
within the time specified on the bid form, which may not exceed 45
calendar days after the execution of the bond. The contractor must use
Standard Form (SF) 273, Reinsurance Agreement for a Bonds Statute
Performance Bond, and SF 274, Reinsurance Agreement for a Bonds Statute
Payment Bond, when reinsurance is furnished with the required
performance or payment bonds. SF 275, Reinsurance Agreement in Favor of
the United States, is used when reinsurance is furnished with bonds for
other purposes.
(b) For contracts performed in a foreign country, sureties not
appearing on Treasury Department Circular 570 are acceptable if the
contracting officer determines that it is impracticable for the
contractor to use Treasury listed sureties.
(c) Treasury issues supplements to Treasury Department Circular
570, notifying all Federal agencies of new approved corporate surety
companies and the termination of the authority of any specific
corporate surety to qualify as a surety on Federal bonds. Upon receipt
of notification of termination of a company's authority to qualify as a
surety on Federal bonds, review the outstanding contracts and take
action necessary to protect the Government, including, where
appropriate, securing new bonds with acceptable sureties in lieu of
outstanding bonds with the named company.
(d) Treasury Department Circular 570 may be obtained from the U.S.
Department of the Treasury, Bureau of the Fiscal Service, Surety Bond
Branch, 3201 Pennsy Drive, Building E, Landover, MD 20785 or at <a href="https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm">https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm</a>.

28.203 Individual sureties.

28.203-1 Acceptability of individual sureties.

(a) An individual surety is acceptable for all types of bonds
except position schedule bonds. Assets pledged by an individual surety
must meet the eligibility requirements of Treasury's Bureau of the
Fiscal Service. Per 31 U.S.C. 9310, individual sureties must pledge
eligible obligations, which Treasury refers to as acceptable collateral
or eligible collateral. A list of acceptable assets, entitled
``Acceptable Collateral for 31 CFR part 225,'' may be accessed by going
to <a href="https://fiscal.treasury.gov/tcmm/resources.html">https://fiscal.treasury.gov/tcmm/resources.html</a> and clicking on ``31
CFR part 225''.
(b)(1) An individual surety must execute the bond (e.g., bid bond
(SF 24), performance bond (SF 25), payment bond (SF 25A)).
(2) The net adjusted value of unencumbered assets is their market
value minus the margin. The margin tables are available at
<a href="http://www.treasurydirect.gov">www.treasurydirect.gov</a>. The net adjusted value of unencumbered assets
pledged by the individual surety must equal or exceed the penal amount
(i.e., face value) of each bond.
(3) The individual surety must execute the SF 28, Affidavit of
Individual Surety, and provide a security interest. One individual
surety is adequate support for a bond, provided the net adjusted value
of unencumbered assets pledged by that individual surety equals or
exceeds the amount of the bond.
(4) An offeror or contractor may submit up to three individual
sureties for each bond, in which case the net adjusted value of the
pledged unencumbered assets, when combined, must equal or exceed the
penal amount of the bond. Each individual surety is jointly and
severally liable to the extent of the penal amount of the bond.
(c) Using the information from the SF 28 submitted by the offeror
or contractor, notify the Treasury's collateral operations support team
by email at <a href="/cdn-cgi/l/email-protection#17555a4357717e6474767b39636572766462656e39707861">[email&#160;protected]</a> or by phone at 888-568-7343 of the
individual surety, the assets to be pledged, and the amount necessary
to cover the individual surety bond, i.e., the required amount to be
collateralized. Treasury will advise the contracting officer whether
the assets are eligible to be pledged, consistent with 28.203-1(a), and
of the valuation of the assets offered to be pledged, consistent with
the valuation standards in 28.203-1(b)(2). If after 3 business days the
contracting officer has not received a response from Treasury, the
contracting officer may seek assistance from the Director, Bank Policy
and Oversight, at 202-504-3502. Determine whether the individual surety
bond is acceptable as to the amount necessary to cover the individual
surety bond based on the asset eligibility and valuation assessment
from Treasury. Notify both the offeror or contractor and the individual
surety of this determination.
(d) If the contracting officer determines the individual surety is
acceptable, request the Treasury's collateral operations support team
set up the necessary individual surety pledged asset collateral
account.
(e) If the contracting officer determines that no individual surety
in support of a bid guarantee is acceptable, reject the offeror
utilizing the individual surety as nonresponsible, except as provided
in 28.101-4. A finding of nonresponsibility based on unacceptability of
an individual surety, need not be referred to the Small Business
Administration for a Certificate of Competency. (See part 19 and 61
Comp. Gen. 456 (1982).)
(f) If a contractor submits an unacceptable individual surety, or
one that Treasury could not assess the asset eligibility and valuation
within a reasonable time, then the contracting officer may permit the
contractor to substitute an acceptable surety within a reasonable time.
(g) Evidence of possible criminal or fraudulent activities by an
individual surety must be referred to the appropriate agency official
in accordance with agency procedures.

28.203-2 Substitution of assets.

An individual surety may request the Government to accept a
substitute asset for that currently pledged by submitting a written
request, including a revised SF 28, to the responsible contracting
officer. Following the requirements set forth in 28.203-1, the
contracting officer may agree to the substitution of assets upon
determining that the substitute assets to be pledged are adequate to
protect the outstanding bond or guarantee obligations.

28.203-3 Release of security interest.

(a) After consultation with legal counsel, release the security
interest on the individual surety's assets using the Optional Form 91,
Release of Personal Property from Escrow, or a similar release as soon
as possible consistent with the conditions in subparagraphs (a)(1) and
(2) of this section. A surety's assets pledged in support of a payment
bond may be released to a subcontractor or supplier upon Government
receipt of a Federal district court judgment, or a sworn statement by
the subcontractor or supplier that the claim is correct along with a
notarized authorization of the release by the surety stating that it
approves of such release.
(1) Contracts subject to the Bonds statute. See section 1.110 and
section 28.102-1, paragraph (a). The security interest must be
maintained for the later of--
(i) 1 year following final payment;
(ii) Until completion of any warranty period (applicable only to
performance bonds); or
(iii) Pending resolution of all claims filed against the payment
bond during the 1 year period following final payment.

[[Page 59558]]

(2) Contracts subject to alternative payment protection. See
section 28.102-1, paragraph (b)(1). The security interest must be
maintained for the full contract performance period plus 1 year.
(3) Other contracts not subject to the Bonds statute. The security
interest must be maintained for 90 days following final payment or
until completion of any warranty period (applicable only to performance
bonds), whichever is later.
(b) Upon written request by the individual surety, the contracting
officer may release the security interest on the individual surety's
assets in support of a bid guarantee based upon evidence that the offer
supported by the individual surety will not result in contract award.
(c) Upon written request by the individual surety, the contracting
officer may release a portion of the security interest on the
individual surety's assets based upon substantial performance of the
contractor's obligations under its performance bond. Release of the
security interest in support of a payment bond must comply with the
subparagraphs (a)(1) through (3) of this section. In making this
determination, the contracting officer will give consideration as to
whether the contractor has reached substantial completion, final
acceptance, or other substantial objective milestone and if the
unreleased portion of the security is sufficient to cover the remaining
contract obligations, including payments to subcontractors and other
potential liabilities. The individual surety must, as a condition of
the partial release, furnish an affidavit agreeing that the release of
such assets does not relieve the individual surety of its obligations
under the bond(s).

28.203-4 Solicitation provision and contract clause.

(a) Insert the provision at 52.228-17, Individual Surety--Pledge of
Assets (Bid Guarantee), in solicitations, including for commercial
products (other than commercially available off-the-shelf items) and
commercial services, that require the submission of a bid guarantee.
(b) Insert the clause at 52.228-11, Individual Surety--Pledge of
Assets, in solicitations and contracts, including those for commercial
products (other than commercially available off-the-shelf items) and
commercial services, that require the submission of performance or
payment bonds.

28.203-5 Exclusion of individual sureties.

(a) An individual may be excluded from acting as a surety on bonds
submitted by offerors on procurement by the executive branch of the
Federal Government, by the acquiring agency's head or designee
utilizing the procedures in part 9. The exclusion must be for the
purpose of protecting the Government.
(b) An individual may be excluded for any of the following causes:
(1) Failure to fulfill the obligations under any bond.
(2) Failure to disclose all bond obligations.
(3) Misrepresentation of the value of available assets or
outstanding liabilities.
(4) Any false or misleading statement, signature or representation
on a bond or affidavit of individual suretyship.
(5) Any other cause affecting responsibility as a surety of such
serious and compelling nature as may be determined to warrant
exclusion.
(c) An individual surety excluded pursuant to this section must be
entered as an exclusion in the System for Award Management (SAM) (see
part 9).
(d) Do not accept the bonds of individual sureties whose names
appear in an active exclusion record in SAM unless the acquiring
agency's head or a designee state in writing the compelling reasons
justifying acceptance.
(e) An exclusion of an individual surety under this section will
also preclude such party from acting as a contractor in accordance with
part 9.

28.204 Alternatives in lieu of corporate or individual sureties.

(a) Any person required to furnish a bond to the Government may
furnish any of the types of security listed in 28.204-1 through 28.204-
3 instead of a corporate or individual surety for the bond. When any of
those types of security are deposited, a statement must be incorporated
in the bond form pledging the security in lieu of execution of the bond
form by corporate or individual sureties. The contractor must execute
the bond forms as the principal. Agencies must establish safeguards to
protect against loss of the security and must return the security or
its equivalent to the contractor when the bond obligation has ceased.
(b) Upon written request by any contractor securing a performance
or payment bond by any of the types of security listed in 28.204-1
through 28.204-3, the contracting officer may release a portion of the
security only when the conditions allowing the partial release of
security in 28.203-3(c) are met. The contractor must, as a condition of
the partial release, furnish an affidavit agreeing that the release of
such security does not relieve the contractor of its obligations under
the bond(s).
(c) The contractor may satisfy a requirement for bond security by
furnishing a combination of the types of security listed in 28.204-1
through 28.204-3 or a combination of bonds supported by these types of
security and additional surety bonds under 28.202 or 28.203. During the
period for which a bond supported by security is required, the
contractor may substitute one type of security listed in 28.204-1
through 28.204-3 for another, or may substitute, in whole or
combination, additional surety bonds under 28.202 or 28.203.

28.204-1 United States bonds or notes.

Any person required to furnish a bond to the Government has the
option, instead of furnishing a surety or sureties on the bond, of
depositing certain United States bonds or notes in an amount equal at
their par value to the penal sum of the bond (the Act of February 24,
1919 (31 U.S.C. 9303) and Treasury Department Circular No. 154 (31 CFR
part 225)). In addition, a duly executed power of attorney and
agreement authorizing the collection or sale of such United States
bonds or notes in the event of default of the principal on the bond
must accompany the deposited bonds or notes. The contracting officer
may--
(a) Turn securities over to the finance or other authorized agency
official; or
(b) Deposit them with the Treasurer of the United States, a Federal
Reserve Bank (or branch with requisite facilities), or other depository
designated for that purpose by the Secretary of the Treasury, under
procedures prescribed by the agency concerned and Treasury Department
Circular No. 154 (exception: deposit all bonds and notes received in
the District of Columbia with the Treasurer of the United States).

28.204-2 Certified or cashier's checks, bank drafts, money orders, or
currency.

Any person required to furnish a bond has an option to furnish a
certified or cashier's check, bank draft, Post Office money order, or
currency, in an amount equal to the penal sum of the bond, instead of
furnishing surety or sureties on the bonds. Those furnishing checks,
drafts, or money orders must draw them to the order of the appropriate
Federal agency.

28.204-3 Irrevocable letter of credit.

(a) Any person required to furnish a bond has the option to furnish
a bond secured by an irrevocable letter of credit (ILC) in an amount
equal to the penal sum required to be secured (see 28.204).

[[Page 59559]]

A separate ILC is required for each bond.
(b) The ILC must be irrevocable, require presentation of no
document other than a written demand and the ILC (and letter of
confirmation, if any), expire only as provided in paragraph (f) of this
subsection, and be issued/confirmed by an acceptable federally insured
financial institution as provided in paragraph (g) of this subsection.
(c) To draw on the ILC, use the sight draft set forth in the clause
at 52.228-14 and present it with the ILC (including letter of
confirmation, if any) to the issuing financial institution or the
confirming financial institution (if any).
(d) If the contractor does not furnish an acceptable replacement
ILC, or other acceptable substitute, at least 30 days before an ILC's
scheduled expiration, immediately draw on the ILC.
(e) If, after the period of performance of a contract where ILCs
are used to support payment bonds, there are outstanding claims against
the payment bond, draw on the ILC prior to the expiration date of the
ILC to cover these claims.
(f) The period for which financial security is required must be as
follows:
(1) If used as a bid guarantee, the ILC should expire no earlier
than 60 days after the close of the bid acceptance period.
(2) If used as an alternative to corporate or individual sureties
as security for a performance or payment bond, the offeror/contractor
may submit an ILC with an initial expiration date estimated to cover
the entire period for which financial security is required or an ILC
with an initial expiration date that is a minimum period of one year
from the date of issuance. The ILC must provide that, unless the issuer
provides the beneficiary written notice of non-renewal at least 60 days
in advance of the current expiration date, the ILC is automatically
extended without amendment for one year from the expiration date, or
any future expiration date, until the period of required coverage is
completed and the contracting officer provides the financial
institution with a written statement waiving the right to payment. The
period of required coverage must be:
(i) For contracts subject to the Bonds statute, the later of--
(A) One year following the expected date of final payment;
(B) For performance bonds only, until completion of any warranty
period; or
(C) For payment bonds only, until resolution of all claims filed
against the payment bond during the one-year period following final
payment.
(ii) For contracts not subject to the Bonds statute, the later of
(A) 90 days following final payment; or
(B) For performance bonds only, until completion of any warranty
period.
(g) Only federally insured financial institutions rated investment
grade must issue or confirm the ILC. Unless the financial institution
issuing the ILC had letter of credit business of at least $25 million
in the past year, ILCs over $5 million must be confirmed by another
acceptable financial institution that had letter of credit business of
at least $25 million in the past year.
(1) The offeror/contractor is required by paragraph (d) of the
clause at 52.228-14, Irrevocable Letter of Credit, to provide the
contracting officer a credit rating from a recognized commercial rating
service that indicates the financial institution has the required
rating(s) as of the date of issuance of the ILC.
(2) To support the credit rating of the financial institution(s)
issuing or confirming the ILC, verify the following information:
(i) Federal insurance: Each financial institution is federally
insured. Verification of federal insurance is available through the
Federal Deposit Insurance Corporation institution directory at the
website <a href="http://www2.fdic.gov/idasp/index.asp">http://www2.fdic.gov/idasp/index.asp</a>.
(ii) Current credit rating. The current credit rating for each
financial institution is investment grade and that the credit rating is
from a Nationally Recognized Statistical Rating Organization (NRSRO).
NRSROs can be located at the website <a href="http://www.sec.gov/answers/nrsro.htm">http://www.sec.gov/answers/nrsro.htm</a> maintained by the SEC.
(3) The rating services listed in the website <a href="http://www.sec.gov/answers/nrsro.htm">http://www.sec.gov/answers/nrsro.htm</a> use different rating scales (e.g., AAA, AA, A, BBB,
BB, B, CCC, CC, C, and D; or Aaa, Aa, A, Baa, Ba, B, Caa, Ca, and C) to
provide evaluations of institutional credit risk; however, all such
systems specify the range of investment grade ratings (e.g., BBB-AAA or
Baa-Aaa in the examples in this section) and permit evaluation of the
relative risk associated with a specific institution. If the
contracting officer learns that a financial institution's rating has
dropped below investment grade level, give the contractor 30 days to
substitute an acceptable ILC or must draw on the ILC using the sight
draft in paragraph (g) of the clause at 52.228-14.
(h) A copy of the Uniform Customs and Practice for Documentary
Credits, 2007 Edition, International Chamber of Commerce Publication
No. 600, is available from: ICC Books USA, 1212 Avenue of the Americas,
21st Floor, New York, NY 10036; Phone: 212-703-5078; Fax: 212-391-6568;
Email: <a href="/cdn-cgi/l/email-protection#b1d8d2d2d3dededac2f1c4c2d2d8d39fdec3d6">[email&#160;protected]</a>; Via the internet at: <a href="http://www.uscib.org/ucp-600-ud-4465/">http://www.uscib.org/ucp-600-ud-4465/</a>.

28.204-4 Contract clause.

Insert the clause at 52.228-14, Irrevocable Letter of Credit, in
solicitations and contracts, including those for commercial products
(other than commercially available off-the-shelf items) and commercial
services, for services, supplies, or construction, when a bid
guarantee, or performance bonds, or performance and payment bonds are
required.

Subpart 28.3--Insurance

28.301 Policy.

Contractors must carry insurance under the following circumstances:
(a)(1) The Government requires any contractor subject to Cost
Accounting Standard (CAS) 416 (48 CFR 9904.416) to obtain insurance, by
purchase or self-coverage, for the perils to which the contractor is
exposed, except when the--
(i) Government, by providing in the contract in accordance with
law, agrees to indemnify the contractor under specified circumstances;
or
(ii) Contract specifically relieves the contractor of liability for
loss of or damage to Government property.
(2) The Government reserves the right to disapprove the purchase of
any insurance coverage not in the Government's interest.
(3) Allowability of the insurance program's cost must be determined
in accordance with the criteria in 31.205-19.
(b) Contractors, whether or not their contracts are subject to CAS
416, are required by law and this regulation to provide insurance for
certain types of perils (e.g., workers' compensation). Insurance is
mandatory also when commingling of property, type of operation,
circumstances of ownership, or condition of the contract make it
necessary for the protection of the Government. The minimum amounts of
insurance required by this regulation (see 28.307-2) may be reduced
when a contract is to be performed outside the United States and its
outlying areas. When more than one agency is involved, the agency
responsible for review and approval of a contractor's insurance program
must coordinate with other interested agencies before acting on
significant insurance matters.
(c) Contractors awarded nonpersonal services contracts for health
care services are required to maintain

[[Page 59560]]

medical liability insurance and indemnify the Government for liability
producing acts or omissions by the contractor, its employees and agents
(see part 37).

28.302 Notice of cancellation or change.

When the Government requires the contractor to provide insurance
coverage, the policies must contain an endorsement that any
cancellation or material change in the coverage adversely affecting the
Government's interest must not be effective unless the insurer or the
contractor gives written notice of cancellation or change as required
by the contracting officer. When the coverage is provided by self-
insurance, the contractor must not change or decrease the coverage
without the administrative contracting officer's prior approval (see
28.308(c)).

28.303 Insurance against loss of or damage to Government property.

When the Government requires or approves insurance to cover loss of
or damage to Government property (see part 45), it may be provided by
specific insurance policies or by inclusion of the risks in the
contractor's existing policies. The policies must disclose the
Government's interest in the property.

28.304 Risk-pooling arrangements.

Agencies may establish risk-pooling arrangements. These
arrangements are designed to use the services of the insurance industry
for safety engineering and the handling of claims at minimum cost to
the Government. The agency responsible must appoint a single manager or
point of contact for each arrangement.

28.305 Overseas workers' compensation and war-hazard insurance.

(a) Public-work contract, as used in this subpart, means any
contract for a fixed improvement or for any other project, fixed or
not, for the public use of the United States or its allies, involving
construction, alteration, removal, or repair, including projects or
operations under service contracts and projects in connection with the
national defense or with war activities, dredging, harbor improvements,
dams, roadways, and housing, as well as preparatory and ancillary work
in connection therewith at the site or on the project.
(b) The Defense Base Act (42 U.S.C. 1651 et seq.) extends the
Longshoremen's and Harbor Workers' Compensation Act (33 U.S.C. 901) to
various classes of employees working outside the United States,
including those engaged in performing--
(1) Public-work contracts; or
(2) Contracts approved or financed under the Foreign Assistance Act
of 1961 (Pub. L. 87-195) other than contracts--
(i) Approved or financed by the Development Loan Fund (unless the
Secretary of Labor, acting upon the recommendation of a department or
agency, determines that such contracts should be covered); or
(ii) Exclusively for materials or supplies.
(c) When the Defense Base Act applies to these employees, the
benefits of the Longshoremen's and Harbor Workers' Compensation Act are
extended through operation of the War Hazards Compensation Act (42
U.S.C. 1701 et seq.) to protect the employees against the risk of war
hazards (injury, death, capture, or detention). When, by means of an
insurance policy or a self-insurance program, the contractor provides
the workers' compensation coverage required by the Defense Base Act,
the contractor's employees automatically receive war-hazard risk
protection.
(d) When the agency head recommends a waiver to the Secretary of
Labor, the Secretary may waive the applicability of the Defense Base
Act to any contract, subcontract, work location, or classification of
employees.
(e) If the Defense Base Act is waived for some or all of the
contractor's employees, the benefits of the War Hazards Compensation
Act are automatically waived with respect to those employees for whom
the Defense Base Act is waived. For those employees, the contractor
must provide workers' compensation coverage against the risk of work
injury or death and assume liability toward the employees and their
beneficiaries for war-hazard injury, death, capture, or detention. The
contract must provide either that the costs of this liability or the
reasonable costs of insurance against this liability must be allowed as
a cost under the contract.

28.306 Insurance under fixed-price contracts.

(a) General. Although the Government is not ordinarily concerned
with the contractor's insurance coverage if the contract is a fixed-
price contract, in special circumstances agencies may specify insurance
requirements under fixed-price contracts. Examples of such
circumstances include the following:
(1) The contractor is--or has a separate operation--engaged
principally in Government work.
(2) Government property is involved.
(3) The work is to be performed on a Government installation.
(4) The Government elects to assume risks for which the contractor
ordinarily obtains commercial insurance.
(b) Work on a Government installation. (1) When the clause at
52.228-5, Insurance--Work on a Government Installation, is required to
be included in a fixed-price contract by 28.310, the coverage specified
in 28.307 is the minimum insurance required and must be included in the
contract Schedule or elsewhere in the contract. The contracting officer
may require additional coverage and higher limits.
(2) When the clause at 52.228-5, Insurance--Work on a Government
Installation, is not required by 28.310 but is included because the
contracting officer considers it to be in the Government's interest to
do so, any of the types of insurance specified in 28.307 may be omitted
or the limits may be lowered, if appropriate.

28.307 Insurance under cost-reimbursement contracts.

Cost-reimbursement contracts (and subcontracts, if the terms of the
prime contract are extended to the subcontract) ordinarily require the
types of insurance listed in 28.307-2, with the minimum amounts of
liability indicated. (See 28.308 for self-insurance.)

28.307-1 Group insurance plans.

(a) Prior approval requirement. Under cost-reimbursement contracts,
before buying insurance under a group insurance plan, the contractor
must submit the plan for approval, in accordance with agency
regulations. Any change in benefits provided under an approved plan
that can reasonably be expected to increase significantly the cost to
the Government requires similar approval.
(b) Premium refunds or credits. The plan must provide for the
Government to share in any premium refunds or credits paid or otherwise
allowed to the contractor. In determining the extent of the
Government's share in any premium refunds or credits, any special
reserves and other refunds to which the contractor may be entitled in
the future must be taken into account.

28.307-2 Liability.

(a) Workers' compensation and employer's liability. Contractors are
required to comply with applicable Federal and State workers'
compensation and occupational disease statutes. If occupational
diseases are not compensable under those statutes, they must be covered
under the employer's liability section of the insurance policy, except
when contract operations are so

[[Page 59561]]

commingled with a contractor's commercial operations that it would not
be practical to require this coverage. Employer's liability coverage of
at least $100,000 must be required, except in States with exclusive or
monopolistic funds that do not permit workers' compensation to be
written by private carriers. (See 28.305(c) for treatment of contracts
subject to the Defense Base Act.)
(b) General liability. (1) Require bodily injury liability
insurance coverage written on the comprehensive form of policy of at
least $500,000 per occurrence.
(2) Property damage liability insurance must be required only in
special circumstances as determined by the agency.
(c) Automobile liability. Require automobile liability insurance
written on the comprehensive form of policy. The policy must provide
for bodily injury and property damage liability covering the operation
of all automobiles used in connection with performing the contract.
Policies covering automobiles operated in the United States must
provide coverage of at least $200,000 per person and $500,000 per
occurrence f

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