Overview
This section prescribes the mandatory procedures and remedial actions a Contracting Officer must follow when a contractor is suspected of using unauthorized foreign construction materials in violation of the Buy American statute or the Recovery Act.
Key Rules
- Mandatory Investigation: The Contracting Officer (CO) is required to review all allegations of violations regarding unauthorized foreign construction materials.
- Contractor Notification: Unless fraud is suspected, the CO must notify the contractor of the apparent noncompliance and request a formal response and proposed corrective action.
- Remedial Options: If noncompliance is confirmed, the CO may:
- Process a late determination of inapplicability (exception).
- Order the removal and replacement of the foreign material.
- Retain the material if removal is impractical, provided a written determination is made.
- Preservation of Rights: Retaining non-compliant material does not waive the government's right to pursue price reductions, termination for default, or suspension and debarment.
- Fraud Referrals: If noncompliance appears fraudulent, the CO must bypass the contractor and refer the matter to the Agency Inspector General or criminal investigators.
Practical Implications
- Contractors face severe financial risks, as the "removal and replacement" of already-installed materials is often significantly more expensive than the original contract value.
- Acceptance of non-compliant material "in place" does not grant the contractor a safe harbor; the government can still leverage the violation to negotiate a lower contract price or initiate debarment proceedings to protect the government's future interests.