
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[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)(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), substituted ``Contract 
requirements'' for ``Negotiated contracts'' in section catchline.
    Subsec. (a). Pub. L. 98-369, Sec. 2714(a)(3), 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 of act June 30, 
1949, set out as a note under section 471 of Title 40, Public Buildings, 
Property, and Works.


                         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.


                               Definitions

    The definitions in section 472 of Title 40, Public Buildings, 
Property, and Works, apply to this subchapter.


                            Cross References

    Agency head, definition of, see section 259 of this title.
    Armed services--
        Examination of contractor's books and records, see section 2313 
            of Title 10, Armed Forces.
        Kinds of contracts, see section 2306 of Title 10.

                  Section Referred to in Other Sections

    This section is referred to in section 257 of this title; title 8 
section 1363a; title 16 section 670o; title 19 section 2081; title 26 
section 7608; title 38 section 8122.
