[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR3.705]

[Page 56-57]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST--Table of Contents
 
              Subpart 3.7--Voiding and Rescinding Contracts
 
Sec. 3.705  Procedures.

    (a) Reporting. The facts concerning any final conviction for any 
violation of 18 U.S.C. 201-224 involving or relating to agency contracts 
shall be reported promptly to the agency head or designee for that 
official's consideration. The agency head or designee shall promptly 
notify the Civil Division, Department of Justice, that an action is 
being considered under this subpart.
    (b) Decision. Following an assessment of the facts, the agency head 
or designee may declare void and rescind contracts with respect to which 
a final conviction has been entered, and recover the amounts expended 
and the property transferred by the agency under the terms of the 
contracts involved.
    (c) Decision-making process. Agency procedures governing the voiding 
and rescinding decision-making process shall be as informal as is 
practicable, consistent with the principles of fundamental fairness. As 
a minimum, however, agencies shall provide the following:
    (1) A notice of the proposed action to declare void and rescind the 
contract shall be made in writing and sent by certified mail, return 
receipt requested.
    (2) A thirty calendar day period after receipt of the notice, for 
the contractor to submit pertinent information before any final decision 
is made.
    (3) Upon request made within the period for submission of pertinent 
information, an opportunity shall be afforded for a hearing at which 
witnesses may be presented, and any witness the agency presents may be 
confronted. However, no inquiry shall be made regarding the validity of 
a conviction.
    (4) If the agency head or designee decides to declare void and 
rescind the contracts involved, that official shall issue a written 
decision which--
    (i) States that determination;
    (ii) Reflects consideration of the fair value of any tangible 
benefits received and retained by the agency; and
    (iii) States the amount due, and the property to be returned, to the 
agency.
    (d) Notice of proposed action. The notice of the proposed action, as 
a minimum shall--
    (1) Advise that consideration is being given to declaring void and 
rescinding contracts awarded by the agency, and recovering the amounts 
expended and property transferred therefor, under the provisions of 18 
U.S.C. 218;
    (2) Specifically identify the contracts affected by the action;
    (3) Specifically identify the offense or final conviction on which 
the action is based;
    (4) State the amounts expended and property transferred under each 
of the contracts involved, and the money and the property demanded to be 
returned;
    (5) Identify any tangible benefits received and retained by the 
agency under the contract, and the value of those benefits, as 
calculated by the agency;
    (6) Advise that pertinent information may be submitted within 30 
calendar days after receipt of the notice, and that, if requested within 
that time, a hearing shall be held at which witnesses may be presented 
and any witness the agency presents may be confronted; and
    (7) Advise that action shall be taken only after the agency head or 
designee issues a final written decision on the proposed action.
    (e) Final agency decision. The final agency decision shall be based 
on the information available to the agency head or designee, including 
any pertinent information submitted or, if a hearing was held, presented 
at the hearing. If the agency decision declares void and rescinds the 
contract, the final decision shall specify the amounts due and property 
to be returned to the agency, and reflect consideration of the fair 
value of any tangible benefits received and retained by the agency. 
Notice of the decision shall be sent promptly by certified mail, return 
receipt requested. Rescission of contracts under the authority of the 
Act and demand for recovery of the

[[Page 57]]

amounts expended and property transferred therefor, is not a claim 
within the meaning of the Contract Disputes Act of 1978 (CDA), 41 U.S.C. 
601-613, or part 33. Therefore, the procedures required by the CDA and 
the FAR for the issuance of a final contracting officer decision are not 
applicable to final agency decisions under this subpart, and shall not 
be followed.

[51 FR 27116, July 29, 1986, as amended at 62 FR 232, Jan. 2, 1997]