on, without regard to the provisions of law relating to the making, performance, amendment, or modification of contracts whenever he deems such action would facilitate the prosecution of the war: Provided, That nothing herein shall be construed to authorize the use of the cost-plus-a-percentage-of-cost system of contracting: Provided further, That nothing herein shall be construed to authorize any contracts in violation of existing law relating to limitation of profits: Provided further, That all acts under the authority of this section shall be made a matter of public record under regulations prescribed by the President and when deemed by him not to be incompatible with the public interest.

§ 802.208 Executive Order 9001. Pursuant to the powers granted him by the First War Powers Act, the President in Title I of Executive Order 9001 (3 CFR Cum. Supp.) conferred authority upon the War Department as follows:

(a) Section 1 of the Executive order authorizes the Secretary of War "within the limits of the amounts appropriated therefor, to enter into contracts and into amendments or modifications of contracts heretofore or hereafter made, and to make advance, progress, and other payments thereon, without regard to the provisions of law relating to the making, amendment, or modification of contracts" and to delegate these powers with authority to redelegate them. (With respect to such delegations, see § 801.107 and following of these procurement regulations, especially § 801.107-9).

(b) "The contracts hereby authorized to be made include agreements of all kinds (whether in the form of letters of intent, purchase orders, or otherwise) for all types and kinds of things and services necessary, appropriate or convenient for the prosecution of war, or for the invention, development, or production of, or research concerning any such things, including but not limited to, aircraft buildings, vessels, arms, armament, equipment, or supplies of any kind, or any portion thereof, including plans, spare parts and equipment therefor, materials, supplies, facilities, utilities, machinery, machine tools, and any other equipment, without any restriction of any kind, either as to type, character, location or form."

(c) "The War Department, the Navy Department, and the United States Maritime Commission may by agreement modify or amend or settle claims under Contracts heretofore or hereafter made,

may make advance, progress and other payments upon such contracts of any percentum of the contract price, and may enter into agreements with contractors and/or obligors, modifying or releasing accrued obligations of any sort, including accrued liquidated damages or liability under surety or other bonds, whenever, in the judgment of the War Department, the Navy Department, or the United States Maritime Commission, respectively, the prosecution of the war is thereby facilitated. Amendments and modifications of contracts may be with or without consideration and may be utilized to accomplish the same things as any original contract could have accomplished hereunder, irrespective of the time or circumstances of the making of or the form of the contract amended or modified, or of the amending or modifying contract, and irrespective of rights which may have accrued under the contract, or the amendments or modifications thereof."

(d) "Advertising, competitive bidding and bid, payment, performance, or other bonds or other forms of security, need not be required."

§ 802.208-1 Restrictions on authority. In Title II of Executive Order 9001, the President restricted the authority conferred by Title I thereof, by prescribing the following regulations:

(a) "Complete data shall be maintained by the War Department, the Navy Department, and the United States Maritime Commission as to all contracts and purchases which they respectively make pursuant to the Act and this Executive Order. The Secretary of War, the Secretary of the Navy, and the Chairman of the United States Maritime Commission shall make available for public inspection, as they may respectively deem compatible with the public interest, so much of such data as does not cover restricted, confidential, or secret contracts or purchases." (As amended by E.O. 9296, 3 CFR Cum. Supp.)

(b) "Notwithstanding anything in the Act or this Executive Order, the War Department, the Navy Department, and the United States Maritime Commission shall not discriminate in any act performed thereunder against any person on the ground of race, creed, color or national origin, and all contracts shall be deemed to incorporate by reference a

provision that the contractor and any subcontractors thereunder shall not so discriminate." (See § 803.325 of this subchapter.)

(c) "No claim against the United States arising under any purchase or contract made under the authority of the Act shall be assigned except in accordance with the Assignment of Claims Act. 1940 (54 Stat. 1029; 31 U.S.C. 203)." (See 803.390 to 803.390-7 of this subchapter.)

(d) "Advance payments shall be made hereunder only after careful scrutiny to determine that such payments will promote the national interest and under such regulations to that end as the Secretary of War, the Secretary of the Navy, or the United States Maritime Commission may prescribe." (See §§ 803.321-803.321-14 of this subchapter.)

(e) Every contract entered into pursuant to the act and Executive order must contain the warranty by the contractor against payment of commissions and contingent fees set out in § 803.323 or §827.726 of this chapter (see § 811.1181 of this subchapter).

(f) The cost-plus-a-percentage-ofcost system of contracting shall not be used.

(g) Provisions of law limiting profits under contracts or fixed-fees continue in effect and in no case shall the fixed fee under a cost-plus-a-fixed-fee contract exceed 7% of the estimated cost exclusive of the fee.

(h) "No contract or, modification or amendment thereof shall be exempt from the provisions of the Walsh-Healey Act (49 Stat. 2036, as amended; 41 U.S.C. and Sup., 35) because of being entered into without advertising or competitive bidding, and the provisions of that act, the Davis-Bacon Act, as amended (49 Stat. 1011, as amended; 40 U.S.C. and Sup., 276a-276a-5), the Copeland Act, as amended (secs. 1, 2, 48 Stat. 948, as amended; 40 U.S.C. 276b, 276c), and the Eight Hour Law (27 Stat. 340, as amended; 40 U.S.C. and Sup., 321-323) as amended by the Act of September 9, 1940 (54 Stat. 872; 23 U.S.C. 6a-1) if otherwise applicable shall apply to contracts made and performed under the authority of this order." (See Part 809 of this subchapter.)

Subpart C-Policies and Forms § 802.210 General.

This

§ 802.210-1 Scope of subpart. subpart states the policies to be followed and the factors to be considered in placing contracts, in selecting contractors, in scheduling deliveries and in revising delivery schedules. Unless otherwise specified, these policies apply irrespective of the method of contracting or purchasing employed, i. e., whether by negotiation or formal advertising.

§ 802.210-2 Related regulations. Policies governing the placement of contracts for expansion of plant facilities are discussed in Part 810 of this subchapter. Policies governing purchases through other services or departments of the Government are discussed in Part 806 of this subchapter. Policies governing foreign purchases are discussed in Part 805 of this subchapter. Policies governing cutbacks and curtailment of production are discussed in Subchapter C of this chapter.

§ 802.210-3 Purchases of surplus property. Sections 806.613 through 806 6138 of this subchapter set out the policy and procedures of the War Department in carrying out the mandate of the Surplus Property Act (58 Stat. 765, as amended; 50 U.S.C., App., Sup., 16111646) with regard to the procurement of supplies from surplus property disposal agencies. Care will be taken to avoid purchasing property obtainable through disposal agencies, from commercial

sources.

§ 802.211 Procurement objective. It is the War Department's objective to so conduct its procurement activities as to secure its requirements with the least possible expense to the nation. The procedures and policies set forth in these regulations are designed to achieve this purpose by stimulating competition among the Government's suppliers, setting up incentives for efficiency, providing for price analysis, preventing inflationary tendencies, and other means. § 802.212 General price policies.

§ 802.212-1 Need for competition. To achieve the War Department's procurement objective contracts must be placed at the lowest possible prices. These may generally be obtained in competitive markets.

§ 802.212-2 Existence of competition. Whenever price competition exists steps shall be taken to secure quotations from the greatest practicable number of qualified producers by means of formal advertising, or informal solicitation. All qualified producers will be afforded an opportunity to submit quotations. All invitations for bids and solicitations will state that the Government reserves the right to reject all bids and quotations received.

§ 802.213 Time for placing contracts and scheduling deliveries.

(a) In

§ 802.213-1 General policies. the absence of some reason deemed adequate by the chief of a technical service, contracts will be placed at such times and deliveries will be scheduled so as to avoid the payment of higher prices for the deliveries. Compliance with this policy will require that contracts be placed sufficiently in advance of production to allow contractors normal "lead-time.' It will also require that deliveries be timed so as to allow contractors to produce and deliver without abnormal use of their plants and without making it necessary that they pay more than straight-time wages to persons employed in the performance of the contracts.

(b) On the other hand, contracts will not be placed unless and until it has been definitely determined that the items are necessary and must be procured. In this way the acquisition of surpluses and the creation of termination claims will, to a great extent, be avoided. Contracts will be scheduled so that deliveries will synchronize with requirements, unless in a particular case efficient production requires otherwise.

§ 802 213-2 Avoiding excessive "leadtime." Procurement will be so planned that contracts will not generally be placed until shortly before the start of the normal lead-time required for the particular procurement.

§ 802 213-3 Duration of contracts. To the extent compatible with obtaining the most economical prices, contracts should be as short in duration as the nature and quantity of the supplies or services beng prccured will permit.

§ 802 213a Quantities and rate of delivery. Notwithstanding the policies discussed in §§ 802.213 to 802.213-3, inclusive, whenever it will not be of manifest disadvantage to the Government, sup

plies and services will be procured in such quantities and under such schedules for delivery as will afford small business concerns (those employing less than 500 wage earners) a reasonable opportunity to compete for the department's business. § 802.214 Factors governing selection of contractors.

§ 802.214-1 Ability to perform. Primary emphasis shall be placed upon the prospective contractor's technical and financial ability to perform the contract to be placed with him.

§ 802.214-2 Price. The selection of the contractor from among the producers who have the requisite ability to perform will next turn on price. Where the contract is to be awarded after formal advertising it will be placed with the lowest responsible bidder complying with the conditions of the invitation for bids, provided his bid is reasonable and it is to the interest of the United States to accept it. Where the contract is to be awarded without formal advertising it should be placed with the producer having the requisite ability to perform who is willing to accept the lowest price.

§ 802.214-3 Additional factors. The following factors will be given due evaluation in negotiated purchases, but will not be considered when the procurement is to be effected by formal advertising. Not all of these factors will apply in each case and no one of them is controlling.

(a) Release of privately owned plants. Privately-owned plants not normally engaged in production of a military character will be given first priority of release from war production in order to facilitate their reconversion to civilian production, due consideration being given to the wishes of the contractor. Governmentowned plants will be kept in operation or reserve until their production is clearly no longer required for military needs.

(b) New facilities. So far as possible, the creation of additional new (as distinguished from existing) machinery, equipment or facilities will be avoided.

(c) Transportation. Transportation facilities will be conserved by avoiding unnecessary cross-hauling of raw, semifinished or finished materials from the point of origin to the point of consumption, and by avoiding long hauling when such materials are available at a shorter distance.

(d) Small business concerns. Contracts will be placed so as to make the most effective utilization of the small plants of the nation. To this end as large proportion of negotiated purchases as practicable will be made from qualified small concerns, directly, if feasible, and if not, through awards to larger firms which will subcontract to small concerns. In connection with the release from war production, independent small concerns should be retained to the fullest extent practicable, due consideration being given to the wishes of such small concerns as may desire to be released from war production. To effectuate this policy with respect to the placement of prime contracts with small concerns, the technical services are authorized and directed to pay a premium price up to 15 per cent higher than the average price at which the purchase can be made from suitable large concerns in any case where the payment of such a premium price is necessary to place a prime contract with a small concern. Payment of a premium price will only be made when the price sought by the small concern is higher than that of the large concerns because of justifiably higher costs, If in the opinion of the chief of a technical service a premium higher than 15 per cent should be paid in a particular case to effectuate this purpose, the proposed prime contract, with supporting data, will be submitted to the Chief, Current Procurement Branch, for approval. (A small concern is defined, for the purposes of this policy, as the employer of less than 500 wage earners.)

CODIFICATION: In the sixth sentence of paragraph (d) the words "will be submitted to the Director, Production and Purchases Division", were changed to "Chief, Current Procurement Branch" by Proc. Reg. 2, C57, Sept. 19, 1946, 11 F.R. 11447.

(e) More than one source of supply. Contracts will be placed so as to have for each item of supply and equipment at least two producers so located as not to be subject to the same hazard. This factor need not be considered if the chief of the technical service concerned shall determine (1) that such placement is impracticable, or (2) that although such placement is practicable the plant protection arrangements of the source selected are in his judgment entirely satisfactory, the source has adequate capacity for all foreseeable needs and adequate information with regard to

the costs of operation of the source and the prices of comparable items are and will be available to ensure that adequate and efficient analysis may be made of the prices to be charged to the Government for such item. In this connection, consideration will be given to the relative needs of the source selected and of proposed secondary sources for facilities and equipment to perform the contract.

(f) Contracts for newly developed articles. In general, a substantial proportion of initial orders for a new article should be placed with the manufacturer who developed it. When the originating manufacturer demands a price for the item substantially higher than the price for which it can be secured elsewhere, or will require substantially more facilities or tools than some other producer in order to get into production, or is already heavily loaded with orders, and the article can readily be made by one or more other producers, the contracts for the article should be placed with such producers.

§ 802.215 Purchasers from or through jobbers, distributors, or other intermediaries. The policy of the War Department is not to pay for functions or services which are of no benefit to it. Some manufacturers who formerly dealt directly with the War Department have attempted to require that contracts for their products be placed with intermediaries, such as jobbers, brokers, and distributors. Intervention of an intermediary in this manner will be avoided unless the intermediary performs a necessary and substantial function or service for the War Department, or such intervention will not result in a contract price higher than that which would properly be payable if the contract were to be placed directly with the manufacturer.

§ 802.216 Disqualified bidders.

§ 802.216-1 Persons and firms disqualified. Contracts will not be placed with persons or firms who are on any of the following lists of disqualified bidders: (a) List of persons or firms found by Secretary of Labor to have breached or violated contractual representations and stipulations required by WalshHealey Act (49 Stat. 2036, as amended; 41 U.S.C. and Sup., 35) published by the Comptroller General (see § 809.924 of this subchapter); (b) List of persons and firms which have been held ineligible to be awarded contracts subject to Public Contracts Act (Walsh-Healey) under provisions of section 5 of that act, published by Department of

Labor (see § 809.924 of this subchapter); (c) List of persons and firms found by the Comptroller General to have violated the requirements of the Davis-Bacon Act (49 Stat. 1011, as amended; 40 U.S.C. and Sup., 276a-276a-5) published by the Comptroller General (see § 809.914-1 of this subchapter); (d) Confidential List of Bidders to Whom Awards Will Not Be Made, published by The Adjutant General; and (e) Proclaimed List of Certain Blocked Nationals, published by the Department of State (see § 811.1185 of this subchapter); and (f) List of certain foreign countries and nationals thereof as provided by Executive Order 8389 (3 CFR, Cum. Supp.) as amended, and Treasury Department regulations issued pursuant thereto (see § 811.1185 of this subchapter).

[Preceding section, in small type, superseded by following section during period covered by this Supplement]

§ 802.216-1 Persons and firms disqualified. Contracts will not be placed with persons or firms who are on any of the following lists of disqualified bidders: (a) List of persons or firms found by Secretary of Labor to have breached or violated contractual representations and stipulations required by Walsh-Healey Act (49 Stat. 2036, as amended; 41 U.S.C. and Sup., 35) published by the Comptroller General (see § 809.924 of this chapter); (b) list of persons and firms which have been held ineligible to be awarded contracts subject to Public Contracts Act (Walsh-Healey) under provisions of section 5 of that act, published by Department of Labor (see § 809.924 of this chapter); (c) list of persons and firms found by the Comptroller General to have violated the requirements of the Davis-Bacon Act (49 Stat. 1011, as amended; 40 U.S.C. and Sup., 276a276a-5) published by the Comptroller General (see § 809.914-1 of this chapter); (d) Confidential List of Bidders to Whom Awards Will Not Be Made, published by The Adjutant General; and (e) list of certain foreign countries and nationals thereof as provided by Executive Order 8389 (3 CFR, Cum. Supp.) as amended, and Treasury Department regulations issued pursuant thereto (see $811.1184 of this chapter). [Proc. Reg. 2. C57, Sept. 19, 1946, 11 F.R. 11447]

1802 216-2 Distribution of lists. The Adjutant General will distribute to the technical services lists of bidders debarred by the Comptroller General by reason of violations of the Walsh-Healey Act or the Davis-Bacon Act and copies of the Confidential List of Bidders To Whom Awards Will Not Be Made. Copies of the proclaimed list of blocked

nationals will also be made available to the chiefs of the technical services.

[Preceding section, in small type, superseded by following section during period covered by this Supplement]

The

§ 802.216-2 Distribution of lists. Adjutant General will distribute to the technical services lists of bidders debarred by the Comptroller General by reason of violations of the Walsh-Healey Act or the Davis-Bacon Act and copies of the Confidential List of Bidders To Whom Awards Will Not Be Made. [Proc. Reg. 2, C57, Sept. 19, 1946, 11 F.R. 11447] § 802.216-3 Procedures for placing bidders on confidential lists of bidders to whom awards will not be made-(a) Authority. The Adjutant General will place a bidder upon the confidential list of bidders to whom awards will not be made (1) where the Director, Procurement Division, Headquarters, Army Service Forces, determines that the bidder has been guilty of fraud or attempted fraud against the United States, or (2) in any instance where the Director, Procurement Division, determines that the best interests of the United States require that contracts be not awarded to the bidder. In recommending that a bidder's name be placed on the list, the chief of a technical service will submit to the Director, Procurement Division, a full report of the specific instances of the bidder's alleged dereliction together with any available evidence relating to the contract concerned and the complaint against the bidder.

(b) Notice. If such action has not already been taken, the Director, Procurement Division, will send to the bidder by registered mail, a notice stating (1) that a recommendation has been made that the bidder's name be placed on the confidential list of bidders to whom awards I will not be made, (2) the specific contract, bid, or action of the bidder as to which complaint is made, and the specific nature of the complaint in reasonable detail, and (3) that the bidder may make a statement in writing with respect to the complaint on or before a date fixed in the notice. The bidder will not be given access to any evidence in the hands of the War Department, except in the notice and statement required by this paragraph.

(c) Direction. The Director may make such investigations and study of the complaint, either directly or through The Judge Advocate General or The In