CONTRACT NO. GH-5710 HYCON MANUFACTURING COMPANY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67B00820R000300060005-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 44
• Document Creation Date: December 12, 2016
• Document Release Date: April 9, 2002
• Sequence Number: 5
• Publication Date: October 18, 1966
• Content Type: MF

SECRET
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OSA-4081-66
18 October 1966
MEMORANDUM FOR: Chief, Contracts Management Division,
O SA
SUBJECT: Contract No. GH-5710
Hycon Manufacturing Company
1. Our records indicate that subject contract
was completed. as of 30 November 1963, and. that final
payment was made 17 December 1963. Following is a
summary of cost:
Amount Obligated Amount Paid Balance
25X1A
2. We are using this memorandum as a basis for
closing this contract.
25X1A
Chief; Financial operations Division
OSA-DD/S&T
CONCUR : -9'j I
25X1A
25X1A
Chief, Contracts anagement Division, OSA
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-~ ~- RET
25X1A
Hycon Mfg. Company
700 Royal Oaks Drive
Monrovia, California
Contract No. GH_5710
(AF33 (657) _11569)
Amendment No. 1
25X1A
25X1A
25X1A
IDEA-1808
Copy of 5
10 JUN 1964
1. Reference is made to Contract No. GH_5710 dated
27 June 1963.
2. Pursuant to the provisions of Clause A entitled
"Incentive Price Revision" which is referenced in PART III _
CONSIDERATION AND PAYMENT, the parties hereto have agreed
upon the final fixed price for Item a of PART I - SCOPE OF
WORK. Said total price is for the three (3)
3. The Contractor will submit a schedule of the residual
material and tooling. Upon receipt and verification of said
listing, the Contracting Officer will amend Contract No. BC-550
to include the items for maintaining future accountability
thereof.
4. The above results in a net decrease of or
a total final consideration ofi 1. All other terms and
conditions of this contract remain unchanged.
5. Please indicate your receipt of this Amendment No. 1
to Contract No. GH_5710 and your acceptance thereof by executing
the original and two copies of this amendment. Return the
fully executed original and one copy to this amendment to the
undersigned, and retain the remaining copy for your files.
Very truly yours,
25X1A
ACKNOWLEDGED AND ACCEPTED
25X1A HY ON MFG- COMPANY
BY
TI
29 June 1964
Contracting Of icer
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25X1A
IDEA 1329
NEGOTIATED CONTRACT Contract No. GH-5710
AF33(657)-11569
Hycon Mfg. Company
700 Royal Oaks Drive
Monrovia, California
Contract For:
(See Schedule)
Amount:
(See Schedule)
Mail In
voice to
:
Period:
(See Schedule)
This contract is entered into, by and between the United States
of America, hereinafter called the Government, represented by the
Contracting Officer executing this contract, and the above-named
Contractor which is a corporation, incorporated in the State of
Delaware, hereinafter called the Contractor.
The parties hereto agree that the Contractor shall furnish the
facilities and deliver all supplies and perform all the services
set forth in the attached schedule issued hereunder, for the
consideration stated therein.
The rights and obligations of the parties to this contract shall
be subject to and governed by the attached schedule and the
General Provisions. In the event of any inconsistency between
the schedule and the General Provisions, the Schedule shall
control.
IN WITNESS WHEREOF, the parties have executed this contract as of
7 27 JUN 1963 , 1963.
Signatures:
HYCON MFG. COMPANY THE UNITED STATES OF AMERICA
25X1A
BY
5X1A
Title Executive Vice President
Contracting Officer
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PAGE
PART I SCOPE OF WORK . . . . . . . . . . . . . . 3
PART II PERIOD OF PERFORMANCE. . . . . . . . . . 4
PART III CONSIDERATION AND PAYMENT. . . . . . . . 4
PART IV PROGRESS PAYMENTS . . . . . . . . . . . . 4
PART V GOVERNMENT FURNISHED EQUIPMENT . . . . . 9
PART VI WAIVER OF REQUIREMENTS OF GENERAL
PROVISIONS . . . . . . . . . . . . . . . 9
PART VII SPECIAL SECURITY RESTRICTIONS. . . . . .10
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Contract No. GH-5710
CERTIFICATE
25X1A
I, - certify that I am the
Secretary-Treasurer of the Corporation named as Contractor
25X1A herein; that who signed this contract
25X1A
on behalf of the Contractor was then Executive 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 the scope of its Corporate powers.
(Corporate Seal)
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The Contractor shall furnish all necessary facilities,
materials and services to fabricate and deliver three (3)
73-B Cameras per the following description.
Unit Total
Price Price
a. 3 each HR-73-B Configurations For the
Part #732010 including the Lot
following.
One (1) Shutter model HS-732
#738000
One (1) Programmer Model 73-B
#732610
One (1) Container, Shipping &
Storage Model 73-B
#732070-11
One (1) 36" f/10 Brouwer Lens
with yellow filter
One (1) Carriage, Configuration
Model 73-B #732060
Cassettes and Film Spools will
be supplied as GFE
25X1A
Delivery: One (1) June 30, 1963
One (1) September 15, 1963
One (1) October 15, 1963
The following ppare parts shall be delivered: 25X1A
b. 2 each Mirror Assemblies #732702-13 $ 8,500 $
Delivery: One (1) October 3,1963
One (1) November 30,1963 25X1A
c. 2 each Bearing, Oblique #738257-D $ 4,500 $
Delivery: Two (2) July 31, 1963
*Target Price
**Ceiling Price
***Firm Fixed Price
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25X1A
25X1A
The equipment to be delivered under this contract will be built
in accordance with the following drawings except that cassettes
and film spools will be supplied as Government Furnished Equipment.
The 36-inch f/10 Brouwer lens in a magnesium casting will be sub-
stituted for the 36-inch lens called out in the drawings.
Drawing No. 732010 -- Top Assembly
Drawing No. 732012 -- Configuration, Shipping & Storage
Drawing No. 732060 -- Carriage Assembly, Configuration
Drawing No. 732070 -- Container Assembly, Configuration
PART II - PERIOD OF PERFORMANCE
This contract shall commence on 14 March 1963 and shall be
completed by 30 November 1963. The delivery schedule is set forth
in PART I.
PART III - CONSIDERATION AND PAYMENT
a. Item a of PART I is subject to the provisions of Clause A
entitled INCENTIVE PRICE REVISION (FIRM TARGET). Said Clause A is
attached a4d made a art of this schedule. The ceiling price for
Item a is
b. Payments for Items b and c are subject to the provisions
of Clause 7 of the General Provisions. The total firm fixed price
for these items is
25X1A c.
The combined total consideration isi
PART IV - PROGRESS PAYMENTS
Progress payments shall be made to the contractor as work
progresses, from time to time upon request, in amounts approved
by the Contracting Officer upon the following terms and conditions:
(a) Computation of Amounts. (1) Unless a smaller amount is
requested, each progress payment shall be (i) 90 percent of the
amount of the Contractor's total costs incurred under this contract
plus (ii) the amount of progress payments to subcontractors as
provided in (j) below; all less the sum of previous progress pay-
ments.
(2) The Contractor's total costs ((a)(1)(i)) shall be
reasonable, allocable to this contract, and consistent with sound
and generally accepted accounting principles and practices.
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However, such costs shall not include (1) any costs incurred by
subcontractors or suppliers, or (ii) any payments or amounts
payable to subcontractors or suppliers, except for completed
work (including partial deliveries) to which the Contractor has
acquired title and except for amounts paid or payable under cost-
reimbursement or time and material subcontracts for work to which
the Contractor has acquired title or (iii) costs ordinarily capi-
talized and subject to depreciation or amortization except for the
property depreciated or amortized portion of such costs.
(3) The amount of unliquidated progress payments shall
not exceed the lesser of (i) 90 percent of the costs mentioned in
(a) (1) (1), above, plus any unliquidated progress payments men-
tioned in item (a) (1) (ii) above, both of which are applicable
only to the supplies and services not yet delivered and invoiced
to and accepted by the Government, or (ii) 80 percent of the total
contract price of supplies and services not yet delivered and in-
voiced to and accepted by the Government, less unliquidated
advance payments.
(4) The aggregate amount of progress payments shall
not exceed 90 percent of the total contract price.
(5) If at any time a progress payment or the unliqui-
dated progress payments exceed the amount permitted by this
paragraph (a), the Contractor shall pay the amount of such excess
to the Government upon demand.
(b) Liquidation. Except as provided in the clause entitled
"Termination for Convenience of the Government," all progress
payments shall be liquidated by deducting from any payment under
this contract, other than advance or progress, the amount of un-
liquidated progress payments, or 90 percent of the gross amount
invoiced, whichever is less. Repayment to the Government required
by a retroactive price reduction will be made after recalculating
liquidations and payments on past invoices at the reduced prices
and adjusting the unliquidated progress payments accordingly.
(c) Reduction or Suspension. The Contracting Officer may
reduce or suspend progress payments, or liquidate them at a rate
higher than the percentage stated in (b) above, or both, whenever
he finds upon substantial evidence that the Contractor (i) has
failed to comply with any material requirement of this contract,
(ii) has so failed to make progress, or is in such unsatisfactory
financial condition, as to endanger performance of this contract,
(iii) has allocated inventory to this contract substantially
exceeding reasonable requirements, (iv) is delinquent in payment
of the costs of performance of this contract in the ordinary
course of business, (v) has so failed to make progress that the
unliquidated progress payments exceed the fair value of the work
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accomplished on the undelivered portion of this contract, or
(vi) is realizing less profit than the estimated profit used
for establishing a liquidation percentage in paragraph (b), if
that liquidation percentage is less than the percentage stated
in paragraph (a) (1).
(d) Title. Immediately, upon the date of this contract,
title to a l parts; materials; inventories; work in process;
special tooling as defined in the clause of this contract en-
titled "Special Tooling"; nondurable (i.e., non-capital) tools,
jigs, dies, fixtures, molds, patterns, taps, gauges, test equip-
ment, and other similar manufacturing aids not included within
the definition of special tooling in such "Special Tooling"
clause; and drawings and technical data (to the extent delivery
thereof to the Government is required by other provisions of
this contract); theretofore acquired or produced by the Contractor
and allocated or properly chargeable to this contract under sound
and generally accepted accounting principles and practices shall
forthwith vest in the Government; and title to all like property
thereafter acquired or produced by the Contractor and allocated
or properly chargeable'to this contract as aforesaid shall forth-
with vest in the Government upon said acquisition, production or
allocation. Notwithstanding that title to property is in the
Government through the operation of this clause, the handling and
disposition of such property shall be determined by the applicable
provisions of this contract such as: the Default clause and
paragraph (h) of this clause; Termination for Convenience of the
Government clause; and the Special Tooling clause. Current pro-
duction scrap may be sold by the Contractor without approval of
the Contracting Officer and the proceeds shall be credited against
the costs of contract performance. With the consent of the
Contracting Officer and on terms approved by him, the Contractor
may acquire or dispose of property to which title is vested in the
Government pursuant to this clause, and in that event, the costs
allocable to the property so transferred from this contract shall
be eliminated from the costs of contract performance and the
Contractor shall repay to the Government (by cash or credit memo-
randum) an amount equal to the unliquidated progress payments
allocable to the property so transferred. Upon completion of per-
formance of all the obligations of the Contractor under this
contract, including liquidation of all progress payments hereunder,
title to all property (or the proceeds thereof) which had not been
delivered to, and accepted by the Government under this contract
or which had not been incorporated in supplies delivered to and
accepted by the Government under this contract and to which title
has vested in the Government under this clause shall vest in the
Contractor. The provisions of this contract referring to or defin-
ing liability for Government-furnished property shall not apply to
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property to which the Government shall have acquired title
solely by virtue of the provisions of this clause.
(e) Risk of Loss. Except to the extent that the Government
shall have otherwise expressly assumed the risk of loss of pro-
perty, title to which vests in the Government pursuant to this
clause, in the event of the loss, theft or destruction of or
damage to any such property before its delivery to and acceptance
.by the Government, the Contractor shall bear the risk of loss and
shall repay the Government an amount equal to the unliquidated
progress payments based on costs allocable to such lost, stolen,
destroyed or damaged property.
(f) Control of Costs and Property. The Contractor shall
maintain an accounting system and controls adequate for the proper
administration of this clause.
(g) Reports--Access to Records. Insofar as pertinent to
the administration of this clause, the Contractor will (1) furnish
promptly such relevant reports, certificates, financial statements,
and other information as may be reasonably requested by the
Contracting Officer, and (ii) give the Government reasonable oppor-
tunity to examine and verify his books, records and accounts.
(h) Special Provisions Regarding Default. If this contract
is terminated pursuant to the clause entitled "Default", (i) the
Contractor shall, upon demand, pay to the Government the amount of
unliquidated progress payments and (ii) with respect to all pro-
perty as to which the Government elects not to require delivery
under the clause entitled "Default", title shall vest in the
Contractor upon full liquidation of progress payments, and the
Government shall be liable for no payment except as provided by
the "Default" clause.
(i) Reservations of Rights. 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. No payment, or vesting of title pursuant to
this clause, shall excuse the Contractor from performance of his
obligations under this contract, nor constitute a waiver of any
of the rights and remedies of the parties under this contract.
No delay or failure of the Government in exercising any right,
power, or privilege under this clause shall affect any such right,
power or privilege, nor shall any single or partial exercise
thereof preclude or impair any further exercise thereof or the
exercise of any other right, power or privilege of the Government.
(j) Progress Payments to Subcontractors. (1) The amount
mentioned in item (a) (1) (ii) above shall be the sum of (i) all
the progress payments made by the Contractor to his subcontractors
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and remaining unliquidated, and (ii) unpaid billings for progress
payments to subcontractors which have been approved for current
payment in the ordinary course of business, when under subcontracts
which conform to (2) below.
(2) Subcontracts on which progress payments to sub-
contractors may be included in the base for progress payments
pursuant to paragraph (a) of this clause are limited to those sub-
contracts in which there is expected to be a long "lead time,"
approximating six months or more between the beginning of work and
the first delivery, containing subcontract progress payment provi-
sions which (1) are substantially similar to and as favorable to
the Government as this "Progress Payments" clause, no more favorable
to the subcontractor than this clause is to the Contractor and on
a basis of not more than 70 percent of total costs or 85 percent of
direct labor and material costs (except that these percentages may
be 75 percent of total costs or 90 percent of direct labor and
material costs for those subcontractors which are small business
concerns), and (ii) make all rights of the subcontractor with re-
spect to all property to which the Government has title under the
subcontract subordinate to the rights of the Government to require
delivery of such property to it in the event of default by the
Contractor under this contract or in the event of the bankruptcy
or insolvency of the subcontractor.
(3) The Government agrees that any proceeds received
by it from -property to which it has acquired title by virtue of
such provisions in any subcontract shall be applied to reduce the
amount of unliquidated progress payments made by the Government to
the Contractor under this contract. In the event the Contractor
fully liquidates such progress payments made by the Government to
him hereunder and there are progress payments to any subcontractors
which are unliquidated, the Contractor shall be subrogated to all
the Government's rights by virtue of such provisions in the sub-
contract or subcontracts involved as if all such rights had there-
upon assigned and transferred to the Contractor.
(4) The billings described in (j) (1) (ii) above shall
be paid promptly by the Contractor in the ordinary course of
business, not later than a reasonable time after payment of equiva-
lent amounts by the Government to the Contractor.
(5) To facilitate small business participation in sub-
contracting under this contract, the Contractor agrees to provide
progress payments to those subcontractors which are small business
concerns, in conformity with the standards for customary progress
payments stated in paragraph 503 of Appendix E of the Armed
Services Procurement Regulation, as in effect on the date of this
contract. The Contractor further agrees that the need for such
progress payments will notQ considered as a handicap or adverse
factor in the award of su ryacts.
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PART V - GOVERNMENT FURNISHED EQUIPMENT
The Government shall furnish the Contractor with the
following equipment which shall be referred to as "GFP" through-
out this contract. The equipment shall be subject to the provi-
sions of the clause of this contract entitled "Government-Furnished
Property."
Item
Nomenclature
Quantity
1.
Cassettes #732400
6 each
2.
Film Spools #734480-503
6 each
The Government will make available on a loan basis the equipment
listed below. with the understanding that such equipment is to be
replaced by the Contractor on or about the time of delivery
(October 1963) of the third unit of Item a of PART I.
Item P/N Nomenclature Quantity
1. 732135 Film Drive Assembly 1
2. 732666 Tension Servo Assembly 1
3. 732741 Mirror Assembly 1
4. 737734 Take-up Drive Assembly 2
5. 737822 Instrument Housing Assembly 1
6. 738000-53 Shutter & Case Assembly 1
7. 738209 Oblique Motor Assembly 1
8. 739170 Sub Assy. - Main Bearing Brake 2
9. 739300-1 & 2 Box Assy. - Tension Sensor 1(-1) & 1(-2)
10. 739435 Vacuum Valve Assembly 1
11. 819105-502 Programmer Assembly 1
PART VI - WAIVER OF REQUIREMENTS OF GENERAL PROVISIONS
Notwithstanding the requirements of any of the General
Provisions of this contract to the contrary, whensoever the Con-
tractor, in performance of the work under this contract, shall find
that 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 his duly authorized representative for
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 General Provisions conflicting with such
security requirements. Any waiver of compliance with the General
Provisions of this contract issued by the Contracting Officer shall
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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 waiver of any clauses
of the General Provisions in conflict with the stipulations of
such contract.
PART VII - SPECIAL SECURITY RESTRICTIONS
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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Clause A
INCENTIVE PRICE REVISION (FIRM TARGET) NOV. 1962)
(a) General. The supplies or services identified in the Schedule
as Items A. are subject to price revision in accordance with the
provisions of this clause; provided that in no event shall the total
25X1 A final price of such ' items exceed pRrggak kxxxx%* of the
total target cost. Any supplies or serv ces which are to be ordered
separately under, or otherwise added to, this contract, and which are to
be subject to price revision in accordance with the provisions of this
clause, shall be identified as such in a modification to this contract.
(b) Submission of Data. Within sixty ( 60 ) days after
the end of the month in which the Contractor has delivered the last unit
of supplies and completed the services called for by those items referred
to in paragraph (a) above, the Contractor shall submit, in such form as
the Contracting Officer may require, (i) a detailed statement of all such
;ems, and (ii) an estimate of costs of such further performance, if any,
s may be necessary to complete performance of all work with respect to
such items.
(c) Price Revision.. Upon submission of the data required by para-
graph (b) above, the Contractor and the Contracting Officer shall
promptly establish the total final price in accordance with the following:
(1) On the basis of the information required by paragraph (b)
above, together with any other pertinent information, there shall be es-
tablished by negotiation the total final cost reasonably incurred or to
be incurred for and properly allocable to the supplies delivered (or
services performed) and accepted by the Government, which are subject to
price revisions under this clause.
(2) The total final price shall be established, by adjusting
"he total final negotiated cost by an amount for profit or loss deter-
.ned as follows:
WHEN THE TOTAL FINAL NEGOTIATED THE ADJUSTMENT FOR PROFIT OR LOSS
COST IS: IS:
Equal to the total target cost. . Total Target profit.
Greater than'the total target
cost . Total target profit less twenty
percent ( 20%) of the amount by.
which the total final negotiated cost
exceeds the total target cost.
Less than the total target cost . Total target profit plus twenty
percent ( 20%) of the amount by
which the total final negotiated cost
is less than the total target cost.
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(3) The total final price of the items referred to in
paragraph (a) above shall be evidenced by a modification to this
contract signed by the Contractor and the Contracting Officer.
Such price shall not be subject to revision notwithstanding any
changes in the cost of performing the contract, with the following
exceptions:
(i) insofar as the parties may agree in writing, .
prior to the determination of the total final price, (A) to exclude
any specific elements of cost from the total final price and (B) to
a procedure to provide subsequent disposition of such elements; and
(ii) to the extent any adjustment or.credit is ex-
plicitly permitted or required by this or any other clause of this
contract.
(d) Subcontracts. No subcontract placed under this contract
shall provide for payment on a cost-plus-a-percentage-of-cost basis;
and the Contractor shall not, without the-prior written consent of
the Contracting Officer, place any subcontract which is on a cost-
plus-a-fee basis and which would involve a total price in excess of
$10,000 including the fee. The Contracting Officer may, in his,
discretion, ratify in writing any such cost-plus-a-fee subcontract
and such action shall constitute the consent of the Contracting
Officer as required by this paragraph (d).
(e) Adjustment of Payments. Pending execution of the con-
tract modification referred to in subparagraph (c) (3) above, the
Contractor shall submit invoices or vouchers in accordance with
billing prices as provided in this paragraph. The billing prices
shall be the target prices set forth in this contract; provided,
that if at any time it appears that the then current billing prices
do not provide for payments consistent with the provisions of sub-
paragraph (f) (3) below, the parties may agree to revised billing
prices, which shall be reflected in a modification to this contract.
Billing prices are for the sole purpose of providing for interim
payments and shall not affect the determination of the total final
price under paragraph (c) above. After execution of the contract
modification referred to in subparagraph,(c) (3) above, the total
amount paid or to be paid on all invoices or vouchers shall be
adjusted to reflect the total final price and any additional pay-
ments, refunds, or credits, resulting therefrom shall be promptly
made.
(f) Limitation on payments. (1) This paragraph (f) shall
,not apply after final price revision.
(2) Within forty-five (45) days after the end of each
quarter of the Contractor's fiscal year, beginning for the quarter
in which a delivery is first made (or services are first performed)
and accepted by the Government' under this contract, and as of the
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end of each quarter, the Contractor shall submit to the Contracting
Officer a cumulative statement setting forth:
(i) the total contract price of all supplies
delivered (or services performed) and accepted by the Government
for which final prices have been established;
(ii) the total costs (estimated to the extent
necessary) reasonably incurred for and properly allocable solely
to the supplies delivered (or services performed) and accepted by
the Government for which final prices have not been established;
(iii) that portion of the total target profit
which is in direct proportion to the supplies delivered ( or
services performed) and accepted by the Government foi which final
prices have not been established, increased or decreased in accor-
dance with the incentive profit formula set forth in (c) (2) above
when the amount of costs stated under (ii) above differs from the
aggregate target costs of such supplies or services; and
(iv) the total amount of all invoices or vouchers
for supplies delivered (or services performed) and accepted by the
Government (including amounts applied or to be applied to liquidate
progress payments).
(3) Notwithstanding any provision of this contract
authorizing greater payments, if on any quarterly statement the
amount of (2) (iv) above exceeds the sum of (2) (1), (ii), and (iii)
above, the Contractor shall immediately refund or credit to the
Government against existing unpaid invoices or vouchers covered by
such statement the amount of such excess less (i) the cumulative
total-of any previous refunds or credits under this clause (exclu-
sive of any tax credits under Section 1481 of the Internal Revenue
Code of 1954) and (ii) any applicable tax credits under Section
1481 of the Internal Revenue Code of 1954. If any portion of such
excess has been applied to the liquidation of progress payments,
such amounts (less all tax credits under the Internal Revenue Code)
may be added or restored to the unliquidated progress payment
account, to the extent consistent with the "Progress Payments"
clause of this contract, instead of direct refund thereof.
(4) The Contractor shall (i) insert in each price re-l
determination or incentive price revision subcontract hereunder the
substance of this paragraph (f), including this subparagraph (4),
modified to omit mention of the Government and reflect the position
of the Contractor as purchaser and of the subcontractor as vendor,
and t o omit that portion of subparagraph (3), relating to tax
credits, and (ii) include in each cost-reimbursement type subcon-
tract hereunder a requirement. that each price redetermination and
incentive price revision subcontract thereunder will contain the
substance of this paragraph (f), including. this subparagraph (4) '
modified as outlined in (i) above. (Rev. No. 1, 7/22/60; Rev.
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(g) Disagreements. If the Contractor and the Contracting
Officer fail to agree upon the total final price within 60 days
after'the date on which the data required by (b) above are to be
submitted, or within such further time as may be specified by the
Contracting Officer, such failure to agree shall be deemed to be
a dispute concerning a question of fact within the meaning of the
"Disputes" clause of this contract and the Contracting Officer
shall promptly issue a decision thereunder.
(h) Termination. If this contract is terminated prior to
establishmen Te total final price, prices of supplies, or
services subject to price revision under this clause shall be
established pursuant to this clause for (i) completed supplies
accepted by the Government and services performed and accepted by
the Government, and (ii) in the event of a partial termination,.
supplies and services which are not terminated. The termination
shall be otherwise accomplished pursuant to other applicable pro-
visions of this contract.
(i) Equitable Adjustments Under Other Clauses. If an equi-
table adjustment in the contract price is made under any other clause
of this contract before the total final price is established, the
adjustment shall be made in the total target cost and may be made
in the total target profit. If such an adjustment is made after the
total final price is established, adjustment shall be made only in
the total final price.
(j) Exclusion From Target Price and Total Final Price. When-
ever any clause of this contract provides that the contract price
does not or will not include an amount for a specific purpose, such
provision shall mean that neither any target price nor the total
final price includes or will include any'amount for such purpose.
(k) Separate Reimbursement. The cost of performance of an
obligation that any clause o this contract expressly provides is
at Government expense shall not be included in any target price or
in the total final price, but shall be reimbursed separately to the
extent reasonable and allocable.
(1) Taxes. As used in the "Federal, State, and Local Taxes"
clause of this contract or any other clause of this contract that
provides for certain taxes or duties to be included in, or excluded
from, the contract price, the term "contract price" includes the
total target price, or if it has been established, the total final
price. When a provision in such clause or clauses requires that the
contract price be increased or decreased as a result of changes in
the obligation of the Contractor to pay or bear the burden of cer-
tain taxes or duties, such increase or decrease shall be made in the
total target price or, if it has been established, in the total
final price, so as not to affect the contractor's profit or loss on
this contract. In the event the contract calls for parts or other
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supplies or services which are to be ordered under a provisioning
document or Government option and the prices of such supplies or
services are to be made subject to incentive price revision in
accordance with the above clause, the following provision (m) shall
be included in such clause:
(m) Parts. Parts, other supplies, or services, which are to
be furnished under this contract pursuant to a provisioning document
or Government option, shall be subject to price revision in accor-
dance-with the provisions of this clause, and any prices established
for such parts, other supplies, or services, pursuant to such pro-
visioning document or Government option, shall be deemed to be
target prices. Target cost and profit covering such parts, other
supplies, or services may be established either separately, in the
aggregate, or in any combination thereof, as the parties may agree.
(NOV.1962) (Rev. No. 12, 11/26/62.)
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Clause No. Page No.
1. Definitions (Feb. 1962) (ASPR 7-103.1) . . . . . . . . . . .
1
2. Limitation of Cost (Feb. 1959) (ASPR 7-402.2) . . . . . . . . .
1
3. Allowable Cost, Fixed Fee, and Payment (Sept. 1962) (ASPR 7-402.3)
1
4. Standards of Work (Feb. 1959) (ASPR 7-402.4) . . . . . . . .
2
5. Inspection and Correction of Defects (May 1960) (ASPR 7-402.5) .
2
6. Assignment of Claims (Feb. 1962) (ASPR 7-103.8) . . . . . . .
3
7. Examination of Records (Nov. 1962) (ASPR 7-203.7) . . . . .
4
8. Subcontracts (Nov. 1962) (ASPR 7-402.8) . . . . . . . . . .
4
9. Utilization of Small Business Concerns (Jan. 1958) (ASPR 1-707.3)
5
10. Termination (Jul. 1962) (ASPR 8-702) . . . . . . . . . . .
5
11. Disputes (Jan. 1958) (ASPR 7-103.12) . . . . . . . . . . . .
8
12. Buy American Act (Jul. 1960) (ASPR 6-104.5) . . . . . . . . .
8
13. Convict Labor (Mar. 1949) (ASPR 12-203) . . . . . . . . . .
9
14. Walsh-Healey Public Contracts Act (Jan. 1958) (ASPR 12-604) . .
9
15. Nondiscrimination in Employment (Jul. 1962) (ASPR 12-802) . . .
9
16. Officials Not to Benefit (Jul. 1949) (ASPR 7-103.19) . . . . . . .
10
17. Covenant Against Contingent Fees (Jan. 1958) (ASPR 7-103.20) .
10
18. Authorization and Consent (Jan. 1961) (ASPR 9-102) . . . . .
10
19. Notice and Assistance Regarding Patent and Copyright Infringe-
ment (Feb. 1962) (ASPR 9-104) . . . . . . . . . . . . .
10
20. Patent Rights (License) (Apr. 1962) (ASPR 9-107) . . . . . . .
10
21. Data (Feb. 1962) (ASPR 9-203.1) . . . . . . . . . . . . .
13
22. Military Security Requirements (Jun. 1958) (ASPR 7-104.12) . . .
14
23. Government Property (Aug. 1961) (ASPR 7-402.25) . . . . . .
15
24. Insurance-Liability to Third Persons {Jan. 1960) (ASPR 7-203.22) .
17
25. Utilization of Concerns in Labor Surplus Areas (Feb. 1962) . . . .
18
26. Payment for Overtime and Shift Premiums (Feb. 1962) (ASPR
1-805.3 (a) ) . . . . . . . . . . . . . . . . . . . . .
18
27. Competition in Subcontracting (Apr. 1962) (ASPR 7-104.40) . . .
18
28. Filing of Patent Applications (Jan. 1955) (ASPR 9-106) . . . . .
18
29. Excusable Delays (Jul. 1958) (ASPR 8-708) . . . . . . . . . .
19
30. Notice to the Government of Labor Disputes (Sep. 1958) (ASPR
7-403.10) . . . . . . . . . . . . . . . . . . . . . .
19
31. Gratuities (Mar. 1952) (ASPR 7-104.16) . . . . . . . . . . .
19
32. Limitation on Withholding of Payments (Feb. 1959) (ASPR 7-403.12)
19
33. Changes (Feb. 1959) (ASPR 7-404.1) . . . . . . . . . . . .
19
34. Stop Work Order (Jul. 1960) (ASPR 7-404.5) . . . . . . . . .
20
35. Reports of Work (Jul. 1960) (ASPR 7-404.6) . . . . . . . . . .
20
36. Data-Withholding of Payment (Apr. 1962) (ASPR 9-207) . . .
20
37. Submission of Vouchers (Jun. 1959) . . . . . . . . . . . . .
21
38. Interest (Feb. 1962) (ASPR E-620) . . . . . . . . . . . . .
21
39. Competition in Subcontracting (Apr. 1962) (ASPR 7-402.29) . . .
21
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INDEX TO GENERAL PROVISIONS (Continued)
Clause No.
Page No.
40. Utilization of Concerns in Labor Surplus Areas (Feb. 1962) (ASPR
7-402.27) . . . . . . . . . . . . . . . . . . . .
. .
21
41. Work Hours Act of 1962-Overtime Compensation (Oct.
1962)
(ASPR 12-303) . . . . . . . . . . . . . . . . . .
. .
21
42. Audit (Nov. 1962) (ASPR 7-104.41) . . . . . . . . . . . .
22
43. Price Reduction for Defective Cost or Pricing Data (Nov. 1962)
(ASPR 7-104.29) . . . . . . . . . . . . . . . . .
22
44. Subcontractor Cost and Pricing Data (Nov. 1962) (ASPR 7-104.42)
22
45. Negotiated Overhead Rates (Dec. 1962) (ASPR 3-704.1) . . . . .
23
46. Alterations in Contract (Jul. 1949) (ASPR 7-105.1) . . . . . . .
24
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COST-REIMBURSEMENT RESEARCH AND
DEVELOPMENT CONTRACT
(With Fixed Fee)
1. DEFINITIONS (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 "Secretary"
means the Secretary, the Under Secretary, any As-
sistant Secretary, or any other head or assistant
head of the executive or military department or
other Federal agency; and the term "his duly au-
thorized representative" means any person or per-
sons or board (other than the Contracting Officer)
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 representa-
tive of a Contracting Officer acting within the limits
of his authority.
(c) Except as otherwise provided in this contract,
the term "subcontracts" includes purchase orders
under this contract.
(d) The term "contract work" means all work
to be performed under this contract including with-
out limitation any studies covering fundamental,
theoretical, or experimental investigations; any ex-
tension of the investigative findings and theories of
a scientific or technical nature into practical ap-
plication; any tangible items, hereinafter referred
to as "supplies," furnished to the Government; and
any reports, data, computations, plans, drawings,
and specifications with respect to any of the fore-
going. (Oct. 1957)
2. LIMITATION OF COST (Feb. 1959)
(a) It is estimated that the total cost to the Gov-
ernment, exclusive of any fixed fee, for the per-
formance of this contract will not exceed the esti-
mated cost set forth in the Schedule, and the Con-
tractor agrees to use his best efforts to perform the
work specified in the Schedule, and all obligations
under this contract within such estimated cost. If
at any time the Contractor has reason to believe
that the costs which he expects to incur in the per-
formance of this contract in the next succeeding
sixty (60) days, when added to all costs previously
incurred, will exceed seventy-five per cent (75%) of
the estimated cost then set forth in the Schedule,
or if at any time, the Contractor has reason to
believe that the total cost to the Government, ex-
clusive of any fixed fee, for the performance of this
contract will be substantially greater or less than
the then estimated cost thereof, the Contractor
shall notify the Contracting Officer in writing to
that effect, giving the revised estimate of such total
cost for the performance of this contract.
(b) The Government shall not be obligated to
reimburse the Contractor for costs incurred in ex-
cess of the estimated cost set forth in the Schedule,
and the Contractor shall not be obligated to con-
tinue performance under the contract or to incur
costs in excess of the estimated cost set forth in the
Schedule, unless and until the Contracting Officer
shall have notified the Contractor in writing that
such estimated cost has been increased and shall
have specified in such notice a revised estimated
cost which shall thereupon constitute the estimated
cost of performance of this contract. When and to
the extent that the estimated cost set forth in the
Schedule has been increased, any costs incurred by
the Contractor in excess of such estimated cost prior
to the increase in estimated cost shall be allowable
to the same extent as if such costs had been in-
curred after such increase in estimated cost.
3. ALLOWABLE COST, FIXED FEE, AND PAY-
MENT (Sept. 1962)
(a) For the performance of this contract, the
Government shall pay to the Contractor:
(i) the cost thereof (hereinafter referred to as
"allowable cost") determined by the Contracting
Officer to be allowable in accordance with-
(A) Part 2 of Section XV of the Armed Services
Procurement Regulation as in effect on the date of
this contract; and
(B) the terms of this contract; and
(ii) such fixed fee, if any, as may be provided for
in the Schedule.
(b) Once each month (or at more frequent in-
tervals, if approved by the Contracting Officer) the
Contractor may submit to an authorized representa-
tive of the Contracting Officer, in such form and
reasonable detail as such representative may re-
quire, an invoice or public voucher supported by a
statement of cost incurred by the Contractor in the
performance of this contract and claimed to con-
stitute allowable cost.
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(c) Promptly after receipt of each invoice or
voucher the Government shall, subject to the pro-
visions of (d) below, make payment thereon as ap-
proved by the Contracting Officer. Payment of the
:fixed fee, if any, shall be made to the Contractor
as specified in the Schedule; Provided, however,
ghat after payment of eighty-five per cent (85%) of
the fixed fee set forth in the Schedule, further
payment on account of the fixed fee shall be with-
held until a reserve of either fifteen per cent (15%)
of the total fixed fee, or one hundred thousand
dollars ($100,000), whichever is less, shall have been
set aside.
(d) At any time or times prior to final payment
under this contract the Contracting Officer may
have the invoices or vouchers and statements of
cost audited. Each payment theretofore made shall
be subject to reduction for amounts included in the
related invoice or voucher which are found by the
+:;ontracting Officer, on the basis of such audit, not
to constitute allowable cost. Any payment may be
reduced for overpayments, or increased for under-
payments, on preceding invoices or vouchers.
(e) On receipt and approval of the invoice or
7oucher designated by the Contractor as the "com-
pletion invoice" or "completion voucher" and upon
compliance by the Contractor with all the provi-
,:;ions of this contract (including, without limitation,
the provisions relating to patents and the provisions
of (f) below), the Government shall promptly pay
to the Contractor any balance of allowable cost,
and any part of the fixed fee which has been with-
held pursuant to (c) above or otherwise not paid to
the Contractor. The completion invoice or voucher
.;hall be submitted by the Contractor promptly fol-
lowing completion of the work under this contract
but in no event later than one (1) year (or such
longer period as the Contracting Officer may in his
discretion approve in writing) from the date of
such completion.
(f) The Contractor agrees that any refunds, re-
bates, credits, or other amounts (including any
interest thereon) accruing to or received by the
ontractor or any assignee under this contract
shall be paid by the Contractor to the Government,
to the extent that they are properly allocable to
costs for which the Contractor has been reimbursed
by the Government under this contract. Reason-
able expenses incurred by the Contractor for the
l;iurpose of securing such refunds, rebates, credits,
or other amounts shall be allowable costs hereunder
when approved by the Contracting Officer. Prior
to final payment under this contract, the Contrac-
tor and each assignee under this contract whose
assignment is in effect at the time of final payment
under this contract shall execute and deliver-
(i) an assignment to the Government, in form
and substance satisfactory to the Contracting
Officer, of refunds, rebates, credits, or other amounts
?: including any interest thereon) properly allocable
to costs for which the Contractor has been reim-
bursed by the Government under this contract; and
(ii) a release discharging the Government, its
officers, agents, and employees from all liabilities,
obligations, and claims arising out of or under this
contract, subject only to the following exceptions-
(A) specified claims in stated amounts or in
estimated amounts where the amounts are not
susceptible of exact statement by the Contractor;
(B) claims, together with reasonable expenses
incidental thereto, based upon liabilities of the Con-
tractor to third parties arising out of the perform-
ance of this contract; provided, that such claims
are not known to the Contractor on the date of the
execution of the release; provided further, that
the Contractor gives notice of such claims in writ-
ing to the Contracting Officer not more than six (6)
years after the date of the release or the date of
any notice to the Contractor that the Government
is prepared to make final payment, whichever is
earlier; and
(C) claims for reimbursement of costs (other
than expenses of the Contractor by reason of any
indemnification of the Government against patent
liability), including reasonable expenses incidental
thereto, incurred by the Contractor under the pro-
visions of this contract relating to patents.
(g) Any cost incurred by the Contractor under
the terms of this contract which would constitute
allowable cost under the provisions of this clause
shall be included in determining the amount pay-
able under this contract, notwithstanding any pro-
visions contained in the specifications or other docu-
ments incorporated in this contract by reference,
designating services to be performed or materials
to be furnished by the Contractor at his expense
or without cost to the Government.
4. STANDARDS OF WORK (Feb. 1959)
The Contractor agrees that the performance of
work and services, pursuant to the requirements of
this contract, shall conform to high professional
standards.
5. INSPECTION AND CORRECTION OF DEFECTS
(May 1960)
(a) All work under this contract shall be subject
to inspection and test by the Government (to the
extent practicable) at all times (including the
period of performance) and places, and in any
event prior to acceptance. The Contractor shall
provide and maintain an inspection system ac-
ceptable to the Government covering the work
hereunder. The Government, through any author-
ized representative, may inspect the plant or plants
of the Contractor or of any of his subcontractors
engaged in the performance of this contract. If
any inspection or test is made by the Government
on the premises of the Contractor or a subcontrac-
2
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tor, the Contractor shall provide and shall require
subcontractors to provide all reasonable facilities
and assistance for the safety and convenience of
the Government inspectors in the performance of
their duties. All inspections and tests by the Gov-
ernment shall be performed in such a manner as
will not unduly delay the work. Except as other-
wise provided in this contract, final inspection, and
acceptance shall be made at the place of delivery
as promptly as practicable after delivery and shall
be deemed to have been made no later than ninety
(90) days after the date of such delivery, if ac-
ceptance has not been made earlier within such
period.
(b) At any time during performance of this con-
tract, but not later than six (6) months (or such
other time as may be provided in the Schedule)
after acceptance of all of the end items (other than
designs, drawings, or reports) to be delivered under
this contract, the Government may require the
Contractor to remedy by correction or replacement,
as directed by the Contracting Officer, any failure
by the Contractor to comply with the requirements
of this contract. Any time devoted to such correc-
tion or replacement shall not be included in the
computation of the period of time specified in the
preceding sentence, except as provided in (d) below.
Except as otherwise provided in paragraph (c)
below, the allowability of the cost of any such re-
placement or correction shall be determined as pro-
vided in the clause of this contract entitled "Allow-
able Cost, Fixed Fee, and Payment," but no addi-
tional fee shall be payable with respect thereto.
Corrected articles shall not be tendered again for
acceptance unless the former tender and the re-
quirement of correction is disclosed. If the Con-
tractor fails to proceed with reasonable promptness
to perform such replacement or correction, the Gov-
ernment (i) may by contract or otherwise perform
such replacemnt or correction and charge to the
Contractor any increased cost occasioned the Gov-
ernment thereby, or may reduce any fixed fee pay-
able under this contract (or require repayment of
any fixed fee theretofore paid) in such amount as
may be equitable under the circumstances, or (ii) In
the case of articles not delivered, may require the
delivery of such articles, and shall have the right
to reduce any fixed fee payable under this contract
(or to require repayment of any fixed fee thereto-
fore paid) in such amount as may be equitable
under the circumstances, or (iii) may terminate
this contract for default. Failure to agree to the
amount of any such increased cost to be charged to
the Contractor or to such reduction in, or repay-
ment of, the fixed fee shall be deemed to be a
dispute concerning a question of fact within the
meaning of the clause of this contract entitled
"Disputes."
(c) Notwithstanding the provisions of paragraph
(b) above, the Government may at any time require
the Contractor to remedy by correction or replace-
ment, without cost to the Government, any failure
by the Contractor to comply with the requirements
of this contract, if such failure is due to fraud, lack
of good faith or willful misconduct on the part of
any of the Contractor's directors or officers, or on
the part of any of his managers, superintendents, or
other equivalent representatives, who has supervi-
sion or direction of (1) all or substantially all of the
Contractor's business, or (ii) all or substantially
all of the Contractor's operations at any one plant or
separate location in which this contract is being
performed, or (iii) a separate and complete major
industrial operation in connection with the per-
formance of this contract. The Government may
at any time also require the Contractor to remedy
by correction or replacement, without cost to the
Government, any such failure caused by one or
more individual employees selected or retained by
the Contractor after any such supervisory person-
nel has reasonable grounds to believe that any such
employee is habitually careless or otherwise un-
qualified.
(d) The provisions of paragraph (b) above shall
apply to any corrected or replacement end item or
component until six months after its acceptance.
(e) The Contractor shall make his records of all
inspection work available to the Government during
the performance of this contract and for such
longer period as may be specified in this contract.
(f) Except as provided in this clause and as may
be provided in the Schedule, the Contractor shall
have no obligation or liability to correct or replace
articles which at the time of delivery are defective
in material or workmanship or otherwise not in
conformity with the requirements of this contract.
(g) Except as otherwise provided in the Schedule,
the Contractor's obligation to correct or replace
Government-furnished Property (which is property
in the possession of or acquired directly by the Gov-
ernment and delivered or otherwise made available
to the Contractor) shall be governed by the pro-
visions of the clause of this contract entitled "Gov-
ernment Property."
6. ASSIGNMENT OF CLAIMS (Feb. 1962)
(a) Pursuant to the provisions of the Assignment
of Claims Act of 1940, as amended (31 U.S.C. 203,
41 U.S.C. 15), if this contract provides for payments
aggregating $1,000 or more, claims for monies due
or to become due the Contractor from the Govern-
ment under this contract may be assigned to a
bank, trust company, or other financing institution,
including any Federal lending agency, and may
thereafter be further assigned and reassigned to
any such institution. Any such assignment or re-
assignment shall cover all amounts payable 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 par-
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ties participating in such financing. Unless other-
wise provided in this contract, payments to an as-
signee of any monies due or to become due under
this contract shall not, to the extent provided in
said Act, as amended, be subject to reduction or
set-off.
(b) In no event shall copies of this contract or of
any plans, specifications, or other similar documents
relating to work under this contract, if marked
"'Top Secret," "Secret," or "Confidential," be fur-
nished 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
all of this contract so marked may be furnished, or
any information contained therein may be dis-
closed, to such assignee upon the prior written au-
thorization of the Contracting Officer.
'7. EXAMINATION OF RECORDS (Nov. 1962)
(a) (1) The Contractor agrees to maintain books,
records, documents, and other evidence pertaining
to the costs and expenses of this contract (herein-
after collectively called the "records") to the extent
and in such detail as will properly reflect all net
costs, direct and indirect, of labor, materials, equip-
rrient, supplies and services, and other costs and
expenses of whatever nature for which reimburse-
ment is claimed under the provisions of this con-
tract.
(2) The Contractor agrees to make available at
the office of the Contractor at all reasonable times
during the period set forth in subparagraph (4) be-
low any of the records for inspection, audit or re-
production by any authorized representative of the
Department or of the Comptroller General.
(3) In the event the Comptroller General or any
of his duly authorized representatives determines
that his audit of the amounts reimbursed under this
contract as transportation charges will be made at
a, place other than the office of the Contractor, the
Contractor agrees to deliver, with the reimburse-
ment voucher covering such charges or as may be
otherwise specified within two years after reim-
bursement of charges covered by any such voucher,
to such representative as may be designated for
that purpose through the Contracting Officer such
documentary evidence in support of transportation
costs as may be required by the Comptroller Gen-
eral or any of his duly authorized representatives.
(4) Except for documentary evidence delivered to
the Government pursuant to subparagraph (3)
above, the Contractor shall preserve and make
available his records (i) for a period of three years
trom the date of final payment under this contract,
and (ii) for such longer period, if any, as is required
by applicable statute, by any other clause of this
contract, or by (A) or (B) below.
A) If this contract is completely or partially
terminated, the records relating to the work ter-
minated shall be preserved and made available for
a period of three years from the date of any final
settlement.
(B) Records which relate to (i) appeals under
the Disputes clause of this contract, (ii) litigation
or the settlement of claims arising out of the per-
formance of this contract, or (iii) cost and expenses
of this contract as to which exception has been
taken by the Comptroller General or any of his
duly authorized representatives, shall be retained
by the Contractor until such appeals, litigation,
claims, or exceptions have been disposed of.
(5) Except for documentary evidence delivered
pursuant to subparagraph (3) above, and the rec-
ords described in subparagraph (4) (B) above, the
Contractor may in fulfillment of his obligation to
retain his records as required by this clause sub-
stitute photographs, microphotographs, or other
authentic reproductions of such records, after the
expiration of two years following the last day of
the month of reimbursement to the Contractor of
the invoice or voucher to which such records relate,
unless a shorter period is authorized by the Con-
tracting Officer with the concurrence of the Comp-
troller General or his duly authorized representa-
tive.
(6) The provisions of this paragraph (a), includ-
ing this subparagraph (6), shall be applicable to
and included in each subcontract hereunder which
is on a cost, cost-plus-a-fixed-fee, time-and-ma-
terial or labor-hour basis.
(b) The Contractor further agrees to include in
each of his subcontracts hereunder, other than
those set forth in subparagraph (a) (6) above, a
provision to the effect that the subcontractor agrees
that the Comptroller General or the Department,
or any of their duly authorized representatives,
shall, until the expiration of three (3) 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 sub-
contractor, involving transactions related to the
subcontract. The term "subcontract," as used in
this paragraph (b) only, excludes (I) purchase or-
ders not exceeding $2,500 and (ii) subcontracts or
purchase orders for public utility services at rates
established for uniform applicability to the general
public.
8. SUBCONTRACTS (Nov. 1962)
(a) The Contractor shall give advance notifica-
tion to the Contracting Officer of any proposed sub-
contract hereunder which (I) is on a cost, cost-plus-
a-fee, time and material, or labor-hour basis, or
(ii) is on a fixed-price basis exceeding in dollar
amount either $25,000 or five per cent (5%) of the
total estimated cost of this contract.
(b) In the case of a proposed subcontract which
(i) is on a cost, cost-plus-a-fee, time and material,
or labor-hour basis and which would involve an
estimated amount in excess of $10,000, including
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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 aggre-
gate are expected to exceed $100,000; the advance
notification required by (a) above shall include:
(1) a description of the supplies or services to be
called for by the subcontract;
(2) identification of the proposed subcontractor
and an explanation of why and how the proposed
subcontractor was selected, including the degree of
competition obtained;
(3) the proposed subcontract price, together with
the Contractor's cost of price analysis thereof, in-
cluding curent, complete and correct cost or pric-
ing data accompanied, except when the requirement
is specifically waived by the Contracting Officer, by
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 current, and has been provided the
Contractor; and
(4) identification of the type of contract proposed
to be used.
(c) The Contractor shall not, without the prior
written consent of the Contracting Officer, place
any subcontract which (i) is on a cost or cost-plus-
a-fee basis, or (ii) is on a fixed-price basis exceed-
ing in dollar amount either $25,000 or five per cent
(5%) of the total estimated cost of this contract,
or (iii) provides for the fabrication, purchase, rent-
al, installation, or other acquisition, of any item of
industrial facilities, or of special tooling having a
value in excess of $1,000, or (iv) is on a time and
material or labor-hour basis, or (v) has experimen-
tal, developmental, or research work as one of its
purposes. The Contracting Officer may, in his dis-
cretion, ratify in writing any such subcontract; such
action shall constitute the consent of the Contract-
ing Officer as required by this paragraph (c).
(d) The Contractor agrees that no subcontract
placed under this contract shall provide for pay-
ment on a cost-plus-a-percentage-of-cost basis.
(e) The Contracting Officer may, in his discretion,
specifically approve in writing any of the provisions
of a subcontract. However, such approval or the
consent of the Contracting Officer obtained as re-
quired by this clause shall not be construed to con-
stitute a determination of the allowabiiity of any
cost under this contract, unless such approval spe-
cifically provides that it constitutes a determination
of the allowability of such cost.
(f) The Contractor shall give the Contracting
Officer immediate notice in writing of any action
or suit filed, and prompt notice of any claim made
against the Contractor by any subcontractor or
vendor which, in the opinion of the Contractor,
may result in litigation, related in any way to this
contract with respect to which the Contractor may
be entitled to reimbursement from the Government.
(g) Notwithstandng (c) above the Contractor
may enter into subcontracts within (ii), or, if the
subcontract is for special tooling, within (iii), of
(c) above, without the prior written consent of the
Contracting Officer if the Contracting Officer has,
in writing, approved the Contractor's purchasing
system and the subcontract is within the limita-
tions of such approval.
(h) The Contractor shall (i) insert in each price
redetermination or incentive price revision subcon-
tract hereunder the substance of the "Limitation
on Payments" provision set forth in paragraph (f)
of the clause prescribed by paragraph 7-108 of the
Armed Services Procurement Regulation, including
subparagraph (4) thereof, modified to omit mention
of the Government and reflect the position of the
Contractor as purchaser and of the subcontractor as
vendor, and to omit that portion of subparagraph
(3) thereof relating to tax credits, and (ii) include
in each cost-reimbursement type subcontract here-
under a requirement that each price redetermina-
tion and incentive price revision subcontract there-
under will contain the substance of the "Limita-
tion on Payments" provision, including subpara-
graph (4) thereof, modified as outlined in (1) above.
(i) To facilitate small business participation in
subcontracting under this contract, the Contractor
agrees to provide progress payments on the fixed-
price types of subcontracts of those subcontractors
which are small business concerns, in conformity
with the standards for customary progress pay-
ments stated in paragraphs 503 and 514 of Appen-
dix E of the Armed Services Procurement Regula-
tion, as in effect on the date of this contract. The
Contractor further agrees that the need for such
progress payments will not be considered as a
handicap or adverse factor in the award of sub-
contracts.
9. UTILIZATION OF SMALL BUSINESS CONCERNS
(Jan. 1958)
(a) It is the policy of the Government as declared
by the Congress that a fair proportion of the pur-
chases and contracts for supplies and services for
the Government be placed with small business con-
cerns.
(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.
10. TERMINATION (Jul. 1962)
(a) The performance of work under the contract
may be terminated by the Government in accord-
ance with this clause in whole, or from time to time
in part:
(i) whenever the Contractor shall default in per-
formance of this contract in accordance with its
terms (including in the term "default" any such
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failure by the Contractor to make progress in the
prosecution of the work hereunder as endangers
uch performance), and shall fail to cure such de-
fault within a period of ten days (or such longer
periods as the Contracting Officer may allow) after
receipt from the Contracting Officer of a notice
:specifying the default; or
(ii) whenever for any reason the Contracting
Officer shall determine that such termination is in
the best interests of the Government.
Any such termination shall be effected by delivery
to the Contractor of a Notice of Termination speci-
:lying whether termination is for the default of the
Contractor or for the convenience of the Govern-
ment, the extent to which performance of work
under the contract is terminated, and the date
upon which such termination becomes effective.
',[f, after notice of termination of this contract for
default under (i) above, it is determined for any
reason that the Contractor was not in default pur-
suant to (I), or that the Contractor's failure to per-
I?orm or to make progress in performance is due to
causes beyond the control and without the fault or
negligence of the Contractor pursuant to the pro-
visions of the clause of this contract relating to
excusable delays, the Notice of Termination shall
be deemed to have been issued under (ii) above,
and the rights and obligations of the parties hereto
shall in such event be governed accordingly.
4b) After receipt of a Notice of Termination and
except as otherwise directed by the Contracting
Officer, the Contractor shall:
,(i) stop work under the contract on the date and
to the extent specified in the Notice of Termina-
tion;
(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 and
to the extent directed by the Contracting Officer,
all of the right, title, and interest of the Contractor
under the orders or subcontracts so terminated,
in which case the Government 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) with the approval or ratification of the Con-
tracting Officer, to the extent he may require, which
approval or ratification shall be final and conclusive
for all purposes of this clause, settle all outstanding
liabilities and all claims arising out of such termina-
tf,on of orders and subcontracts, the cost of which
would be reimbursable in whole or in part, in ac-
cordance with the provisions of this contract;
(vi) transfer title (to the extent that title has not
already been transferred) and, in the manner, to
the extent, and at times directed by the Contract-
ing Officer, deliver to the Government (A) the fabri-
cated or unfabricated parts, work in process, com-
pleted work, supplies, and other material produced
as a part of, or acquired in respect of the perform-
ance of, the work terminated by the Notice of Ter-
mination, (B) the completed or partially completed
plans, drawings, information, and other property
which, if the contract had been completed, would
be required to be furnished to the Government, and
(C) the jigs, dies, and fixtures, and other special
tools and tooling acquired or manufactured for the
performance of this contract for the cost of which
the Contractor has been or will be reimbursed under
this contract;
(vii) use his best efforts to sell in the manner,
at the times, to 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 pay-
ments to be made by the Government to the Con-
tractor under this contract or shall otherwise 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 Contrac-
tor in which the Government has or may acquire
an interest.
The Contractor shall proceed immediately with
the performance of the above obligations notwith-
standing any delay in determining or adjusting the
amount of the fee, or any item of reimbursable
cost, under this clause. At any time after expira-
tion of the plant clearance period, as defined in
Section VIII, Armed Services Procurement Regula-
tion, as it may be amended from time to time, the
Contractor may submit to the Contracting Officer a
list, certified as to quantity 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 Con-
tracting Officer, and may request the Government
to remove such items or enter into a storage agree-
ment covering them. Not later than fifteen (15)
days thereafter, the Government will accept such
items and remove them or enter into a storage
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agreement covering the same; provided, that the
list submitted shall be subject 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 submission of the list, and any
necessary adjustment to correct the list as sub-
mitted shall be made prior to final settlement.
(c) After receipt of a Notice of Termination, the
Contractor shall submit to the Contracting Officer
his termination claim in the form and with the
certification prescribed by the Contracting Officer.
Such claim shall be submitted promptly but in no
event later than one year from the effective date
of termination, unless one or more extensions in
writing are granted by the Contracting Officer,
upon request of the Contractor made in writing
within such one year period or authorized extension
thereof. However, if the Contracting Officer deter-
mines that the facts justify such action, he may
receive and act upon any such termination claim
at any time after such one year period or any ex-
tension thereof. Upon failure of the Contractor
to submit his termination claim within the time
allowed, the Contracting Officer may, subject to any
Settlement Review Board approvals required by Sec-
tion VIII of the Armed Services Procurement Regu-
lation 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 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
(including an allowance for the fee) to the Con-
tractor by reason of the total or partial termination
of work pursuant to this clause. The contract shall
be amended accordingly, and the Contractor shall
be paid the agreed amount.
(e) In the event of the failure of the Contractor
and the Contracting Officer to agree in whole or in
part, as provided in paragraph (d), as to the
amounts with respect to costs and fee, or as to the
amount of the fee, to be paid to the Contractor in
connection with the termination of work pursuant
to this clause, the Contracting Officer shall, sub=
ject to any Settlement Review Board approvals re-
quired by Section VIII of the Armed Services Pro-
curement 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 termination
and shall pay to the Contractor the amount deter-
mined as follows:
(i) if the settlement includes cost and fee
(A) there shall be included therein all costs and
expenses reimbursable in accordance with this con-
tract, not previously paid to the Contractor for
the performance of this contract prior to the effec-
tive date of the Notice of Termination, and such
of these costs as may continue for a reasonable
time thereafter with the approval of or as directed
by the Contracting Officer; provided, however, that
the Contractor shall proceed as rapidly as practi-
cable to discontinue such costs;
(B) there shall be included therein so far as not
included under (A) above, 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 charge-
able to the terminated portion of the contract;
(C) there shall be included therein the reason-
able costs of settlement, including accounting, legal,
clerical, and other expenses reasonably necessary
for the preparation of settlement claims and sup-
porting data with respect to the terminated portion
of the contract and for the termination and settle-
ment of subcontracts thereunder, together with
reasonable storage, transportation, and other costs
incurred in connection with the protection or dis-
position of termination inventory; provided, how-
ever, that if the termination is for default of the
Contractor there shall not be included any amounts
for the preparation of the Contractor's settlement
proposal; and
(D) there shall be included therein a portion of
the fee payable under the contract determined as
follows-
(I) in the event of the termination of this con-
tract for the convenience of the Government and
not for the default of the Contractor, there shall
be paid a percentage of the fee equivalent to the
percentage of the completion of work contemplated
by the contract, less fee payments previously made
hereunder; or
(II) in the event of termination of this con-
tract for the default of the Contractor, the total
fee payable shall be such proportionate part of the
fee (or, if this contract calls for articles of different
types, of such part of the fee as is reasonably
allocable to the type of article under consideration)
as the total number of articles delivered to and ac-
cepted by the Government bears to the total num-
ber of articles of a like kind called for by this
contract;
if the amount determined under this subparagraph
(i) is less than the total payment theretofore made
to the Contractor, the Contractor shall repay to the
Government the excess amount; or
(ii) if the settlement includes only the fee, the
amount thereof will be determined in accordance
with subparagraph (i) (D) above.
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(f) 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 exten-
sion 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
):paragraph (c) or (e) above, the Government shall
):)ay to the Contractor the following: (1) if there
is no right of appeal hereunder or if no timely ap-
peal has been taken, the amount so determined by
the Contracting Officer, or (ii) if an appeal has
been taken, the amount finally determined on such
appeal.
f;g) In arriving at the amount due the Contractor
i.inder this clause there shall be deducted (i) all
umliquidated advance or other payments thereto-
fore made to the Contractor, applicable to the ter-
minated portion of this contract, (ii) any claim
which the Government may have against the Con-
tractor in connection with this contract, and (iii)
the agreed price for, or the proceeds of sale of, any
materials, supplies, or other things acquired by the
Contractor or sold pursuant to the provisions of
this clause and not otherwise recovered by or cred-
ited to the Government.
(h) In the event of a partial termination, the
portion of the fee which is payable with respect
to the work under the continued portion of the
(iontract shall be equitably adjusted by agreement
'aetween the Contractor and the Contracting Officer,
and such adjustment shall be evidenced by an
amendment to this contract.
(f) The Government may from time to time,
under such terms and conditions as it may pre-
scribe, make partial payments and payments on
account against costs incurred by the Contractor in
connection with the terminated portion of the 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 determined to be
clue under this clause, such excess shall be payable
by the Contractor to the Government upon demand,
together with interest computed at the rate of
it percent per annum, for the period from the date
such excess payment is received by the Contractor
to the date on which such excess is repaid to the
Government; provided, however, that no interest
:;hall be charged with respect to any such excess
payment attributable to a reduction in the Contrac-
tor's claim by reason of retention or other disposi-
Ilion of termination inventory 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 circumstances.
(j) The provisions of this clause relating to the
fee shall be inapplicable if this contract does not
provide for payment of a fee.
(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
Officer, who shall reduce his decision to writing
and mail or otherwise furnish a copy thereof to
the Contractor. The decision of the Contracting
Officer 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 Con-
tracting 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 jurisdic-
tion to have been fraudulent, or capricious, or arbi-
trary, or so grossly erroneous as necessarily to im-
ply bad faith, or not supported by substantial evi-
dence. In connection with any appeal proceeding
under this clause, the Contractor shall be afforded
an opportunity to be heard and to offer evidence in
support of his appeal. Pending final decision of a
dispute hereunder, the Contractor shall proceed
diligently with the performance of the contract
and in accordance with the Contracting Officer's
decision.
(b) This "Disputes" clause does not preclude con-
sideration of law questions in connection with deci-
sions provided for in paragraph (a) above; pro-
vided, that nothing in this contract shall be con-
strued as making final the decision of any admin-
istrative official, representative, or board on a ques-
tion of law.
(a) In acquiring end products, the Buy American
Act (41 U.S.C. lOa-d) provides that the Government
give preference to domestic source end products.
For the purpose of this clause:
(f) "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
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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.
(The foregoing requirements are administered in
accordance with Executive Order No. 10582, dated
December 17, 1954.)
13. CONVICT LABOR (Mar. 1949)
In connection with the performance of work
under this contract, the Contractor agrees not to
employ any person undergoing sentence of im-
prisonment at hard labor.
14. WALSH-HEALEY PUBLIC CONTRACTS ACT
(Jan. 1958)
If this contract is for the manufacture or fur-
nishing of materials, supplies, articles, or equip-
ment in an amount which exceeds or may exceed
$10,000 and is otherwise subject to the Walsh-
Healey Public Contracts Act, as amended (41 U.S.C.
35-45), there are hereby incorporated by reference
all representations and stipulations required by said
Act and regulations issued thereunder by the Sec-
retary of Labor, such representations and stipula-
tions being subject to all applicable rulings and in-
terpretations of the Secretary of Labor which are
now or may hereafter be in effect.
15. NONDISCRIMINATION IN EMPLOYMENT
(Jul. 1962)
The following clause is applicable unless this con-
tract is exempt under the rules and regulations of
the President's Committee on Equal Employment
Opportunity issued pursuant to Executive Order No.
10925 of March 6, 1961 (26 FR 1977).)
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 ter-
mination; rates of pay or other forms of compen-
sation; 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 in Employment clause.
(b) The Contractor will, in all solicitations or ad-
vertisements for employees placed by or on behalf
of the Contractor, state that all 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
Contracting Officer, advising the said labor union
or workers' representative of the Contractor's com-
mitments under this section, and shall post copies
of the notice in conspicuous places available to em-
ployees and applicants for employment.
(d) The Contractor will comply with all pro-
visions of Executive Order No. 10925 of March 6,
1961, and of the rules, regulations, and relevant
orders of the President's Committee on Equal Em-
ployment 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 ac-
counts by the contracting agency and the Commit-
tee for purposes of investigation to ascertain com-
pliance with such rules, regulations, and orders.
(f) In the event of the Contractor's noncompli-
ance with the Nondiscrimination in Employment
clause of this contract or with any of the said rules,
regulations, or orders, this contract may be can-
celled in whole or in part and the Contractor may
be declared ineligible for further Government con-
tracts in accordance 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 Com-
mittee 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
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binding upon each subcontractor or vendor.* The
Contractor will take such action with respect to any
subcontract or purchase order as the contracting
agency may direct as a means of enforcing such
provisions, including sanctions for noncompliance:
Provided, however, that in the event the Contractor
yrecomes involved in, or is threatened with, litiga-
,,ion 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.
1.6. OFFICIALS NOT TO BENEFIT (Jul. 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.
17. COVENANT AGAINST CONTINGENT FEES
(Jan. 1958)
The Contractor warrants that no person or selling
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
krona fide established commercial or selling agencies
iuaintained 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 dis-
cretion, to deduct from the contract price or con-
sideration, or otherwise recover, the full amount
of such commission, percentage, brokerage or con-
tingent fee.
18. AUTHORIZATION AND CONSENT (Jan. 1961)
The Government hereby gives its authorization
and consent for all use and manufacture of any in-
vention described in and covered by a patent of the
United States in the performance of this contract
or any part hereof or any amendment hereto or any
The President's Committee on Equal Employment
Opportunity interprets the first sentence of para-
graph (g) to mean that the Contractor will include
the provisions of the foregoing paragraphs (a)
through (f) in every first-tier subcontract or pur-
chase order, so that such provisions will be binding
upon each such subcontractor or vendor, and will
require each first-tier subcontractor or vendor
similarly to include the provisions of paragraphs
+;a) through (f) in any subcontract or purchase
order which he places, unless exempted by rules,
regulations, or orders of the President's Commit-
tee on Equal Employment Opportunity issued pur-
suant to section 303 of Executive Order 10925 of
March 6, 1961.
subcontract hereunder (including any lower-tier
subcontract).
19. NOTICE AND ASSISTANCE REGARDING
PATENT AND COPYRIGHT INFRINGEMENT
(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 or copyright in-
fringement based on the performance of this con-
tract 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
the Contractor has agreed to idemnify the Govern-
ment against the claim being asserted.
20. PATENT RIGHTS (LICENSE) (Apr. 1962)
(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 required
under this contract; or
(B) in the performance of any experimental, de-
velopmental, or research work relating to the sub-
ject 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.
(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.
(iii) The terms "subcontract" and "subcontractor"
mean any subcontract or subcontractor of the Con-
tractor, and any lower-tier subcontract or subcon-
tractor under this contract.
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(b) (1) The Contractor agrees to and does hereby
grant to the Government an irrevocable, nonexclu-
sive, and royalty-free license to practice, and cause
to be practiced by or for the United States Govern-
ment, throughout the world, each Subject Invention
in the manufacture, use, and disposition according
to law, of any article or material, and in the use
of any method. Such license (1) shall be nontrans-
ferable, except that the Government shall have
the right to grant sublicenses to any foreign gov-
ernment or international organization specifically
for use in programs established by International
Agreements for research, development or produc-
tion of weapons or equipment for mutual defense,
and (ii) shall include the practice of Subject Inven-
tion in the manufacture, use, and disposition of any
article 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.
(b) (1) (This paragraph applies if this contract
has as one of its purposes the performance of re-
search and development work under a space pro-
gram, project or task and paragraph (b) (1) above
is made inapplicable.) The Contractor agrees to
and does hereby grant to the Government an ir-
revocable, nonexclusive, and royalty-free license to
practice, and cause to be practiced by or for the
United States Government, throughout the world,
each Subject Invention in the manufacture, use,
and disposition according to law, of any article or
material, and in the use of any method. Such
license (i) shall be nontransferable, except that the
Government shall have (a) the right to grant sub-
licenses to any foreign government or international
organization specifically for use in programs estab-
lished by International Agreements for research, de-
velopment or production of weapons or equipment
for mutual defense and (b) the right to grant sub-
licenses to others, under such terms and conditions
as may be prescribed, for the practice of any Sub-
ject Invention throughout the world in the design,
development, manufacture, operation, maintenance
and testing of communications satellite systems,
and of equipment, components, and ground track-
ing, transmitting and receiving facilities therefor,
and (ii) shall include the practice of Subject Inven-
tion in the manufacture, use, and disposition of any
article 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 Govern-
ment or otherwise through the Government.
(2) With respect to:
(i) any Subject Invention made by other than
Technical Personnel; and
(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;
the obligation of the Contractor to grant a license
as provided in (b) (1) above, to convey title as pro-
vided 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 Contractor's right to
grant the same without incurring any obligation to
pay royalties or other compensation 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 Sub-
ject Invention.
(c) The Contractor shall furnish to the Contract-
ing Officer the following information and reports
concerning Subject Inventions which reasonably
appear to be patentable:
(1) a written disclosure promptly after conception
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) (1) 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 Contractor
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
thereafter notifies the Contracting Officer to the
contrary), 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 Contrac-
tor or, where applicable, of any contemplated pub-
lication by the Contractor, stating the date and
identity of such publication or contemplated pub-
lication; and
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(B) convey to the Government the Contractor's
entire right, title, and interest in such Invention by
delivering to the Contracting Officer upon written
request such duly executed instruments (prepared
by the Government) of assignment and application,
and such other papers as are deemed necessary to
vest in the Government the Contractor's right, title,
and interest aforesaid, and the right to apply for
and prosecute patent applications covering such
Invention throughout the world, subject, however,
to the rights of the Contractor in foreign applica-
tions as provided in (e) below, and subject further
to the reservation of a nonexclusive and royalty-free
license to the Contractor (and to his existing and
future associated and affiliated companies, if any,
within the corporate structure of which the Con-
tractor 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 irrevocable power
of attorney to inspect and make copies of each
1'.'rited States patent application filed by or on be-
half of the Contractor covering any such Invention;
':iv) in the event the Contractor, or those other
than the Government deriving rights from the Con-
tractor, elects not to continue prosecution of any
such United States patent application filed by or
on behalf of the Contractor, the Contractor shall
;o notify the Contracting Officer not less than sixty
(lays 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
o vest in the Government the Contractor's entire
right, title, and interest in such Invention and the
application, subject to the reservation as specified
to (d) (ii) above; and
(v) the Contractor shall deliver to the Contract-
tng, Officer duly executed instruments fully con-
firmatory of any license rights herein agreed to be
;eranted to the Government.
(e) The Contractor, or those other than the Gov-
!rnment deriving rights from the Contractor, shall,
as between the parties hereto, have the exclusive
right to file applications on Subject Inventions in
=each foreign country within:
(i) nine months from the date a
i:Jnited 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
':;ontractor'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
bove specified, subject to the reservation of a
nonexclusive and royalty-free license to the Con-
tractor 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
Contractor's business to which the Subject Inven-
tion 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 disclosures
for all Subject Inventions required by (c) (i) above
shown to be due in accordance with any interim
report delivered under (c) (ii) or otherwise known
to be unreported, there shall be withheld from pay-
ment until the Contractor shall have corrected such
failures either ten per cent (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 per cent (10%) of such amount, or five
thousand dollars ($5,000), whichever is less, shall
have been set aside, such reserve or balance thereof
to be retained until the Contractor shall have fur-
nished to the Contracting Officer:
(1) the final report required by (c) (iii) above;
(ii) written disclosures for all Subject Inventions
required by (c) (1) above which are shown to be due
in accordance with interim reports delivered under
(c) (ii) above, or in accordance with such final re-
ports, or are otherwise known to be unreported; and
(iii) the information as to any subcontractor re-
quired by (h) below.
The maximum amount which may be withheld un-
der this paragraph (f) shall not exceed ten per
cent (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 specified by this paragraph
(f) is being withheld under other provisions of this
contract. The withholding of any amount or sub-
sequent payment thereof to the Contractor shall
not be construed as a waiver of any rights accruing
to the Government under this contract. This para-
graph (f) shall not be construed as requiring the
Contractor to withhold any amounts from a sub-
contractor to enforce compliance with the patent
provisions of a subcontract.
(g) The Contractor shall, unless otherwise au-
thorized by the Contracting Officer as hereafter
provided, include a patent rights clause containing
all the provisions of this Patent Rights Clause ex-
cept provision (f) in any subcontract hereunder of
three thousand dollars ($3,000) or more having ex-
perimental, developmental, or research work as one
of its purposes. In the event of refusal by a sub-
contractor 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
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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 the subcontractor (or by di-
rection of the Contracting Officer) be furnished to
the Contractor for transmission to the Contract-
ing Officer.
(h) The Contractor shall, at the earliest practi-
cable date, notify the Contracting Officer in writing
of any subcontract containing one or more patent
rights clauses; furnish the Contracting Officer a
copy of each of such clauses; and notify the Con-
tracting Officer when such subcontract is com-
pleted. It is understood that with respect to any
subcontract clause granting rights to the Govern-
ment 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.
(i) The Contractor recognizes that the Govern-
ment, or a foreign 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 for 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 contracts
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 and make appropriate arrange-
ments 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.
21. DATA (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 agrees to and does hereby
grant to the Government, and to its officers, agents,
and employees acting within the scope of their
official duties, a royalty-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.
(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.
(d) The Contractor shall report to the Contract-
ing Officer, promptly and in reasonable written
detail, each notice or claim of copyright infringe-
ment received by the Contractor with respect to all
Subject 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 Government
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.
(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
derived 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.
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(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.
(i) Data need not be furnished for standard com-
anercial items or services which are normally or
have been sold or offered to the public commercially
by any supplier and which are incorporated as
component parts in or to be used with the product
or process being developed if in lieu thereof iden-
tification of source and characteristics (including
performance specifications, when necessary) suffi-
cient to enable the Government to procure the part
or an. adequate substitute, are furnished; and fur-
ther, "proprietary data" need not be furnished for
other items which were developed at private ex-
pense and previously sold or offered for sale, includ-
ing minor modifications thereof, which are incor-
porated as component parts in or to be used with
the product or process being developed, if in lieu
thereof the Contractor shall identify such other
items and that "proprietary data" pertaining there-
to which is necessary to enable reproduction or
manufacture of the item or performance of the
process. For the purpose of this clause "proprietary
data" means data providing information concern-
ing the details of a Contractor's secrets of manu-
facture, such as may be contained in but not limited
to its manufacturing methods or processes, treat-
ment and chemical composition of materials, plant
layout and tooling, to the extent that such informa-
tion is not disclosed by inspection or analysis of the
product itself and to the extent that the Contractor
has protected such information from unrestricted
use by others. (Oct. 1958)
12. MILITARY SECURITY REQUIREMENTS
(Jun. 1958)
(a) The provisions of this clause shall apply to
the extent that this contract involves access to in-
formation classified "Confidential" including "Con-
tidential--Modified Handling Authorized" or higher.
(b) The Government shall notify the Contractor
of the security classification of this contract and the
elements thereof, and of any subsequent revisions
in such security classification, by the use of a Secu-
rity Requirements Check List (DD Form 254), or
other written notification.
(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
;i:irovided in paragraph (b) above, the Contractor
hall safeguard all classified elements of this con-
tract and shall provide and maintain a system of
scurity controls within his own organization in ac-
cordance 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 Contractor'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 these representatives, de-
termine that the Contractor is not complying with
the security requirements of this contract the Con-
tractor shall be informed in writing by the Security
Office of the cognizant Military Department of the
proper action to be taken in order to effect com-
pliance with such requirements.
(e) If, subsequent to the date of this contract,
the security classifications or security requirements
under this contract are changed by the Government
as provided in this clause, and if such change causes
an increase or decrease in the estimated cost of
performance of this contract, the estimated cost and
fixed fee shall, to the extent appropriate, be subject
to an equitable adjustment. Any such equitable ad-
justment shall be accomplished in the manner set
forth in the "Changes" clause in this contract.
(f) The Contractor agrees to insert, in all sub-
contracts hereunder which involve access to clas-
sified information, provisions which shall conform
substantially to the language of this clause, includ-
ing this paragraph (f) but excluding paragraph (e)
of this clause. The Contractor may insert in any
such subcontract, and any such subcontract entered
into thereunder may contain, in lieu of paragraph
(e) of this clause, provisions which permit equitable
adjustments to be made in the subcontract price or
in the estimated cost and fixed fee of the subcon-
tract (as appropriate to the type of subcontract
involved) on account of changes in security clas-
sifications or requirements made under the provi-
sions of this clause subsequent to the date of the
subcontract involved. (Oct. 1953)
(g) The Contractor also agrees that he shall de-
termine that any subcontractor proposed by him 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.
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23. GOVERNMENT PROPERTY (Aug. 1961)
(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 referred
to as "Government-furnished Property"). The de-
livery or performance dates for the supplies or serv-
ices to be furnished by the Contractor under this
contract are based upon the expectation that Gov-
ernment-furnished Property suitable for use will
be delivered to the Contractor at the times stated
in the Schedule or, if not so stated, in sufficient
time to enable the Contractor to meet such delivery
or performance dates. In the event that Govern-
ment-furnished Property is not delivered to the
Contractor by such time or times, the Contracting
Officer shall, upon timely written request made by
the Contractor, make a determination of the delay
occasioned the Contractor and shall equitably adjust
the estimated cost, fixed fee, or delivery or per-
formance dates, or all of them, and any other con-
tractual provisions affected by such delay, in ac-
cordance with the procedures provided for in the
clause of this contract entitled "Changes." In the
event that Government-furnished Property is re-
ceived by the Contractor in a condition not suitable
for the intended use, the Contractor shall, upon re-
ceipt thereof notify the Contracting Officer of such
fact and, as directed by the Contracting Officer,
either (1) return such property at the Government's
expense or otherwise dispose of the property or (ii)
effect repairs or modifications. Upon completion
of (i) or (ii) above, the Contracting Officer upon
written request of the Contractor shall equitably
adjust the estimated cost, fixed fee, or delivery or
performance dates, or all of them, and any other
contractual provision affected by the return or dis-
position, or the repair or modification, in accordance
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 such
property in a condition not suitable for its intended
use.
(b) Title to all property furnished by the Govern-
ment shall remain in the Government. Title to
all property purchased by the Contractor, for the
cost of which the Contractor is entitled is to be
reimbursed as a direct item of cost under this
contract, shall pass to and vest in the Government
upon delivery of such property by the vendor. Title
to other property, the cost of which is reimbursable
to the Contractor under the contract, shall pass to
and vest in the Government upon (1) issuance for
use of such property in the performance of this con-
tract, or (ii) commencement of processing or use
of such property in the performance of this con-
tract, or (iii) reimbursement of the cost thereof by
the Government in whole or in part, whichever
first occurs. All Government-furnished Property,
together with all property acquired by the Contrac-
tor title to which vests in the Government under
this paragraph, are subject to the provisions of this
clause and are hereinafter collectively referred to
as "Government Property."
(c) Title to the Government Property shall not be
affected by the incorporation or attachment thereof
to any property not owned by the Government, nor
shall such Government Property, or any part there-
of, be or become a fixture or lose its identity as
personalty by reason of affixation to any realty.
The Contractor shall comply with the provisions of
the "Manual for Control of Government Property
in Possession of Contractors" (Appendix B, 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 Property provided or fur-
nished pursuant to the terms of this contract shall,
unless otherwise provided herein, be used only for
the performance of this contract.
(e) The Contractor shall maintain and administer
in accordance with sound industrial practice, a pro-
gram, for the maintenance, repair, protection and
preservation of Government Property so as to as-
sure its full availability and usefulness for the
performance of this contract. The Contractor shall
take all reasonable steps to comply with all appro-
priate directions or instructions which the Contract-
ing Officer may prescribe as reasonably necessary
for the protection of Government Property.
(f) (1) The Contractor shall not be liable for any
loss of or damage to the Government Property, or for
expenses incidental to such loss or damage, except
that the Contractor shall be responsible for any
such loss or damage (including expenses incidental
thereto) -
(1) which results from willful misconduct or lack
of good faith on the part of any one of the Contrac-
tor's directors or officers, or on the part of any of
his managers, superintendents, or other equivalent
representatives, who has supervision or direction of:
(A) all or substantially all of the Contractor's
business, or
(B) all or substantially all of the Contractor's
operations at any one plant or separate location in
which this contract is being performed, or
(C) a separate and complete major industrial op-
eration in connection with the performance of this
contract;
(ii) which results from a failure on the part of
the Contractor, due to the willful misconduct or
lack of good faith on the part of any of his directors,
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officers, or other representatives mentioned in sub-
paragraph (1) above,
(A) to maintain and administer, in accordance
with sound industrial practice, the program for
maintenance, repair, protection and preservation of
Government Property as required by paragraph (e)
hereof, or
(B) to take all reasonable steps to comply with
any appropriate written directions of the Contract-
ing Officer under paragraph (e) hereof;
,(iii) for which the Contractor is otherwise re-
sponsible under the express terms of the clause or
clauses designated in the Schedule;
(iv) which results from a risk expressly required
to be insured under this contract, but only to the
extent of the insurance so required to be procured
:end maintained, or to the extent of insurance
actually procured and maintained, whichever is
greater; or
(v) which results from a risk which is in fact
covered by insurance or for which the Contractor
is otherwise reimbursed, but only to the extent
of such insurance or reimbursement;
provided that, if more than one of the above excep-
tions shall be applicable in any case, the Contrac-
tor's liability under any one exception shall not be
limited by any other exception. This clause shall
not be construed as relieving a subcontractor from
Hability for loss or destruction of or damage to Gov-
ernment Property in his 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 liabil-
ity. In the absence of such approval, the subcon-
tract shall contain appropriate provisions requiring
the return of all Government Property in as good
condition as when received, except for reasonable
wear and tear or for the utilization of the property
in accordance with the provisions of the prime
contract.
(2) The Contractor shall not be reimbursed for,
and shall not include as an item of overhead, the
cost of insurance, or any provision for a reserve,
covering the risk of loss of or damage to the Gov-
ernment Property, except to the extent that the
Government may have required the Contractor to
carry such insurance under any other provisions
of this contract.
(3) Upon the happening of loss or destruction of
or damage to the Government Property, the Con-
tractor shall notify the Contracting Officer thereof,
and shall communicate with the Loss and Salvage
Organization, if any, now or hereafter designated
by the Contracting Officer, and with the assistance
of the Loss and Salvage Organization so designated
(unless the Contracting Officer has designated that
r;to such organization be employed), shall take all
reasonable steps to protect the Government Prop-
erty from further damage, separate the damaged
and undamaged Government Property, put all the
Government Property in the best possible order,
and furnish to the Contracting Officer a state-
ment of-
(f) the lost, destroyed and damaged Government
Property,
(ii) the time and origin of the loss, destruction
or damage,
(iii) all known interests in commingled property
of which the Government Property is a part, and
(iv) the insurance, if any, covering any part of
or interest in such commingled property.
The Contractor shall make repairs and renovations
of the damaged Government Property or take such
other action, as the Contracting Officer directs.
(4) In the event the Contractor is indemnified,
reimbursed, or otherwise compensated for any loss
or destruction of or damage to the Government
Property, he shall use the proceeds to repair, reno-
vate or replace the Government Property involved,
or shall credit such proceeds against the cost of the
work covered by the contract, or shall otherwise
reimburse the Government, as directed by the Con-
tracting Officer. The Contractor shall do nothing
to prejudice the Government's right to recover
against third parties for any such loss, destruction
or damage and, upon the request of the Contract-
ing Officer, shall, at the Government's expense,
furnish to the Government all reasonable assistance
and cooperation (including the prosecution of suit
and the execution of instruments of assignment in
favor of the Government) in obtaining recovery.
In addition, where the subcontractor has not been
relieved from liability for any loss or destruction
of or damage to Government Property, the Con-
tractor shall enforce the liability of the subcontrac-
tor for such loss or destruction of or damage to the
Government Property for the benefit of the Gov-
ernment.
(5) 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 clause of this con-
tract entitled "Flight Risks" shall control, to the
extent it is applicable, in the case of loss or destruc-
tion of, or damage to, aircraft.
(g) The Government shall at all reasonable times
have access to the premises where any of the Gov-
ernment Property is located.
(h) The Government Property shall remain in the
possession of the Contractor for such period of time
as is required for the performance of this contract
unless the Contracting Officer determines that the
interests of the Government require removal of
such property. In such case the Contractor shall
promptly take such action as the Contracting Offi-
cer may direct with respect to the removal and
shipping of Government Property. In any such
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instance, the contract may be amended to accom-
plish an equitable adjustment in the terms and pro-
visions thereof.
(i) Upon the completion of this contract, or at
such earlier dates as may be fixed by the Contract-
ing Officer, the Contractor shall submit to the Con-
tracting Officer in a form acceptable to him, inven-
tory schedules covering all items of the Govern-
ment Property not consumed in the performance of
this contract, or not theretofore delivered to the
Government, and shall deliver or make such other
disposal of such Government Property as may be
directed or authorized by the Contracting Officer.
The net proceeds of any such disposal shall be cred-
ited to the cost of the work covered by the con-
tract or shall be paid in such manner as the Con-
tracting Officer may direct. The foregoing provi-
sions shall apply to scrap from Government Prop-
erty; provided, however, that the Contracting Offi-
cer may authorize or direct the Contractor to omit
from such inventory schedules any scrap consisting
of faulty castings or forgings, or cutting and proc-
essing waste, such as chips, cuttings, borings, turn-
ings, short ends, circles, trimmings, clippings, and
remnants, and to dispose of such scrap in accord-
ance with the Contractor's normal practice and ac-
count therefor as a part of general overhead or
other reimbursable cost in accordance with the Con-
tractor's established accounting procedures.
(j) Unless otherwise provided herein, the Gov-
ernment shall not be under any duty or obligation
to restore or rehabilitate, or to pay the costs of the
restoration or rehabilitation of the Contractor's
plant or any portion thereof which is affected by
the removal of any Government Property.
(k) Directions of the Contracting Officer and
communications of the Contractor issued pursuant
to this clause shall be in writing.
24. INSURANCE-LIABILITY TO THIRD PERSONS
(Jan. 1960)
(a) The Contractor shall procure and thereafter
maintain workmen's compensation, employer's lia-
bility, comprehensive general liability (bodily in-
jury) and comprehensive automobile liability (bod-
ily injury and property damage) insurance, with
respect to performance under this contract, and
such other insurance as the Contracting Officer
may from time to time require with respect to per-
formance under this contract; provided, that the
Contractor may with the approval of the Contract-
ing Officer maintain a self-insurance program, and
provided further, that with respect to workmen's
compensation the Contractor is qualified pursuant
to statutory authority. All insurance required
pursuant to the provisions of this paragraph shall
be in such form, in such amounts, and for such
periods of time, as the Contracting Officer may
from time to time require or approve, and with
insurers approved by the Contracting Officer.
(b) The Contractor agrees, to the extent and in
the manner required by the Contracting Officer, to
submit for the approval of the Contracting Officer
any other insurance maintained by the Contractor
in connection with the performance of this contract
and for which the Contractor seeks reimbursement
hereunder.
(c) The Contractor shall be reimbursed: (i) for
the portion allocable to this contract of the reason-
able cost of insurance as required or approved pur-
suant to the provisions of this clause, and (ii) for
liabilities to third persons for loss of or damage to
property (other than property (A) owned, occupied
or used by the Contractor or rented to the Contrac-
tor, or (B) in the care, custody, or control of the
Contractor), or for death or bodily injury, not com-
pensated by insurance or otherwise, arising out of
the performance of this contract, whether or not
caused by the negligence of the Contractor, his
agents, servants or employees, provided such liabil-
ities are represented by final judgments or by settle-
ments approved in writing by the Government, and
expenses incidental to such liabilities, except liabil-
ities (I) for which the Contractor is otherwise re-
sponsible under the express terms of the clause or
clauses, if any, specified in the Schedule, or (II)
with respect to which the Contractor has failed to
insure as required or maintain insurance as ap-
proved by the Contracting. Officer or (III) which
results from willful misconduct or lack of good faith
on the part of any of the Contractor's directors, or
officers, or on the part of any of his managers,
superintendents, or other equivalent representatives,
who has supervision or direction of (1) all or sub-
stantially all of the Contractor's business, or (2) all
or substantially all of the Contractor's operations
at any one plant or separate location in which this
contract is being performed, or (3) a separate and
complete major industrial operation in connection
with the performance of this contract. The fore-
going shall not restrict the right of the Contractor
to be reimbursed for the cost of insurance main-
tained by the Contractor in connection with the
performance of this contract, other than insurance
required to be submitted for approval or required
to be procured and maintained pursuant to the pro-
visions of this clause, provided such cost would con-
stitute Allowable Cost under the clause of this con-
tract entitled "Allowable Cost, Fixed Fee, and Pay-
ment."
(d) The Contractor shall give the Government or
its representatives immediate notice of any suit or
action filed, or prompt notice of any claim made,
against the Contractor arising out of the perform-
ance of this contract, the cost and expense of which
may be reimbursable to the Contractor under the
provisions of this contract, and the risk of which
is then uninsured or in which the amount claimed
exceeds the amount of coverage. The Contractor
shall furnish immediately to the Government copies
of all pertinent papers received by the Contractor.
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If the amount of the liability claimed exceeds the
amount of coverage, the Contractor shall authorize
representatives of the Government to collaborate
with counsel for the insurance carrier, if any, in
settling or defending such claim. If the liability
is not insured or covered by bond, the Contractor
shall, if required by the Government, authorize
representatives of the Government to settle or de-
tend any such claim and to represent the Contrac-
tor in or take charge of any litigation in connec-
tion therewith; provided, however, that the Con-
tractor may, at his own expense, be associated with
the representatives of the Government in the settle-
nient or defense of any such claim or litigation.
25. UTILIZATION OF CONCERNS IN LABOR SUR-
PLUS AREAS (Feb. 1962) (The provisions of
this clause shall be applicable if this contract
is in excess of $5,000.00.)
It is the policy of the Government to place con-
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 entitled
"Utilization of Small Business Concerns," the Con-
tractor 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 surplus area
concerns; (iii) substantial labor surplus area con-
cerns which are also small business concerns; (iv)
ether substantial labor surplus area concerns; and
(v) small business concerns which are not labor
surplus area concerns.
26. PAYMENT FOR OVERTIME AND SHIFT
PREMIUMS (Feb. 1962)
(a) Allowable cost shall not include any amount
on account of overtime premiums or shift premi-
ums, except to the extent that they either (i) are
approved in writing on behalf of the Government
or (ii) are paid for work-
(A) necessary to cope with emergencies such as
those resulting from accidents, natural disasters,
breakdowns of production equipment, or occasional
production bottlenecks of a sporadic nature;
(B) by indirect labor employees such as those
performing duties in connection with administra-
tion, protection, transportation, maintenance, stand-
by plant protection, operation of utilities, or ac-
counting;
(C) in the performance of tests, industrial proc-
esses, laboratory procedures, loading or unloading
of transportation media, and operations in flight
or afloat, which are continuous in nature and can-
not reasonably be interrupted or otherwise com-
pleted; or
(D) which will result in lower overall cost to the
Government.
(b) The cost of overtime premiums or shift premi-
ums otherwise allowable under (a) above shall be
allowed only to the extent the amount thereof is
reasonable and properly allocable to the work under
this contract.
27. COMPETITION IN SUBCONTRACTING
(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.
28. FILING OF PATENT APPLICATIONS
(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) days provision below, transmit the proposed
application to the Contracting Officer for deter-
mination whether, for reasons of national security,
such application should be placed under an order
of secrecy or sealed in accordance with the provi-
sions 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 fil-
ing, but the Contractor shall not be denied the
right to file such patent application. If the Con-
tracting Officer shall not have given. any such in-
structions with 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 Con-
tracting 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
"Confidential," a copy of such application for de-
termination whether, for reasons of national secu-
rity, such application should be placed under an
order of secrecy or the issuance of a patent should
be otherwise delayed under pertinent statutes or
regulation.
(c) In filing any patent application coming with-
in the scope of this clause, the Contractor shall ob-
serve all applicable security regulations covering
the transmission of classified subject matter.
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29. EXCUSABLE DELAYS (Jul. 1958)
Except with respect to defaults of subcontractors,
the Contractor shall not be in default by reason of
any failure in performance of this contract in ac-
cordance with its terms (including any failure by
the Contractor to make progress in the prosecution
of the work hereunder which endangers such per-
formance) if such failure arises out of causes
beyond the control and without the fault or negli-
gence of the Contractor. Such causes may include,
but are not restricted to: acts of God or of the
public enemy; acts of the Government in either its
sovereign or contractual capacity; fires; floods; epi-
demics; quarantine restrictions; strikes; freight em-
bargoes; and unusually severe weather; but in 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 failure of a subcontractor to perform or
make progress, and if such failure arises out of
causes beyond the control of both the Contractor
and subcontractor, and without the fault or negli-
gence of either of them, the Contractor shall not
be deemed to be in default, unless (1) the supplies
or services to be furnished by the subcontractor
were obtainable from other sources, (ii) the Con-
tracting Officer shall have ordered the Contractor
in writing to procure such supplies or services from
such other sources, and (iii) the Contractor shall
have failed to comply reasonably with such order.
Upon request of the Contractor, the Contracting
Officer shall ascertain the facts and extent of such
failure and, if he shall determine that any failure
to perform was occasioned by any one or. more
of the said causes, the delivery schedule shall be
revised accordingly, subject to the rights of the
Government under the clause hereof entitled "Ter-
mination."
30. NOTICE TO THE GOVERNMENT OF LABOR
DISPUTES (Sep. 1958)
(a) Whenever the Contractor has knowledge that
any actual or potential labor dispute is delaying
or threatens to delay the timely performance of this
contract, the Contractor shall immediately give
notice thereof, including all relevant information
with respect thereto, to the Contracting Officer.
(b) The Contractor agrees to insert the substance
of this clause, including this paragraph (b), in any
subcontract hereunder as to which a labor dispute
may delay the timely performance of this contract;
except that each such subcontract shall provide that
in the event its timely performance is delayed or
threatened by delay by any actual or potential labor
dispute, the subcontractor shall immediately notify
his next higher tier subcontractor, or the prime
contractor, as the case may be, of all relevant in-
formation with respect to such dispute.
31. GRATUITIES (Mar. 1952)
(a) The Government may, by written notice to
the Contractor, terminate the right of the Contrac-
tor to proceed under this contract if it is found,
after notice and hearing, by the Secretary or his
duly authorized representative, that gratuities (in
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 treatment
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 in 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 dam-
ages to which it may be entitled by law, to exem-
plary damages in an amount (as determined by
the Secretary or his duly authorized representative)
which shall be not less than three nor more than
ten times the costs incurred by the Contractor 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.
32. LIMITATION ON WITHHOLDING OF PAY-
MENTS (Feb. 1959)
If more than one clause or Schedule provision of
this contract authorizes the temporary withhold-
ing of amounts otherwise payable to the Contractor
for work performed under this contract, the total
of the amounts so withheld at any one time shall
not exceed the greatest amount which may be with-
held under any one such clause or Schedule pro-
vision at that time; provided, that this limitation
shall not apply to:
(i) withholdings pursuant to any clause relating
to wages or hours of employees;
(ii) withholdings not specifically provided for by
this contract; and
(iii) the recovery of overpayments.
33. CHANGES (Feb. 1959)
The Contracting Officer may at any time, by a
written order, and without notice to the sureties, if
any, make changes, within the general scope of
this contract, in any one or more of the following:
(i) drawings, designs, or specifications, (ii) method
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cf shipment or packing; (iii) place of inspection,
delivery, or acceptance, and (iv) the amount of
Government-furnished Property. If any such
change causes an increase or decrease in the esti-
mated cost of, or the time required for performance
of this contract, or otherwise affects any other pro-
visions of this contract, whether changed or not
changed by any such order, an equitable adjustment
shall be made (I) in the estimated cost or delivery
schedule, or both, (ii) in the amount of any fee to
be paid to the Contractor, and (iii) in such other
provisions of the contract as may be so affected,
and the contract shall be modified in writing ac-
cordingly. Any claim by the Contractor for ad-
justment under this clause must be asserted within
sixty (60) days from the date of receipt by the Con-
tractor 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. Failure to
agree to any adjustment shall be a dispute concern-
ing a question of fact within the meaning of the
clause of this contract entitled "Disputes." How-
ever, nothing in this clause shall excuse the Con-
tractor from proceeding with the contract as
changed.
34. STOP WORK ORDER (Jul. 1960)
(a) The Contracting Officer may, at any time,
by written order to the Contractor, require the Con-
tractor to stop all, or any part, of the work called
for by this contract for a period of ninety (90) days
after the order is delivered to the Contractor, and
for any further period to which the parties may
agree. Any such order shall be specifically identi-
fied as a Stop Work Order issued pursuant to this
clause. Upon receipt of such an order, the Contrac-
tor shall forthwith comply with its terms and take
all reasonable steps to minimize the incurrence of
costs allocable to the work covered by the order
during the period of work stoppage. Within a pe-
riod of ninety (90) days after a stop work order is
delivered to the Contractor, or within any extension
of that period to which the parties shall have
agreed, the Contracting Officer shall either-
(I) cancel the stop work order, or
(ii) terminate the work covered by such order as
provided in the "Termination" clause of this con-
tract.
(b) If a stop work order issued under this clause
is canceled or the period of the order or any ex-
tension thereof expires, the Contractor shall resume
work. An equitable adjustment shall be made in
the delivery schedule, the estimated cost, the fee,
c r a combination thereof, and in any other pro-
visions of the contract that may be affected, and
the contract shall be modified in writing accord-
ingly, if-
(I) the stop work order results in an increase in
the time required for, or in the Contractor's cost
properly allocable to, the performance of any part
of this contract, and
(11) the Contractor asserts a claim for such ad-
justment within thirty (30) days after the end of
the period of work stoppage; provided that, if the
Contracting Officer decides the facts justify such
action, he may receive and act upon any such claim
asserted at any time prior to final payment under
this contract.
Failure to agree to any adjustment shall be a dis-
pute concerning a question of fact within the mean-
ing of "Disputes" clause of this contract.
(c) If a stop work order is not canceled and the
work covered by such order is terminated for the
convenience of the Government, the reasonable
costs resulting from the stop work order shall be
allowed in arriving at the termination settlement.
35. REPORTS OF WORK (Jul. 1960)
(a) The Contractor shall submit reports making
full disclosure of all work done and the results there-
of, in the manner, at the times, and. to the extent
set forth in the Schedule; provided that, unless
otherwise specified in the Schedule, the Contractor
shall submit such reports in triplicate from time to
time as requested and upon completion (or earlier
termination) of the work. Except as may be other-
wise specified in the Schedule, or unless the Con-
tractor is otherwise instructed, the Contractor shall,
upon completion (or earlier termination) of the
work deliver any working drawings and specifica-
tions of any prototypes as may have been developed.
(b) if the Contractor becomes unable to complete
the contract work and to deliver at the time speci-
fied in the Schedule because of technical difficul-
ties, notwithstanding the exercise of good faith and
diligent efforts in performance of the work, he shall
give the Contracting Officer written notice of the
anticipated delays with reasons therefor, not less
than forty-five (45) days before the completion date
specified in the Schedule or within such time as
the Contracting Officer deems sufficient. When no-
tice is so required, the Contracting Officer may, in
his discretion, extend the time specified in the
Schedule for such period as he deems advisable.
36. DATA-WITHHOLDING OF PAYMENT
(Apr. 1962) (This clause is applicable only if
this contract contains the "Data" clause set forth
in ASPR 9-203.1)
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 con-
tract or is deficient upon delivery (including hav-
ing restrictive markings not specifically authorized
20
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by the contract), the Contracting Officer may, until
such data is delivered or deficiencies are corrected.
withhold payment due the Contractor on account
of allowable costs and fixed fee, of ten percent
(10%) of the contract price, unless a lesser with-
holding 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
Contractor within the meaning of the clause hereof
entitled "Excusable Delays." 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.
Pursuant to the Allowable Cost, Fixed Fee, and
Payment (or Allowable Cost and Payment) General
Provision of this contract, the Contractor shall sub-
mit vouchers to the Contracting Officer, with the
supporting statement of costs describing the
amounts claimed for: direct salaries and wages,
labor burden or overhead, materials, and other di-
rect and indirect costs.
Notwithstanding any other provisions 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 Ap-
pendix E of the Armed Services Procurement Regu-
lation, as in effect on the date of this contract.
Amounts shall be due upon the earliest one of (I)
the date fixed pursuant to this contract, (ii) the
date of the first demand for payment, (iii) the date
of a supplemental 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 connec-
tion with a pricing proposal or in connection with
a negotiated pricing agreement not confirmed by
contract supplement.
39. COMPETITION IN SUBCONTRACTING
(Apr. 1962)
The contractor shall select subcontractors (in-
cluding suppliers) on a competitive basis to the
maximum practical extent consistent with objec-
tives and requirements of the contract.
40. UTILIZATION OF CONCERNS IN LABOR SUR-
PLUS AREAS (Feb. 1962)
It is the policy of the Government to place con-
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 ef-
forts to place his subcontracts in accordance with
this policy. In complying with the foregoing and
with paragraph (b) of the clause of this contract
entitled "Utilization of Small Business Concerns,"
the Contractor in placing his subcontracts shall
observe the following order of preference: (i) per-
sistent labor surplus area concerns which are also
small business concerns; (ii) other persistent labor
surplus area concerns; (iii) substantial labor sur-
plus area concerns which are also small business.
concerns; (iv) other substantial labor surplus area
concerns; and (v) small business concerns which
are not labor surplus area concerns.
41. WORK HOURS ACT OF 1962-OVERTIME
COMPENSATION (Oct. 1962)
This contract to the extent that it is of a char-
acter specified in the Work Hours Act of 1962
(Public 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 pro-
visions 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 calen-
dar day or in excess of forty hours in any work-
week unless such laborer or mechanic receives com-
pensation 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, which-
ever 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 liqui-
dated 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
payment 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-
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contractor, the full amount of wages required by
this contract and such sums as may administra-
l ively be determined to be necessary to satisfy any
Liabilities of such contractor or subcontractor for
liquidated damages as provided in paragraph (b).
12. AUDIT (Nov. 1962)
(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-
IRtave 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 computations and
projections used therein, which were available to
the Contractor 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
;ubcontracts 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.
'113. PRICE REDUCTION FOR DEFECTIVE COST
OR PRICING DATA (Nov. 1962)
(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-
rent Cost or Pricing Data, then such price shall
be reduced accordingly and the contract shall be
modified in writing to reflect such adjustment.
(b) Failure to agree on a reduction shall be a dis-
pute concerning a question of fact within the mean-
mg of the "Disputes" clause of this contract.
(c) 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 regula-
tion. In each such excepted subcontract hereunder
,t'hich 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 that is not based on adequate price com-
petition, established catalog or market price of com-
mercial items sold in substantial quantities to the
general public or prices set by law or regulation.
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.
44. SUBCONTRACTOR COST AND PRICING DATA
(Nov. 1962)
(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-redeterminable subcon-
tract;
(ii) prior to the award of any subcontract the
price of which is expected to exceed $100,000;
(iii) prior to the pricing of any subcontract change
or other modification for which the price adjust-
ment is expected to exceed $100,000;
except, in the case of (ii) or (iii), where 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.
(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 knowl-
edge 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
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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 re-
quirements of this clause shall be limited to such
price adjustments.
(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-redeterminable subcon-
tract;
(ii) prior to the award of any subcontract the
price of which is expected to exceed $100,000;
(iii) prior to the pricing of any subcontract
change or other modification for which the price
adjustment is expected to exceed $100,000;
except, in the case of (ii) or (iii), where 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.
(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 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 negotiated 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.
45. NEGOTIATED OVERHEAD RATES (Dec. 1962)
(a) Notwithstanding the provisions of the clause
of this contract entitled "Allowable Cost, Fixed Fee,
and Payment," the allowable indirect costs under
this contract shall be obtained by applying negoti-
ated overhead rates to bases agreed upon by the
parties, as specified below.
(b) The Contractor, as soon as possible but not
later than ninety (90) days after the expiration of
each period specified in the Schedule, shall submit
to the Contracting Officer with a copy to the cogni-
zant audit activity a proposed final overhead rate
or rates for that period based on the Contractor's
actual cost experience during that period, together
with supporting cost data. Negotiation of final
overhead rates by the Contractor and the Contract-
ing Officer shall be undertaken as promptly as prac-
ticable after receipt of the Contractor's proposal.
(c) Allowability of costs and acceptability of cost
allocation methods shall be determined in accord-
ance with Part 2 of Section XV of the Armed Serv-
ices Procurement Regulation as in effect on the
date of this contract.
(d) The results of each negotiation shall be set
forth in a modification to this contract, which shall
specify (i) the agreed final rates, (ii) the bases to
which the rates apply, and (iii) the periods for
which the rates apply.
(e) Pending establishment of final overhead rates
for any period, the Contractor shall be reimbursed
either at negotiated provisional rates as provided
in the Schedule or at billing rates acceptable to the
Contracting Officer, subject to appropriate adjust-
ment when the final rates for that period are estab-
lished. To prevent substantial over or under pay-
ment, the provisional or billing rates may, at the
request of either party, be revised by mutual agree-
ment, either retroactively or prospectively. Any
such revision of negotiated provisional rates pro-
vided in the Schedule shall be set forth in an
amendment to this contract.
(f) Any failure by the parties to agree on any final
rate or rates under this clause shall be considered
a dispute concerning a question of fact for decision
by the Contracting Officer within the meaning of
the "Disputes" clause of this contract.
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46. ALTERATIONS IN CONTRACT
The following alterations have been made in the
provisions of this contract.
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