25.1001 Waiver of right to examination of records
Source: FAR 25.1001 on acquisition.gov
Always attempt to include the Comptroller General's audit rights in foreign contracts, and only use alternate clauses after thorough justification and high-level approval.
Overview
FAR 25.1001 outlines the policy and procedures for waiving the right to examination of records in negotiated contracts with foreign contractors. Normally, the clauses at 52.215-2 or 52.212-5 grant the Comptroller General the right to examine contractor records. However, if it is not possible to include these basic clauses—after exhausting all reasonable efforts and considering factors like alternate sources, cost, and delivery time—the contracting officer may use alternate clauses, provided a formal determination and findings (D&F) is executed by the agency head with the Comptroller General's concurrence (unless the contractor is a foreign government or legal restrictions apply). The D&F must document the contract details, efforts made, reasons for refusal, alternative sources, and justify that using the alternate clause serves U.S. interests.
Key Rules
- Inclusion of Audit Clauses
- Always attempt to include the basic audit clause (52.215-2 or 52.212-5) in negotiated contracts with foreign contractors.
- Use of Alternate Clauses
- Alternate clauses may be used only after all reasonable efforts to include the basic clause have failed, relevant factors are considered, and a D&F is executed and concurred by the Comptroller General (with exceptions for foreign governments or legal prohibitions).
- Determination and Findings Requirements
- The D&F must detail the contract, efforts to include the clause, reasons for refusal, alternative sources, and justify the use of the alternate clause.
Responsibilities
- Contracting Officers: Must attempt to include the basic audit clause, document efforts, and obtain necessary approvals for alternate clauses.
- Contractors: Must comply with audit clause requirements unless legally exempt or unable to provide access.
- Agencies: Agency heads must execute D&F and obtain Comptroller General concurrence when required.
Practical Implications
- Ensures transparency and accountability in foreign contracts by default, but allows flexibility when inclusion is not feasible.
- Requires thorough documentation and high-level approval for waivers, reducing risk of improper waivers.
- Common pitfalls include inadequate documentation or failure to obtain required approvals.
(a) Policy. The clause at 52.215-2, Audit and Records-Negotiation, prescribed at 15.209(b), and paragraph (d) of the clause at 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders-Commercial Products and Commercial Services, prescribed at 12.301(b)(4), implement https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3841&num=0&edition=prelim" target="_blank">10 U.S.C. 3841 and 41 U.S.C. 4706. The basic clauses authorize examination of records by the Comptroller General.
(1) Insert the appropriate basic clause, whenever possible, in negotiated contracts with foreign contractors.
(2) The contracting officer may use 52.215-2 with its Alternate III or 52.212-5 with its Alternate I after-
(i) Exhausting all reasonable efforts to include the basic clause;
(ii) Considering factors such as alternate sources of supply, additional cost, and time of delivery; and
(iii) The head of the agency has executed a determination and findings in accordance with paragraph (b) of this section, with the concurrence of the Comptroller General. However, concurrence of the Comptroller General is not required if the contractor is a foreign government or agency thereof or is precluded by the laws of the country involved from making its records available for examination.
(b) Determination and findings. The determination and findings must-
(1) Identify the contract and its purpose, and identify if the contract is with a foreign contractor or with a foreign government or an agency of a foreign government;
(2) Describe the efforts to include the basic clause;
(3) State the reasons for the contractor’s refusal to include the basic clause;
(4) Describe the price and availability of the supplies or services from the United States and other sources; and
(5) Determine that it will best serve the interest of the United States to use the appropriate alternate clause in paragraph (a)(2) of this section.