[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 41USC254]
TITLE 41--PUBLIC CONTRACTS
CHAPTER 4--PROCUREMENT PROCEDURES
SUBCHAPTER IV--PROCUREMENT PROVISIONS
Sec. 254. Contract requirements
(a) Contracts awarded using procedures other than sealed-bid procedures
Except as provided in subsection (b) of this section, contracts
awarded after using procedures other than sealed-bid procedures may be
of any type which in the opinion of the agency head will promote the
best interests of the Government. Every contract awarded after using
procedures other than sealed-bid procedures shall contain a suitable
warranty, as determined by the agency head, by the contractor that no
person or selling agency has been employed or retained to solicit or
secure such contract upon an agreement or understanding for a
commission, percentage, brokerage, or contingent fee, excepting bona
fide employees or bona fide established commercial or selling agencies
maintained by the contractor for the purpose of securing business, for
the breach or violation of which warranty the Government shall have the
right to annul such contract without liability or in its discretion to
deduct from the contract price or consideration the full amount of such
commission, percentage, brokerage, or contingent fee. The preceding
sentence does not apply to a contract for an amount that is not greater
than the simplified acquisition threshold or to a contract for the
acquisition of commercial items.
(b) Barred contracts; fee limitation; determination of use; advance
notification
The cost-plus-a-percentage-of-cost system of contracting shall not
be used, and in the case of a cost-plus-a-fixed-fee contract the fee
shall not exceed 10 percent of the estimated cost of the contract,
exclusive of the fee, as determined by the agency head at the time of
entering into such contract (except that a fee not in excess of 15
percent of such estimated cost is authorized in any such contract for
experimental, developmental, or research work and that a fee inclusive
of the contractor's costs and not in excess of 6 percent of the
estimated cost, exclusive of fees, as determined by the agency head at
the time of entering into the contract, of the project to which such fee
is applicable is authorized in contracts for architectural or
engineering services relating to any public works or utility project).
All cost and cost-plus-a-fixed-fee contracts shall provide for advance
notification by the contractor to the procuring agency of any
subcontract thereunder on a cost-plus-a-fixed-fee basis and of any
fixed-price subcontract or purchase order which exceeds in dollar amount
either the simplified acquisition threshold or 5 percent of the total
estimated cost of the prime contract; and a procuring agency, through
any authorized representative thereof, shall have the right to inspect
the plans and to audit the books and records of any prime contractor or
subcontractor engaged in the performance of a cost or cost-plus-a-fixed-
fee contract.
(June 30, 1949, ch. 288, title III, Sec. 304, 63 Stat. 395; Oct. 31,
1951, ch. 652, 65 Stat. 700; July 12, 1952, ch. 703, Sec. 1(m), 66 Stat.
594; Pub. L. 89-607, Sec. 2, Sept. 27, 1966, 80 Stat. 850; Pub. L. 98-
369, div. B, title VII, Secs. 2712, 2714(a)(2), (3), July 18, 1984, 98
Stat. 1181, 1184; Pub. L. 103-355, title I, Secs. 1071, 1251(a)(1),
title II, Sec. 2251(b), title IV, Secs. 4103(c), 4402(c), title VIII,
Sec. 8204(b), title X, Sec. 10005(e), Oct. 13, 1994, 108 Stat. 3270,
3278, 3320, 3341, 3349, 3396, 3408.)
Amendments
1994--Subsec. (a). Pub. L. 103-355, Secs. 4103(c), 8204(b), inserted
at end ``The preceding sentence does not apply to a contract for an
amount that is not greater than the simplified acquisition threshold or
to a contract for the acquisition of commercial items.''
Subsec. (b). Pub. L. 103-355, Secs. 4402(c), 10005(e), substituted
``percent'' for ``per centum'' wherever appearing and ``either the
simplified acquisition threshold'' for ``either $25,000'' in last
sentence.
Pub. L. 103-355, Sec. 1071, struck out after first sentence
``Neither a cost nor a cost-plus-a-fixed-fee contract nor an incentive-
type contract shall be used unless the agency head determines that such
method of contracting is likely to be less costly than other methods or
that it is impractical to secure property or services of the kind or
quality required without the use of a cost or cost-plus-a-fixed-fee
contract or an incentive-type contract.''
Subsec. (c). Pub. L. 103-355, Sec. 2251(b), struck out subsec. (c)
which related to examination of books, records, etc. of contractors,
time limitations, exemptions, exceptional conditions, and reports to
Congress. See section 254d of this title.
Subsec. (d). Pub. L. 103-355, Sec. 1251(a)(1), struck out subsec.
(d) which related to submission of cost or pricing data by contractors
and subcontractors, certificate requirements, adjustment of price,
inspection of books, records, etc., necessity of data, and exceptions.
See section 254b of this title.
1984--Pub. L. 98-369, Sec. 2714(a)(2), amended section catchline
generally.
Subsec. (a). Pub. L. 98-369, Sec. 2714(a)(3)(A), (B), substituted
``awarded after using procedures other than sealed-bid procedures'' for
``negotiated pursuant to section 252(c) of this title'' in first and
second sentences.
Subsec. (c). Pub. L. 98-369, Sec. 2714(a)(3)(C), substituted
``awarded after using procedures other than sealed-bid procedures'' for
``negotiated without advertising pursuant to authority contained in this
Act'' in first sentence.
Subsec. (d). Pub. L. 98-369, Sec. 2712, added subsec. (d).
1966--Subsec. (c). Pub. L. 89-607 provided for exemption of certain
contracts with foreign contractors from the requirement for an
examination-of-records clause, such determination to be reported to
Congress.
1952--Subsec. (b). Act July 12, 1952, substituted ``property'' for
``supplies''.
1951--Subsec. (c). Act Oct. 31, 1951, added subsec. (c).
Effective Date of 1994 Amendment
For effective date and applicability of amendment by Pub. L. 103-
355, see section 10001 of Pub. L. 103-355, set out as a note under
section 251 of this title.
Effective Date of 1984 Amendment
Amendment by Pub. L. 98-369 applicable with respect to any
solicitation for bids or proposals issued after Mar. 31, 1985, see
section 2751 of Pub. L. 98-369, set out as a note under section 251 of
this title.
Effective Date
Section effective July 1, 1949, see section 605, formerly section
505, of act June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act
Sept. 5, 1950, ch. 849, Sec. 6(a), (b), 64 Stat. 583.
Exemption of Functions
Functions authorized by Foreign Assistance Act of 1961, as amended,
as exempt, see Ex. Ord. No. 11223, eff. May 12, 1965, 30 F.R. 6635, set
out as a note under section 2393 of Title 22, Foreign Relations and
Intercourse.
Foreign Contractors
Secretaries of Defense, Army, Navy, or Air Force, or their
designees, to determine, prior to exercising the authority provided in
the amendment of this section by Pub. L. 89-607 to exempt certain
contracts with foreign contractors from the requirement of an
examination-of-records clause, that all reasonable efforts have been
made to include such examination-of-records clause, as required by par.
(11) of Part I of Ex. Ord. No. 10789, and that alternate sources of
supply are not reasonably available, see par. (11) of Part I of Ex. Ord.
No. 10789, eff. Nov. 14, 1958, 23 F.R. 8897, as amended, set out as a
note under section 1431 of Title 50, War and National Defense.
Executive Order No. 12800
Ex. Ord. No. 12800, Apr. 13, 1992, 57 F.R. 12985, 13413, which
required Federal contractors to post a notice that employees could not
be required to be members of a union in order to retain their jobs, was
revoked by Ex. Ord. No. 12836, Sec. 1, Feb. 1, 1993, 58 F.R. 7045, which
was itself revoked as it relates to notification of employee rights
concerning payment of union dues or fees by Ex. Ord. No. 13201, Sec. 11,
Feb. 17, 2001, 66 F.R. 11221, and as it relates to project agreements by
Ex. Ord. No. 13202, Sec. 8, Feb. 17, 2001, 66 F.R. 11226.
Ex. Ord. No. 13201. Notification of Employee Rights Concerning Payment
of Union Dues or Fees
Ex. Ord. No. 13201, Feb. 17, 2001, 66 F.R. 11221, provided:
By the authority vested in me as President by the Constitution and
the laws of the United States of America, including the Federal Property
and Administrative Services Act, 40 U.S.C. 471 et seq. [now chapters 1
to 11 of Title 40, Public Buildings, Property, and Works, and title III
of the Act of June 30, 1949 (41 U.S.C. 251 et seq.)], and in order to
ensure the economical and efficient administration and completion of
Government contracts, it is hereby ordered that:
Section 1. (a) This order is designed to promote economy and
efficiency in Government procurement. When workers are better informed
of their rights, including their rights under the Federal labor laws,
their productivity is enhanced. The availability of such a workforce
from which the United States may draw facilitates the efficient and
economical completion of its procurement contracts.
(b) The Secretary of Labor (Secretary) shall be responsible for the
administration and enforcement of this order. The Secretary shall adopt
such rules and regulations and issue such orders as are deemed necessary
and appropriate to achieve the purposes of this order.
Sec. 2. (a) Except in contracts exempted in accordance with section
3 of this order, all Government contracting departments and agencies
shall, to the extent consistent with law, include the following
provisions in every Government contract, other than collective
bargaining agreements as defined in 5 U.S.C. 7103(a)(8) and purchases
under the ``Simplified Acquisition Threshold'' as defined in the Office
of Federal Procurement Policy Act (41 U.S.C. 403).
``1. During the term of this contract, the contractor agrees to post
a notice, of such size and in such form as the Secretary of Labor shall
prescribe, in conspicuous places in and about its plants and offices,
including all places where notices to employees are customarily posted.
The notice shall include the following information (except that the last
sentence shall not be included in notices posted in the plants or
offices of carriers subject to the Railway Labor Act, as amended (45
U.S.C. 151-188)):
``NOTICE TO EMPLOYEES
Under Federal law, employees cannot be required to join a union or
maintain membership in a union in order to retain their jobs. Under
certain conditions, the law permits a union and an employer to enter
into a union-security agreement requiring employees to pay uniform
periodic dues and initiation fees. However, employees who are not union
members can object to the use of their payments for certain purposes and
can only be required to pay their share of union costs relating to
collective bargaining, contract administration, and grievance
adjustment.
``If you do not want to pay that portion of dues or fees used to
support activities not related to collective bargaining, contract
administration, or grievance adjustment, you are entitled to an
appropriate reduction in your payment. If you believe that you have been
required to pay dues or fees used in part to support activities not
related to collective bargaining, contract administration, or grievance
adjustment, you may be entitled to a refund and to an appropriate
reduction in future payments.
``For further information concerning your rights, you may wish to
contact the National Labor Relations Board (NLRB) either at one of its
Regional offices or at the following address:
National Labor Relations Board
Division of Information
1099 14th Street, N.W.
Washington, D.C. 20570
``To locate the nearest NLRB office, see NLRB's website at
www.nlrb.gov.''
``2. The contractor will comply with all provisions of Executive
Order 13201 of February 17, 2001, and related rules, regulations, and
orders of the Secretary of Labor.
``3. In the event that the contractor does not comply with any of
the requirements set forth in paragraphs (1) or (2) above, this contract
may be cancelled, terminated, or suspended in whole or in part, and the
contractor may be declared ineligible for further Government contracts
in accordance with procedures authorized in or adopted pursuant to
Executive Order 13201 of February 17, 2001. Such other sanctions or
remedies may be imposed as are provided in Executive Order 13201 of
February 17, 2001, or by rule, regulation, or order of the Secretary of
Labor, or as are otherwise provided by law.
``4. The contractor will include the provisions of paragraphs (1)
through (3) herein in every subcontract or purchase order entered into
in connect
