NEGOTIATED CONTRACT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP66B00728R000300060005-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: November 16, 2016
• Document Release Date: May 22, 2000
• Sequence Number: 5
• Publication Date: September 25, 1964
• Content Type: CONT

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NEGOTIATED CONTRACT
,,,(Firm Fixed Price)
za.._
Chicago 24, Illlnoi
0522
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Contract No. GN-8651
AF33(657)-13731
Amount: See Schedule
Contract For: See Schedule
Performance Period:
See Schedule
Mail Invoices To:
is entered into by and between threpresentedabYs
This contract and the above-
of America, hereinafter called thethosecontract,
Officer executing incorporated in the
the Contracting oration,
named Contractor which is a Corp
e of Delaware, hereinafter called the Contractor u.rnish the
Stat
arties hereto agree that the ContraceT~ormaall the services
The p lies and p
attached Schedule, Appendix I and the General
facilities and deliver all supp a e and the
set forth in the together with this signature p g 8651. In
Provisions, which, rise this Contract No. Gand the General
accompanying certificate comp between this Schedule
the event of any inconsistency
Provisions,-the Schedule shall control.
he arties hereto have executed this Contract
WHEREOF, t p
IN WITNESS ~ 1964.
as of 25 Se tember
Signatures:
25X1A
E UNITED STATES OF AMERICA 25X1A
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CERTIFICATE
the Assistant Secretary
25X1A
as Contractor herein; that
25X1A
I ~ certify that I am
of the Corporation named
~- who
signed this contract on behalf of the Contractor was then
Vice- President of said Corporation; that said Contract
was duly signed for and in behalf of said Corporation by authority
of its governing body, and is within scope of its Corporate Powers.
25X1A
(Corporate Seal)
,`
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Contract No. GN-8651
AF33(657)-13731
PART I -
MA TERTAL AND SERVICES TO BE FURNISHED. 4
PART II -
DELIVERY SCHEDULE. 5
PART III -
INSPECTION AND ACCEPTANCE. 5
PART IV -
FUNDS ALLOTTED, CONSIDERATION AND PAYMENT. 6
PART V -
WAIVER OF REQUIREMENTS OF GENERAL PROVISIONS, 6
PART VI -
SPECIAL SECURITY RESTRICTIONS. 6
PART VII -
ALTERATIONS IN SCHEDULE. 7
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Contract GN-8651
AF33(657)-13731
SCHEDULE
PART I - MATERIAL AND SERVICES TO BE FURNISHED
Item 1
The Contractor will provide services and ~ aerials to
study, plan, analyze, design and evaluate a prototype infra-
red countermeasure device which can be used as a flyable
breadboard for initial testing capable of countering IR
homing missile. Said effort will be accomplished in accord- 25X1A
ance with Contractor's document entitled
Technical Memorandum" dated 12 August 19 ~ncorpo a e erein
by reference.
25X1A
The Contractor will provide services and materials to
develope a breadboard e ui ment which upon receipt of pulsed
signals from a will generate a jamming
program to degrade simulated radar performance. The effort and
results will be accomplished in accordance with the Contractor's
document entitled "Technical Memorandum dated 26
August 1964 and incorporated herein. by reference,
a. Letter Progress Reports in three (3} capies
as of the end of each month during the life of
the Contract.
b. A final report in three (3) copies contain-
ing complete details of the test program and
the results obtained therefrom,
c. A laboratory model of the which is 25X1A
capable of producing the modulations synthesized
in the analysis and experimental program.
d. A handbook of operating and maintenance
instructions for the delivered
25X1A
25X1A
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a. Letter Progress Reports in three (3) copies
as of tYie end of each month during the life of the
Contract,
b. A final report in three (3) copies containing
complete details of the development and evaluation.
program and the results obtained therefrom.
c. Engineering services to support 30 days of
actual simulation testing exercises at 25X1A
25X1A d. A breadboard model o
in operating condition t
on or before 12 October 1 .
e. Consultation services to help evaluate the data
obtained from the simulation program as required,
25X1A
25X1A
25X1A
f. A complete test plan for synthesizing and evalua-
tin~ the best mode of operation utilizing th 25X1A
Deliverable items will be delivered in accordance with
the schedules contained in the Phasing Chart and Milestones
schedule contained in the Contractor's documents entitled
"Special ethnical Memorandum" dated I2 August 1964 and
"Technical Memorandu dated 26 August 1964. It
is contemplated that all work shall be completed by 31 December
1964,
PART III - INSPECTION AND ACCEPTANCE
All studies, supplies and services to be furnished under
the Contract shall be shipped f.o.b, destination. in accordance
with shipping instructions as may be provided the Contractor
by the technical representative of the Contracting Officex.
Inspection and acceptance shall be made at destination.
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PART IV - FUNDS ALLOTTED, CONSIDERATION AND PAYMENT
For the ur oses of this Contract there has been allotted
the amount o which, in accordance with Clause
7 of the General Provisions, the Government will pay the
Contractor upon satisfactory completion. anal acceptance by the
Government of the studies, services and supplies delivered
hereunder, The Contractor shall submit evidence of satis-
factory completion with the invoice in order that payment may
be made. Payment will be made in one lump sum.
PART V - WAIVER OF REQUIREMENTS OF GENERAL PROVISIONS
Notwithstanding the requirements of any of the General
Provisions o:F this contract to the contrary, whensoever the
Contractor, in performance of the work under this contract,
shall find the requirements of any of the clauses of the General
Provisions are in conflict with security instructions issued
to the Contractor by the Contracting Officer or by his authorized
representative far security matters, the Contractor shall call
the attention of the Contracting Officer to such conflict and
the Contracting Officer or his duly authorized representative
for security matters shall (i) modify or rescind such security
requirements or (ii} the Contracting Officer shall issue to
the Contractor a waiver of compliance with the requirements
of the Genes~al Provisions conflicting with such security re-
quirements, Any waiver of compliance with the General Provis-
ions of this Contract issued by the Contracting Officer shall
be in writing, except that the approval by the Contracting
Officer of any subcontract issued hereunder by the Contractor
shall be deemed to constitute approval of waivex of any clause
of the General Provisions in conflict with the stipulations of
such subcontract.
The Contractor shall not reveal (i) the specific nature of
any details of the work being performed hereunder or (ii) any
information whatsoever with respect to the department of the
Government sponsoring this contract and the work thereunder
except as the Contractor is directed or permitted to reveal such
information by the Contracting Officer or by his duly authorized
representative for security matters, and notwithstanding any clause
or section of this contract to the contrary, the Contractor
shall not interpret any clause or section of this contract as
requiring or permitting divulgence of such information to any
person, public or private, or to any officer or department of the
Government without the express consent of the Contracting Officer
or his duly authorized representative for security matters.
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~-
.~.w._
The following alterations were made to this SCHEDULE
prior to execution. of this contract:
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Contract No. GN-8651
AF33(657)-13731
This is to certify that, to the best of my knowledge and belief;
(i) complete (pricing data) and (cost data) current as
of 25 Se tember I964.
ate
have been considered in preparing the Proposal
and submitted to the Contracting Officer or is re-
presentative:
ii) all significant changes in the above data which occurred
since the aforementioned date through 25 Se tember 1964
have been similarly a e
submitted; and no more recent significant change in such data
was known to the undersigned at the time of executing
this certificate; and
(iii) all of the data submitted are accurate.
25X1A
25 Septemk~er 1964 Firm
( a e o xecu ion.
Note that 18 U.S.C. 1001 prescribes criminal penalties for making
false representations to the Government. (NOVEMBER 1962)
o~l~.
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1
Definitions
1
2
Changes
1
3
Extras
1
4
Variation in Quantity
1
5
Inspection
1
6
Responsibilty for Supplies .
2
7
Payments
2
8
Assignment of Claims
2
9
Additional Bond Security .
3
10
Federal, State, and Local Taxes
3
11
Default .
4
12
Disputes
5
13
Soviet Controlled Areas
5
14
Work Hours Act of 1962-Overtime Compensation
5
15
Walsh-Healey Public Contracts Act
5
16
Nondiscrimination in Employment
6
17
Officials Not To Benefit
6
18
Covenant Against Contingent Fees
8
19
Termination for Convenience of the Government .
7
20
Authorization and Consent
9
2I
Notice and Assistance Regarding Patent and Copyright In-
fringement
9
22
Buy American Act
10
23
Filing of Patent Applications
10
24
Patent Rights tLicense)
10
25
Data
13
26
Data-Withholding of Payment
13
27
Military Security Requirements
14
28
Utilization of Small Business Concerns .
14
29
Examination of Records
14
30
Gratuities
14
31
Convict Labor
15
32
Material Inspection and Receiving Report
15
33
Subcontracts (Sources)
15
34
Subcontracts
15
35
Subcontractor Cost and Pricing Data
16
36
Subcontractor Cost and Pricing Data-Price Adjustments
16
37
Competition in Subcontracting
17
38
Utilization of Concerns in Labor Surplus Areas
17
39
Standards of Work
17
40
Ground and Flight Risk
17
. ,- ^} {")
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INDEX (Continued)
Clause No. Page No.
41 Government-Furnished Property .
20
42 Interest
22
43 Audit and Records .
22
44 Price Reduction for Defective Cost or Pricing Data .
24
45 Price Reduction for Defective Cost or Pricing Data-Price Ad-
j ustments .
24
46 Audit-Price Adjustments ,
24
47 Inspection and Audit .
25
48 Alterations in Contract
25
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1. DEFINITIONS (ASPR 7-103.1) (Feb. 1962)
As used throughout this contract, the following
terms shall have the meanings set forth below:
(a) The term "head of the agency" or "Secre-
tary" means the Secretary, the Under Secretary,
any Assistant Secretary, or any other head or as-
sistant head of the executive or military department
or other Federal agency; and the term "his duly
authorized representative" means any person or
persons or board (other than the Contracting Offi-
cer) authorized to act for the head of the agency
or the Secretary.
(b) The term "Contracting Officer" means the
person executing this contract on behalf of the
Government, and any other officer or civilian em-
ployee who is a properly designated Contracting
Officer; and the term includes, except as otherwise
provided in this contract, the authorized repre-
sentative of a Contracting Officer acting within
the limits of his authority.
(c) Except as otherwise provided in this con-
tract, the terzxi "subcontracts" includes purchase
orders under this contract.
2. CIiANGES (ASPR 7-103.2) (Jan. 1958)
The Contracting Officer may at any time, by a
written order, and without notice to the sureties,
make changes, within the general scope of this
contract, in any one or more of the following: (i)
Drawings, designs, or specifications, where the sup-
plies to be furnished are to be specially manufac-
tured for the Government in accordance therewith;
(ii) method of shipment or packing; and (iii) place
of delivery. If any such change causes an increase
or decrease in the cost of, or the time required for
the performance of any part of the work under
this contract, whether changed or not changed by
any such order, an equitable adjustmnt shall be
made in the contract price or delivery schedule, or
both, and the contract shall be modified in writing
accordingly. Any claim by the Contractor for ad-
justment under this clause must be asserted within
30 days from the date of receipt by the Contractor
of the notification of change: Provided, however,
That the Contracting Officer, if he decides that the
facts justify such action, may receive and act upon
any such claim asserted at any time prior to final
payment under this contract. Where the cost of
property made obsolete or excess as a result of a
change is included in the Contractor's claim for
adjustment, the Contracting Officer shall have the
right to prescribe the manner of disposition of such
property. Failure to agree to any adjustment shall
be a dispute concerning a question of fact within
the meaning of the clause of this contract entitled
"Disputes." However, nothing in this clause shall
excuse the Contractor from proceeding with the
contract as changed. [Rev. No. 28, 1/28/58; Rev.
No. 30, 3/17/58.]
3. EXTRAS (ASPR 7-103.3) (July 1949)
Except as otherwise provided in this contract, no
payment for extras shall be made unless such
extras and the price therefor have been authorized
in writing by the Contracting Officer.
4. VARIATION IN QUANTITY (ASPR 7-103.4)
(July 1949)
No variation in the quantity of any item called
for by this contract will be accepted unless such
variation has been caused by conditions of loading,
shipping, or packing, or allowances in manufactur-
ing processes, and then only to the extent, if any,
specified elsewhere in this contract.
5. INSPECTION (ASPR 7-103.5) (May 1958)
(a) All supplies (which term throughout this
clause includes without limitation raw materials,
components, intermediate assemblies, and end prod-
ucts) shall be subject to inspection and test by the
Government, to the extent practicable at all times
and places including the period of manufacture,
and in any event prior to acceptance. [Rev. No.
33, 5/14/58.7
(b) In case any supplies or lots of supplies are
defective in material or workmanship or otherwise
not in conformity with the requirements of this
contract, the Government shall have the right
either to reject them (with or without instructions
as to their disposition) or to require their correc-
tion. Supplies or lots of supplies which have been
rejected or required to be corrected shall be removed
or, if permitted or required by the Contracting Offi-
cer, corrected in place by and at the expense of
the Contractor promptly after notice, and shall not
thereafter be tendered for acceptance unless the
former rejection or requirement of correction is
disclosed. If the Contractor fails promptly to re-
move such supplies or lots of supplies which are
required to be removed, or promptly to replace or
correct such supplies or lots of supplies, the Gov-
ernment either (i) may by contract or otherwise
replace or correct such supplies and charge to the
Contractor the cost occasioned the Government
thereby, or (ii) may terminate this contract for
default as provided in the clause of this contract
entitled "Default." Unless the Contractor corrects
or replaces such supplies within the delivery sched-
ule, the Contracting Officer may require the delivery
of such supplies at a reduction in price which is
equitable under the circumstances. Failure to agree
to such reduction of price shall be a dispute con-
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cerning a question of fact within the meaning of
the clause of this contract entitled "Disputes."
[Rev. No. 28, 1/28/58.]
(c) .If any inspection or test is made by the Gov-
ernmexit on the premises of the Contractor or a
subcontractor, the Contractor without additional
charge shall provide all reasonable facilities and
assistance for the safety and convenience of the
Government inspectors in the performance of their
duties. If Government inspection or test is made
at a point other than the premises of the Con-
tractor or a subcontractor, it shall be at the ex-
pense of the Government except as otherwise pro-
vided in this contract: Provided, That in case of
rejection the Government shall not be liable for
any reduction in value of samples used in connec-
tion with such inspection or test. All inspections
and tests by the Government shall be performed
in such a manner as not to unduly delay the work.
The Government reserves the right to charge to the
Contractor any additional cost of Government in-
spection and test when supplies are not ready at
the time such inspection and test is requested by
the Contractor or when reinspection or retest is
necessitated by px?ior rejection. Acceptance or re-
jection of the supplies shall be made as promptly
as practicable after delivery, except as otherwise
provided in this contract; but failure to inspect and
accept or reject supplies shall neither relieve the
Contractor from responsibility for such supplies
as are not in accordance with the contract require-
ments nor impose liability on the Government
therefor. [Rev. No. 28, 1/28/58.]
(d) The inspection and test by the Government
of any supplies or lots thereof does not relieve the
Contractor from any responsibillity regarding de-
fects or other failures to meet the contract require-
ments which may be discovered prior to acceptance.
Except as otherwise provided in this contract, ac-
ceptance shall be conclusive except as regards latent
defects, fraud, or such gross mistakes as amount
to fraud.
(e) The Contractor shall provide and maintain
an inspection system acceptable to the Government
covering the supplies hereunder. Records of all in-
spection work by the Contractor shall be kept com-
plete and available to the Government during the
performance of this contract and for such longer
period as may be specified elsewhere in this con-
tract.
6. RESPONSIB'ILTY FOR SUPPLIES (ASPR 7-103.6)
(Jan. 1958)
Except as otherwise provided in this contract, (il
the Contractor shall be responsible for the supplies
covered by this contract until they are delivered at
the designated delivery point, regardless of the
point of inspection; (ii) after delivery to the Gov-
ernment at the designed point and prior to accept-
ance- by the Government or rejection and giving
notice thereof by the Government, the Government
shall be responsible for the loss or destruction of or
damage to the supplies only if such loss, destruc-
tion, or damage results from the negligence of
officers, agents, or employees of the Government
acting within the scope of their employment; and
(iii) the Contractor shall bear all risks as to re-
jected supplies after notice of rejection, except that
the Government shall be responsible for the loss,
or destruction of, or damage to the supplies only
if such loss, destruction or damage results from the
gross negligence of officers, agents, or employees of
the Government acting within the scope of their
employment. ;Rev. No. 28, 1/28i 58.1
7. PAYMENTS (ASPR 7-103.7) (Jan. 1958)
The Contractor shall be paid, upon the submis-
sion of proper invoices or voucher:, the prices stipu-
lated herein for supplies delivered and accepted,
less deductions, if any, as herein provided. Unless
otherwise specified, payment will be made on partial
deliveries accepted by the Government when the
amount due on such deliveries so warrants; or, when
requested by the Contractor, payment for accepted
partial deliveries shall be made whenever such pay-
ment would equal or exceed either $1,000 or 50 per-
cent of the total amount of this contract. [Rev.
No. 30, 3/17/58.]
8. ASSIGNMENT OF CLAIMS (ASPR 7-103.8 mod.)
(Feb. 1962)
(a) Pursuant to the provisions of the Assignment
of Claims Act of 1940, as amended (31 U. S. Code
203, 41 U. S. Code 15) if this contract provides for
payments aggregating $1,000 or more, claims for
monies due or to become due the Contractor from
tkxe Government under this contract may be as-
signed to a bank, trust company, or other financing
institution, including any Federal lending agency,
atxd may thereafter be further assigned and re-
assigned to any such institution. Any such assign-
ment or reassignment shall cover all amounts pay-
able under this contract and not already paid, and
shall not be made to more than one party, except
that any such assignment or reassignment may be
made to one party as agent or trustee for two or
more parties participating in such financing.
Unless otherwise provided in this contract, pay-
ments to an assignee of any monies due or to be-
come due under this contract shall not, to the
^xtent provided in said Act, as amended, be subject
to reduction or setoff.
(b) In no event shall copies of this contract or
of any plans, specifications, or other similar docu-
ments relating to work under this contract, if
marked "Top Secret," "Secret," or "Confidential,"
be furnished to any assignee of any claim arising
under this contract or to any other person not
entitled to receive the same: however a copy of any
part or ail of this contract so marked may be fur-
nished, or any information contained therein may
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be disclosed, to such assignee upon the prior written
authorization of the Contracting Officer.[Rev.
No. 28, 1/28/58.]
(c) The Contractor shall obtain the written au-
thorization of the Contracting Officer prior to the
assignment of any rights under this contract.
9. ADDITIONAL BOND SECURITY (ASPR 7-103.9)
(July 1949)
If any surety upon any bond furnished in con-
nection with this contract becomes unacceptable to
the Government, or if any such surety fails to fur-
nish reports as to his financial condition from time
to time as requested by the Government, the Con-
tractor shall promptly furnish such additional secu-
rity as may be required from time to time to pro-
tect the interests of the Government and of persons
supplying labor. or materials in the prosecution of
the work contemplated by this contract.
10. FEDERAL, STATE, AND LOCAL TAXES (ASPR
11-401-2) (July 1960)
(a) As used throughout this clause, the term
"contract date" means the date of this contract.
As to additional supplies or services procured by
modification to this contract, the term "contract
date" means the date of such modification.
(b) Except as may be otherwise provided in this
contract, the contract price includes, to the extent
allocable to this contract, all Federal, State, and
local taxes which, on the contract date:
(i) by Constitution, statute, or ordinance, are ap-
plicable to this contract, or to the transactions
covered by this contract or to property or interests
in property, or
(ii) pursuant to written ruling or regulation, the
authority charged with administering any such tax
is assessing or applying to, and is not granting or
honoring an exemption for, a contractor under this
kind of contract, or the transactions covered by this
contract, or property or interests in property.
(c) Except as may be otherwise provided in this
contract, duties in effect on the contract date are
included in the contract price to the extent allo-
cable to this cantract. [Rev. No. 1, 7/22/60.]
(d) (1) If the contractor is required to pay or
bear the burden-
(i) of any tax or duty which either was not to
be included in the contract price pursuant to the
requirements o:f paragraphs (b) and (c), or of a tax
or duty specifically excluded from the contract price
by a provision of this contract; or
(ii) of an increase in rate of any tax or duty,
whether or not such tax or duty was excluded from
the contract price; or
(iii) of any interest or penalty on any tax or duty
referred to in (i) or (ii) above; the contract price
shall be increased by the amount of such tax, duty,
interest, or penalty allocable to this contract; pro-
vided, that the Contractor warrants in writing that
no amount of such tax, duty, or rate increase was
included in the contract price as a contingency
reserve or otherwise; and provided further, that
liability for such tax, duty, rate increase, interest,
or penalty was not incurred through the fault or
negligence of the Contractor or his failure to fol-
low instructions of the Contracting Officer. [Rev.
No. 1, 7/22/60.]
(2) If the Contractor is not required to pay or
bear the burden, or obtains a refund or drawback,
in whole or in part, of any tax, duty, interest, or
penalty which:
(i) was to be included in the contract price pur-
suant to the requirements of paragraphs (b) and
(c) ;
(ii) was included in the contract price; or
(iii) was the basis of an increase in the contract
price; the contract price shall be decreased by the
amount of such relief, refund, or drawback allocable
to this contract, or the allocable amount of such
relief, refund, or drawback shall be paid to the
Government, as directed by the Contracting Offi-
cer. The contract price also shall be similarly de-
creased if the Contractor, through his fault or neg-
ligence or his failure to follow insti?uctions of the
Contracting Officer, is required to pay or bear the
burden, does not obtain a refund or drawback of
any such tax, duty, interest, or penalty. Interest
paid or credited to the Contractor incident to a
refund of taxes shall inure to the benefit of the
Government to the extent that such interest was
earned after the Contractor was paid or reimbursed
by the Government for such taxes.
(3) Invoices or vouchers covering any adjustment
of the contract price pursuant to this paragraph
(d) shall set forth the amount thereof as a separate
item and shall identify the particular tax or duty
involved.
(4) This paragraph (d) shall not be applicable to
social security taxes; income and franchise taxes,
other than those levied on or measured by (i) sales
or receipts from sales, or (ii) the Contractor's pos-
session of, interest in, or use of property, title to
which is in the Government; excess profits taxes;
capital stock taxes; unemployment compensation
taxes; or property taxes, other than such property
taxes, allocable to this contract, as are assessed
either on completed supplies covered by this con-
tract, or on the Contractor's possession of, interest
in, or use of property, title to which is in the Gov-
ernment.
(5) No adjustment of less than $100 is required
to be made in the contract price pursuant to this
paragraph (d).
(e) Unless there does not exist any reasonable
basis to sustain an exemption, the Government
upon request of the Contractor, without further
liability, agrees, except as otherwise provided in
this contract, to furnish evidence appropriate to
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establish exemption from any tax which the Con-
tractor warrants in writing was excluded from the
contract price. In addition, the Contracting Officer
may furnish evidence appropriate to establish ex-
emption from any tax that may, pursuant to this
clause, give rise to either an increase or decrease
in the contract price. Except as otherwise provided
in this contract, evidence appropriate to establish
exemption from duties will be furnished only at
the discretion of the Contracting Officer.
(f) (1) The Contractor shall promptly notify the
Contracting Officer of all matters pertaining to
Federal, State, and local taxes, and duties, that
reasonably may be expected to result in either an
increase or decrease in the contract price.
(2) Whenever an increase or decrease in the con-
tract price may be required under this clause, the
Contractor shall take action as directed by the
Contracting Officer, and the contract price shall
be equitably adjusted to cover the costs of such
action, including any interest, penalty, and reason-
able attorneys' fees.
11. DEFAULT (ASPR 7-103.11-ASPR 8-707 )
(July 1962)
(a) The Government may, subject to the pro-
visions of paragraph (c) below, by written notice
of default to the Contractor, terminate the whole
or any part of this contract in any one of the
following circumstances:
(i) if the Contractor fails to make delivery of
the supplies or to perform the services within the
time specified herein or any extension thereof; or
(ii) if the Contractor fails to perform any of
the other provisions of this contract, or so fails
to make progress as to endanger performance of
this contract in accordance with its terms, and in
either of these two circumstances does not cure
such :failure within a period of 10 days (or such
longer period as the Contracting Officer may au-
thorize in writing) after receipt of notice from the
Contracting Officer specifying such failure.
(b) In the event the Government terminates this
contract in whole or in part as provided in para-
graph (a) of this clause, the Government may pro-
cure, upon such terms and in such manner as the
Contracting Officer may deem appropriate, supplies
or services similar to those so terminated, and the
Contractor shall be liable to the Government for
any excess costs for such similar supplies or serv-
ices: Provided, That the Contractor shall continue
the performance of this contract to the extent not
Lermixiated under the provisions of this clause.
(c) Except with respect to defaults of subcon-
tractors, the Contractor shall not be liable for any
excess costs if the failure to perform the contract
arises out of causes beyond the control and with-
out the fault or negligence of the Contractor. Such
causes may include, but are not restricted to, acts
of God or of the public enemy, acts of the Govern-
ment in either its sovereign or contractual capacity,
fires, floods, epidemics, quarantine restrictions,
strikes, freight embargoes, and unusually severe
weather; but iri every case the failure to perform
must be beyond the control and without the fault
or negligence of the Contractor. If the failure to
perform is caused by the default of a subcontractor,
and if such default arises out of causes beyond the
control of both the Contractor and subcontractor,
and without the fault or negligence of either of
them, the Contractor shall not be liable for any
excess costs for failure to perform, unless the sup-
plies or services to be furnished by the subcon-
tractor were obtainable from other sources in suffi-
cient time to permit the Contractor to meet the re-
quired delivery schedule.
(d) If this contract is terminated as provided in
paragraph (a) of this clause, the Government, in
addition to any other rights provided in this clause,
may require the Contractor to transfer title and de-
liver to the Government, in the manner and to
Lhe extent directed by the Contracting Officer, (i)
any completed supplies, and (ii) such partially
completed supplies and materials, parts, tools, dies,
jigs, fixtures, plans, drawings, information, and
contract rights (hereinafter called "manufacturing
materials") as the Contractor has specifically pro-
duced or specifically acquired for the performance
of such part of this contract as has been termi-
nated; and the Contractor shall, upon direction of
the Contracting Officer, protect and preserve prop-
erty in possession of the Contractor in which the
Government has an interest. Payment for com-
pleted supplies delivered to and accepted by the
Government shall be at the contract price. Pay-
ment for manufacturing materials delivered to and
accepted by the Government and for the protection
and preservation of property shall be in an amount
agreed upon by the Contractor and the Contracting
Ofl'icer; failure to agree to such amount shall be
a dispute concerning a question of fact within the
meaning of the clause of this contract entitled "Dis-
putes." The Government may withhold from
amounts otherwise due the Contractor for such
completed supplies or manufacturing materials
such sum as the Contracting Officer determines to
be necessary to protect the Government against
loss because of outstanding liens or claims of for-
mer lien holders.
(e) If, after r;otice of termination of this contract
under the provisions of this clause, it is determined
for any reason that the Contractor was not in de-
fault under the provisions of this clause, or that the
default was excusable under the provisions of this
clause, the rights and obligations of the parties
shall, if the contract contains a clause providing
for termination for convenience of the Government,
be the same as if the notice of termination had
been issued pursuant to such clause.
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If, after notice of termination of this contract
under the provisions of this clause, it is determined
for any reason that the Contractor was not in de-
fault under the provisions of this clause, and if
this contract does not contain a clause providing
for termination for convenience of the Govern-
ment, the contract shall be equitably adjusted to
compensate for such termination and the contract
modified accordingly; failure to agree to any such
adjustment shall be a dispute concerning a ques-
tion of fact within the meaning of the clause of
this contract entitled "Disputes." [Rev. No. 10,
7/30/62.]
(f) The rights and remedies of the Government
provided in this clause shall not be exclusive and
are in addition to any other rights and remedies
provided by law or under this contract. [Rev. No.
36, 9/5/58].
12. DISPUTES (ASPR 7-103.12) (Jan. 1958)
(a) Except as otherwise provided in this contract,
any dispute concerning a question of fact arising
under this contract which is not disposed of by
agreement shall be decided by the Contracting Offi-
cer, who shall reduce his decision to writing and
mail or otherwise furnish a copy thereof to the
Contractor. The decision of the Contracting Offi-
cer shall be final and conclusive unless, within 30
days from the date of receipt of such copy, the
Contractor mails or otherwise furnishes to the
Contracting Officer a written appeal addressed to
the Secretary. The decision of the Secretary or his
duly authorized representative for the determina-
tion of such appeals shall be final and conclusive
unless determined by a court of competent juris-
diction to have been fraudulent, or capricious, or
arbitrary, or so grossly erroneous as necessarily to
imply bad faith, or not supported by substantial
evidence. In connection with any appeal proceed-
ing under this clause, the Contractor shall be af-
forded an opportunity to be heard and to offer
evidence in support of its appeal. Pending final
decision of a dispute hereunder, the Contractor
shall proceed diligently with the performance of
the contract and in accordance with the Contract-
ing Officer's decision.
(b) This "Disputes" clause does not preclude con-
sideration of law questions in connection with de-
cisions provided for in paragraph (a) above: Pro-
vided, That nothing in this contract shall be con-
strued as making final the decision of any ad-
ministrative official, representative, or board on
a question of law. [Rev. No. 28, 1/28/58.]
contract, or transported from or through Hong
Kong or Macao, without the written approval of
the Contracting Officer.
(b) The contractor agrees to insert the provisions
of this clause including this subparagraph (b) and
the Soviet-controlled areas listed in the schedule,
in all subcontracts hereunder.
14. WORK HOURS ACT OF 1962 -OVERTIME
COMPENSATION (ASPR 12-303.1) (Oct. 1962)
This contract, to the extent that it is of a char-
acter specified in the Work Hours Act of 1962 (Pub-
lic Law 87-581, 76 Stat. 357-360) and is not covered
by the Walsh-Healey Public Contracts Act (41
U.S.C. 35-45), is subject to the following provisions
and to all other provisions and exceptions of said
Work Hours Act of 1962.
(a) No contractor or subcontractor contracting
for any part of the contract work shall require or
permit any laborer or mechanic to be employed on
such work in excess of eight hours in any calendar
day or in excess of forty hours in any workweek un-
less such laborer or mechanic receives compensation
at a rate not less than one and one-half times his
basic rate of pay for all hours worked in excess of
eight hours in any calendar day or in excess of forty
hours in such workweek, whichever is the greater
number of overtime hours.
(b) In the event of any violation of the pro-
visions of paragraph (a), the contractor and any
subcontractor responsible for such violation shall
be liable to any affected employee for his unpaid
wages. In addition, such contractor or subcon-
tractor shall be liable to the United States for
liquidated damages. Such liquidated damages shall
be computed, with respect to each individual laborer
or mechanic employed in violation of the provisions
of paragraph (a), in the sum of $10 for each
calendar day on which such employee was required
or permitted to work in excess of eight hours or in
excess of forty hours in a workweek without pay-
ment of the required overtime wages.
(c) The Contracting Officer may withhold, or
cause to be withheld, from moneys payable on ac-
count of work performed by the contractor or sub-
contractor, the full amount of wages required by
this contract and such sums as may administratively
be determined to be necessary to satisfy any li-
abilities of such contractor or subcontractor for
liquidated damages as provided in paragraph (b).
[Rev. No. 13, 12/31/62.7
15. WALSH-HEALEY PUBLIC CONTRACTS ACT
(ASPR 12-605 mod.) (Jan. 1958)
13. SOVIET-CONTROLLED AREAS (ASPR 6-403)
(April 1962)
(a) The Contractor shall not acquire for use
in the performance of this contract any supplies
or services originating from sources within Soviet-
controlled areas, as listed in the schedule of this
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If this contract is for the manufacture or fur-
nishing of materials, supplies, articles or equipment
in an amount which exceeds or may exceed $10,000
and is otherwise subject to the Walsh-Healey Pub-
lic Contracts Act, as amended (41 U. S. Code 35-45),
there are hereby incorporated by reference all rep-
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resentations and stipulations required by said Act
and regulations issued thereunder by the Secretary
of Labor, such representations and stipulations
being subject to all applicable rulings and inter-
pretations of the Secretary of Labor which are now
or may hereafter be in effect, except that the Con-
tractor shall not be required to include this clause
in subcontracts issued hereunder when the inclusion
of this clause in a subcontract would jeopardize or
conflict with the security considerations established
in connection with this contract. [Rev. No. 11,
9/30/62.7
16. NONDISCRIMINATION IN EMPLOYMENT
(ASPR 12-802) (July 1962)
In connection with the performance of work un-
der this contract, the contractor agrees as follows:
(a) The contractor will not discriminate against
any employee or applicant for employment because
of race, creed, color, or national origin. The Con-
tractor will take affirmative action to ensure that
applicants are employed, and that employees are
treated during employment, without regard to their
race, creed, color or national origin. Such action
shall include, but not be limited to, the following:
Employment, upgrading, demotion or transfer; re-
cruitment or recruitment advertising; layoff or
termixiation; rates of pay or other forms of com-
pensation; and selection for training, including ap-
prenticeship. The contractor agrees to post in
conspicuous places, available to employees and ap-
plicants for employment, notices to be provided by
the contracting officer setting forth the provisions
of this nondiscrimination clause.
(b) The contractor will, in all solicitations or ad-
vertisements for employees placed by or on behalf
of the contractor, state that ail qualified applicants
will receive consideration for employment without
regard to race, creed, color, or national origin.
(c) The contractor will send to each labor union
or representative of workers with which he has a
collective bargaining agreement or other contract
or understanding, a notice, to be provided by the
agency contracting officer, advising the said labor
union or workers' representative of the contractor's
commitments under this section, and shall post
copies of the notice in conspicuous places available
to employees and applicants for employment.
(d) The contractor will comply with all provi-
sions of Executive Order No. 10925 of March 6, 1961,
and of the rules, regulations, and relevant orders
of The President's Committee on Equal Employ-
ment Opportunity in effect as of the date of this
contract.
(e) The contractor will furnish all information
and reports required by Executive Order No. 10925
of March 6, 1961, and by the rules, regulations, and
orders of the said Committee or pursuant thereto,
and will permit access to his books, records, and
accounts by the contracting agency and the Com-
mittee for purposes of investigation to ascertain
compliance-with such rules, regulations, and orders.
(f) In the event of the contractor's non-com-
pliance with the nondiscrimination clauses of this
contract or with any of the said rules, regulations,
or orders, this .contract may be cancelled in whole
or in part and the contractor may be declared
ineligible for further government contracts in ac-
cordance with procedures authorized in Executive
Order No. 10925 of March 6, 1961, and such other
sanctions may be imposed and remedies invoked
as provided in the said Executive Order or by rule,
regulation, or order of The President's Committee
on Equal Employment Opportunity, or as otherwise
provided by law.
(g) The contractor will include the provisions of
the foregoing paragraphs (a) through (f) in every
subcontract or purchase order unless exempted by
rules, regulations, or orders of The President's Com-
mittee on Equal Employment Opportunity issued
pursuant to Section 303 of Executive Order No.
10925 of March 6, 1961, so that such provisions will
be binding upon each subcontractor or vendor. The
contractor will take such action with respect to any
subcontractor or purchase order as the contract-
ing agency may direct as a means of enforcing such
provisions, including sanctions for noncompliance:
Provided however that in the event the contractor
becomes involved in, or is threatened with, litiga-
tion with a subcontractor or vendor as a result of
such direction by the contracting agency, the con-
tractor may request the United States to enter into
such litigation to protect the interests of the United
States.
17. OFFICIALS NOT TO BENEFIT (ASPR 7-103.19)
(July 1949)
No member of or delegate to Congress or resident
commissioner, shall be admitted to any share or
part of this contract, or to any benefit that may
arise therefrom; but this provision shall not be
construed to extend to this contract if made with
a corporation for its general benefit.
18. COVENANT AGAINST CONTINGENT FEES
(ASPR 7-103.20) (Jan. 1958)
The Contractor warrants that no person or sell-
ing agency has been employed or retained to solicit
or secure this contract-upon an agreement or under-
standing 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 breach or violation of this
warranty the Government shall have the right
to annul this contract without liability or in its
discretion to deduct from the contract price or con-
sideration, or otherwise recover, the full amount of
such commission, percentage, brokerage, or con-
tingent fee.
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19. TERMINATION FOR CONVENIENCE OF THE
GOVERNMENT (ASPR 8-701) (Jan. 1961)
(a) The performance of work under this con-
tract may be terminated by the Government in ac-
cordance with this clause in whole, or from time to
time in part, whenever the Contracting Officer
shall determine that such termination is in the
best interests of the Government. Any such ter-
mination shall be effected by delivery to the Con-
tractor of a Notice of Termination specifying the
extent to which performance of work under the
contract is terminated, and the date upon which
such termination becomes effective.
(b) After receipt of a Notice of Termination, and
except as otherwise directed by the Contracting
Oil3cer, the Contractor shall:
(i) stop work under the contract on the date
and to the extent specified in the Notice of Termi-
nation;
(ii) place no further orders or subcontracts for
materials, services or facilities, except as may be
necessary for completion of such portion of the
work under the contract as is not terminated;
(iii) terminate all orders and subcontracts to
the extent that they relate to the performance of
work terminated by the Notice of Termination;
(iv) assign to the Government, in the manner,
at the times, and to the extent directed by the
Contracting Oificer, all of the right, title, and in-
terest of the Contractor under the orders and sub-
contracts sa terminated, in which case the Gov-
ernment shall have the right in its discretion, to
settle or pay any or all claims arising out of the
termination of such orders and subcontracts;
(v) settle all outstanding liabilities and all claims
arising out of such termination of orders and sub-
contracts, with the approval or ratification of the
Contracting Officer, to the extent he may require,
which approval or ratification shall be final for all
the purposes of this clause;
(vi) transfer title and deliver to the Govern-
ment, in the manner, at the times, and to the ex-
tent, if any, directed by the Contracting Officer,
(A) the fabricated or unfabricated parts, wark in
process, completed work, supplies, and other ma-
terial produced as a part of, or acquired in connec-
tion with the performance of, the work terminated
by the Notice of Termination, and (B) the com-
pleted or partially completed plans, drawings, in-
formation, and other property which, if the con-
tract had been completed, would have been required
to be furnished to the Government;
(vii) use its best efforts to sell, in the manner,
at the times, t;o the extent, and at the price or
prices directed or authorized by the Contracting
Officer, any property of the types referred to in
(vi) above; provided, however, that the Contractor
(A) shall not be required to extend credit to any
purchaser, and (B) may acquire any such property
under the conditions prescribed by and at a price
or prices approved by the Contracting Officer; and
provided further that the proceeds of any such
transfer or disposition shall be applied in reduction
of any payments to be made by the Government to
the Contractor under this contract or shall other-
wise be credited to the price or cost of the work
covered by this contract or paid in such other
manner as the Contracting Officer may direct;
(viii) complete performance of such part of the
work as shall not have been terminated by the
Notice of Termination; and
(ix) take such action as may be necessary, or as
the Contracting Officer may direct, for the protec-
tion and preservation of the property related to
this contract which is in the possession of the Con-
tractor and in which the Government has or may
acquire an interest.
At any time after expiration of the plant clearance
period, as defined in Section VIII, Armed Services
Procurement Regulation, as it may be amended
from time to time, the Contractor may submit to
the Contracting Officer a list, certified as to quan-
tity and quality, of any or all items of termination
inventory not previously disposed of, exclusive of
items the disposition of which has been directed or
authorized by the Contracting Officer, and may re-
quest the Government to remove such items or
enter into a storage agreement covering them. Not
later than fifteen (15) days thereafter, the Gov-
ernment will accept title to such items and remove
them or enter into a storage agreement covering the
same; provided that the list submitted shall be sub-
ject to verification by the Contracting Officer upon
removal of the items, or if the items are stored,
within forty-five (45) days from the date of sub-
mission of the list, and any necessary adjustment
to correct the list as submitted shall be made prior
to final settlement.
(c) After receipt of a Notice of Termination, the
Contractor shall submit to the Contracting Officer
its termination claim, in the form and with certi-
fication prescribed by the Contracting Oificer. Such
claim shall be submitted promptly but in no event
later than one year from the effective date of ter-
mination, unless one or more extensions in writing
are granted by the Contracting Officer, upon re-
quest of the Contractor made in writing within such
one year period or authorized extension thereof.
However, if the Contracting Officer determines that
the facts justify such action, he may receive and act
upon any such termination claim at anytime after
such one year period or any extension thereof.
Upon failure of the Contractor to submit its ter-
mination claim within the time allowed, the Con-
tracting Officer may, subject to any Settlement
Review Board approvals required by Section VIII
of the Armed Services Procurement Regulation in
effect as of the date of execution of this contract,
determine, on the basis of information available to
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him, the amount, if any, due to the Contractor by
reason of the termination and shall thereupon pay
to the Contractor the amount so determined.
(d) Subject to the provisions of paragraph (c) ,
and subject to any Settlement Review Board ap-
provals required by Section VIII of the Armed Serv-
ices Procurement Regulation in effect as of the date
of execution of this contract, the Contractor and
the Contracting Officer may agree upon the whole
or any part of the amount or amounts to be paid
to the Contractor by reason of the total or partial
termination of work pursuant to this clause, which
amount or amounts may include a reasonable al-
lowance for profit on work done; provided that such
agreed amount or amounts, exclusive of settlement
costs, shall not exceed the total contract price as
reduced by the amount of payments otherwise
made and as further reduced by the contract price
of work not terminated. The contract shall be
amended accordingly, and the Contractor shall be
paid 'the agreed amount. Nothing in paragraph
(e) of this clause, prescribing the amount to be paid
to the Contractor in the event of failure of the Con-
tractor and the Contracting Officer to agree upon
the whole amount to be paid to the Contractor by
reason of the termination of work pursuant to this
clause, shall be deemed to limit, restrict, or other-
wise determine or affect the amount or amounts
which. may be agreed upon to be paid to the Con-
tractor pursuant to this paragraph (d) .
(e) In the event of the failure of the Contractor
and the Contracting Officer to agree as provided in
paragraph (d) upon the whole amount to be paid
to the Contractor by reason of the termination of
work pursuant to this clause, the Contracting Officer
shall, subject to any Settlement Review Board ap-
provals required by Section VIII of the Armed Serv-
ices Procurement Regulation in effect as of the date
of execution of this contract, determine, on the
basis of information available to him, the amount,
if any, due to the Contractor by reason of the ter-
mination and shall pay to the Contractor the
amounts determined as follows:
(i) for completed supplies accepted by the Gov-
ernment (or sold or acquired as provided in para-
graph (b) (vii) above) and not theretofore paid
for, a sum equivalent to the aggregate price for
such supplies computed in accordance with the
price or prices specified in the contract, appro-
priately adjusted for any saving of freight or other
charges;
(ii) the total of -
(A) the costs incurred in the performance of the
work terminated, including initial costs and pre-
paratory expense allocable thereto, but exclusive of
any costs attributable to supplies paid or to be paid
for under paragraph (e) (i) hereof;
(B) the cost of settling and paying claims arising
out of the termination of work under subcontracts
or orders, as provided in paragraph (b) (v) above,
which are properly chargeable to the terminated
portion of the contract (exclusive of amounts paid
or payable on account of supplies or materials
delivered or services furnished by subcontractors or
vendors prior to the effective date of the Notice of
"Termination, which amounts shall be included in
the costs payable under (A) above; and
(C) a sum, as a profit, equal to 2 percent of that
part of the amount determined under (A) above
which represents the cost of articles and materials
not processed by the Contractor, plus a sum equal
to 8 percent of the remainder of such amount, but
the aggregate of such sums shall not exceed 6 per-
cent of the whole of the amount determined under
(A) above; provided, however, that if it appears
that the Contractor would have sustained a loss
on the entire contract had it been completed, no
profit shall be included or allowed under this sub-
division (C) and an appropriate adjustment shall
be made reducing the amount of the settlement to
reflect the indicated rate of loss; and
(iii) the reasonable costs of settlement, including
accounting, legal, clerical, and other expenses rea-
sonably necessary for the preparation of settlement
claims and supporting data with respect to the ter-
minated portion of the contract and for the ter-
mination and settlement of subcontracts there-
under, together withreasonable storage, transporta-
tion, and other costs incurred in connection with
the protection or disposition of property allocable to
this contract. The total sum to be paid to the Con-
tractor under (i) and (ii) of this paragraph (e)
shall not exceed the total contract price as reduced
by the amount of payments otherwise made and as
further reduced by the contract price of work not
terminated. Except for normal spoilage, and ex-
cept to the extent that the Government shall have
otherwise expressly assumed the risk of loss, there
shall be excluded from the amounts payable to the
Contractor as provided in (e) (i) and (ii) (A) above,
the fair value, as determined by the Contracting
Officer, of property which is destroyed, lost, stolen,
or damaged so as to become undeliverable to the
Government, or to a buyer pursuant to paragraph
(b) (vii) .
(f) Any determination of costs under paragraph
(c) or (e) hereof shall be governed by the principles
for consideration of costs set forth in Section XV,
Part 2, of the Armed Services Procurement Regula-
tion, as in effect on the date of this contract.
(g) The Contractor shall have the right of ap-
peal, under the clause of this contract entitled
"Disputes," from any determination made by the
Contracting Officer under paragraphs (c) or (e)
above, except That if the Contractor has failed to
submit his claim within the time provided in para-
graph (c) above and has failed to request extension
of such time, he shall have no such right of appeal.
In any case where the Contracting Officer has made
a determination of the amount due under para-
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graph (c) or (e) above, the Government shall pay
to the Contractor the following: (i) if there is no
right of appeal hereunder or if no timely appeal has
been taken, the amount so determined by the Con-
tracting Officer, or (ii) if an appeal has been taken,
the amount finally determined on such appeal.
(h) In arriving at the amount due the Contrac-
tor under this clause there shall be deducted (i)
all unliquidated advance or other payments on ac-
count theretofore made to the Contractor, applicable
to the terminated portion of this contract, (ii) any
claim which the Government may have against the
Contractor in connection with this contract, and
(iii) the agreed price for, or the proceeds of sale
of, any materials, supplies, or other things ac-
quired by the Contractor or sold, pursuant to the
provisions of this clause, and not otherwise re-
covered by or credited to the Government.
(i) If the termination hereunder be partial, prior
to the settlement of the terminated portion of this
contract, the Contractor may file with the Con-
tracting Officer a request in writing for an equitable
adjustment of the price or prices specified in the
contract relating to the continued portion of the
contract (the portion not terminated by the Notice
of Termination), and such equitable adjustment as
may be agreed upon shall be made in such price
or prices.
(j) The Government may from time to time,
under such terms and conditions as it may pre-
scribe, make partial payments and payments on ac-
count against costs incurred by the Contractor in
connection with the terminated portion of this con-
tract whenever in the opinion of the Contracting
Officer the aggregate of such payments shall be
within the amount to which the Contractor will be
entitled hereunder. If the total of such payments
is in excess of the amount finally agreed or deter-
mined to be due under this clause, such excess
shall be payable by the Contractor to the Govern-
ment upon demand, together with interest com-
puted at the rate of 6 percent per annum, for the
period from the date such excess payment is re-
ceived by the Contractor to the date on which such
excess is repaid to the Government; provided, how-
ever, that no interest shall be charged with respect
to any such excess payment attributable to a re-
duction in the Contractor's claim by reason of re-
tention or other disposition of termination inven-
tory until ten days after the date of such retention
or disposition, or such later date as determined by
the Contracting Officer by reason of the circum-
stances.
(k) Unless otherwise provided for in this con-
tract, or by applicable statute, the Contractor, from
the effective date of termination and for a period
of three years after final settlement under this con-
tract, shall preserve and make available to the Gov-
ernment at all reasonable times at the Office of the
Contractor but without direct charge to the Gov-
ernment, all his books, records, documents, and
other evidence bearing on the costs and expenses
of the Contractor under this contract and relating
to the work terminated hereunder, or, to the ex-
tent approved by the Contracting Officer, photo-
graphs, microphotographs, or other authentic re-
productions thereof. [Rev. No. 49, 10/1/59.]
20. AUTHORIZATION AND CONSENT
(ASPR 9-102.1) (Jan. 1961)
The Government hereby gives its authorization
and consent (without prejudice to its rights of
indemnification, if such rights are provided for in
this contract) for all use and manufacture, in the
performance of this contract or any part hereof or
any amendment hereto or any subcontract here-
under (including any lower-tier subcontract) , of
any invention described in and covered by a patent
of the United States (i) embodied in the structure
or composition of any article the delivery of which
is accepted by the Government under this contract,
or (ii) utilized in the machinery, tools, or methods
the use of which necessarily results from compliance
by the Contractor or the using subcontractor with
(a) specifications or written provisions now or here-
after forming a part of this contract, or (b) specific
written instructions given by the Contracting Officer
directing the manner of performance. The Con-
tractor's entire liability to the Government for in-
fringement of a patent of the United States shall
be determined solely by the provisions of the in-
demnity clause if any, included in the contract and
the Government assumes liability for all other in-
fringement to the extent of the authorization and
consent hereinabove granted. [Rev. No. 28, 1/28/58;
Rev. No. 3, 1/31/61.]
21. NOTICE AND ASSISTANCE REGARDING
PATENT AND COPYRIGHT INFRINGEMENT
(ASPR 9-104) (Feb. 1962)
The provisions of this clause shall be applicable
only if the amount of this contract exceeds $10,000.
(a) The Contractor shall report to the Contract-
ing Officer, promptly and in reasonable written de-
tail, each notice or claim of patent infringement
based on the performance of this contract of which
the Contractor has knowledge.
(b) In the event of any suit against the Govern-
ment, or any claim against the Government made
before suit has been instituted, on account of any
alleged patent or copyright infringement arising
out of the performance of this contract or out of
the use of any supplies furnished or work or serv-
ices performed hereunder, the Contractor shall fur-
nish to the Government, upon request, all evidence
and information in possession of the Contractor
pertaining to such suit or claim. Such evidence
and information shall be furnished at the expense
of the Government except in those cases in which
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the Contractor has agreed to indemnify the Gov-
ernment against the claim being asserted. [Rev.
No. 35; 7/15/58; Rev. No. 7, 2/15/62.]
22. BUY AMERICAN ACT (ASPR fr104.5)
(July 1960)
(a) In acquiring end products, the Buy American
Act (41 U. S. Code 10 a-d) provides that the Gov-
ernment give preference to domestic source end
products. For the purpose of this clause:
(i) "components" means those articles, materials,
and supplies, which are directly incorporated in the
end products;
(ii) "end products" means those articles, ma-
terials, and supplies, which are to be acquired under
this contract for public use; and
(iii) a "domestic source end product" means (A)
an unmanufactured end product which has been
mined or produced in the United States and (B)
an end product manufactured in the United States
if the cost of the components thereof which are
mined, produced, or manufactured in the United
States or Canada exceeds 50 percent of the cost
of all. its components. For the purposes of this
(a) (iii) (B), components of foreign origin of the
same type or kind as the products referred to in
(b) (ii) or (iii) of this clause shall be treated as
components mined, produced, or manufactured in
the United States.
(b) The Contractor agrees that there will be de-
livered under this contract only domestic source
end products, except end products:
(i) which are for use outside the United States;
(ii) which the Government determines are not
mined, produced, or manufactured in the United
States in sufficient and reasonably available com-
mercial quantities and of a satisfactory quality;
(iii) as to which the Secretary determines the
domestic preference to be inconsistent with the
public interest; or
(iv) as to which the Secretary determines the
cost to the Government to be unreasonable.
23. FILING OF PATENT APPLICATIONS
(ASPR 9-106) (Jan. 1955)
(a) Before filing or causing to be filed a patent
application disclosing any subject matter of this
contract, which subject matter is classified "Secret"
or higher, the Contractor shall, citing the thirty
(30) day provision below, transmit the proposed
application to the Contracting Officer for determi-
nation whether, for reasons of national security,
such application should be placed under an order
of secrecy or sealed in accordance with the pro-
visions of 35 U. S. Code 181-188 or the issuance of
a patent should be otherwise delayed under perti-
nent statutes or regulations; and the Contractor
shall observe any instructions of the Contracting
Officer with respect to the manner of delivery of
the patent application to the U. S. Patent Office
for filing, but f,he Contractor shall not be denied
the right to file such patent application. If the
Contracting Officer shall not have given any such
instructions within thirty (30) days from the date
of mailing or other transmittal of the proposed ap-
plication, the Contractor may file the application.
(b) The Contractor shall furnish to the Contract-
ing Officer, at the time of or prior to the time when
the Contractor files or causes to be filed a patent
application disclosing any subject matter of this
contract, which subject matter is classified "Confi-
dential," acopy of such application for determina-
tion whether, for reasons of national security, such
application should be placed under an order of se-
crecy or the issuance of a patent should be other-
wise delayed under pertinent statutes or regulations.
(c) In filing any patent application coming within
the scope of this clause, the Contractor shall ob-
serve all applicable security regulations covering
the transmission of classified subject matter.
24. PATENT RIGHTS (LICENSE) (ASPR 9-107.2 -
7-204.7) (Apri11962)
(a) As used in this clause, the following terms
shall have the meanings set forth below:
(i) The term "Subject Invention" means any in-
vention, improvement, or discovery (whether or not
patentable) conceived or first actually reduced to
practice either
(A) in the performance of the experimental, de-
velopmental, or research work called for or re-
quired under this contract: or
(B) in the performance of any experimental, de-
velopmental, or research work relating to the sub-
j ect matter of this contract which was done upon
an understanding in writing that a contract would
be awarded; provided that the term "Subject In-
vention" shall not include any invention which is
specifically identified and listed in the Schedule
for the purpose of excluding it from the license
granted by this clause. [Rev. No. 28, 1/28/58.]
(ii) The term "Technical Personnel" means any
person employed by or working under contract with
the Contractor (other than a subcontractor whose
responsibilities with respect to rights accruing to
the Government in inventions arising under sub-
contracts are set forth in (g) and (h), below), who,
by reason of the nature of his duties in connection
with the performance of this contract, would rea-
sonably be expected to make inventions. [Rev. No.
28, 1/28/58.]
(iii) The terms "subcontract" and "subcontrac-
tor" mean any subcontract or subcontractor of the
Contractor, and any lower-tier subcontract or sub-
contractor under this contract. [Rev. No. 10,
7/30/62.]
(b) (1) The Contractor agrees to and does hereby
grant to the Government an irrevocable, nonexclu-
sive, nontransferable, and royalty-free license to
practice, and cause to be practiced by or for the
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United States Government throughout the world,
each Subject Invention in the manufacture, use and
disposition according to law, of any article or ma-
terial, and in the use of any method. Such license
(i) shall be non-transferable except that the Gov-
ernment shall have the right to grant sub-licenses
to any foreign government or international organ-
ization specifically for use in programs established
by international agreements for research develop-
ments or production of weapons or equipment for
mutual defense and (ii) shall include the practice
of Subject Invention in the manufacture, use, and
disposition of any articles or material, in the use
of any method, or in the performance of any
service acquired by or for the Government or
with funds derived through the Military Assistance
Program of the Government or otherwise through
the Government. [Rev. No. 9, 4/15/62.]
(2) With respect to:
(i) any Subject Invention made by other than
Technical Personnel;
(ii) any Subject Invention conceived prior to, but
first actually reduced to practice in the course of,
any of the experimental, developmental, or research
work specified in (a) (i) above; and
(iii) the practice of any Subject Invention in for-
eign countries; the obligation of the Contractor to
grant a license as provided in (b) (1) above, to con-
vey title as provided in (d) (ii) (B) or (d) (iv) below,
and to convey foreign rights as provided in (e)
below, shall be limited to the extent of the Con-
tractor's right to grant the same without incurring
any obligation to pay royalties or other compen-
sation to others solely on account of said grant.
Nothing contained in this Patent Rights clause
shall be deemed to grant any license under any
invention other than a Subject Invention.
(c) The Contractor shall furnish to the Contract-
ing Officer the following information and reports
concerning Subject Inventions which reasonably ap-
pear to be patentable:
(i) a written disclosure promptly after concep-
tion or first actual reduction to practice of each
such Invention together with a written statement
specifying whether or not a United States patent
application claiming the Invention has been or
will be filed by or on behalf of the Contractor;
(ii) interim reports, at least every twelve months,
commencing with the date of this contract, each
listing all such Inventions conceived or first ac-
tually reduced to practice more than three months
prior to the date of the report, and not listed on
a prior interim. report, or certifying that there are
no such unreported inventions; and
(iii) prior to final settlement of this contract, a
final report listing all such Inventions including
all those previously listed in interim reports.
(d) In connection with each Subject Invention
referred to in (c) (i) above, the Contractor shall
do the following:
(i) if the Contractor specifies that a United
States patent application claiming such Invention
will be filed, the Contractor shall file or cause to
be filed such application in due form and time;
however, if the Contractor, after having specified
that such an application would be filed, decides not
to file or cause to be filed said application, the Con-
tractor shall so notify the Contracting Officer at
the earliest practicable date and in any event not
later than eight months after first publication,
public use or sale.
(ii) if the Contractor specifies that a United
States patent application claiming such Invention
has not been filed and will not be filed (or having
specified that such an application will be filed there-
after notifies the Contracting Officer to the con-
trary), the Contractor shall:
(A) inform the Contracting Officer in writing at
the earliest practicable date of any publication of
such Invention made by or known to the Contractor
or, where applicable, of any contemplated publica-
tion by the Contractor, stating the date and iden-
tity of such publication or contemplated publica-
tion; and
(B) convey to the Government the Contractor's
entire right, title, and interest in such Invention
by delivering to the Contracting Officer upon writ-
ten request such duly executed instruments (pre-
pared by the Government) of assignment and ap-
plication, and such other papers as are deemed
necessary to vest in the Government the Contrac-
tor's right, title, and interest aforesaid, and the
right to apply for and prosecute patent applications
covering such Invention throughout the world, sub-
ject, however, to the rights of the Contractor in
foreign applications as provided in (e) below, and
subject further to the reservation of a non-exclu-
sive and royalty-free license to the Contractor (and
to its existing and future associated and affiliated
companies, if any, within the corporate structure
of which the Contractor is a part) which license
shall be assignable to the successor of that part of
the Contractor's business to which such Invention
pertains;
(iii) the Contractor shall furnish promptly to the
Contracting Officer on request an ix?revocable power
of attorney to inspect and make copies of each
United States patent application filed by or on be-
half of the Contractor covering any such Inven-
tion;
(iv) in the event the Contractor, or those other
than the Government deriving rights from the
Contractor, elects not to continue prosecution of
any such United States patent application filed by
or on behalf of the Contractor, the Contractor shall
so notify the Contracting Officer not less than sixty
days before the expiration of the response period
and, upon written request, deliver to the Contract-
ing Officer such duly executed instruments (pre-
pared by the Government) as are deemed necessary
to vest in the Government the Contractor's entire
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right, title, and interest in such Invention and the
application, subject to the reservation as specified
in (d) (ii) above; and
(v) the Contractor shall deliver to the Contract-
ing Officer duly executed instruments fully con-
firmatory of any license rights herein agreed to be
granted to the Government.
(e) The Contractor, or those other than the Gov-
ernment deriving rights from the Contractor, shall,
as between the parties hereto, have the exclusive
rights to file applications on Subject Inventions in
each foreign country within:
(i) nine months from the date a corresponding
ZJnited States application is filed;
(ii) six months from the date permission is
granted to file foreign applications where such filing
had been prohibited for security reasons; or
(iii) such longer period as may be approved by
the Contracting Officer.
The Contractor shall, upon written request of the
Contracting Officer, convey to the Government the
Contractor's entire right, title, and interest in each
Subject Invention in each foreign country in which
an application has not been filed within the time
above specified, subject to the reservation of a non-
exclusive and royalty-free license to the Contrac-
tor together with the right of the Contractor to
grant sublicenses, which license and right shall be
assignable to the successor of that part of the Con-
tractor's business to which the Subject Invention
pertains.
(f) If the Contractor fails to deliver to the Con-
tracting Officer the interim reports required by
(c) (ii) above, or fails to furnish the written dis-
closures for all Subject Inventions required by
(c) (i) above shown to be due in accordance with
any interim report delivered under (c) (ii) or other-
wise known to be unreported, there shall be with-
held from payment until the Contractor shall
have corrected such failures either ten percent
(10%) of the amount of this contract, as from time
to time amended, or five thousand dollars ($5,000),
whichever is less. After payment of eighty per-
cent (80%) of the amount of this contract, as from
time to time amended, payment shall be withheld
until a reserve of either ten percent (10%) of such
amount, or five thousand dollars ($5,000), which-
ever is less, shall have been set aside, such reserve
or balance thereof to be retained until the Con-
tractor shall have furnished to the Contracting
Officer:
(i) the final report required by (c) (iii) above;
(ii) written disclosures for all Subject Inventions
required by (c) (i) above which are shown to be
due in accordance with interim reports delivered
under (c) (ii) above or in accordance with such
final reports or are otherwise known to be unre-
ported; and
(iii) the information as to any subcontractor re-
quired by (h) below. The maximum amount which
may be withheld under this paragraph (f) shall
not exceed ten percent (10%) of the amount of
this contract or five thousand dollars ($5,000),
whichever is less, and no amount shall be withheld
under this paragraph (f) when the amount speci-
fied by this paragraph (f) is being withheld under
other provisions of this contract. The withhold-
ing of any amount or subsequent payment thereof
to the Contractor shall not be construed as a waiver
of any rights accruing to the Government under
this contract. This paragraph (f) shall not be con-
strued as requiring the Contractor to withhold any
amounts from a subcontractor to enforce compli-
ance with the patent provisions of a subcontract.
(g) The Contractor shall, unless otherwise au-
thorized by the Contracting Ofncer as hereafter pro-
vided, include a patent rights clause containing all
the provisions of this Patent Rights Clause except
provision (f) in any subcontract hereunder of three
thousand dollars ($3,000) or more having experi-
mental, developmental, or research work as one of
its purposes. In the event of refusal by a subcon-
tractor to accept such a patent rights clause, the
contractor (i) shall promptly submit a written re-
port to the Contracting Officer setting forth the
subcontractor's reasons for such refusal and other
pertinent information which may expedite disposi-
tion of the matter, and (ii) shall not proceed with
the subcontract without the written authorization
of the Contracting Officer. Reports, instruments,
and other information required to be furnished by
a subcontractor to the Contracting Officer under
the provisions of such a patent rights clause in a
subcontract hereunder may, upon mutual consent
of the Contractor and subcontractor, (or by direc-
tion of the Contracting Officer) be furnished to the
Contractor for transmission to the Contracting Offi-
cer. [Rev. No. 9, 4/15/62.]
(h) The Contractor shall, at the earliest prac-
ticable date, notify the Contracting Officer in writ-
ing of any subcontract containing one or more
patent rights clauses, furnish the Contracting Offi-
cer acopy of each of such clauses; and notify the
Contracting Officer when such subcontract is com-
pleted. It is understood that with respect to any
subcontract clause granting rights to the Govern-
Tnent in Subject Inventions, the Government is a
third party beneficiary; and the Contractor hereby
assigns to the Government all the rights that the
Contractor would have to enforce the subcontrac-
tor's obligations for the benefit of the Government
with respect to Subject Inventions. If there are
no subcontracts containing patent rights clauses,
a negative report is required. The Contractor shall
not be obligated to enforce the agreements of any
subcontractor hereunder relating to the obligations
of the subcontractor to the Government in regard
to Subject Inventions.
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(i) The contractor recognizes that the Govern-
ment, or a foreigxx Government with funds derived
through the Military Assistance Program or other-
wise through the United States Government, may
contract for property or services with respect to
which the vendor may be liable to the Contractor
for royalties fo:r the use of a Subject Invention on
account of such a contract. The Contractor fur-
ther recognizes that it is the policy of the Govern-
ment not to pay in connection with its contracts,
or to allow to be paid in connection with contract
made with funds derived through the Military As-
sistance Program or otherwise through the United
States Government, charges for use of patents in
which the Government holds a royalty free license.
In recognition of this policy, the Contractor agrees
to participate in this policy and to make ap-
propriate arrangements for the exclusion of such
charges from such contracts or for the refund of
amounts received by the contractor with respect to
any such charges not so excluded. [Rev. No. 9,
4/15/62.]
25. DATA (ASP:ft 9-203.1) (Feb. 1962)
(a) The term "Subject Data" as used herein in-
cludes writings, sound recordings, pictorial repro-
ductions, drawings or other graphical representa-
tions, and works of any similar nature (whether or
not copyrighted) which are specified to be delivered
under this contract. The term does not include
financial reports, cost analyses, and other informa-
tion incidental to contract administration.
(b) The Contractor agx?ees to and does hereby
grant to the Government, and to its officers, agents,
and employees acting within the scope of their
oft'icial duties, aroyalty-free, nonexclusive and ir-
revocable license throughout the world for Govern-
ment purposes to publish, translate, reproduce, de-
liver, perform, dispose of, and to authorize others
so to do, all Subject Data now or hereafter covered
by copyright. [Rev. No. 7, 2/15/62.]
(c) The Contractor shall not include in the Sub-
ject Data any copyrighted matter, without the
written approval of the Contracting Officer, unless
he provides the Government with the written per-
mission of the copyright owner for the Government
to use such copyrighted matter in the manner pro-
vided in paragraph (b) above. [Rev. No. 7, 2/15/62.]
(d) The Contractor shall report to the Contract-
ing Ofllcer, promptly and in reasonable written de-
tail, each notice or claim of copyright infringement
received by the Contractor with respect to all Sub-
ject Data delivered under this contract.
(e) Nothing contained in this clause shall imply
a license to the Government under any patent or
be construed as affecting the scope of any license
or other right otherwise granted to the Govern-
ment under any patent.
(f) Unless otherwise limited below, the Govern-
ment may duplicate, use, and disclose in any man-
ner and for any purpose whatsoever, and have
others so do, all Subject Data delivered under this
contract. [Rev. No. 7, 2/15/62.]
(g) The Contractor recognizes that the Govern-
ment, or a foreign government with funds derived
through the Mutual Security Program or otherwise
through the United States Government, may con-
tract for property or services with respect to which
the vendor may be liable to the Contractor for
charges for the use of Subject Data on account of
such a contract. The Contractor further recognizes
that it is the policy of the Government not to pay in
connection with its contracts, or to allow to be paid
in connection with contracts made with funds de-
rived through the Mutual Security Program or
otherwise through the United States Government,
charges for data which the Government has a right
to use and disclose to others, or which is in the
public domain, or with respect to which the Gov-
ernment has been placed in possession without
restrictions upon its use and disclosure to others.
This policy does not apply to reasonable reproduc-
tion, handling, mailing, and similar administrative
costs incident to the furnishing of such data. In
recognition of this policy, the Contractor agrees to
participate in and make appropriate arrangements
for the exclusion of such charges from such con-
tracts or for the refund of amounts received by the
Contractor with respect to any such charges not
so excluded. [Rev. No. 52, 3/15/60.]
(h) Notwithstanding any provisions of this con-
tract concerning inspection and acceptance, the
Government shall have the right at any time to
modify, remove, obliterate or ignore any marking
not authorized by the terms of this contract on
any piece of Subject Data furnished under this
contract. [Rev. No. 38, 10/15/58; Rev. No. 52,
3/15/60.]
26. DATA -WITHHOLDING OF PAYMENT
(ASPR 9-207.2) (Apr. 1962)
If "Subject Data" (as defined in the clause of
this contract entitled "Data") , or any part thereof,
is not delivered within the time specified by this
contract or is deficient upon delivery (including
having restrictive markings not specifically author-
ized by the contract) , the Contracting Officer xnay,
until such data is delivered or deficiencies are cor-
rected, withhold payment to the Contractor of ten
percent (10%) of the contract price unless a lesser
withholding is specified in the schedule. Payments
shall not be withheld nor any other action taken
pursuant to this clause where the Contractor's fail-
ure to make timely delivery or to deliver data with-
out deficiencies arises out of causes beyond the con-
trol and without the fault or negligence of the Con-
tractor within the meaning of the clause hereof
entitled "Default." The withholding of any amount
or subsequent payment thereof to the Contractor
shall not be construed as a waiver of any rights
accruing to the Government under this contract.
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27. MILITARY SEC-URITY REQUIR.EMENT5
(ASPR 7-104.12) (June 1958)
(a) The provisions of this clause shall apply to
the extent that this contract involves access to
security information classified "Confidential" in-
cluding "Confidential-Modified Handling Author-
ized" or higher.
(b) The Government shall notify the Contractor
of the security classification of this contract and
the elements thereof, and of any subsequent re-
visions in such security classification, by the use
of a Security Requirements Check List (DD Form
254) or other written information.
(c) To the extent the Government has indicated
as of the date of this contract, or thereafter indi-
cates, security classification under this contract as
provided in paragraph (b) above, the Contractor
shall safeguard all classified elements of this con-
tract and shall provide and maintain a system of
security controls within its own organization in
accordance with the requirements of:
(i) the Security Agreement (DD Form 441), in-
cluding the Department of Defense Industrial Secu-
rity Manual for Safeguarding Classified Informa-
tion as in effect on the date of this contract, and
any modification to the Security Agreement for
the purpose of adapting the Manual to the Con-
tractor's business; and
(ii) any amendments to said Manual made after
the date of this contract, notice of which has been
furnished to the Contractor by the Security Office
of the Military Department having security cogni-
zance over the facility.
(d) Representatives of the Military Department
having security cognizance over the facility and
representatives of the contracting Military Depart-
ment shall have the right to inspect at reasonable
intervals the procedures, methods, and facilities
utilized by the Contractor in complying with the
security requirements under this contract. Should
the Government, through its authorized representa-
tives, determine that the Contractor is not comply-
ing with such requirements, the Government shall
inform the Contractor in writing of the proper ac-
tions to be taken in order to effect compliance with
such requirements.
(e) If, subsequent to the date of this contract,
the security classifications or requirements under
this contract are changed by the Government as
provided in this clause and the security costs under
this contract are thereby increased or decreased,
the contract price shall be subject to an equitable
adjustment by reason of such increased or de-
creased costs. Any equitable adjustment shall be
accomplished in the same manner as if such
changes were directed under the "Changes" clause
in this contract.
(f) The Contractor agrees to insert, in all sub-
contracts hereunder which involve access to clas-
sifted security information, provisions which shall
conform substantially to the language of this clause,
including this paragraph (f) but excluding the
last sentence of paragraph (e) of this clause.
(g) The Contractor also agrees that it shall de-
termine that any subcontractor proposed by it for
the furnishing of supplies and services which will
involve access to classified information in the Con-
tractor's custody has been granted an appropriate
facility security clearance, which is still in effect,
prior to being accorded access to such classified
information. CRev. No. 34, 6/11/58; Rev. No. 48,
8/1/59.7
28. UTILIZATION OF SMALL BUSINESS
CONCERNS (ASPR 7-104.14) (Jan. 1958)
(a) It is the policy of the Government as de-
clared by the Congress that a ;fair proportion of
the purchases and contracts for supplies and serv-
ices for the Government be placed with small
business concerns. [Rev. No. 28, 1/28/58.]
(b) The Contractor agrees to accomplish the
maximum amount of subcontracting to small busi-
ness concerns that the Contractor finds to be con-
sistent with the efficient performance of this con-
tract.
29. EXAMINATION OF RECORDS
(ASPR 7-104.15) (Mod.) (Feb. 1962)
(a) The Contractor agrees that the Contracting
Offlcer or any of his duly authorized representatives
shall, until the expiration of three years after
final payment under this contract, have access to
and the right to examine any directly pertinent
books, documents, papers and records of the Con-
tractor involving transactions related to this con-
tract.
(b) The Contractor further agrees to include in
all his subcontracts hereunder a provision to the
effect that the subcontractor agrees that the Con-
tracting Officer or any of his duly authorized repre-
sentatives shall, until the expiration of three years
after final payment under the subcontract, have
access to and the right to examine any directly
pertinent books, documents, papers, and records of
such subcontractor involving transactions related
to the subcontract. The term "subcontract" as
used in this clause excludes (i) purchase orders not
exceeding $2,500 and (ii) subcontracts or purchase
orders for public utility services at rates established
for uniform applicability to the general public.
[Rev. No. 39, 11/3/58; Rev. No. 42, 1/9/59.]
30. GRATUITIES (ASPR 7-104.1G) (Mar. 1952)
(a) The Government may, by written notice to
the Contractor, terminate the right of the Con-
tractor to proceed under this contract if it is found,
after notice and hearing, by the Secretary or his
duly authorized representative, that gratuities (in
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the form of entertainment, gifts, or otherwise) were
offered or given by the Contractor, or any agent or
representative of the Contractor, to any officer or
employee of the Government with a view toward
securing a contract or securing favorable treat-
ment with respect to the awarding or amending or
the making of any determinations with respect to
the performing of such contract; provided, that the
existence of the facts upon which the Secretary or
his duly authorized representative makes such find-
ings shall be iri issue and may be reviewed in any
competent court.
(b) In the event this contract is terminated as
provided in paragraph (a) hereof, the Government
shall be entitled (i) to pursue the same remedies
against the Contractor as it could pursue in the
event of a breach of the contract by the Contractor,
and (ii) as a penalty in addition to any other
damages to which it may be entitled by law, to
exemplary damages in an amount (as determined
by the Secretary or his duly authorized representa-
tive) which shall be not less than three nor more
than ten times the costs incurred by the Contrac-
tor in providing any such gratuities to any such
officer or employee.
(c) The rights and remedies of the Government
provided in this clause shall not be exclusive and
are in addition to any other rights and remedies
provided by law or under this contract.
31. CONVICT LABOR (ASPR 7-104.17-
ASPR 12-203) (Mar. 1949)
In connection with the performance of work un-
der this contract, the Contractor agrees not to em-
ploy any person undergoing sentence of imprison-
ment at hard labor.
32. MATERIEL INSPECTION AND RECEIVING
REPORT (ASPR 7-105.7)
At the time of each delivery under this contract
the Contractor shall prepare and furnish to the
Government, in the manner and to the extent re-
quired by the Contracting Officer, a Materiel In-
spection and li,eceiving Report (DD Form 250 or
comparable form) . The Government shall furnish
the required forms to the Contractor upon request.
[Rev. No. 11, 9/30/62.]
33. SUBCONTRACTS (SOURCES) (AFPI 7-4030)
(Mar. 1960)
No contract shall be made by the Contractor with
any other party for furnishing any of the completed
or substantially completed articles, spare parts, or
work, herein contracted for, without the written
approval of the Contracting Officer as to sources.
34. SUBCONTRACTS (ASPR 3-903.1) (Nov. 1962)
If this contract provides for price redetermina-
tion or incentive, the following additional provisions
shall apply to subcontracts.
(a) As used in this clause, the term "subcontract"
includes purchase orders.
(b) Except as provided in paragraph (d) below,
the Contractor shall notify the Contracting Officer
reasonably in advance of entering into any sub-
contract which-
(i) is on acost-plus-a-fee, time and material, or
labor-hour basis and which would involve an esti-
mated amount in excess of $10,000, including any
fee; or
(ii) is proposed to exceed $100,000; or
(iii) is one of a number of subcontracts under
this contract with a single subcontractor for the
same or related supplies or services which, in the
aggregate, are expected to exceed $100,000.
(c) The advance notification required by para-
graph (b) above shall include:
(i) a description of the supplies or services to
be called for by the subcontract;
(ii) identification of the proposed subcontractor
and an explanation of why and how the proposed
subcontractor was selected, including the degree of
competition obtained;
(iii) the proposed subcontract price, together with
the Contractor's cost or price analysis thereof, in-
cluding current, complete, and correct cost or pric-
ing data accompanied with a certificate from the
subcontractor to the effect that all cost or pricing
data has been considered by the subcontractor in
preparing his proposal and that such data is cur-
rent, and has been provided the Contractor; and
[Rev. No. 6, 11/15/1; Rev. No. 7, 2/15/62.]
(iv) identification of the type of contract proposed
to be used.
(d) Advance notifications of subcontracts, as re-
quired by paragraph (b) above, are not required
for any subcontract (i) not on acost-plus-a-fee,
time and material, or labor-hour basis, if the Con-
tracting Officer has in writing approved the Con-
tractor's purchasing system and the subcontract is
within the limitations of such approval, or (ii) con-
sented to in writing by the Contracting Officer as a
proposed subcontract prior to the execution of this
contract.
(e) The Contractor shall not, without the prior
written consent of the Contracting Officer, enter
into any subcontract for which advance notifica-
tion to the Contracting Officer is required by this
clause; provided that, in his discretion, the Con-
tracting Officer may ratify in writing any subcon-
tract and such ratification shall constitute the con-
sent of the Contracting Officer required by this
paragraph.
(f) No consent by the Contracting Officer to any
subcontract or any provisions thereof or approval
of the Contractor's purchasing system shall be con-
strued to be a determination of the acceptability
of any subcontract price or of any amount paid
under any subcontract or to relieve the Contractor
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of an;y responsibility for performing this contract,
unless such approval or consent specifically provides
otherwise.
(g) The Contractor agrees that no subcontract
placed under this contract shall provide for pay-
ment on a cost-plus-a-percentage-of-cost basis.
fRev. No. 6, 11/15/61; AFPC No. 37, 8/14/62; Rev. No.
11, 9/30/62; Rev. No. 12, 11/26/62.7
35. SUBCONTRACTOR COST AND PRICING DATA
(ASPR 7-104.42) (Nov. 1962)
The following clause shall apply to all incentive
and redeterminable type contracts, and to all other
xegotiated contracts when the contractor has fur-
nished aCertificate of Current Cost or Pricing Data
in connection with the initial pricing thereof.
(a) The Contractor shall require subcontractors
hereunder to submit cost or pricing data under the
following circumstances: (i) prior to award of any
cost-reimbursement type, incentive, or price rede-
terminable subcontract; (ii) prior to the award of
any subcontract the price of which is expected to
exceed $100,000, except where the price thereof is
based on adequate price competition, established
catalog or market prices of commercial items sold
in substantial quantities to the general public, or
prices set by law or regulation; (iii) prior to the
pricing of any subcontract change or other modifi-
cation for which the price adjustment is expected
to exceed $100,000.
(b) The Contractor shall require subcontractors
to certify, in substantially the same form as that
used :in the certificate by the Prime Contractor to
the Government, that to the best of their knowledge
and belief, the cost and pricing data submitted
under (a) above is accurate, complete, and current
as of the date of execution, which date shall be as
close as possible to the date of agreement on the
negotiated price of the subcontract.
(c) The Contractor shall insert the substance of
this clause, including this paragraph (c), in each
subcontract hereunder which exceeds $100,000, ex-
cept where the price thereof is based on adequate
price competition, established catalog or market
prices of commercial items sold in substantial quan-
tities to the general public, or prices set by law or
regulation. In each such excepted subcontract
hereunder in excess of $100,000 the Contractor shall
insert the substance of the following clause:
Subcontractor Cost and Pricing Data-
Price Adjustments
(a) Paragraphs (b) and (c) of this clause shall
become operative only with respect to any change
or other modification made pursuant to one or more
provisions of this contract which involves a price
adjustment in excess of $100,000. The requirements
of this clause shall be limited to such price adjust-
ments.
(b) The Contractor shall require subcontractors
hereunder to submit cost or pricing data under the:
following circumstances: (i) prior to award of any
cost-reimbursement type; incentive, or price rede-
terminable subcontract; (ii) prior to award of any
subcontract, trte price of which is expected to ex-
ceed $100,000 except where the price thereof is based
on adequate price competition, established catalog
or market prices of commercial items sold in sub-
stantial quantities to the general public or prices
set by law or regulation; (iii) prior to the pricing
of any subcontract change or other modification for
which the price adjustment is expected to exceed
$100,000.
(c) The Contractor shall require subcontractors
to certify, in substantially the same form as that
used in the certificate by the Prime Contractor
to the Government, that to the best of their knowl-
edge and belief the cost and pricing data submit-
ted under (b) ~~bove is accurate, complete, and cur-
rent as of the date of the execution, which date
shall be as close as possible to the date of agree-
ment on the nE=gotiated price of the contract modi-
fication.
(d) The Contractor shall insert the substance of
this clause including this paragraph (d) in each
subcontract hereunder which exceeds $100,000.
36. SUBCONTRACTOR COST AND P R I C I N G
DATA-PRICE ADJUSTMENTS (ASPR 7-104.42)
(Nov. 1962)
The following; clause shall apply to all advertised
and negotiated contracts in excess of $100,000,
where the contractor has not furnished a Certificate
of Current Cost or Pricing Data in connection with
the initial pricing thereof.
Subcontractor Cost and Pricing Data-
Price Adjustments (Nov. 1962)
(a) Paragraphs (b) and (c) of this clause shall
become operative arily with respect to any change
or other modification made pursuant to one or more
provisions of this contract which involves a price
adjustment in excess of $100,000. The requirements
cf this clause shall be limited to such price ad-
j ustments.
(b) The Contractor shall require subcontractors
hereunder to submit? cost or pricing data under the
following circumstances: (i) prior to award of any
cost-reimbursement type, incentive, or price redeter-
rninable subcontract; (ii) prior to award of any sub-
contract the price of which is expected to exceed
$100,00Q except. where the price thereof is based on
adequate price competition, established catalog or
market prices of commercial items sold in sub-
stantial quantities to the general public or prices
set by law or regulation; (iii) prior to the pricing of
any subcontract change or other modification for
which the price adjustment is expected to exceed
$100,000.
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(c) The Contractor shall require subcontractors to
certify that to t:he best of their knowledge and belief
the cost and pricing data submitted under (b)
above is accurate, complete, and current as of the
date of the execution, which date shall be as close
as possible to the date of agreement on the ne-
gotiated price of the contract modification.
(d) The Contractor shall insert the substance of
this clause including this paragraph (d) in each
subcontract hereunder which exceeds $100,000.
37. COMPETITION IN SUBCONTRACTING
(ASPR 7-104.40) (Apr. 1962)
The Contractor shall select subcontractors (in-
cluding suppliers) on a competitive basis to the
maximum practical extent consistent with the ob-
jectives and requirements of the contract. [Rev.
No. 9, 4/15/62.1
38. UTILIZATION OF CONCERNS IN LABOR
SURPLUS AREAS (ASPR 1-805.3) (Feb. 1962)
It is the policy of the Government to place con-
~.r~'` tracts with concerns which will perform such con-
tracts substantially in areas of persistent or sub-
stantial labor surplus where this can be done, con-
sistent with the efficient performance of the con-
tract, at prices no higher than are obtainable else-
where. The Contractor agrees to use his best efforts
to place his subcontracts in accordance with this
policy. In complying with the foregoing and with
paragraph (b) of the clause of this contract en-
titled "Utilization of Small Business Concerns," the
Contractor in placing his subcontracts shall observe
the following order of preference: (i) persistent
labor surplus area concerns which are also small
business concerns; (ii) other persistent labor sur-
plus area concerns; (iii) substantial labor surplus
area concerns which are also small business con-
cerns; (iv) other substantial labor surplus area
concerns; and (v) small business concerns which
are not labor surplus area concerns.
39. STANDARDS OF WORK (ASPR 7-302.3)
(June 1959)
The Contractor agrees that the perforrance of
work and services pursuant to the requirements of
this contract shall conform to high professional
standards.
40. GROUND AND FLIGHT RISK (ASPR 10-404)
(Feb. 1962)
(a) Notwithstanding any other provisions of this
contract, except as may be specifically provided in
the Schedule as an exception to this clause, the
Government, subject to the definitions and limita-
tions of this clause, assumes the risk of damage to,
or loss or destruction of, aircraft "in the open,"
during "operation," and in "flight," as these terms
are defined below, and agrees that the Contractor
shall not be liable to the Government for any such
damage, loss, or destruction, the risk of which is so
assumed by the Government.
(b) For the purposes of this clause:
(i) Unless otherwise specifically provided in the
Schedule, the term "aircraft" means-
(A) aircraft (including (I) complete aircraft, and
(II) aircraft in the course of being manufactured,
disassembled, or reassembled, provided that an en-
gine or a portion of a wing or a wing is attached
to a fuselage of such aircraft) to be furnished to
the Government under this contract (whether be-
fore or after acceptance by the Government) ; and
(B) aircraft (regardless of whether in a state of
disassembly or reassembly) furnished by the Gov-
ernment to the Contractor under this contract; in-
cluding all property installed therein, or in the
process of installation, or temporarily removed from
such aircraft; provided, however, that such aircraft
and property are not covered by a separate bail-
ment agreement.
(ii) The term "in the open" means located wholly
outside of buildings on the Contractor's premises or
at such other places as may be described in the
Schedule as being in the open for the purposes of
this clause, except that aircraft furnished by the
Government shall be deemed to be in the open at
all times while in the Contractor's possession, care
custody, or control.
(iii) The term "flight" means any flight demon-
stration, flight test, taxi test, or other flight, made
in the performance of this contract, or for the pur-
pose of safeguarding the aircraft, or previously ap-
proved in writing by the Contracting Officer. With
respect to land based aircraft, "flight" shall com-
mence with the taxi roll from a flight line on the
Contractor's premises, and continue until the air-
craft has completed the taxi roll in returning to a
flight line on the Contractor's premises; with re-
spect to seaplanes, "flight" shall commence with
the launching from a ramp on the Contractor's
premises and continue until the aircraft has com-
pleted its landing run upon return and is beached
at a ramp on the Contractor's premises; with re-
spect to helicopters, "flight" shall commence upon
engagement of the rotors for the purpose of take-
off from the Contractor's premises and continue
until the aircraft has returned to the ground on
the Contractor's premises and the rotors are dis-
engaged; and with respect to vertical take-off air-
craft, "flight" shall commence upon disengagement
from any launching platform or device on the Con-
tractor's premises and continue until the aircraft
has been re-engaged to any launching platform
or device on the Contractor's premises; provided,
however, that aircraft off the Contractor's premises
shall be deemed to be in flight when on the ground
or water only during periods of reasonable dura-
tion following emergency landings, other landings
made in the performance of this contract, or land-
ings approved by the Contracting Officer in writing.
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(iv) The term "Contractor's premises" means
those premises designated as such in the Schedule
or in writing by the Contracting Officer, and any
other place to which aircraft are moved for the
purpose of safeguarding the aircraft.
(v) The term "operation" means operations and
tests, other than on any production line, of air-
craft, when not in flight, whether or not the air-
craft is in the open or in motion during the making
of any such operations or tests, and includes opera-
tions and tests of equipment, accessories, and power
plants, only when installed in aircraft.
(vi) The term "flight crew members" means the
pilot, the co-pilot and, unless otherwise specifically
provided in the Schedule, the flight engineer, navi-
gator, bombardier-navigator, and defensive systems
operator, when required, or assigned to their respec-
tive crew positions, to conduct any flight on behalf
of the Contractor.
(c) (1) The Government's assumption of risk
under this clause, as to aircraft in the open, shall
continue in effect unless terminated pursuant to
subparagraph (3) below. Where the Contracting
Officer finds that any of such aircraft is in the
open under unreasonable conditions, he shall notify
the Contractor in writing of the conditions he finds
to be unreasonable and require the Contractor to
correct such conditions within a reasonable time.
(2) Upon receipt of such notice, the Contractor
shall act promptly to correct such conditions, re-
gardless of whether he agrees that such condi-
tions are in fact unreasonable. To the extent that
the Contracting Officer may later determine that
such conditions were not in fact unreasonable, an
equitable adjustment shall be made in the contract
price to compensate the Contractor for any addi-
tional costs it incurred in correcting such condi-
tions and the contract shall be modified in writing
accordingly. Any dispute as to the unreasonable-
ness of such conditions or the equitable adjust-
ment shall be deemed to be a dispute concerning
a question of the fact within the meaning of the
clause of this contract entitled "Disputes."
(3) If the Contracting Officer finds that the Con-
tractor has failed to act promptly to correct such
conditions or has failed to correct such conditions
within a reasonable time, he may terminate the
Government's assumption of risk under this clause,
as to any of the aircraft which is in the open under
such conditions, such termination to be effective at
12:01 A. M. on the fifteenth day following the day
of receipt by the Contractor of written notice there-
of. If the Contracting Officer later determines that
the Contractor acted promptly to correct such con-
ditions or that the time taken by the Contractor
was not in fact unreasonable, an equitable adjust-
ment shall, notwithstanding paragraph (f) of this
clause, be made in the contract price to compensate
the Contractor for any additional costs he incurred
as a result of termination of the Government's as-
sumption of risk under this clause and the contract
shall be modified in writing accordingly. Any dis-
pute as to whether the Contractor failed to act
promptly to correct such conditions, or as to the
reasonableness of the time for correction of such
conditions, or as to such equitable adjustment, shall
be deemed to be a dispute concerning a question
of fact within the meaning of the clause of this
contract entitled "Disputes."
(4) In the event the Government's assumption
of risk under this clause is terminated in accord-
ance with (3) above, the risk of loss with respect
to Government-furnished property shall be deter-
mined in accordance with the clause of this con-
tract, if any, entitled "Government-Furnished Prop-
erty" until the Government's assumption of risk is
x?einstated in accordance with (5) below.
(5) When unreasonable conditions have been
corrected, the Contractor shall promptly notify the
Government thereof. The Government may elect
to again-assume the risks and relieve the Contractor
of liabilities as provided in this clause, or not, and
the Contracting Officer shall notify the Contractor
of the Government's election. If, after correction
of the unreasonable conditions, the Government
elects to again assume such risks and relieve the
Contractor of such liabilities, the: Contractor shall
be entitled to an equitable adjustment in the con-
tract price for costs of insurance, if any, extending
from the end of the third working day after the
Contractor notifies the Government of such cor-
rection until the Government notifies the Contrac-
tor of such election. If the Government elects not
to again assume such risks, and such conditions
have in fact been corrected, the Contractor shall
be entitled to an equitable adjustment for costs
of insurance, if any, extending after such third
working day.
(d) The Government's assumption of risk shall
not extend to damage to, or loss or destruction of,
such aircraft:
(i) resulting from failure of the Contractor, due
to willful misconduct or lack of good faith of any
of the Contractor's managerial personnel, to main-
tain and administer a program for the protection
and preservation of aircraft in the open, and dur-
ing operation, in accordance with sound industrial
practice (the term "Contractor's managerial per-
sonnel" means the Contractor's directors, officers,
and any of its managers, superintendents, or other
equivalent representatives, who leas supervision or
direction of all or substantially all of the Contrac-
tor's business, or all or substantially all of the
Contractor's operations at any one plant or separate
location at which this contract is performed, or a
separate and complete major industrial operation
in connection with the performance of this con-
tract) ;
(ii) sustained during flight ii' the flight crew
members conducting such flight have not been ap-
proved in writing by the Contracting Officer;
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(iii) while in the course of transportation by rail,
or by conveyance on public streets, highways, or
waterways, except for Government-furnished prop-
erty;
(iv) to the extent that such damage, loss or
destruction is in fact covered by insurance;
(v) consisting of wear and tear, deterioration
(including rust; and corrosion), freezing, or me-
chanical, structural, or electrical breakdown or
failure, unless such damage is the result of other
loss, damage, or destruction covered by this clause;
provided, however, in the case of Government-
furnished property, if such damage consists of
reasonable wear and tear or deterioration, or re-
sults from inherent vice in such property, this ex-
clusion shall not apply;
(vi) sustained while the aircraft is being worked
upon and directly resulting therefrom, including
but not limited to any repairing, adjusting, serv-
icing or maintenance operation, unless such dam-
age, loss or destruction is of a type which would
be covered by :insurance which would customarily
have been maintained by the Contractor at the
time of such damage, loss, or destruction, but for
the Government's assumption of risk under this
clause; or
(vii) under this clause, where the total loss re-
sulting from each event separately occurring is less
than $500.
(e) A subcontractor shall not be relieved from
liability for damage to, or loss or destruction of,
aircraft while in its possession or control, except
to the extent that the subcontract, with the prior
written approval of the Contracting Officer, pro-
vides for relief of the subcontractor from such
liability. In thE~ absence of such approval, the sub-
contract shall contain appropriate provisions re-
quiring the return of such aircraft in as good con-
dition as when received, except for reasonable wear
and tear or for the utilization of the property in
accordance with the provisions of this contract.
Where a subcontractor has not been relieved from
liability for any damage, loss, or destruction of air-
craft and any damage, loss, or destruction occurs,
the Contractor shall enforce the liability of the
subcontractor for such damage to, or loss or de-
struction of, the aircraft for the benefit of the
Government.
(f) The Contractor warrants that the contract
price does not and will not include, except as may
be otherwise authorized in this clause, any charge
or contingency reserve for insurance (including
self-insurance funds or reserves) covering any
damage to, or loss or destruction of, aircraft while
in the open, during operation, or in flight, the risk
of which has been assumed by the Government
under the provisions of this clause, whether or not
such assumption may be terminated as to aircraft
in the open.
(g) In the event of damage to, or loss or destruc-
tion of, aircraft in the open, during operation, or
in flight, the Contractor shall take all reasonable
steps to protect such aircraft from further dam-
age, separate damaged and undamaged aircraft,
put all aircraft in the best possible order and, fur-
ther, except in cases covered by (d) (vii) above, the
Contractor should furnish to the Contracting Offi-
cer astatement of:
(i) the damaged, lost, or destroyed aircraft;
(ii) the time and origin of the damage, loss, or
destruction;
(iii) all known interests in commingled property
of which aircraft are a part; and
(iv) the insurance, if any, covering any part of
the interest in such commingled property.
Except in cases covered by (d) (vii) above, an equi-
table adjustment shall be made in the amount due
under this contract far expenditures made by the
Contractor in performing its obligations under this
paragraph (g) and this contract shall be modified
in writing accordingly.
(h) If prior to delivery and acceptance by the
Government any aircraft is damaged, lost, or de-
stroyed and the Government has under this clause
assumed the risk of such damage, loss, or destruc-
tion, the Government shall either (1) require that
such aircraft be replaced or restored by the Con-
tractor to the condition in which it was immediately
prior to such damage, or (2) shall terminate this
contract with respect to such aircraft. In the
event that the Government requires that the air-
craft be replaced or restored, an equitable adjust-
ment shall be made in the amount due under this
contract and in the time required for its perform-
ance, and this contract shall be modified in writing
accordingly. If, in the alternative, this contract
is terminated under this paragraph with respect
to such aircraft and under this clause the Govern-
ment has assumed the risk of such damage, loss,
or destruction, the Contractor shall be paid the
contract price for said aircraft (or, if applicable,
any work to be performed on said aircraft) less
such amounts as the Contracting Officer determines
(1) that it would have cost the contractor to com-
plete the aircraft (or any work to be performed on
said aircraft) together with anticipated profit, if
any, on any such uncompleted work, and (2) to be
the value, if any, of the damaged aircraft or any
remaining portion thereof retained by the Con-
tractor. The Contracting Officer shall have the
right to prescribe the manner of disposition of the
damaged, lost, or destroyed aircraft, or any remain-
ing parts thereof; and, if any additional costs of
such disposition are incurred by the Contractor,
a further equitable adjustment will be made in the
amount due to the Contractor. Failure of the par-
ties to agree upon an equitable adjustment or upon
the amount to be paid in the event of termination
of the contract with respect to any aircraft, shall
be a dispute concerning a question of fact within
the meaning of the Disputes clause of this con-
tract. [Rev. No. 6, 11/15/61.]
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(i) In the event the Contractor is at any time
reimbursed or compensated by any third person
for any damage, loss, or destruction of any aircraft,
the risk of which has been assumed by the Govern-
ment under the provisions of this clause and for
which the Contractor has been compensated by the
Government, he shall equitably reimburse the Gov-
ernment. The Contractor shall do nothing to prej -
udice the Government's rights to recover against
third parties for any such damage, loss, or destruc-
tion and upon the request of the Contracting Officer
shall at the Government's expense furnish to the
Government all reasonable assistance and coopera-
tion (including the prosecution of suit and the ex-
ecution of instruments of assignment or subroga-
tion in favor of the Government) in obtaining re-
covery.
41. GOVERNMENT-FURNISHED PROPERTY
(ASPR 13-502) (Nov. 1958)
(a) The Government shall deliver to the Contrac-
tor, for use in connection with and under the terms
of this contract, the property described in the
Schedule or specifications, together with such re-
lated data and information as the Contractor may
request and as may reasonably be required for
the intended use of such property (hereinafter re-
ferred. to as "Government-furnished Property") .
The delivery or performance dates for the supplies
or services to be furnished by the Contractor under
this contract are based upon the expectation that
Government-furnished Property suitable for use
will be delivered to the Contractor at the times
stated in the Schedule or, if not so stated, in suf-
ficient time to enable the Contractor to meet such
delivery or performance dates. In the event that
Government-furnished Property is not delivered to
the Contractor by such time or times, the Contract-
ing Officer shall, upon timely written request made
by the Contractor, make a determination of the
delay occasioned the Contractor thereby, and shall
equitably adjust the delivery or performance dates
or the contract price, or both, and any other con-
tractual provision affected by such delay, in ac-
cordance with the procedures provided for in the
clause of this contract entitled "Changes." In the
event the Government-furnished Property is re-
ceived by the Contractor in a condition not suitable
for the intended use the Contractor shall, upon
receipt thereof, notify the Contracting Officer of
such :fact and, as directed by the Contracting Officer,
either (i) return such property at the Government's
expense or otherwise dispose of the property, or
(ii) effect repairs or modifications. Upon the com-
pletion of (i) or (ii) above, the Contracting Officer
upon written request of the Contractor shall equi-
tably adjust the delivery or performance dates or
the contract price, or both, and any other con-
tractual provision affected by the rejection or dis-
position, or the repair or modification, in accord-
ance with the procedures provided for in the clause
of this contract entitled "Changes." The foregoing
provisions for adjustment are exclusive and the
Government shall not be liable to suit for breach
of contract by reason of any delay in delivery of
Government-furnished Property or delivery of sucYx
property in a condition not suitable for its intended
use.
(b) By notice in writing the Contracting Officer
may decrease the property furnished or to be fur-
nished by the Government under this contract. In
any such case. the Contracting Officer upon the
written request of the Contractor shall equitably
adjust the delivery or performance dates or the
contract price, or both, and any other contractual
provisions affected by the decrease, in accordance
with the procedures provided for in the clause
of this contract entftled "Changes."
(c) Title to the Government-furnfshed Property
shall remain in the Government. Title to Govern-
ment-furnished Property shall not be affected by
the incorporation or attachment thereof to any
property not owned by the Government, nor shall
such Government-furnished Property, or any part
thereof, be or become a fixture or lose its identity
as personalty by feason of affixation to any realty.
The Contractor shall comply with the provisions of
the "Manual for the Control of Government Prop-
erty in the Possession of Contractors" (Appendix
li, Armed Services Procurement Regulation) as in
effect on the date of the contract, which Manual is
hereby incorporated by reference and made a part
of this contract.
(d) The Government-furnished Property shall,
unless otherwise provided herein, be used only for
the performance of this contract.
(e) The Contractor shall maintain and admin-
ister, in accordance with sound industrial practice,
a program for the maintenance, repair, protection
and preservation of Goverment-furnished Property,
until disposed of by the Contractor in accordance
with this clau:~e. In the event that any damage
occurs to Government-furnished Property the risk
of which has been assumed by the Government
under this contract, the Government shall replace
such items or tfle Contractor shall-make such repair
of the property as the Government directs; provided,
however, that ;f the Contractor cannot effect such
repair within the time required, the Contractor shall
dispose of such property in the manner directed
by the Contracting Officer. The contract price in-
cludes no compensation to the Contractor for the
performance of any repair or replacement for which
the Government is responsible, and an equitable
adjustment wfll be made in the contract price for
any such repair ur replacement of Government-
furnished Property made at the direction of the
Government. Any repair or replacement for which
the Contractor is responsible under the provisions
of this contract shall be accomplished by the Con-
tractor at his own expense.
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(f) (1) Except for loss, destruction or damage
resulting from a failure of the Contractor, due to
willful misconduct or lack of good faith of any of
the Contractor's managerial personnel as defined
herein, to maintain and administer the program for
the maintenance, repair, protection and preserva-
tion of the Government-furnished Property as re-
quired by paragraph (e) hereof, and except as spe-
cifically provided in clause (s)
................ of this contract or in the clause
or clauses of this contract designated in the Sched-
ule, the Contractor shall not be liable for loss or
destruction of or damage to the Government-fur-
nished Property (i) caused by any peril while the
property is in transit off the Contractor's premises,
or (ii) caused ley any of the following perils while
the property is on the Contractor's or subcontrac-
tor's premises, or on any other premises where such
property may properly be located, or by removal
therefrom because of any of the following perils:
(A) Fire, lightning; windstorm, cyclone, tornado,
hail; explosion; riot, riot attending a strike, civil
commotion; vandalism and malicious mischief;
sabotage; aircraft or objects falling therefrom;
vehicles running on land or tracks, excluding vehi-
cles owned or operated by the Contractor or any
agent or employee of the Contractor; smoke; sprin-
kler leakage; earthquake or volcanic eruption;
flood, meaning thereby rising of a body of water;
hostile or warlike action, including action in hinder-
ing, combating, or defending against an actual,
impending or expected attack by any government
or sovereign power (de jure or de facto), or by any
authority using military, naval, or air forces, or
by an agent of any such government, power, au-
thority, or forces; or
(B) Other peril, of a type not listed above, if
such other peril is customarily covered by insurance
(or by a reserve for self-insurance) in accordance
with the normal practice of the Contractor, or the
prevailing practice in the industry in which the
Contractor is engaged with respect to similar prop-
erty in the same general locale.
The perils as set forth in (i) and (ii) above are
hereinafter called "excepted perils."
This clause shall not be construed as relieving a
subcontractor from liability for loss or destruction
of or damage to the Government-furnished Prop-
erty while in its possession or control, except to the
extent that the subcontract, with the prior approval
of the Contracting Officer, may provide for the
relief of the subcontractor from such liability. In
the absence of such approval, the subcontract shall
contain appropriate provisions requiring the re-
turn of all Government-furnished Property in as
good condition as when received except for rea-
sonable wear and tear or for the utilization of the
property in accordance with the provisions of the
prime contract.
The term "Contractor's managerial personnel" as
used herein means the Contractor's directors, offi-
cers and any of its managers, superintendents, or
other equivalent representatives who have supervi-
sion or direction of (i) all or substantially all of
the Contractor's business; (ii) all or substantially
all of the Contractor's operation at any one plant
or separate location at which the contract is being
performed; (iii) a separate and complete major in-
dustrial operation in connection with the perform-
ance of this contract.
(2) The Contractor represents that it is not in-
cluding in the price hereunder, and agrees that it
will not hereafter include in any price to the Gov-
ernment, any charge or reserve for insurance (in-
cluding self-insurance funds or reserves) cover-
ing loss or destruction of or damage to the Gov-
ernment-furnished Property caused by any ex-
cepted peril.
(3) Upon the happening of loss or destruction of
or damage to any Government-furnished property
caused by an excepted peril, the Contractor shall
notify the Contracting Officer thereof, and shall
communicate with the Loss and Salvage Organiza-
tion, if any, now or hereafter designated by the Con-
tracting Officer, and with the assistance of the Loss
and Salvage Organization so designated (unless the
Contracting Officer has directed that no such or-
ganization be employed) , shall take all reasonable
steps to protect the Government-furnished prop-
erty from further damage, separate the damaged
and undamaged Government-furnished property,
put all the Government-furnished property in the
best possible order, and furnish to the Contracting
Officer a statement of: (i) the lost, destroyed and
damaged Government-furnished property (ii) the
time and origin of the loss, destruction or damage,
(iii) all known interests in commingled property
of which the Government-furnished property is a
part, and (iv) the insurance, if any, covering any
part of or interest in such commingled property.
The Contractor shall be reimbursed for the expendi-
tures made by it in performing its obligations under
this subparagraph (3) (including charges made to
the Contractor by the Loss and Salvage Organiza-
tion, except any of such charges the payment of
which the Government has, at its option, assumed
directly) , to the extent approved by the Contract-
ing Officer and set forth in a Supplemental Agree-
ment.
(4) With the approval of the Contracting Officer
after loss or destruction of or damage to Govern-
ment-furnished property, and subject to such con-
ditions and limitations as may be imposed by the
Contracting Officer, the Contractor may, in order
to minimize the loss to the Government or in order
to permit resumption of business or the like, sell
for the account of the Government any item of
Government-furnished property which has been
damaged beyond practicable repair, or which is so
commingled or combined with property of others,
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including the Contractor, that separation is im-
practicable.
(5) Except to the extent of any loss or destruc-
tion o:C or damage to Government-furnished prop-
erty for which the Contractor is relieved of liability
under the foregoing provisions of this clause, and
except for reasonable wear and tear or depreciation,
or the utilization of the Government-furnished
property in accordance with the provisions of this
contract, the Government-furnished property (other
than property permitted to be sold) shall be re-
turned to the Government in as good condition
as when received by the Contractor in connection
with this contract, or as repaired under paragraph
(e) above.
(6) In the event the Contractor is reimbursed
or compensated for any loss or destruction of or
damage to the Government-furnished property,
caused by an excepted peril, it shall equitably reim-
burse the Government. The Contractor shall do
nothing to prejudice the Government's rights to
recover against third parties for any such loss,
destruction or damage and, upon the request of
the Contracting Officer, shall at the Government's
expense, furnish to the Government all reasonable
assistance and cooperation (including the prosecu-
tion of suit and the execution of instruments of
assignment in favor of the Government) in obtain-
ing recovery. In addition, where a subcontractor
has not been relieved from liability for any loss or
destruction of or damage to the Government-fur-
nished property, the Contractor shall enforce the
liability of the subcontractor for such loss or de-
struction of or damage to the Government-fur-
nished property for the benefit of the Government.
(7) If this contract is for the development, pro-
duction, modification, maintenance or overhaul of
aircraft, or otherwise involves the furnishing of air-
craft by the Government, the "Ground and Flight
Risk" clause of this contract shall control, to the
extent it is applicable, in the case of loss or de-
struction of, or damage to, aircraft. (Rev. No. 6,
11/15/61.]
(g) The Government shall at all reasonable times
have access to the premises wherein any Govern-
ment-furnished property is located.
(h) Upon the completion of this contract, or at
such earlier date as may be fixed by the Contract-
ing Officer, the Contractor shall submit, in a form
acceptable to the Contracting Officer, inventory
schedules covering all items of Government-fur-
nished property not consumed in the performance
of this contract (including any resulting scrap) , or
not theretofore delivered to the Government, and
shall deliver or make such other disposal of such
Government-furnished property, as may be directed
or authorized by the Contracting Officer. The net
proceeds of any such disposal shall be credited to
the contract price or shall be paid in such other
manner as the Contracting Officer may direct.
(i) Directions of the Contracting Officer and com-
munications of the Contractor issued pursuant to
this clause shall be in writing.
Notwithstanding any other provision of this con-
tract, unless paid within 30 days all amounts that
become payable by the contractor to the Govern-
ment under this contract (net of any applicable tax
credit under the Internal Revenue Code) shall bear
interest at the rate of six percent per annum from
the date due until paid, and shall. be subject to the
adjustments as provided by Part 6 of Appendix E
of the Armed Services Procurement Regulation, as
in effect on the date of this contract. Amounts
shall be due upon the earliest orie of (i) the date
fixed pursuant to this contract, (ii) the date of the
first demand for payment, (iii) the date of a sup-
plemental agreement fixing the amount, or (iv) if
this contract provides for revision of prices, the date
of written notice to the contractor stating the
amount of refund payable in connection with a
pricing proposal or in connection with a negotiated
pricing agreement not confirmed by contract sup-
plement.
43. AUDIT AND RECORDS (ASPR 7-104.41)
(Nov. 1962)
I. The following clause shall apply to all con-
tracts, changes, or modifications where the contrac-
tor has furnished a Certificate of Current Cost or
Pricing Data.
(a) For purposes of verifying that cost or pricing
data submitted, in conjunction with the negotiation
of this contract or any contract change or other
modification involving an amount in excess of
$100,000 are accurate, complete, and current, the
Contracting Officer, or his authorized representa-
tives shall-until the expiration of three years from
the date of final payment under this contract-have
the right to examine those books, records, docu-
ments and other supporting data, which will permit
adequate evaluation of the cost or pricing data sub-
mitted, along with the computations and projections
used therein, which were available to the Contrac-
tor as of the date of execution of the Contractor's
Certificate of Current Cost or Pricing Data.
(b) The Contractor agrees to insert the substance
of this clause including this paragraph (b) in all
subcontracts hereunder in excess of $100,000 unless
the price is based on adequate price competition,
established catalog or market prices of commercial
items sold in substantial quantities to the general
public, or prices set by law or regulation.
II. In the event this contract provides for incen-
tive or price redetermination, the following alter-
nate AUDIT AND RECORDS clause shall apply.
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(a) The Contractor shall maintain books, records,
documents, and other evidence and accounting pro-
cedures and practices, sufficient to reflect properly
all direct and indirect costs of whatever nature
claimed to have been incurred and anticipated to be
incurred for the performance of this contract. The
foregoing constitute "retards" for the purposes of
this clause.
(b) The Contractor's plants, or such part thereof
as may be engaged in the performance of this con-
tract, and his records shall be subject at all rea-
sonable times to inspection and audit by the Con-
tracting Oflice:r or his authorized representative.
(c) The Contractor shall preserve and make
available his records (i) until the expiration of three
years from the date of final payment under this
contract, and (ii) for such longer period, if any,
as is required by applicable statute, or by other
clauses of this contract, or by (A) or (B) below.
(A) If this contract is completely or partially ter-
minated, the records relating to the work termi-
nated shall be preserved and made available for a
period of three years from the date of any result-
ing final settlement.
(B) Records which relate to (i) appeals under the
"Disputes" clause of this contract or (ii) litigation
or the settlement of claims arising out of the per-
formance of this contract, shall be retained until
such appeals, litigation, or claims have been dis-
posed of.
(d) (1) The Contractor shall insert the substance
of this clause, including the whole of this paragraph
(d),in each subcontract hereunder that is not on
a firm fixed-price basis.
(2) The Contractor shall insert the substance of
the following clause in each firm fixed-price sub-
contract hereunder in excess of $100,000, except
those subcontracts covered by subparagraph (3)
below.
(a) For purposes of verifying that cost or pricing
data submitted in conjunction with the negotiation
of this contract or any contract change or other
modification involving an amount in excess of
$100,000 are accurate, complete, and current, the
Contracting Officer, or his authorized representa-
tives, shall-until the expiration of three years from
the date of final payment under this contract-have
the right to examine those books, records, docu-
ments, and other supporting data which will permit
adequate evaluation of the cost or pricing data sub-
mitted, along with the computations and projec-
tions used therein, which were available to the Con-
tractor as of the date of execution of the Contrac-
tor's Certificate of Current Cost or Pricing Data.
(b) The Contractor agrees to insert the substance
of this clause including this paragraph (b) in all
subcontracts hereunder in excess of $100,000, unless
the price is based on adequate price competition,
established catalog or market prices of commercial
items sold in substantial quantities to the general
public, or prices set by law or regulation.
(3) The Contractor shall insert the substance of
the following clause in each firm fixed-price sub-
contract hereunder in excess of $100,000 where the
price is based on adequate price competition, estab-
lished catalog or market prices of commercial items
sold in substantial quantities to the general public,
or prices set by law or regulation.
(a) This clause shall become operative only with
respect to any change or other modification made
pursuant to one or more provisions of this contract
which involves a price adjustment in excess of
$100,000, unless the price adjustment is based on
adequate price competition, established catalog or
market prices of commercial items sold in substan-
tial quantities to the general public, or prices set
by law or regulation.
(b) For purposes of verifying that any cost or
pricing data submitted in conjunction with a con-
tract change or other modification involving an
amount in excess of $100,000 are adequate, complete,
and current, the Contracting Officer, or his author-
ized representatives, shall-until the expiration of
three years from the date of final payment under
this contract-have the right to examine those
books, records, documents and other supporting
data which will permit adequate evaluation of the
cost or pricing data submitted, along with the com-
putations and projections used therein, which were
available to the Contractor as of the date of execu-
tion of the Contractor's Certificate of Current Cost
or Pricing Data.
(c) The Contractor agrees to insert the substance
of this clause including this paragraph (c) in all
subcontracts hereunder in excess of $100,000 unless
the price is based on adequate price competition,
established catalog or market prices of commercial
items sold in substantial quantities to the general
public, or prices set by law or regulation.
44. PRICE REDUCTION FOR DEFECTIVE COST
OR PRICING DATA (ASPR 7-104.29) (Nov. 1962)
The following clause shall apply to all contracts
where the contractor has furnished a Certificate
of Current Cost or Pricing Data.
(a) If the Contracting Officer determines that
any price, including profit or fee, negotiated in
connection with this contract was increased by any
significant sums because the Contractor, or any
subcontractor in connection with a subcontract
covered by (c) below, furnished incomplete or in-
accurate cost or pricing data or data not current
as certified in the Contractor's Certificate of Cur-
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rent Cost or Pricing Data, then such price shall be
reduced accordingly and the contract shall be mod-
ified in writing to reflect such adjustment.
(b) Failure to agree on a reduction shall be a
dispute concerning a question of fact within the
meaning of the "Disputes" clause of this contract.
tc) The Contractor agrees to insert the substance
of paragraphs (a) and (c) of this clause in each
of his cost-reimbursement type, price redetermi-
nable, or incentive subcontracts hereunder, and in
any other subcontract hereunder in excess of
$100,000 unless the price is based on adequate price
competition, established catalog or market prices
of commercial items sold in substantial quantities
to the general public, or prices set by law or regu-
lation. In each such excepted subcontract here-
under which exceeds $100,000, the Contractor shall
insert the substance of the following clause.
Price Reduction for Defective Cost or
Pricing Data.-Price Adjustments
(a) This clause shall become operative only with
respect to any change or other modification made
pursuant to one or more provisions of this contract
which involves a price adjustment in excess of
$100,000. The right to price reduction under this
clause shall be limited to such price adjustments.
(b) If the Contractor determines that any price,
including profit or fee, negotiated in connection
with any price adjustment under this contract was
increased by any significant sums because the sub-
contractor or any of his subcontractors in connec-
tion with a subcontract covered by paragraph (c)
below, furnished incomplete or inaccurate cost or
pricing data or data not current as of the date of
execution of the subcontractor's certificate of cur-
rent cost or pricing data, then such price shall be
reduced accordingly and the subcontract shall be
modified in writing to reflect such adjustment.
(c) The subcontractor agrees to insert the sub-
stance of this clause in each subcontract hereunder
which exceeds $100,000.
45. PRICE REDUCTION FOR DEFECTIVE COST
OR PRICING DATA-PRICE ADJUSTMENTS
(ASPR 7-104.29) (Nov. 1962)
(a) This clause shall become operative only with
respect to any change or other modification made
pursuant to one or more provisions of this contract
which involves a price adjustment in excess of
$100,000. The right to price reduction under this
clause shall be limited to such price adjustments.
(b) If the Contracting Officer determines that
any price, including profit, or fee, negotiated in
connection with any price adjustment under this
contract was increased by any significant sums be-
cause the Contractor or any subcontractor in con-
nection with a subcontract covered by paragraph
(d) below, furnished incomplete or inaccurate cost
or pricing data or data not current as of the date
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of execution of the Contractor's Certificate of Cur-
rent Cost or Pricing Data, then such price shall be
reduced accordingly and the contract shall be mod-
ified in writing to reflect such adjustment.
(c) Failure to agree on a reduction shall be a
dispute concerning a question of fact within the
meaning of the "Disputes" clause of this contract.
(d) The Contractor agrees to insert the substance
of paragraphs (a), (b), and (d) of this clause in
each subcontract hereunder that exceeds $100,000.
[Rev. No. 3, 1/31/61; Rev. No. 12, 11/26/62.]
46. AUDIT -PRICE ADJUSTMENTS
(ASPR 7-104.41) (Nov. 1962)
(a) This clause shall become operative only with
respect to any change or other modification made
pursuant to one or more provisions of this con-
tract which involves a price adjustment in excess
of $100,000, unless the price adjustment is based
on adequate price competition, established catalog
or market prices of commercial items sold in sub-
stantial quantities to the general public, or prices
set by law or regulation.
(b) For purposes of verifying that cost or pric-
ing data submitted in conjunction with a contract
change or other modification involving an amount
in excess of $100,000 are accurate, complete, and
current, the Contracting Officer, the Comptroller
General of the Lnited States, or any authorized rep-
resentatives, shall-until the expiration of three
years from the date of final payment under this
contract--have the right to examine those books,
records, documents and other supporting data
which will permit adequate evaluation of the cost
or pricing data submitted, along with the compu-
tations and projections used therein, which were
available to the Contractor as of the date of execu-
tion of the Contractor's Certificate of Current Cost
or Pricing Data.
(c) The Contractor agrees to insert the substance
of this clause including this paragraph (c) in all
subcontracts hereunder in excess of $100,000 unless
the price is based on adequate price competition,
established catalog or market prices of commercial
items sold in substantial quantities to the general
public, or prices set by law or regulation.
47. INSPECTION AND AUDIT (AFPI 7-023)
(July 1948)
(a) The Contractor agrees that its books and
records and its plants, or such part thereof as may
be engaged in the performance of this contract,
shall at all reasonable times be subject to inspec-
tion and audit by any authorized representative of
the Contracting Officer.
(b) The Contractor shall cause a like provision
to be included in ail subcontracts hereunder.
48. ALTERATIONS IN CONTRACT (ASPR 7-105.1)
The following alterations have been made in the
provisions of this contract:
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