(5) for any service to be rendered by any university, college, or other educational institution;

(6) the property or services are to be procured and used outside the limits of the United States and its possessions;

(7) for medicines or medical property;

(8) for property purchased for authorized resale;

(9) for property or services for which it is impracticable to secure competition;

(10) the agency head determines that the purchase or contract is for experimental, developmental, or research work, or for the manufacture or furnishing of property for experimentation, development, research, or test: Provided, That beginning six months after the effective date of this title and at the end of each six-month period thereafter, there shall be furnished to the Congress a report setting forth the name of each contractor with whom a contract has been entered into pursuant to this paragraph (10) since the date of the last such report, the amount of the contract, and, with due consideration given to the national security, a description of the work required to be performed thereunder;

(11) for property or services as to which the agency head determines that the character, ingredients, or components thereof are such that the purchase or contract should not be publicly disclosed;

(12) for equipment which the agency head determines to be technical equipment, and as to which he determines that the procurement thereof without advertising is necessary in special situations or in particular localities in order to assure standardization of equipment and interchangeability of parts and that such standardization and interchangeability is necessary in the public interest:

(13) for property or services as to which the agency head determines that bid prices after advertising therefor are not reasonable (either as to all or as to some part of the requirements) or have not been independently arrived at in open competition: Provided, That no negotiated purchase or contract may be entered into under this paragraph after the rejection of all or some of the bids received unless (A) notification of the intention to negotiate and reasonable opportunity to negotiate shall have been given by the agency head to each responsible bidder and (B) the negotiated price is the lowest negotiated price offered by any responsible supplier; or

(14) otherwise authorized by law.

(d) If in the opinion of the agency head bids received after advertising evidence any violation of the antitrust laws he shall refer such bids to the Attorney General for appropriate action.

(e) This section shall not be construed to (A) authorize the erection, repair, or furnishing of any public building or public improvement, but such authorization shall be required in the same manner as heretofore, or (B) permit any contract for the construction or repair of buildings, roads, sidewalks, sewers, mains, or similar items to be negotiated without advertising as required by section 303, unless such contract is to be performed outside the continental United States or unless negotiation of such contract is authorized by the provisions

of paragraph (1), (2), (3), (9), (10), (11), or (13) of subsection (c) of this section.

ANALYSIS

Section 302. Application and procurement methods (Sec. 302, 63 Stat. 393, as amended by sec. 1 (m), 66 Stat. 594; 41 U. S. C. 252)

(a) Applicability of title III; delegations of authority. This subsection makes the provisions of title III applicable to purchases and contracts for property or services made by the General Services Administration either for its own use or otherwise, including centralized procurement. By delegation the Administrator inay authorize any other civilian executive agency to use the procedure set forth in title III when such agency is designated to perform a central procurement function. In addition, authority to use the procedures set forth in title III may may be delegated by the Administrator to another civilian executive agency in other cases where the Administrator determines that such delegation is advantageous to the Government in terms of economy, efficiency, or national security. It is required that the Administrator's determination in such other cases set forth the circumstances upon which the determination is based. The terms "economy" and "efficiency" are broad enough to cover cases where authority is delegated to negotiate contracts under secs. 302 (c) (5) and 302 (c) (10) of this title. This title does not confer upon any civilian executive agency any vested right to receive such delegation. The Congressional intent was that such power of delegation will not be exercised indiscriminately but rather will be used with care and discretion. It was also intended that the Administrator will make periodic reviews to determine whether the authority so delegated has been properly used, and that he will either take such action as may be necessary to correct any misuse or will withdraw the delegation. After the Administrator has made such delegation he shall give notice thereof to the General Accounting Office. Section 307 (b) restricts delegation by the Administrator of the power to make the delegations and determinations specified in this subsection.

(b) Policy as to small business concerns; advance publicity concerning negotiation. This subsection states the policy that a fair proportion of the total purchases and contracts shall be placed with small business concerns and further provides that notice of intent to negotiate shall be published in certain cases.

(c) Exceptions from requirement for advertising.-Initially, this subsection reaffirms the basic principle that purchases and contracts shall be made by advertising. Negotiation is made permissible in certain excepted cases, however, to provide flexibility in Government procurement. (Section 310 (b) of the Act, which was added by subsection (n) of section 1 of Public Law 522 of the 82d Congress, approved July 12, 1952, provides that reference in any act, except section 310 (a) of the Federal Property and Administrative Services Act of 1949, as amended, to the applicability of section 3709 of the Revised Statutes, as amended (41 U. S. C. 5), to the procurement of property or services by the General Services Administration or any constituent organization thereof shall be deemed to be reference to section 302 (c) of the Act.)

(1) This paragraph would permit automatic and immediate transition from more rigid peacetime advertising procedures to a completely flexible system if the President or the Congress declares the existence of a national emergency.

(2) This provision is an adaptation of a portion of section 3709 of the Revised Statutes as amended by section 9 (a) of the act of August 2, 1946 (60 Stat. 809; 41 U. S. C. 5). Whenever urgency requires an immediate purchase this exception would be available irrespective of whether the emergency could or should have been foreseen.

(3) This paragraph extends to the General Services Administration the power to negotiate if the aggregate amount involved does not exceed $1,000. However, no delegation of such authority may be made to other executive agencies under this paragraph for purchases or contracts for property or services in excess of $500 unless such purchasing or contracting is for centralized procurement.

(4) The provision permitting negotiation for personal or professional services is an adaptation of the exception from advertising provided by section 3709 of the Revised Statutes, as amended, hereinabove referred to.

(5) This paragraph would permit negotiation of contracts for technical assistance, expert study, and the application of specialized knowledge to be performed by any university, college, or other educational institution. This would cover

matters which might not clearly qualify as experimental, developmental, or research work under paragraph (10) of this section.

(6) Under this paragraph if property or services are to be procured and used outside the limits of the United States and its possessions the contracts or purchases may be negotiated. In such cases it is frequently impracticable or uneconomical to advertise.

(7) Due to the technical nature, special characteristics, and differing qualities of medicines and medical property it is sometimes extremely difficult if not impossible to describe adequately in detailed specifications the exact characteristics of qualities needed. In such cases the need for negotiation is clear.

(8) Where property is purchased for authorized resale, the purchasing agency must accommodate the brand preference or the quality preference of the organization requesting the purchase. This paragraph therefore provides authority to negotiate such purchases.

(9) This paragraph provides for negotiation where it is impracticable to secure competition and places upon the agency concerned the maximum responsibility for decisions as to when it is impracticable. It was intended that this paragraph should be construed liberally.

(10) The very nature of a research and development contract does not ordinarily lend itself to formal advertising. This paragraph therefore provides that contracts for experimental, developmental, or research work or for the manufacture or furnishing of property for experimentation, development, research, or test may be negotiated and provides also for periodic reports to the Congress of action taken under this paragraph. Section 307 (b) restricts delegation of the power to make the determinations or decisions specified in this paragraph.

(11) It is provided that in cases where the purchase or contract should not be publicly disclosed negotiation may be employed. In such cases public disclosure through advertising would clearly be adverse to the interests of the Government. By section 307 (b) the power of the agency head to make the determination specified in this paragraph may not be delegated.

(12) This paragraph permits negotiation of contracts for technical equipment in order to assure standardization of equipment and interchangeability of parts when such standardization and interchangeability are necessary in the public interest. It is intended that this authority should be used "in special situations or in particular localities" and such provision has been therefore added to the language as it appears in section 2 (c) (13) of the Armed Services Procurement Act of 1947. The paragraph would protect in every way possible the principles of competition and antimonopoly consistent with the occasional need for such standardization, and section 307 (b) of this title provides that the agency head may not delegate his responsibility for making any of the determinations required under this paragraph.

(13) This paragraph permits negotiation for property or services when it is determined that bid prices after advertising are not reasonable either as to all or some part of the requirements or have not been independently arrived at in open competition. It is designed to cope with cases including those where all bids received are too high, although not actually identical or apparently collusive. This paragraph should be most useful in breaking collusive bidding, follow-theleader pricing, rotated low bids, identical bids requiring drawing of lots, uniform estimating systems, refusal to classify the Government as other than a retail buyer regardless of the quantity purchased, and similar practices. Notification of the intention to negotiate after such advertising and reasonable opportunity to negotiate must be given to each responsible bidder, and, also, the negotiated price must be the lowest negotiated price offered by any responsible supplier. This paragraph is a modification of paragraph 2 (c) (15) of the Armed Services Procurement Act of 1947. The modification will remove a restriction which in cases such as sudden upward market fluctuations might make it impossible to secure the needed property.

(14) This provision would preserve the authority to negotiate contracts conferred by other permanent legislation, for example, the Strategic and Critical Materials Stock Piling Act (60 Stat. 596; 50 U. S. C. 98-98h). This paragraph also has the effect of permitting negotiation under any relevant law which may be subsequently enacted whether said law is general or special legislation.

(d) Violations of antitrust laws in bidding.—The immediate furnishing of evidence of possible violations of the antitrust laws to the Department of Justice as required by this subsection will facilitate appropriate action where violations exist and will have a valuable moral effect on bidders, Compliance with this

paragraph is not to be construed, however, as a condition precedent to exercise of the authority conferred by this title.

(e) No change in requirements regarding construction, repair, etc.-For clarity this subsection provides that section 302 does not change the existing requirements for authorization for the erection or repair of buildings, or permit any contract for construction or repair of buildings, roads, sidewalks, or similar items to be negotiated without advertising as required by section 303 except in the particular cases as specified in the subsection.

ized representatives shall until the expiration of three years after final payment have access to and the right to examine any directly pertinent books, documents, papers, and records of the contractor or any of his subcontractors engaged in the performance of and involving transactions related to such contracts or subcontracts.

ANALYSIS

Section 304. Requirements of negotiated contracts (Sec. 304, 63 Stat. 395, as amended by 65 Stat. 700, and sec. 1 (m), 66 Stat. 594; 41 U. S. C. 254)

(a) Types of contracts; warranties against contingent fees, etc.-The right to use the most suitable type of contract is a necessary and inseparable adjunct to the right to negotiate and this subsection therefore permits negotiated contracts to be of any type which in the opinion of the agency head will promote the best interests of the Government, except as provided in subsection (b). Authority to negotiate contracts in the first instance carries with it equal authority to negotiate subsequent changes in the terms of negotiated contracts, and such amendments may also be of such type as the agency head believes will promote the best interests of the Government. This subsection also provides that every negotiated contract shall contain a suitable warranty against contingent fees, commissions, and like arrangements.

(b) Restrictions against certain types of contracts.-This subsection prohibits the cost-plus-a-percentage-of-cost system of contracting and prescribes maximum fees in connection with cost-plus-a-fixed-fee contracts. Neither a cost nor a costplus-a-fixed-fee contract nor an incentive-type contract may be used unless it is determined that such method is likely to be less costly than other methods or that it is impracticable to secure property or services of the kind or quality without the use of such type of contract.

(c) Examination by Comptroller General of books, etc., of contractors.-This subsection was added to section 304 by Public Law 245, 82d Congress, 1st session, approved October 31, 1951, 65 Stat. 700, entitled "An Act To amend section 304 of the Federal Property and Administrative Services Act of 1949 and section 4 of the Armed Services Procurement Act of 1947". The requirement was thus established that all contracts negotiated without advertising shall include a clause to the effect that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment, have access to, and the right to examine any directly pertinent books, documents, papers, and records of the contractor or any of his subcontractors engaged in the performance of and involving transactions related to such contracts or subcontracts. Public Law 245 also added a new subsection (c), identical in text with the above subsection (c), to section 4 of the Armed Services Procurement Act of 1947 (62 Stat. 23, 41 U. S. C. 153), which section is similar to section 304 of Public Law 152.