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~ 76 
GUIDE 
TO THE 
DEFENSE CONTRACTING REGULATI10NS 
FOR 
SMALL BUSINESS 
SMALL DISADVANTAGED BUSINE~SS 
WOMEN-OWNED SMALL BUSINE~)S 

DIRECTORATE OF 
SMALL AND DISADVANTAGED BUSINESS UTILIZATION 
OFFICE OF THE SECRETARY OF DEFENSE 

WASHINGTON, DC 20301 Sllf<I'Y . !· "EhxHo~(} 
'I\~,::-.: ·: .. ,-, l'f"'l .. : -
\ 


GUIDE 
TO THE 

DEFENSE CONTRACTING REGULATIONS 
FOR 
SMALL BUSINESS 
SMALL DISADVANTAGED BUSINESS 
WOMEN-OWNED SMALL BUSINESS 

DIRECTORATE OF 
SMALL AND DISADVANTAGED BUSINESS UTILIZATION 
OFFICE OF THE SECRETARY OF DEFENSE 
WASHINGTON, DC 20301 

For sale by the Superintendent of Documents, U.S. Government Printing Olftce 
Washington, D.C. 20402 


TABLE OF CONTENTS 
1. INTRODUCTION ..... . 1 
How This Guide Can Help You. 1 Contents of This Guide . 2 
2. BACKGROUND INFORMATION 3 
Overview of the Regulations . 3 Major Differences Between Commercial and Government Practices ..... 4 
3. BASIC CONTRACTING PRINCIPLES 5 
4. CONTRACT FORMATION 7 
Contracting Opportunities 7 Contracting Procedures 12 Sealed Bids ..... . 12 Competitive Proposals . 15 Other-Than-Competitive Procedures 17 Small Purchases 18 
5. THE CONTRACT 21 
Contract Types 21 Fixed-Price Contracts 21 Cost-Reimbursement Contracts . 22 Parts of the Contract . . 24 The Contract Schedule 24 Contract Clauses . . . 25 Performance . . . • . 26 Inspection and Acceptance. 26 Subcontracts . . . . . . . 27 Government Property . . . 28 Patents, Date;~, and Copyrights 29 Bonds, Insurance, and Taxes 31 Disputes ...... . 32 Payments ....... . 32 Contract Cost Principles. 35 Contract Changes . . . . 37 Terminations . . . . . . 38 Terminations for Convenience 38 Terminations for Default. 39 Public Policies. . . . . 40 Labor Standards . . . . 41 Labor Surplus Areas 41 Equal Employment Opportunity. 41 Preferred Products and Services 42 Sanctions Against Improper Conduct 43 Examination of Records and Audits 44 
iii 
6. CONCLUSION ..... 
APPENDIX -Additional Sources of Information. 
AVAILABILITY OF THE REGULATIONS .... 

Page 
47 
49 
53 
iv 
This guide explains, in simple language, the basic purchasing rules and regulations of the Department of Defense (DoD). It is not intended to provide assistance in locating sales opportunities, although the Appendix lists several excellent sources of marketing information. 
Every Defense purchasing office has at least one person called a Small and Disadvantaged Business Utilization Specialist. These specialists can provide information about contracting and subcontracting opportunities with that office and at other DoD contracting offices. They can also provide assistance when problems arise during the performance of a contract. 
v 

1. INTRODUCTION 

HOW THIS GUIDE CAN HELP YOU 

Small businesses play an important role in developing and supplying the goods and services needed to preserve our national security. The maintenance of a broad base of competent suppliers to DoD is essential to our national security. DoD is continuously searching for additional suppliers for its vast array of needs. Thus, DoD offers great business opportunities for 
competent  suppliers.  Small  businesses,  including  those  owned  by  socially  
and  economically  disadvantaged  persons  and  those  owned  by  women,  are  
encouraged  to  do business with  DoD.  

DoD business is good business. DoD policy recognizes the need to attract the best industrial capabilities to meet ·its needs. Its profit policy reflects this need. However, selling to DoD is different from· selling to your commercial customers. You, the contractor, must abide by certain rules. If you don•t, you may not get the contracts, or, if you do get the business, you may find yourself in unnecessary trouble. The basic contracting rules for -all Federal Government agencies are set forth in the Federal Acquisition Regulation (FAR). Additional rules unique to DoD contracting are set forth in the DoD FAR Supplement. To be a successful Defense COf!tractor, you must have a working knowledge of both of these regulations. 
Both the FAR and the DoD FAR Supplement are published in looseleaf form. When needed, Federal Acquisition Circulars (FACs) and Defense Acquisition Circulars (DACs) issue changes in the FAR and the DoD FAR Supplement. Many public libraries subscribe to these regulations. DoD purchasing offices and contract administration offices maintain copies to which you may refer. Subscriptions to the FAR and the DoD FAR Supplement will provide you with the basic regulations, with all changes to date, and with any changes that may be issued until new editions of the FAR and DoD FAR Supplement are published. Subscriptions may be obtained from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. The annual subscription rates (as of November 1984) are $30.00 for the FAR and $66.00 for the DoD FAR Supplement. (Subscription forms are included on page 53.) 
1 

This guide will introduce you to the basics of Defense contracting set 
forth in these regulations. They contain policies and procedures for purchases of products and services ranging from everyday household items to the most advanced weapon systems. Yet most DoD contracts are entered into and performed under fairly standard procedures. This is especially true of the procurements that small businesses are most likely to perform. 
While explaining DoD•s buying rules, this guide will point out the pit
falls awaiting the unwary small business contractor. Read it carefully and understand what•s expected of you. Don•t fool yourself. If you can•t perform the job within the r.ules, then the Government won•t get the product it needs, and you may find yourself in financial straits as well. Remember, to be a successful Defense contractor, you must understand the basic rules. 
CONTENTS OF THIS GUIDE 
This guide is not a marketing manual. Rather, it offers simple explanations to help you understand the regulations. Chapter 2 of this guide is an overview of the regulations and explains the major differences between doing business in the private sector and doing business with DoD. Chapter 3 introduces four basic principles underlying DoD•s contracting process. Chapter 4 covers DoD•s procedures for soliciting suppliers and entering into contracts, with special emphasis on small business aspects. Chapter 5 examines the types of contracts used by DoD, commonly used contract clauses, and procedures you may encounter during the course of contract performance. Additional sources of information that may be helpful to small business contractors are provided in the Appendix. To assist you in locating relevant material in the regulations, references to applicable FAR 
11 F11
coverage (prefaced by an ) and DoD FAR Supplement coverage (prefaced 
11 D11
by a ) are placed in the margins of this guide. 
A WORD OF CAUTION: This guide is not a substitute for any requirements of the regulations. It does not provide total coverage of any topic. Its coverage is limited to those regulations and procedures most frequently encountered by DoD•s small business suppliers. If' an unusual or complex contracting problem arises, you should refer to the exact language of the 
regulation and seek clarification from the contracting officer, and you may also want to seek legal advice. 
2 

2. BACKGROUND INFORMATION 

OVERVIEW OF THE REGULATIONS 

The FAR is the primary instruction governing all Defense contracting. It contains procurement policies as well as many detailed procedural and administrative requirements that apply to all procurements by Federal executive agencies. The DoD FAR Supplement contains instructions needed to implement the FAR within DoD. It also contains supplementary regulations that are unique to DoD. The Supplement is not a stand-alone document. It must be used in conjunction with ·the FAR. 
The FAR is over 1,000 pages long. It is divided into 53 parts (equivalent to chapters). Each part deals with a separate aspect of. procurement. The first six parts deal with general matters relating to Government contracting. The next six parts deal with aspects of acquisition planning. Part 13 contains simplified procedures for contracts of $25,000 or less. Parts 14 and 15 deal with procurement procedures for larger contracts. Other parts deal with various aspects of procurement, such as labor laws, contract cost principles, contract administration, standard clauses, and forms. 
The DoD FAR Supplement is over 1,100 pages long. It is divided into parts corresponding to those of the FAR. Each part contains any material needed to implement FAR policies and procedures within DoD, as well as any additional policies, procedures, and contract clauses that supplement the FAR to meet specific DoD needs. In addition, the DoD FAR Supplement has 13 appendices, 2 manuals, and 6 supplements. 
Much of the material in these regulations is necessary to cover the wide variety of Federal Government procurements. For example, even though there are over 500 pages of standard clauses and 250 pages of standard forms, only a relatively few will be used in any single procurement. 
Certain policies and procedures apply 2.!!.!:i to small businesses. They 
include  programs  designed  to  match  small  business  capabilities  with  DoD  
needs  and  procurement  techniques  designed  to  help  small  businesses  with  
individual  procurements  and  subcontracting  opportunities.  All  such  small  
business  aid~ are  discussed  in this guide.  

3 
466-347 0 -85 -2 
MAJOR Dl FFERENCES BETWEEN COMMERCIAL AND GOVERNMENT 
PRACTICES 
While there are similarities between doing business in the private sector and doing business with DoD, Government contracting has some unique aspects you should know about. 
First, DoD conducts its business through certain authorized agents called contracting officers. You may be dealing with more than one contracting officer. Procurement contracting officers (PCOs) ·enter into contracts. Administrative contracting officers (ACOs) supervise contract performance. Sometimes the· PCO and ACO will be the same person. 
Second, unlike your commercial customers, DoD has the unilateral right to revise its contracts. While you are entitled to equitable adjustments in price and/or delivery time resulting from such revisions, you must continue performance of the contract as changed. 
Third, DoD obtains extensive audit and work surveillance rights under its contracts. You are obligated to maintain and retain certain contract records and to submit them for audit on demand. Should these audits reveal a fCiilure to conform to contract requirements, you may be subject to penalties or price adjustments. 
Fourth, DoD uses its procurement program as a vehicle for attaining numerous national, social, and economic goals. As a prospective contractor, you must recognize that participation in DoD contracts may require cooperation and compliance with various programs to achieve governmental objectives. 
Fifth, under certain types of contracts, there are limitations _on the amount of profit can earn and the amounts and of
you on types costs you  
may  recover.  
Finally,  DoD  has  an  absolute  right  to  terminate  all  or  any  part  of  
your contract  at  any  time.  Your  contract  may  be terminated  either for  the  
convenience  of  DoD,  whenever  the  need  dictates,  or  for  default  if  your  
performance is unsatisfactory.  

4 

3. BASIC CONTRACTING PRINCIPLES 

Before looking at the regulations in detail, you should be of four basic principles underlying DoD1s contracting process.  aware  
First, to ensure reasonable prices, contracts ~awarded competitively whenever possible. This practice reflects the theory that full and open competition results in fair and reasonable prices. Such competition also avoids favoritism by assuring that all qualified suppliers have the opportunity to sell to the Government.  
In most instances, full and open competition for Government procurements is best accomplished by the .sealed-bid method (formerly called formal advertising). The regulations require DoD purchases to be made by sealed bids whenever feasible. When sealed bids are not appropriate, competitive proposals must generally be solicited. Procurements may be made by other-than-competitive procedures only in very limited, specific situations. The use of such procedures must be just~fied in writing by the contracting officer.  F-6. 401 F-6. 302  
Second, responsible. contracts are awarded 2.!!!Y, to contractors found to be Regardless of the procurement method used, the regulations provide that, before the contract is awarded, the contracting officer must assure that a prospective contractor is responsible. This means that you must:  F-,9.1 04-1  
(1)  have,  or  be  able  to  obtain,  adequate  financial  resources,  
(2)  be able to comply with the delivery requirements,  
(3)  have  a  satisfactory record of performance,  
(4)  have  a  satisfactory  record  of  integrity  and  business  ethics,  
(5)  have, or be able to experience, accounting nical skills,  obtain, the necessary organization, and operational controls, and tech 
(6)  have, or struction,  be able to obtain, the necessary production, and technical equipment and facilities, and  con 
(7)  be otherwise qualified and eligible to applicable laws and regulations.  receive  an  award  under  

5 

These determinations are generally based on the contracting officer•s evaluation of contractors• data and records of prior performance. 
In the case of small business, special rules apply. If a contract-F-19. 602 ing officer cannot find that the small business that offered the lowest price is responsible, the case must be referred to the Small Business Administration (SBA). SBA reviews the findings and makes its own determination as to whether or not the small business is responsible. If it does find the small business responsible, the SBA issues a Certificate of Competency to the contracting officer. Except in some unusual circumstances, the c:;:ontracting officer must abide by the SBA1s decision and award the contract to the small business firm that offered the lowest price. 
Third, the ~of contract issued must be appropriate for the F-16.104 partiCular procurement. The regulations authorize the use of several different types of contracts and describe the circumstances appropriate for the use of each. The type of contract used in each procurement should be determined by the circumstances of the procurement and the degree of risk associated with performance of the contract. 
. 
Fourth, the Defense procurement program is used to implement various ·national social and economic policies. Some policies are implemented by mandatory contract provisions, such as those requiring that minimum standards for wages, hours, and working conditions be met in F-22.1002 producing supplies or performing services under a DoD contract. Other policies are furthered by laws requiring contracts to be awarded to certain contractors or prohibiting their award to others. For example, certain items must be purchased from Federal Prison F-8. 601 Industries, Inc., and contracting with a company convicted of violating F-23.103 air pollution standards is prohibited. A third method of implementing national policies is the use of special procurement techniques, such as F-19. 501 set-asides both for small businesses and for firrlls located in labor D-20. ?003 
/ 
surplus areas. 
6 

4. CONTRACT FORMATION 
CONTRACTING OPPORTUNITIES 
DoD enters into millions of contracts each year. The regulations mention several methods of assuring that all prospective contractors are aware of contracting opportunities. The most common ways in which DoD alerts prospective contractors to its requirements are notices in the Commerce Business Daily (CBD) and use of solicitation 
mailing lists (SMLs). 
One way to find out about contracting opportunities is to read the 
CBD, which is published every weekday by the Department of Commerce. The regulations require virtually every proposed procurement F-5.101 over $10,000 to be publicized in the CBD. This must be done 15 days before issuing a solicitation for property or services, and 30 days before issuing a solicitation for research and development effort. These solicitations must allow at least 30 days for prospective con-F-5. 203 tractors to respond. Information on subcontracting opportunities must also. be published. This includes the names and addresses of firms to F-5. 206 be solicited for major procurements and synopses of all contract awards F-5. 301 over $25,000, unless the information is classified. In addition, procuring agencies are· required to continually search for sources competent to perform research and development work. This effort includes pub-F-5. 205 licizing the agency•s research and development requirements in the 
CBD as early as possible. 
A second way to find out about prime contracting opportunities is F-14. 205 to be included on an SML of a contracting activity likely to have a need for your product or service. The regulations require purchasing activities to establish and maintain lists of prospective suppliers. Standard Form 129, Solicitation Mailing List Application, should be submitted to each purchasing activity with which you hope to do business. The activity is required to notify you of your acceptance or rejection for the SML. When your name is placed on an SML, solicita
tions for requirements will automatically be issued to you. However, you must respond to each solicitation by either an offer or a request for retention on the list; otherwise your narne may be deleted. When 
7 
the SML is extremely long, the purchasing activity may use only a  
portion of it. However, in these situations, the regulations require  F-19. 202-4  
·that a pro rata number of small businesses be solicited.  
Contracting for architect-engineering services follows a special  F-36. 602  
procedure and does not use SMLs. Firms interested in such work  
should obtain the pamphlet 11 DoD/A-E Selection Procedures, .. listed in  
the Appendix.  
A less common way to find out about contracting opportunities is  F-9. 202  
to be included on a qualified products list (QPL). Such lists are used  
only for products that require lengthy or costly testing to determine  
whether they meet the Government•s requirements. The QPL for each  
product identifies the specification and the manufacturer or distributor  
of each qualified item. When there is a need to procure a product for  
which a QPL exists, bids or proposals are usually accepted only for  
products on the list. To have your product listed on a QPL, you  
must submit a ~ample to the appropriate office for testing and  
acceptance.  
Information about subcontracting opportunities is provided by  
DoD•s Small Business Subcontracting Directory. This publication is  
issued annually by the Directorate of Small and Disadvantaged Busi 
ness Utilization. It lists, by State, those DoD prime contractors with  
established plans and goals for subcontracting with small business and  
small disadvantaged business. For each contractor, the directory  
provides the address, the product or service line, and the name and  
telephone number of the company•s small business liaison officer. You  
should be .aware that as a subcontractor, you have a contractual  
agreement with the prime contractor, not with DoD. DoD has no  
contractual relationship with subcontractors to its prime contractors.  
Small high-technology firms should become familiar with DoD1s  
Small Business Innovative Research (SBIR) program. DoD has a  
specific annual goal for participation by small business in its SBI R.  
Under this program, each year DoD publishes solicitations that des 
cribe the research and/or development needs of DoD to be awarded  
through the SBI R program. Small high-technology firms can submit  
proposals for research projects relating to the subject areas identified  

8 

in the solicitation, and DoD makes awards on a competitive basis. Selection criteria are included in each solicitation. For each project, Phase I awards of up to $50,000 are made to evaluate the scientific and technical merit and feasibility of an idea. Those projects showing the most potential in Phase I can be funded for up to $500,000 and one or two years to further develop the proposed ideas. Thereafter, privatesector investment or DoD production contracts are expected to bring an innovation to the marketplace. The Phase master program solicitation release schedule for all Government agencies is published annually by the SBA.  
Sometimes you can create your own contracting opportunities by submitting unsolicited proposals. These are written offers to perform a task or effort that you initiate and submit to the Government. You can learn about an agency•s research and development needs from advance notices in the CBD. Informal contacts with agency personnel are also a good means of obtaining this information. To be considered, an unsolicited proposal must offer a unique or innovative concept to the Government.  F-15. 503  
The regulations provide general guidance for submitting an unsolicited proposal. It should contain an abstract of the proposed effort, the method of approach, and the extent of the effort. It should also include a proposed price or estimated cost. You should clearly mark any proprietary data you wish to protect.  F-15. 509  
The regulations authorize use of other-than-competitive procurement procedures to make an acquisition on the basis of a favorably evaluated unsolicited proposal. They also require that offerors be notified of the disposition or intended disposition of material submitted as an unsolicited proposal.  D-15. 506-1  
Certain factors limit Doo•s ability to contract with small businesses. Vast amounts of facilities and working capital are required to produce major weapon systems. In many cases, even the resources of large businesses can be strained by performance and cost risks. To offset the potential ill effects of these and other factors on small business contractors, DoD has implemented a major program to place a fair  
9  

proportion of its contracts with small businesses. Its activities to F-19. 201 
and
promote maximum small business participation include: 
F-19.202 
seeking additional qualified  small  business suppliers  
including all  qualified small  business suppliers  on  SMLs  
permitting offers on  less than the total  requirements  
allowing  the  maximum  time  possible  for  preparation  of  offers  
assigning Small and Disadvantaged Specialists to each principal contracting administration office  Business Utilization activity and contract  
making provision ment offices  for  SBA  representatives at all  major procure 
measuring and reporting the extent of small business participation in Defense contracts to the President and the Congress  
setting aside businesses  certain  procurements  for  award  only  to  small  
contracting directly with the SBA for subcontracting with small disadvantaged businesses in the SBA1s 8(a) portfolio  
encouraging large DoD contractors to subcontract with small businesses, small disadvantaged businesses, and small womenowned businesses  
The small business set-aside is a major procurement practice that DoD uses to promote small business participation. Contracting officers must set aside procurements solely for small businesses whenever there is a reasonable expectation that at least two responsible small businesses will offer the products of different small business concerns, and that an award can be made at a reasonable price. This is called a total set-aside. Certain classes of procurements (for example, all purchases under $10,000 and construction contracts under $2 mi Ilion) are automatically reserved or set aside for small business awards.  F-19. 501 F-19. 502-2  
Contracting officers must justify in writing any failure to award such procurements to small business. Once a product or service has been successfully purchased as a' small business set-aside, all future purchases must also be on a set-aside basis unless the contracting officer determines that this practice will probably not result in offers from at least two responsible small business concerns offering products of different small business concerns at reasonable prices.  
10  

Sometimes a procurement not suitable for a total set-aside is large F-19. 502-3enough to be divided into two or more economic production lots. If it is likely that a small business can furnish one or more lots at a reasonable price, the regulations require a partial set-aside. Under a partial set-aside, a portion of a requirement is set aside for award to small business. Any business (large or small) can compete for the non-set-aside portion. 
The reasoning is (1) to allow the competitive 
process to determine a reasonable price for the non-set-aside portion, 
and (2) to give small businesses the opportunity to receive a contract 
for the set-aside portion at the price of the non-set-aside portion. 

The SBA has the authority to contract directly with DoD for sup-F-19. 801 plies or services and then to subcontract the work totally to small disadvantaged businesses. These transactions are called 8(a) contracts (named for the section of the Small Business Act that authorizes them). 
The objectives of the 8(a) program are (1) to foster business ownership by socially and economically disadvantaged individuals and 
(2) ·to give such businesses opportunities for full participation in the free enterprise system. To participate in the 8(a) program, a small disadvantaged firm must receive SBA approval of a business development plan for attaining the above objectives. In cooperation with DoD•s Small and Disadvantaged Business Utilization Specialists, the SBA identifies the supplies or services 8(a) companies can provide. 
If feasible, DoD contracts for these supplies and services with SBA. SBA, in turn, subcontracts with the 8(a) company. If the costs for the supplies or services are in excess of Do01s estimated current fair market prices, the excess is eligible for funding as business development expense but must be funded by the SBA. 
Because much of Doo•s contracting is for major weapon systems, great emphasis is placed on providing subcontracting opportunities for F-19. ?02small businesses. Virtually every DoD contract over $10,000 contains a clause committing the contractor to use small firms and small disadvantaged firms to the fullest practicable extent. Before a con
tract over $500,000 ($1 million for construction) can be awarded to a large contractor, a plan must be submitted showing how the contractor 
11 
466-347 0 -85 -3 
intends to meet subcontracting obligations to small businesses and to small businesses owned and controlled by socially and economically disadvantaged individuals. The regulations require that actual performance under these plans be reviewed by the contracting officer. Failure to comply in good faith with the requirements of the subcontracting plan is a material breach of the contract. This could result in sanctions against contractors that fail to comply with such plans. 
CONTRACTING PROCEDURES 
It is DoD policy to accomplish procurements by full and open F-6 .1 01 competitive procedures to the maximum practicable extent. The order of priority of procurement procedures is as follows: 
(1) 	
Sealed bids (used when (a) time permits, (b) award will be based on price or price-related factors, (c) discussions are not necessary, (d) and more than one bid is expected). 

(2) 	
Competitive proposals (used when sealed bids are not appropriate). 

(3) 	
Other-than-competitive procedures. 


Under some circumstances, competitive procedures may be used although certain potential sources are excluded from participating. For example, procurements by sealed bids or by competitive proposals 
may 	be restricted to small business sources only. 
The use of other-than-competitive procedures is limited to specific circumstances and must be justified in detail. The justification must be approved at senior levels within the procuring activity. 
Sealed Bids 
Sealed bidding (formerly called formal advertising) is a very 
rigid process designed to protect the integrity of the competitive 
bidding system. Although it consists of procedures that must be 
strictly followed, the courts, the Comptroller General, and the Armed 
Services Board of Contract Appeals have created many precedents for 
interpreting certain aspects of the process. These precedents are far 
too numerous and specialized to be covered here. The information in 
this 	section should be considered general guidance only. 
12 

Procurement  by  sealed  bids  begins  with  the  issuance  of  an  F-14. 201  
invitation  for  bids  (I FB),  which  contains  all  the  information  bidders  
need  to  respond.  The  I FB  states  the  needs  of the procuring activity  
and  defines  the  work  in  sufficient detail  to  permit  all  bidders to  com 
pete  on  the  same  basis.  It  also  states  all  significant  factors  to  be  
considered  in  evaluating  the  bids  and  the  relative  importance  of each  
factor.  Prospective  bidders  are  provided  standard  forms  on  which  to  
submit  bids,  and  a  specific  time  for  opening  the  bids  is  established.  
When  necessary,  the  I FB may be modified  by the Government  F-14. 208  
before  the  bid  opening.  Once  issued,  an  I FB  may  be  cancelled  only  F-14. 209  
when  cancellation  is  clearly  in  the  public interest;  for  example,  when  
the supplies  or services  are  no  longer needed.  
Interested  firms  respond  to  the  I FB  by  submitting  sealed  F-14. 401  
bids,  which  are  stored  unopened in  a  locked box  or  safe until the time  
set ,for  qpening.  Bid  opening  is  designed  to  ensure  secrecy  of the  F-14. 402  
bids  and  to  prevent manipulation by the bidders.  The opening is held  
in  public,  at  the  time  specified  in  the  IFB,  and  each  bid  is  read  
aloud.  As  a  rule,  late  bids  (those  received  after  bid  opening time)  F-14. 304  
may  not be considered for award.  
The contract is awarded  to that responsible bidder whose bid  F-14. 407  
is  most  advantageous  to  the  Government.  Unless  other  factors  are  
identified  in  the  I FB,  award  is  based  on  price only.  Prompt payment  
discounts  are  not  considered  in  evaluation  of  bids.  The  actual  award  
must  be  made  within  a  time  specified in the IFB,  usually 60 days from  
the opening date.  
To  be  considered for award,  your bid (and any modifications  
to  it)  must  be where the bids  are to  be opened before the time  set for  
the  opening.  It  must  be  on  the  bid  form  (or  must  repeat  every  
essential  provision  of the  bid  form)  and  must  offer  what  is  called  for  
in  the  IFB.  Individual  bids  will  be  rejected  if they fail  to  meet  any  
essential  requirement  of the  IFB.  If  a  bidder  takes  exception  to  any  F-14. 404-2  
material  provision  of the  IFB,  such  as  offering  a  different product or  
delivery  schedule  or  refusing  to  accept  a  contract  provision,  the  bid  
will  be  rejected.  However,  bidders  must  be  given  the  opportunity  to  F-14. 405  

13 

correct any minor failure to comply with the IFB, such as failure to  
make the required representation regarding the firm•s size.  
Mistakes in bids occur frequently. A bidder may change or  F-14. 304-1  
withdraw a bid (and thereby correct any mistakes) at any time before  
the opening of the bids. After the opening, contracting officers must  F-14. 406  
examine all bids for mistakes. Obvious clerical mistakes in a bid may  
be corrected before award of a contract. Treatment of other mistakes  
found after opening, but before award, depends on the circumstances.  
tn all cases, the evidence available to support the claimed mistakes  
must be reviewed by a seni.or official of the purchasing activity. The  
official may require that a bid stand as submitted or, if appropriate,  
may allow a bidder to correct or withdraw a bid. After award of a  F-33. 005  
contract, relief from a bid mistake must be handled as a claim in ac 
cordance with the disputes clause ·included in every contract. Legal  F-52. 233-1  
assistance should probably be sought in any case other than that of an  
obvious clerical mistake.  
Any actual or prospective bidder has the right to protest  F-14. 407-8  
the proposed or actual award of a contract if it appears that an  
improper procedure was followed. Protests should be made in writing.  
You may submit a protest to the contracting officer or higher authority  
in the procuring activity; or to the Comptroller General of the United  
States. A successful protest can result in a change in the planned  
award, in cancellation of an award already made, or in a monetary  
award to reimburse the successful protestor for costs of preparing  
disputed bids, and for the cost of the protest.  
Two-step sealed bidding is a method of contracting designed  F-14. 501  
to obtain the benefits of sealed bidding when adequate specifications  
are not available.  
In Step 1, technical proposals are solicited. No pricing is  F-14. 503  
involved. The proposals received are evaluated as (1) acceptable,  
(2) reasonably susceptible of being made acceptable, or (3) unaccept 
able. If there are enough Category (1) proposals to ensure adequate  
competition, the contracting officer proceeds to Step 2, in which IFBs  
are sent only to the firms that made acceptable proposals. Each firm  

14 

submits a bid price covering its own technical proposal, and the award is made to the lowest bidder. 
If there are not enough Category (1) proposals, those in Category (2) are discussed with the proposers in an attempt to make them acceptable. If this process results in enough acceptable technical proposals to ensure adequate competition, Step 2 is followed. If not, the sealed bidding process ends, and negotiations are conducted with 
the  firms  that  submitted  acceptable  technical  proposals.  In  extreme  
cases,  the solicitation may be cancelled.  
Competitive Proposals  
When  use  of  sealed  bids  is  not  appropriate,  competitive  

proposals are solicited. Procurement by competitive proposals begins with the issuance of a request for proposals ( R FP). 
The RFP, like the IFB, is a request for offers. When you F-15.402 submit your completed RFP, you make an offer to-DoD. The RFP may provide that DoD may accept your offer without change. This offer and acceptance creates a binding contract between you and DoD. 
The regulations for R FPs are almost the same as those for IFBs. A standard form is used, and a specific date for submission of offers is established. Although RFPs are not opened publicly, pro-F-15. 412 posals or modifications of proposals received after the deadline generally will not be considered. The rules for protesting awards and F-15.1004 correcting mistakes are almost identical to those for sealed bids. F-15.1005 
If the most favorable proposal submitted in response to an RFP is accepted without any discussion, written or oral, with any offeror, the award portion of Standard Form 33 is completed and sent F-15. 414 to that offeror, creating a binding contract. 
If discussions or negotiation with any offeror are necessary, F-15. 610 the regulations require the contracting officer to conduct written or oral discussions with all responsible offerors whose proposals are within a competitive range. The competitive range is determined by F-15. 609 the contracting officer. It must include all proposals with a reasonable chance of being selected for award, considering price or cost, technical, and other pertinent factors. The discussions may not disclose 
15 
any information about competing proposals or the relative standing of an offeror's prices, but they may indicate any deficiencies in a proposal or too high a price. At the conclusion of discussions, all F-15. 611 
offerors still within the competitive range are requested to submit, by a given date, best and final offers. Award is made to that source whose best and final offer is most advantageous to the Government. 
All procurements other than those awarded by sealed bids require some form of price or cost analysis to establish the reasonableness of the contract price or cost. Price analysis can be accomplished F-15. 805-2 
by comparing quoted prices with (1) other offers, (2) prior prices, 
(3) established price lists, or (4) Government estimates of reasonable prices or by applying rough yardsticks. Price analysis is generally used in the purchase of competitive items, commercial items, or relatively small-dollar-value items. 
When price analysis alone is not sufficient, DoD uses cost F-15. 805-3 analysis to establish the reasonableness of contract price or cost. Cost analysis is an examination of each cost element in a proposal to determine whether the amounts are appropriate and reasonable. The dat'a used to prepare the proposal form the basis for cost analysis. 
When the price of any contract or contract modification over F-15. 804-2 $100,000 is not set by adequate competition, by established catalog or market prices, or by law or regulation, the contracting officer is required to obtain from the prospective contractors the cost or pricing data used to support their proposals. The contractor must also certify F-15. 804-4 in writing that these data are accurate, complete, and current at the time of agreement on contract price. The same requirements exist for all subcontracts over $100,000 under such contracts. Both prime contracts and subcontracts must contain clauses entitling the Govern-F-52. 215-22 ment to appropriate price or fee reductions should the cost or pricing data subsequently be found to have been inaccurate, incomplete, or non-current. 
DoD uses profit to stimulate efficient contract performance. 
The regulations contain guidelines for developing profit and fee objec-F-15. 903 tives, which contracting officers are directed to establish before conducting contract negotiations. These objectives should provide the 
16 

opportunity to earn profits while motivating contractors to undertake difficult work, provide their own facilities and financing, perform independent development work, and increase productivity. DoD uses a D-15. 905 technique called the weighted guidelines to balance these factors in establishing negotiation objectives. You should be familiar with this 
technique, since it directly affects your negotiations. 
The regulations limit fees (profit) that may be paid under F-15. 903 cost-reimbursement contracts to: 
(1) 	15 percent of estimated cost for experimental, developmental, or research work; 
(2) 	10 percent of estimated cost for all other types ofwork. 
The regulations also provide that the contract price (or estimated cost plus fee) for architect-engineering services for public works or utilities may not exceed 6 percent of the estimated cost of construction. 
Other-Than-Competitive Procedures 
Procurement by other-than-competitive procedures is F-6. 302 authorized only for cases such as sole-source situations, unusual and compelling urgency of the need, maintenance of a mobilization source, purchases for foreign governments, brand-name items for resale, and national security considerations. Contracts resulting from unsolicited proposals are considered sole-source procurements. Contracts for follow-on orders for continued development or production of major systems or highly specialized equipment are also considered sole-source procurements. To the extent possible, in cases of compelling urgency or national security considerations, competitive proposals must be obtained. 
Procurement by other-than-competitive procedures often begins with the issuance of a request for quotations (RFQ). The RFQ F-15.402 is simply an invitation to prospective contractors to enter into negotiations. It sets forth the terms and specifications desired by the Government. It differs from the RFP in that your response does not constitute an offer. 
17 
In the absence of competition or other circumstances to establish the reasonableness of proposed prices, detailed cost analysis will normally be performed by the contracting officer. Contract prices are established by negotiations. Any such contract in excess of $100,000 will require the contractor to certify as to the accuracy, completeness, and currency of all cost or pricing data used to establish the price. 
Small Purchases 
Small purchases are those not over $25,000. DoD uses simplif~ed procedures for making these purchases. They include simpler contract forms and fast payment procedures. Purchases of F-13.106 $1,000 or less may be made without securing competitive quotations if the contracting officer considers the prices to be reasonable. For purchases between $1,000 and $25,000, the general rule is that competitive quotations are solicited orally from potential suppliers in the local trade area. Written solicitations are used when suppliers are outside the local trade area, when unusual specifications or a large num.ber of different items are involved, or when oral quotes are otherwise impractical. Reasonableness of price is generally determined by the competitive process. 
For repetitive purchases of small quantities of supplies or F-13. 201 
services, a blanket purchase agreement (BPA) is used. A BPA is much like a charge account. The agreement is issued on D-13. 203-2 DD Form 1155, Order for Supplies/Request for Quotation, which contains general terms and conditions. Usually BPAs are placed with two 
or more suppliers of the same type of item. Orders are generally placed orally, and payments are made monthly on a summary invoice submitted by the contractor. 
DoD also uses DD Form 1155 as a purchase order form for D-13. 505-2 
non-repetitive small purchases. When necessary, additional clauses are added to the printed form. Oral or written quotations are solicited, as appropriate. Reasonableness of price is established through the competitive process. Form 1155 is also used as the public voucher 
(invoice) for payment in all small purchases. 
18 
The fast payment procedure is authorized for use in all pur-F-13. 302 
chases of less than $25,000. It provides that suppliers may submit their invoices for payment as soon as the supplies are delivered to a post office or common carrier or to the Government. The supplier 
must agree to replace, repair, or correct any supplies that are not received by the Government, are damaged in transit, or do not conform to purchase requirements. 
19 
466-347 0 -85 -4 
20 

5. THE CONTRACT 

CONTRACT TYPES  
DoD uses reimbursement. the contractor, risk.  two basic contract types: Cost-reimbursement contracts while fixed-price contracts  fixed-price · and costplace very little risk on may involve substantial  
Fixed-Price Contracts  
Under  a  fixed-prjce  contract,  you  must  perform  the  work  

regardless of what it costs you. You should be very careful in pricing such work. You should take into account potential cost increases due to inflation, material shortages, or difficulties in meeting performance requirements. This is particularly important if your contract contains options. Options give the Government the right to require-you to perform, at stipulated prices, additional work that may extend your performance over a long period of time. 
The firm-fixed-price contract is the most common type --the F-16. 202 price is firm for the duration of the contract and is not subject to any adjustment, except for authorized changes. Under this type of contract, you assume the maximum risk of profit or loss, including the risk of unexpected costs such as those which might result from inflation, material shortage, etc. 
DoD uses firm-fixed-price contracts when costs of performance are reasonably predictable, and when adequate functional or detailed specifications are available. They are particularly suitable for standard or modified commercial items and previously purchased military items. 
Some fixed-price contracts contain economic price adjustment F-16. 203 clauses. These clauses protect you and the Government against wide fluctuations in labor or material costs when market conditions are unstable. Economic price adjustment clauses may provide for adjustment of the contract price for increases or decreases from an agreed-upon level measured against: 
(1) published or established prices of specific items, 
21 
(2)  specified  costs  of  labor  and  material  actually  experi 
enced during performance,  or  
(3)  specified  labor  or  material  cost  standards  or  indices.  
You  are  entitled  to  a  price adjustment (or required  to make  a  refund)  
only  if there  is  a  change  in  the price levels specified in the contract.  

Frequently, the contract will contain a ceiling price that the Government will not exceed, no matter what the cost fluctuations may be. 
Under a fixed-price redetermination contract, you and the contracting officer establish ·an initial price, a ceiling price, and a time for redetermination. At the time of redetermination, you submit a proposal based on actual costs of performance and the estimated cost of any incomplete work. After a Government audit, you negotiate a revised price. The revised price may be higher or lower than the initial price, but may not exceed the ceiling price. 
A fixed-price incentive contract is similar to a redetermination contract. The difference is that a fixed-price incentive contract contains a target cost, a target profit, and a formula by which you and DoD will share any differences between target costs and negotiated final costs. The formula rewards you with more profit if final costs are less than the target cost, and it takes profit away if final costs exceed the target. For example, a typical sharing arrangement would be one whereby DoD would keep 70 percent of the savings and pay you the remaining 30 percent. Likewise, if final costs were higher than the target cost, DoD would pay 70 percent of the excess costs, and you would have to bear 30 percent of the excess costs as a reduction of profit. An infinite variety of sharing arrangements is 
possible, but you must remember that you cannot be paid more than the ceiling price. 
Cost-Reimbursement Contracts 
Under a cost-reimbursement contract, DoD reimburses you
I 
for the allowable incurred costs of performance. You are paid your costs no matter what you have produced, and you are required to perform only as long as the contract provides money to pay you for costs incurred. However, you can be reimbursed for costs only in 
22 
F-16.205 and F-16.206 
F-16. 204 
F-16. 301 
accordance with the provisions of Part 31 of the regulations. There are several different types of cost-reimbursement contracts, but all have this common feature: your obligation to perform the work. ceases when your costs of performance equal the funds provided under the contract. 
The simplest type is the cost-plus-fixed-fee contract. You F-16. 306 and DoD agree on the estimated cost of contract performance and a fixed fee (profit) that you will receive for doing the work. You will receive the same fee, regardless of whether your actual costs are greater or lesser than the estimated cost. 
Under a cost-plus-incentive-fee contract, you and the con-F-16. 304 tracting officer agree on a target cost, a target fee, and an incentive formula for determining the final fee. The formula provides for an adjustment in the fee, based on any difference between the target cost and the total allowable cost of performing the contract. Unlike the fixed-price incentive contract, however, the contract will provide both a minimum and maximum limit on the fee adjustment. 
The cost-plus-award-fee contract is another type of cost-F-16. 305 reimbursement contract. The fee consists of (1) a base amount (which may be zero) that does not vary with performance and (2) an award amount. The award amount paid varies according to the Government•s judgmental evaluation of the contractor•s performance in such areas as quality, timeliness, ingenuity, and cost-effective management. 
Another contract type frequently used by DoD is the time-F-16. 601 and-materials· contract. Under this type of contract, you negotiate a fixed hourly rate for direct labor. This rate includes all appropriate wages, overhead, and profit. You are reimbursed at the fixed rate for each labor hour worked on the task. Any material costs incurred in performing the work are reimbursed at cost. The time-andmaterials contract is used when it is not possible to estimate the extent of the work, especially in cases of repair, maintenance, or overhaul work. 
23 

PARTS OF THE CONTRACT 
The uniform contract format used by DoD for most procurements (excluding construction, subsistence items, and shipbuilding) has four 
parts: (1) the Schedule; (2) the Contract clauses; (3) the List of documents, exhibits, and other attachments; and (4) the Representations and instructions. The List of documents identifies all attachments to the solicitation or contract. The Representations and instructions are those solicitation provisions required from offerors, 
and information and instructions to guide offerors in preparing proposals. The major parts of every contract are the Schedule and the Contract clauses (often referred to as the 11 boilerplate11 ). 
The Contract Schedule 
The Schedule is tailored to each transaction and represents the substance of the deal. It begins with a cover sheet, usually Standard Form 33 (SF 33). There follows a statement of the. work to be done or the supplies to be furnished and prices; the specifications; packaging and marking requirements; inspection and acceptance requir'ements; the delivery schedule; any necessary contract administration data not included on the SF 33; and any special conditions pertaining to the contract. Different items being purchased listed
are separately as contract line items. Every DoD contract uses a uniform numbering system for line items. This means that the first item listed in a Schedule will be Item No. 0001. 
The list of supplies or services is followed by the specifications or other descriptions to which the work must conform. You should be familiar with the Government•s system of specifications. Federal specifications cover materials, products, or services used by two or more Federal agencies, or new items of potential general application. Military specifications cover items or services intrinsically military in character, or commercial items modified to meet special requirements of the military. Commercial item descriptions concisely 
describe the key physical and/or performance characteristics of available commercial products. Two publications listed in the Appendix -11Selling to the Military11 and 11 A Guide for Private lndustry11 provide 
24 
F-14. 201-1 

and F-15.406-1 
F-14. 201-2 and F-15.406-2 
D-4. ?103-2 
detailed information on how to obtain indexes of all available specifications.  both individual  specifications and  
Careful reading of the specifications is essential, because many of them refer to other requirements, generally known as referenced documents. You must comply with all contract requirements, including any referenced documents, to complete the contract satisfactorily.  
Both the packaging and marking requirements and the inspection and acceptance requirements may also include referenced documents. You should be aware of any obligations that might be imposed by such documents.  
The delivery section of the Schedule specifies the time, place, and method of delivery for supplies, or the place of performance of services. Most contracts require that delivery be f.o.b. origin or f.o.b. destination. When f.o.b. origin is required, you deliver the goods to the carrier and the Government pays the shipping charge. When f.o.b. destination is required, you deliver the goods to the· Government and you pay all shipping charges. Your contract prices should include any shipping charges you may have to incur. Special attention should be given to the delivery point stipulated in IFBs, since offers submitted on a basis other than that called for in the IFB must be rejected.  F-14. 404-2  
Finally, the Schedule contains any special provisions applicable to the specific contract. Examples include use of Governmentowned property, options for additional quantities of supplies, special test procedures, and agreements regarding payment of fees under cost-plus-fixed-fee contracts.  
Contract Clauses  
The second part of DoD contracts consists mainly of clauses required by statute or regulation. Deviations from the requirements of these clauses involve tedious procedures and are the exception rather than the rule. A sealed-bid contract is similar to an insurance policy in that you have no control over the clauses included. In contracts awarded by other than sealed-bid procedures you may be able to  D-1.403 and D-1.404  
25  

influence some of the terms. Certain clauses require particular attention because they expose you to many of the peculiarities associated with Government contracting. These clauses have little or no counterpart in commercial dealings. They relate to changes, disputes, terminations, patent rights, examination of records, Government inspection, and correction of defects. 
The regulations contain over 500 pages of contract clauses, and it would be impractical to cover every one of them in this guide. Fortunately, many clauses cover similar topic areas. We have arranged 
these areas in cost principles,  six major groups: contract changes,  performance, payments, contract terminations, and public policies.  
Performance  
DoD  has  many  procedures  and  clauses  that affect your per 

formance of a contract. While performing the contract, you may face issues such as DoD inspection and acceptance; subcontracts; use of Government property; · patents, data, and copyrights; and bonds, insurance, and taxes. In addition, every DoD contract contains a provision for resolving disputes that may arise under the contract. 
Inspection and Acceptance. As a contractor, you are F-46.105 responsible for delivering products or providing services on schedule and for assuring that they conform to contract requirements. The contract administration office is responsible for assuring that you F-46.104 fulfill your contract quality requirements. The Government may conduct inspections and tests to determine whether the goods are in conformity. The type and extent of inspection and testing depend F-46. 201 largely on what is being procured. The contract schedule will desig-F-46. 401 nate the place of inspection~ If the goods are to be shipped from the plant before they are accepted, the contract will contain a clause F-52. 246-16 assigning the risk of loss if the goods are damaged in transit. 
Generally, when each delivery is made, the contractor must D-46· 6?1 prepare and submit a Material Inspection and Receiving Report (DD Form 250). This lists the goods delivered, quantities, contract number, and other necessary information. You may obtain copies of DD Form 250, at no cost, from the contract administration office. If 
26 
the contract contains a fast payment invoice in lieu of a Form 250.  procedure,  you  may  submit your  F-13. 301  
While there are many versions of the inspection clause, certain uniform features can be noted. The standard clause used in fixed-price contracts provides that items to be delivered under the contract are subject to inspection and test by DoD before acceptance. DoD has the right to reject nonconforming items, have the defects corrected at the contractor's expense, or accept the nonconforming items at a reduced price. Acceptance by DoD is final, except as regards hidden defects or fraud.  F-46. 302 F-52. 246-2  
You are required to provide facilities for, and assistance to, DoD inspectors at your own expense. You must maintain an acceptable inspection system. You are also responsible for providing appropriate quality assurance controls. If the Government inspection or test is made somewhere other than on your premises or those of your subcontractor, it is at DoD's expense. The inspection and test must not unduly delay your work.  F-52. 246-2  
The clause governing inspection and correction of defects in cost-reimbursement contracts differs from the standard fixed-price clause in two major respects. First, you will be reimbursed for correcting any nonfraudulent defects. Second, the Government may require you to remedy any defective items up to six months after acceptance.  F-52. 256-3  
Subcontracts. Subcontracts affect the price and performance of prime contracts. DoD frequently requires that you obtain the contracting officer's consent to proposed subcontracts. The regulations require prime contractors to select subcontractors and suppliers on the most competitive basis possible. The terms and conditions of a subcontract generally are subject to negotiation between the subcontractor and the prime contractor. However, the regulations do stipulate certain mandatory provisions in subcontracts. Remember, as a subcontractor you have a contractual agreement with the prime contractor, not with DoD. DoD cannot intervene in the relationship between you and the prime contractor.  F-52. 244-1 F-52. 244-5  
27  

In many instances, contractors must require prospective F-15. 804-2 
subcontractors to furnish complete, current, and accurate cost or pricing data before award of a subcontract. DoD reserves the right to reduce a prime contractor•s price because of a subcontractor•s defective cost or pricing data. If a prime contractor suffers such a reduction, the subcontractor may have to reimburse the prime contractor.  
property contract  Government Property. In general, you must furnish all the required to perform your contract. However, sometimes your may require DoD to supply you with Government property.  F-45. 102  
Government property can be either Government-furnished or contractor-acquired. Government-furnished property is property the Government possesses or acquires directly and then makes available to a contractor. Contractor-acquired property is property that a contractor provides for the performance of a contract but to which the Government has title.  F-45.101  
Government property includes materials, special tooling, special test equipment, and facilities. Materials are property that may be Incorporated into or attached to an end item to be delivered under the contract or that may be consumed or expended in performing a contract. Special tooling and special test equipment are manufacturing aids designed for use in production and test of the product being produced under the contract. Facilities are industrial property used for production~ maintenance, research, development, or testing (other than material, special tooling, and special test equipment), including real property, buildings, and other structures.  
damage tractor  As a rule, the Government assumes the risk of loss or to its property. In certain procurements, however, the conassumes liability for this risk.  F-45.103  
You may use the Government property in your possession only for performance of the contract for which it is provided. Use for any other purpose must be approved by the contracting officer. If DoD furnishes property that is unsuitable for its intended use or that creates production difficulties resulting in extra costs, you are entitled to an appropriate price adjustment.  F-52. 245-2  
28  

Contractors already possessing Government property suitable F-45. 201 
for use in an upcoming award could have a competitive advantage. To eliminate any such advantage, DoD applies evaluation or rental factors to the offers of these contractors when reviewing bids and proposals.  
Part 45 of the regulations sets forth requirements for contractors to follow in establishing and maintaining control over Government property. These include record-keeping, control of scrap and salvage, identification requirements, and the contractor•s duties and responsibilities with respect to the property.  
Patents, Data, and Copyrights. Patents, data, and copyrights are generally grouped together for discussion purposes. They are often described as 11 intellectual property . 11 There are two aspects of this type of property that are pertinent to DoD contracting: (1) the determination of who receives title to property developed in the course of performing a DoD contract, and (2) the right to use existing property.  
If a purpose of a contract is the performance of experimental, developmental, or research work, the contract will contain a patent rights clause. It is DoD policy that small business firms, whether acting as prime contractors or subcontractors, should retain title to any invention conceived or first reduced to practice in performance of work under DoD contracts. The Government retains an irrevocable, nonexclusive, nontransferable royalty-free license to practice or to have such inventions practiced on its behalf. You must disclose any such invention to the contracting officer. You may forfeit title to the invention if you fail to disclose it. You may elect not to retain title to an invention, in which case the Government may assume title and provide you with a royalty-free license.  F-27.303 F-52.227-11 F-27.302  
You must agree that any exclusive right to use or sell any invention in the United States will provide that any product embodying the invention will be manufactured substantially in the United States. The patent rights clause also provides 11 march-in rights11 to the Govern:nent. Under this provision you may be required to grant a license to a responsible applicant if the Government determines you have not  
29  

taken steps to achieve practical application of public interest otherwise dictates such action.  an  invention  or  if the  
The standard practice with respect to existing patent rights is to include an 11 authorization and consent11 clause in every contract in excess of $25,000. The clause authorizes you to use any invention patented by others in the United States. Its purpose is to prevent disruption of contract performance by court injunctions against patent infringement. In the event of an infringement, the patent owner must sue DoD rather than suing you.  F-27. 201 F-52. 227-1  
The authorization ·and consent clause does not mean that DoD necessarily accepts final liability for a patent infringement. Most contracts in excess of $25,000 for supplies or services normally sold or offered for sale in the commercial market (or for minor modifications of such supplies or services) will contain a patent indemnity clause requiring you to reimburse DoD for any claims paid as· a result of patent infringement. You are required to notify DoD of any infringement claims arising from the performance of your contracts and to assist the Government in its defense against such claims.  F-27. 202 F-52. 227-3  
DoD's policy is to acquire only those technical data rights essential to meet its needs. The term 11 technical data11 means recorded information of a scientific or technical nature. It does not include  D-27. 403-2 D-27. 401  
computer software or other management data.  financial,  administrative,  cost  or  pricing,  or  
DoD acquires unlimited data rights if the data are developed at public expense and identified as a contract requirement. Unlimited rights allow DoD to use the data in any manner and for any purpose, including follow-on work with other contractors.  D-27. 403-2 D-27. 401  
DoD acquires limited rights to unpublished data pertaining to items, components, or processes developed at private expense. This means DoD may use, duplicate, or disclose the data only for internal Government purposes. Such data may not be released outside the Government except in certain emergencies.  D-27. 403-2 D-27. 401  
that  on  DoD policy on rights to computer software generally parallels technical data. DoD acquires unlimited rights to software  D-27. 404-1  
30  

developed directly under or as a necessary part of a contract. Software developed at private expense may be acquired with limited use rights, that is, for any internal Government purpose. Software supplied with a specific computer may be acquired with restricted use rights. It may generally be used only with the computer for which it was acquired.  
In general, exclusive rights to:  the copyright law gives the owner of a  copyright  D-27. 402  
(1)  reproduce records,  the  copyrighted  work  in  copies  or  phone 
(2)  prepare derivative works,  
(3)  distribute copies or phonorecords to the public,  
(4)  perform the copyrighted work publicly,  and  
(5)  display the copyrighted work publicly.  
Although a contractor may cop.yright data originated under a Government contract, the Government retains a nonexclusive, paid-up license to reproduce, translate, publish, and use these data.  
Bonds, Insurance, and Taxes. Contracting officers may require performance or payment bonds in appropriate circumstances. In practice, these bonds are generally required only in construction contracts. When performance bonds are required, bid guarantees (usually 20 percent of the bid price but not more than $3 million) are also required.  F-28.102 F-28 .103 F-28 .101-2  
The Government is not ordinarily concerned with the contractor's insurance coverage if the contract is a fixed-price contract. Contractors are required to carry insurance under fixed-price contracts only in special circumstances. Under cost-reimbursement contracts, you are normally required to carry workmen's compensation, employer's liability, comprehensive general liability (bodily injury), and comprehensive automobile liability (bodily injury and property damage) insurance, with respect to the performance of the contract.  F-28. 306 F-28. 307  
Contracts for research indemnification against unusually  and development may provide for hazardous risks for you and your  D-35. 070  
31  

subcontractors. This includes claims by third parties (including employees) for death, bodily injury, or loss of or damage to property. The indemnification also covers your property to the extent such liability, loss, or damage results from a risk that the contract defines as 11 unusually hazardous , 11 arises out of the direct performance of the contract, and is not compensated by insurance or otherwise.  
The tax aspects of Government contracting are many and varied. Only two basic points can be made here. First, you should include in your contract price all applicable Federal, State, and local taxes. Second, in some c.ircumstances, the contract may include a price adjustment clause to compensate for increases or decreases in Federal excise or State and local taxes.  F-PART 29 F-52. 229-3  
Disputes. Disputes between you and the contracting officer may occur under the contrac.t. All contracts contain a disputes clause that presents the procedures to be followed in case of any unresolved disagreements between you and the contracting· officer. You must state your position in writing to the contracting officer, who must res~ond with a written decision, including supporting reasons, and advise you of your appeal rights. Unless appealed within certain time limits, the contracting officer's decision becomes final and not subject to review. You have 90 days from the date of an adverse decision by the contracting officer to appeal to the Armed Services Board of Contract Appeals. The Board's decision is final, unless you appeal to the U.S. Court of Appeals within 120 days. Alternatively, you may elect to appeal a contracting officer's decision directly to the Court of Claims, provided you do .so within 12 months of the date of the decision.  F-52. 233-1 F-33. 006 F-33. 011  
Remember that you under the contract except when  are required to continue performance DoD breaches the contract.  
Payments  
One of the most important provisions of a contract deals with payments. How you receive payment for your work depends on the type of contract you have. P~yments under cost-reimbursement contracts are entirely different. fr9m those under fixed-price contracts.  
32  

Your contract will specify the DoD office responsible for payments and  D-42. 205  
will also contain invoicing instructions. Regardless of the type of  
contract, the time it takes to be paid is directly related to the  
accuracy of your invoices, so it is worthwhile to understand the pay 
ment process thoroughly. Every fixed-price contract contains a clause  D-52. 232-70  
entitled 11 1nvoices11 that sets forth the information to be included in  
each invoice.  
Under cost-reimbursement contracts, you are reimbursed for  F-52. 216-7  
the allowable costs you incur in performing the work. Any costs you  
incur that are not allowablE:! under DoD's rules will be omitted from  
your payments. (See the following section for an explanation of allow 
able costs.) Every two weeks, or more frequently if warranted, you  
may submit an invoice (or a public voucher form obtained from your  
contract administration office) for costs incurred. Your contract  
should specify a payment date, expressed as a number of days after  
receipt of your invoice. Otherwise you may not be paid until 30 days  
after receipt of your invoice.  
You must negotiate the way in which the fee will be paid.  
This should be set forth in the contract schedule under the section  
entitled 11 Special contract requirements . 11 After you have received  F-52. 216-8  
85 percent of any fee under a contract, the contracting officer may  
withhold a reserve to protect the Government's interest pending com 
pletion of the work. This reserve may not exceed 15 percent of the  
total fee or $100,000, whichever is less.  
Under fixed-price contracts, the method of payment can vary  
with the dollar value of the contract. For relatively small contracts  
with a single item of work, you will generally be paid the total con 
tract price in one lump sum. Payment is made after you deliver the  
products or services and DoD accepts them. For larger contracts with  
many items, you can invoice and receive partial payments. For  
example, in a contract for 120 units with a delivery rate of 10 per  
month, you can invoice each month for the price of delivered (and  
accepted) items. A payment date, expressed as a number of days  
after receipt of a proper invoice, should be included in the 11 Payments11  F-52. 232-1  
clause of the contract. This may not be less than 5 days. In the  
33  

absence of such proper invoice.  a  date  you  will  be  paid  30 days  after  receipt  of  a  
When the value of a contract or group of contracts to be performed by a small business concern exceeds $100,000 and the first delivery is at least four months after award, DoD recognizes your need for working capital. To help finance the work, these contracts may contain a clause allowing you to obtain progress payments monthly. Progress payments to small business are usually made at 95 percent of costs incurred. Payments upon delivery are adjusted to reflect previous progress payments,. Your contract should specify a payment date, expressed as a number of days after receipt of a progress payment request. Otherwise you will be paid 30 days after receipt of your request.  F-32. 502-1 F-52. 232-16  
Even with progress payments at 95 percent of costs incurred, invoice processing time may cause your investment in work in process to exceed 5 percent. If this appears likely, you may request flexible progress payments for any contract in excess of $1,000,000. This procedure allows the progress payment rate to vary between 95 percent and 100 percent of costs incurred as work progresses. Detailed cash flow analyses are required to demonstrate the need for flexible progress payments. The contracting officer will assist you in determining whether you need and qualify for flexible progress payments.  D-32. 502-1  
Because progress payments are an advance for work to be performed, you must repay them if you fail to complete the work. To protect its interest, DoD takes title to your work in process for which progress payments have been made.  F-52. 232-16  
To qualify for progress payments, you must have an accounting system and controls adequate for proper administration of progress payments. Also, the contracting officer must be satisfied that your financial condition is sound enough to protect the Government against loss of progress payments. To receive progress payments, you submit an SF 1433 to your administrative contracting officer.  
34  

Fast payment procedures normally apply to contracts of F-13. 302 
$25,000 or less. You submit an invoice showing that the supplies have F-52. 213-1 been delivered to a post office, common carrier, or the point of first receipt by the Government. You agree to replace, repair, or correct supplies not received at destination, damaged in transit, or not con
forming to purchase requirements. When DoD receives the invoice, you may be paid without waiting for actual receipt and acceptance of the supplies. However, you won't be paid until 30 days after receipt of your invoice unless an earlier date is specified in the contract. 
To minimize the need for financial assistance to contractors, 
DoD 	emphasizes prompt payment on all contracts. This includes both 
DoD 	payments to prime contractors and prime contractor payments to 
subcontractors. If the Government fails to pay amounts due on valid D-33. 070 
invoices within the prescribed time limit, you may be entitled to interest on such amounts. Contract Cost Principles 
The regulations contain certain cost principles to be applied F-31.103 in the following situations: 
(1) 	
pricing contracts when cost analysis is performed, 

(2) 	
determining reimbursements under cost-reimbursement contracts, 

(3) 	
negotiating indirect cost rates, 

(
4) 	termination settlements, 

(5) 	
price revision of redeterminable and fixed-price incentive contracts, and 

(6) 	
pricing contract modifications. 


In these situations, you cannot recover all costs incurred, but only 
those costs deemed "allowable." 
F-31.201-2
To be allowable, an individual item of cost must be: 
(1) 	
reasonable, 

(2) 	
allocable, 


35 
(3) 	
computed in accordance with generally accepted accounting principles and practices appropriate to the particular circumstances, and 

(4) 	
consistent with any other limitation or exclusion set out in the regulations or the contract. 


A cost is reasonable if, in its nature and amount, it does not exceed F-31. 201-3 
that which would be incurred by a prudent person in the conduct of competitive business. Generally, a cost is allocable if it can be F-31. 201-4 charged to a contract, product, product line, etc., according to the relative benefits received. Specifically, a cost is allocable if it: 
) 
(1) 	
is incurred directly for the contract, 

(2) 	
benefits both the contract and other work and can be distributed among all work in reasonable proportion to the benefits received, or 

(3) 	
is necessary to the overall operation of your business. 


The regulations do not discuss every type of cost. Approximately 50 selected items of cost are defined and designated as F-31. 205 allowable or unallowable. For example, depreciation of plant and equipment is an allowable cost; interest on borrowings is unallowable. Allowability of costs not explicitly covered by the regulations is based on the general principles stated above and on the treatment of similar or related cost items. 
In any given contract, the reasonableness and allocability of F-31.109 certain items of cost may be difficult to determine. To avoid disallowances, you should seek advance agreement with DoD as to the treatment of these costs. The advance agreement should be negotiated before the costs are incurred. It should be incorporated into the contract. The advance agreement cannot allow treatment of costs inconsistent with the cost principles set forth in the regulations. 
The regulations list 15 specific cost items in which advance agreements may be particularly important: 
(1) 	
compensation for personal services, 

(2) 	
use charge for fully depreciated assets, 

(3) 	
deferred maintenance costs, 


36 
(4)  precontract costs,  
(5)  independent research proposal costs,  and  development  and  bid  and  
(6)  royalties,  
(7)  selling and distribution costs,  
(8)  travel and relocation costs, mass personnel movements,  as  related  to  special  or  
(9)  costs of idle facilities and idle capacity,  
(10)  costs of automatic data processing equipment,  
(11)  severance contracts,  pay  to  employees  on  support  service  
(12)  plant reconversions,  
(13)  professional services,  
(14)  allocations  of  general  and  administrative  costs,  and  
(15)  costs of construction struction contracts).  plant and  equipment (under  con 
Contract Changes  
contain a the type elements.  Because DoD•s needs change frequently, most DoD contracts changes clause. The particular clause varies according to of contract, but all changes clauses have certain common  F-43. 205  
A changes clause authorizes the contracting officer to order you to make changes 11 within the general scope of the contract. 11 A change is within the scope of the contract if it can be regarded as fair and reasonable within the contemplation of the parties when the contract was entered into. This means that DoD cannot use a change order to change the nature of the contract. In supply contracts, the changes are limited to drawings, designs, or specifications (if the goods are specially manufactured for DoD); the method of shipment or packing; and the place of delivery. If the change causes an increase or decrease in the cost of, or the time required for, the performance of any part of the work under the contract, an equitable adjustment will be made in the contract price, the delivery schedule, or both.  F-52. 243-1  
37  

Change orders are issued in writing. You must submit your claim for an equitable adjustment to the contracting officer within 30 days after receipt of a written change order. 
You must proceed to perform the contract as changed, 
unless the change is beyond the general scope of the contract. If you 
fail to proceed under a proper change order, you are liable for breach 
of contract. 
Terminations 
Virtually every poD contract contains a clause allowing termination for convenience of the Government. In addition, most contracts in excess of $25,000 contain a default clause. 
Terminations for Convenience. DoD may terminate all or part of a contract for its convenience. This type of termination pro
tects DoD•s interests by allowing cancellation of contracts for products that become obsolete or unneeded. The termination does not arise from any fault on the part of the contractor. 
DoD must give you written notice of termination for con-F-49.102 venience. The notice of termination will usually direct you to do the following: 
(1) 	
stop work, 

(2) 	
terminate subcontracts, 

(3) 	
place no further orders, and 

(4) 	
communicate similar instructions to subcontractors and suppliers. 


If you fail to follow these directions, you do so at your own risk and 
expense. You should also receive detailed instructions as to the protection and preservation of all property that is, or may become, Government-owned. 
After termination, DoD is required to make a fair and prompt F-49.105 settlement with you. Generally speaking, settlement takes the form of a negotiated agreement between the parties. The idea is to agree on an amount that will compensate you fully and fairly for the work you 
38 

have done portion of included.  and the The  for any preparation you have made for the terminated contract. A reasonable allowance for profit is also settlement of cost-reimbursement contracts is somewhat  
simpler than for fixed-price contracts, since you will have been bursed on a cost basis from the beginning of the contract.  reim 
You  are  entitled  to  recover  all  allowable  costs  incurred  in  F-31. 205-42  
settling  a  termination for convenience.  These may be costs for:  
(1)  preparation and  presentation of claims,  
(2)  termination and settlement of subcontracts,  
(3)  storage and  and  disposal  of  Government-owned  property,  
( 4)  other termination activities.  
DoD retains the right to approve or ratify any settlements made with subcontractors. When you and DoD agree to all or part of your claim for compensation as a result of the termination, a written amendment (known as a settlement agreement) is made to the contract.  F-49 .108-3  
Generally, termination halts regular payments to you under the contract. However, since you may have money tied up in finished and unfinished products, materials, and labor, most termination clauses provide you with ·interim financing through partial payments.  F-49.112  
Terminations for Default. contract for default if you fail to:  DoD may terminate all  or  part of a  F-52. 249-8  
(1)  deliver the supplies or perform time specified in the contract,  the  services  within  the  
(2)  perform any other provisions of the contract,  or  
(3)  make progress and of the contract.  that  failure  endangers performance  
Before terminating a contract for default because of your failure to deliver supplies or perform services, the contracting officer will usually send a show cause notice. This notice directs you to show why your contract should not be terminated for default. It ensures that you understand your predicament. Your answer can be used in evaluating whether circumstances justify default action.  

39 

Before terminating a contract for default because of your failure to make progress or to perform other provisions of the contract, the contracting officer must give you a written notice, called a 11 cure notice. 11 This notice allows you at least 10 days to cure any defects. Unless the failure to perform is cured within the 10 days, the contracting officer may issue a notice of termination for default. 
Upon termination for default, you are entitled only to pay-F-49. 402-2 ment at the contract price for items accepted by DoD. Under a default clause, DoD has the right to repurchase the item elsewhere and charge any excess reprocurement costs to you. 
If you can show that your failure to perform the contract is F-52. 249-8 excusable, your contract cannot be terminated for default. To be excusable, the failure must be beyond your control and not caused by your fault or negligence. Examples of excusable delay include: 
(1) acts of God, 
(2) acts of the public enemy, 
(3) acts of Government, 
( 4) fires, 
(5) floods, 
(6) epidemics, 
(7) quarantine restrictions, 
(8) strikes, 
(9) freight embargoes, and 
(10) unusually severe weather. If, after termination, it is determined that you were not in default, or that the default was excusable, the termination will be treated as one for the convenience of the Government. Public Policies 
Other national goals, besides the promotion of small businesses, are reflected in DoD contract clauses. As a DoD contrac
tor, you need to be aware of these additional requirements. We have 
40 
grouped the clauses under six headings and summarized key points about each below. You should, of course, become more familiar with their specific requirements before entering into a contract.  
Labor Standards. Under the Contract Work Hours and Safety Standards Act, certain Government contractors who employ laborers or mechanics ·are required to pay them time-and-a-half for work in excess of 8 hours a day and 40 hours a week. This requirement also extends to all subcontracts.  F-22. 301 F-52. 222-4  
Contractors receiving supply contracts over $10,000 that are manufactu-rers of, or regular dealers in, the supplies mu.st comply with the regulations issued by the Secretary of Labor under the Walsh-Healey Public Contracts Act. This act governs minimum wages, maximum hours, and working conditions and prohibits the use of child and convict labor.  F-22. 602 F-52. 222. 20  
Contracts not subject to the Walsh-Healey Act must include a provision prohibiting the use of convict labor. Contracts involving construction work must contain several additional clauses relating to construction industry labor standards. Contracts for services contain a clause required by the Service Contract Act. This clause stipulates minimum standards for wages, fringe benefits, and working conditions for service employees.  F-22.201 F-52.222-3 F-22.1002 F-52.222-40 F-52.222-41  
Labor Surplus Areas. The Government encourages placing of contracts with firms located in areas of unemployment or underemployment. In all contracts over $25,000 (except those for personal services or with foreign firms), contractors must try to place subcontracts in accordance with this policy. If the contract exceeds $500,000, the contractor must organize and carry out a progr·am for placing subcontracts with firms located in areas of high unempioyment or underemployment.  F-20.102 F-52.220-3 F-20. 301 F-52. 220-4  
Equal Employment Opportunity. The Government ensures equal opportunity for all qualified persons employed by, or seeking employment with, Government contractors, regardless of race, color, religion, sex, or national origin. Unless exempted by the Director, Office of Federal Contract Compliance Programs, all DoD contracts and  F-22. 802  
41  

subcontracts must contain an equal opportunity clause. Individual contracts and subcontracts are exempt from application of the clause unless the aggregate value of such business exceeds $10,000 in any 12-month period. This clause obligates the contractor to ensure nondiscrimination in hiring, as well as in the terms and conditions of employment. If the contractor does not comply, the contract may be terminated.  F-52. 222-26  
In contracts over $1,000,000, offerors are subject to preaward equal opportunity review to determine their eligibility for contract award. Offerors on a contract exceeding $10,000 must certify that they maintain nonsegregated facilities.  F-22.805 F-52. 222-21  
Contracts and subcontracts exceeding $2,500 must contain a clause prohibiting discrimination against any employee or applicant for employment because of a physical or mental handicap, if that person is otherwise qualified for the position. Contracts and subcontracts exceeding $10,000 must contain a clause prohibiting discrimination against any employee or applicant for employment who is a disabled vet~ran or veteran of the Vietnam era, if that person is otherwise qualified for the position.  F-52. 222-36 F-52. 222-35  
An Executive order prohibits contractors and subcontractors because are used to implement this policy.  discrimination by Government of age. No contract clauses  
Preferred Products and Services. clauses reflect public policies requiring that certain products or services. For example:  Many DoD preference be  contract given to  
U.S. private vessels shall supplies.  be used for shipment of certain  F-47. 502  
Contractors sources.  must  purchase jewel  bearings  from  domestic  F-8. 202  
The most frequently encountered preferred product procedures involve the Buy American Act. Under this act, the Government favors domestic products over foreign products. A product is considered to be domestic if the cost of the domestic materials used in the product is over 50 percent of the cost of all materials used in the  F-25.101  
42  

product.  The  act  requires  that  only  domestic  products  be  acquired  F-25.102  
for  public  use  except when  (1) the articles, materials,  or  supplies  are  
for  use  abroad  or  for  commissary  resale,  (2) domestic  products of  a  
satisfactory  quality  are  unavailable  in  sufficient  quantities,  or  (3)  a  
domestic  purchase  would  be  either  contrary  to  public  interest  or  its  
cost would  be unreasonable.  
To  determine  the  reasonableness  of  the  lowest  acceptable  F-25.105  
domestic  offer  when  both  domestic  and  foreign  products  are  offered,  
the foreign offer is adjusted by adding 6 percent of the offer inclusive  
of  duty.  If  the  low  dome~tic offeror  is  either  a  small  business  or  a  
labor  surplus  area  business,  a  12-percent  factor  is  used  instead  of  
6 percent.  If  the  adjusted  foreign  offer  is  lower  than  the  lowest  
acceptable domestic offer,  the domestic offer is unreasonable and award  
is made to the foreign offeror.  
The requirements of the act are  waived when the Government  D-25. ?405  
purchases  certain  Defense items from companies in  NATO countries.  It  
is also waived  on  certain U.S.  purchases from countries with which the  
United  States  has  trade  agreements.  Prospective  contractors  are  F-52. 225-1  
advised  in  the  solicitation  that  information  about exceptions  under the  
act is available upon  request.  
Sanctions Against Improper Conduct.  Several  standard  
clauses  protect  the  integrity of the  Government  procurement  process.  
The  Officials  Not  to  Benefit  clause  prohibits  members  of  F-52. 203-1  
Congress  or  resident commissioners  from  participating  in  any share or  
part of the contract.  
The  Gratuities  clause  provides  that  a  contractor  may  not  F-52. 203-3  
offer  or  give  any  gratuity  (such  as  entertainment  or  a  gift)  to  a  
Government  employee  to  obtain  a  contract  or  favorable  treatment  
regarding contract awards and determinations.  
A  clause  entitled  11 Covenant  Against  Contingent  Fees11  F-52. 203-5  
requires  contractors  to  warrant  that  no  persons, other than employees  
or  established  commercial  or  selling agencies,  have  been  employed  for  
the  purpose  of  soliciting  business  upon  a  commission,  percentage,  
brokerage,  or contingent fee basis.  

43 

The anti-kickback law prohibits subcontractors from paying F-3. 502 
any fee, commission, or compensation to any prime contractor or higher tier subcontractor as an inducement or acknowledgment for the award of a subcontract or order. No contract clauses are used to  
implement this law.  
The regulations prescribe sanctions against those who violate or otherwise fail to conform to the standards required of Government contractors. These sanctions consist of debarment, suspension, and ineligibility for award of contracts. Debarment is the most serious penalty. It generally results from conviction of a serious offense or willful violation of contract requirements and can last up to three years. Suspension is temporary, pending completion of investigation and legal proceedings. It is used when serious evidence of wrongdoing exists but has not been proven. Contractors may become ineligible, that is, excluded from Government contracting as a result of violations of laws or regulations such as the Buy American Act, the Walsh-Healey Act, the Service Contract Act, etc. Goverment agencies mai~tain a consolidated list of debarred, ineligible, and suspended contractors.  F-9. 402  
Examination of Records and Audits. To ensure accuracy and honesty in the pricing, costing, and reporting under contracts awarded without benefit of full and open competition, the Government often reserves the right to examine or to audit contractors• records and the data supporting cost proposals, claimed costs of performance, reports required by the contract, and similar items.  
Virtually all contracts except small purchases and those awarded by sealed bids must contain a clause granting the Comptroller General the right to examine the contractor•s records related to the contract for up to three years after final payment. A similar clause must be included in subcontracts under these contracts.  F-52. 215-1  
All contracts (other than small purchases) that are on a cost-reimbursement, incentive, time-and-materials, labor-hour, or price-redeterminable basis give the contracting officer the right to examine and audit books; records; documents and other data relating  F-52. 215-2  
44  

to the claimed costs of performance; the cost or pricing data used to support the pricing of the contract; and any cost, funding, or performance reports required under the contract. 
45 


6. CONCLUSION 
This guide is not a substitute for any requirement or provision of any regulations. It is simply an introduction to Defense contracting. 
In this guide you have been exposed I 
to those DoD policies and procedures most frequently encountered by small businesses. You are now aware of some of the major differences between commercial and Government procurement. You understand what a Government contract contains and how it is formed. Finally, now that you know the basics of Defense contracting, you will find that doing business with DoD is not as difficult as you may have thought. 
47 


APPENDIX ADDITIONAL SOURCES OF INFORMATION 
MARKETING INFORMATION 
11 Selling to the Military11 
Provides offices, addresses, and telephone numbers of major buying offices of the Army, Navy, Air Force, and Defense Logistics Agency, with summaries of the procurement responsibilities and types of major purchases for each activity. 
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402 (Stock No. 008-000-00392-1), or may be obtained from nearest DoD contracting office. 
11 Commerce Business Daily11 
A daily list of proposed Defense procurements estimated to exceed $10,000 and civil agency procurements estimated to exceed $5,000. Also contains lists of subcontracting leads, sales of surplus property, and foreign business opportunities. 
Subscriptions may be made through the Superintendent of Documents, 
U.S. Government Printing Office, Washington, DC 20402. 11 U.S. Government Purchasing and Sales Directory11 Provides a listing of products and services bought by all Federal agencies, keyed to the purchasing offices that buy them. Also provides information on Government sales of surplus property. Available from nearest Small Business Administration office. 11 Small Business Subcontracting Directory11 Provides company name and address, product or service line, and 
name and telephone number of company•s small .business liaison officer for DoD prime contractors that have plans and goals (set 
forth in their prime contracts) for subcontracting with ness and small disadvantaged business concerns. annually. - small busiPublished  
Available from the Small and Disadvantaged Business Specialist at the nearest military purchasing activity.  Utilization  
11 SBA Master Small Release Schedule11  Business  Innovation  Research  Program  Solicitation  

49 

Each fiscal year the Small Business Administration will publish the list of topics upon which research effort will be sought by all major Government agencies. This list will include name, address, and telephone numbers of agency contact points for the program and the estimated dates when solicitation will be issued and proposals required, together with the estimated number and average amounts of awards planned for ·that fiscal year. 
Available from the U.S. Small Business Administration, SB IR, 1441 L Street, N.W., Washington, DC 20416. 
11 DoD Architect-Engineer Selection Procedures11 
Outlines policies governing selection of architect-engineers and describes procedures for obtaining consideration for architect-engineer contracts. 
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402 (Stock No. 008-007-02778-6), or may be obtained from U.S. Army Corps of Engineers District Offices and U.S. Navy Facilities Engineering Command offices. 
11 Handbook for Small Business: A Survey of Small Business Programs of the Federal Government11 
Contains information on Government-sponsored loans and financial guarantees, management and technical assistance and programs, Government purchasing and sales programs, grants, and entering the world trade markets. Outlines design of Federal programs, describes each program, and indicates how and where further information can be obtained. 
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402 (Stock No. 052-071-00600-1). 
11 A Guide for Private lndustry11 
Tells how to obtain information regarding specifications and standards from the DoD Single Stock Point for Specifications and Standards. 
Available from the Naval Publications and Forms Center, 5801 Tabor Avenue, Philadelphia, PA 19120. 
AIDS FOR SMALL BUSINESSES 
11 DoD Small and Disadvantaged Business Utilization Specialists11 
On a nationwide basis, lists specialists by name, location, and phone number. 
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402 (Stock No. 008-000-00390-4), or may be obtained from nearest DoD contracting office. 
so 
11 Procurement Automated Service System (PASS)11 
The PASS matches key data about small businesses against requirements for future Government procurement to determine the most acceptable firms that may be asked to prepare a bid or proposal for the procurement. 
To be listed in the PASS, contact nearest Small Business Administration office for SBA Form 1167. (Participation in PASS is free.) 
11 Management Aids11 
Short papers providing specific guidance on various topics. 
Available from neares:t Small Business Administration office. 
51 
U.S. GOVERNMENT PRINTING OFFICE 1985 0 -466-347 

AVAILABILITY OF THE REGULATIONS 
The regulations are sold on a subscription basis. This subscription 
service consists of basic sets of looseleaf pages plus any changes published 
as Federal Acquisition Circulars and Defense Acquisition Circulars. 
To place an order for this service, please complete and return the 
forms provided below to the Government Printing Office with remittance made 
payable to the Superintendent of Documents. 
SUBSCRIPTION ORDER FORM ENTER MY SUBSCRIPTION TO FEDERAL ACQUISITION "REGULATION
------------~-------------------------------------
at $30.00 	$37.50 far foreign mailing.) 
Send Subscription to: 
NAME -FIRST LAST 0 Remittance EnclosedI I I I I I I I I I I I I 1 I '1 I I I I I I I I (Make checks payable toSuperintendent of Documents)COMPANY NAME OR ADDITIONAL ADDRESSI 0 Charge to myDeposit Account
STREET ADDRESS 	NO. ______________
r 1 I I l I I I I I I I I I I I I I I l I I II IZIP CODE FORM TO:
MAIL ORDER
CITY 	IsTrE!
I I I I I I I I I I I· . I I I I 	Superintendent of DocumentsGovernment Printing OfficePLEASE PRINT 
Washington, D. C. 20402 
SUBSCRIPTION ORDER FORM 
ENTER MY SUBSCRIPTION TO DoD FAR Supplement 

at "$66. 00 ( $82.50 for foreign mailing.} 
Send Subscription to: 
NAME-FIRST, LAST 0 Remittance EnclosedI I I I I I I I I 1-1 I I I I I I I I I I (Make checks payable toSuperintendent of Documents)
NAME OR ADDITIONAL ADDRESS LINE 0 Charge to myDeposit Account
NO. _______
I I I I I I 
CITY I 1sTrEI IZIP CODE MAIL ORDER FORM TO:~~~~ILLI~1~1~1~1~1~1-lw. . I I I I Superintendent of DocumentsGovernment Printing Office
PL E AS E PRINT 
Washington, D. C. 20402 
1985