LETTER TO (Sanitized)CORPORATION FROM (SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81B00878R000800040040-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 58
• Document Creation Date: December 19, 2016
• Document Release Date: January 30, 2006
• Sequence Number: 40
• Publication Date: January 28, 1958
• Content Type: LETTER

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319M. 23517
Contract No. NY-A-501
Amendment No. 1
'JAN 2 8 1958
Corporation
-os Angeles , fornia
Gentlemen:
1. This document constitutes Amendment No. 1 to Contract
Corporation, Los Angeles, California, and the United States of
America.
No. NY-A-501 dated 21 August 1957 between The
2. Pursuant to the clause of this contract entitled
"Changes" the Government does hereby amend this. contract as
follows
3. APPENDIX I of the Schedule is superseded by the attached
APPENDIX I, Revision 1, dated 17 January 1958, which incorporates
additional work to be performed by the Contractor under this con-
tract.,
4. In consideration of the expanded scope of work, PART V
ESTIMATED COST AND FIXED FEE is deleted in its entirety and the
following is substituted therefor:
"PART V -. ESTIMATED COST AND FIXED FILE
25X1 A 1. The estimated cost of the performance of this
25X1A
.25X1 A.
2. The fixed fee for performance of this contr
25X1A is
25X1A
25X1 A 5? This Amendment results in a .net increase of I
terms and conditions remain as originally stipulated*
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act
25X1
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T -y
6. Please indicate your acceptance hereof in the space
'below. Return the original and one executed copy to the under-
signed. The remaining copy is to be retained for your files.
25X1A
Very truly yours,
25X1 A ACKNOWLEDGED AND A CFsI'TED
THIS 5 DAY OF , 1958-
By __J
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Contract No. NY-.5O
CERTIFICATE
25X1A
25X1A
25X1A
25X1A
I , certiry tna& 1. am
the of the Corporation named
as Contractor herein; that
who signed this contract on behalf of the Contractor was then
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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Contract No. NY-A-501
Page
PART I STATEIENT OF WORK .............................. 4
PART II PERIOD OF PERFORMANCE AND DELIVEEIES ........... 4
PART III PACKAGING REQUIREMENTS ......................... 4
PART IV INSPECTION AND ACCEPTANCE ...................... 4
PART V ESTIMATED COST AND FIXED FEE ................... 4
PART VI PAYMENT ........................................ L,
PART VII OVERHEAD ....................................... 5
PART VIII AUDIT .......................................... 5
PART IX NON-STANDARD COSTS 6
PART X ANTICIPATORY COST .............................. 6
PART XI SPECIAL SECURITY RESTRICTIONS .................. 6
PART XII WAIVER OF REQUIREMENTS OF GENERAL PROVISIONS ... 6
PART XIII REPORTS ........................................ 7
PART XIV LETTER CONTRACT SUPERSEDED ..................... 7
Appendix I
Exhibit "A"
Exhibit "B"
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Contract No. NY-A-501
SCHEDULE
25X1A
25X1A
PART I - STATEMENT OF WORK. The Contractor shall provide the
necessary engineering, labor, facilities, and material to perform
the work as set forth in APPENDIX I which is attached hereto.
PA II PERIOD OF PESFORNANCE AND DELIVERIES.
1. The delivery schedule for items called for in Part I is
set forth in APPENDIX I.
2. The items called for under this contract shall be delivered
to the Government f.o.b. cars or carrier's equipment at the plant or
plants of the Contractor, Los Angeles, California or the point or
points nearest thereto that rail carrier service is available. Such
items shall be consigned as directed by the Contracting Officer.
3. The performance of work hereunder shall be completed on 30
June 1955, subject to any amendments to this contract extending such
period of performance.
PART III PACKAGING F=UlR NTS. The items called for under this
contract shall be packed for domestic shipment in accordance with
standard commerical practice.
PART IV - INSPECTION AND ACCEPTANCE. The Contractor's plant, Los
Angeles, California, is hereby designated as the point of final
inspection and acceptance by the Government.
PART V - IMATED COST AND FIXED FEE.
1. The estimated cost o rformance of this contract,
--husive of the fixed f e is
2_ The fixed-fee for performance of this contract
25X1A pater VI - PAYMENT.
25X1 A 1. Payment of costs shall be made upon the receipt of weekly
invoices in accordance with the provisions of Clause 4 of the
General Provisions entitled "Allowable Cost, Fixed Fee, and Payment."
2. Payment of fee shall be made upon receipt of monthly invoices
25X1 A setting forth a sum equal to of the costs billed during the
month. Payment of the fee sh made in accordance with the
provisions of Clause 4 as cited in 1 above.
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Contract No. NY-A-501
PART VII - OVERHEAD
1. Allowable costs shall include an amount for overhead,
indirect charges, and other elements of cost, excluded from or
not covered by direct costs, and properly chargeable as indirect
costs in accordance with "Contract Cost Principles, Section RV,
Part 2, Armed Services Procurement Regulations" and the appli-
cation of such contract cost principles as determined by the
cognizant Department of Defense Audit Agency to the Contractor's
Operations under Department of Defense contracts in the Contrac-
tor's plant and accepted by the Contracting Officer hereunder as
being in accordance with such principles and such application.
2. Pending establishment of final overhead rates for any
period, the Contractor shall be reimbursed at the billing rates
mutually acceptable to the Contractor and Contracting Officer
subject to appropriate adjustment when the final rates for that
period are established. To prevent substantial over or under
payment, the provisional rates may, at the request of either
party, be revised by mutual agreement, either retroactively or
prospectively.
3. Any failure by the parties to agree on any final rate
or rates under this clause shall be considered a dispute concern-
ing a question of fact for decision by the Contracting Officer
within the meaning of the clause of this contract entitled
"Disputes".
PART VIII - AUDIT
Audit of costs hereunder shall be by the cognizant military
audit agency, in accordance with security requirements which
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Contract No. NY'-A-501
shall be agreed upon between the Contractor and the Contracting
Officer.
PART IX - NON-STANDARD COSTS. Allowable costs shall include any
unusual or non-standard items of cost, not expressly excluded by
other provisions of this contract, as should, in the opinion of the
Contracting Officer, be included in the cost of the work called for
in this contract. Any such items shall be specifically certified by
the Contracting Officer as being allowable under this section.
PART X - AWTICIPATOAY_. Al]. costs which have been incurred by the
Contractor on or after 20 June 1957, in anticipation of and prior to
the signing of this contract, and which, if incurred after the signing
of this contract, would have been considered as items of Allowable
Costs hereunder, will be accepted by the Contracting Officer as cost
under this contract.
11 - SPECIAL CURITY RESTRICTIONS. The Contractor shall not
reveal (i) the specific nature or 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 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.
PART XII - WAIVER OF REQUIREMENTS OF GENERAL PROVISIONS. Notwithstanding
the requirements of any of the General Provisions of this contract
to the contrary, whensoever the Contractor, 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
by his duly authorized representative for security matters, the Con-
tractor shall call the attention of the Contracting Officer to such
conflict and the Contracting Officer or his duly authorized representa-
tive 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 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
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of waiver of any clauses of the General Provisions in conflict with
the stipulations of such subcontract.
PART XIII- PORTS
1. Technical Reports
(a) Nbnthly Progress Reports - The Contractor shall
prepare and submit to the Government monthly
technical and engineering progress reports in
sufficient detail to enable the Government to
monitor progress being made in performance of the
contract work.
(b) Final Report - The Contractor shall prepare a
final technical and engineering report covering
the work performed hereunder. The form and scope
of such final report shall be subject to agreement
between the Government and the Contractor, A ided
that the Government may waive the submission of
such report if it so elects.
2. Fiscal Reports
(a) The Contractor shall prepare and submit to the
Government such reconciliation of costs incurred
and projections of costs expected to be incurred
under this contract as the Contracting Officer
may from time to time request.
(b) The Contractor shall prepare and submit to the
Government upon completion of the contract work
a final statement of costs incurred by the
Contractor in performance of the contract work
and shall submit such final statement of costs
incurred to the Contracting Officer, along with
such other statements and reports required by the
General Provisions and the Schedule of this
contract, prior to the making of final payment
hereunder.
PART XIV - LETTER CONTRACT SUPERSEDED
This is the Definitive Contract contemplated by the Letter
Contract issued by the Government to the Contractor under date of
25 June 1957, and supersedes said Letter Contract. Work performed
and payments made under said Letter Contract shall be deemed to be
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work performed and payments made under this Definitive Contract.
The date of the Letter Contract shall govern for the determination
of the priority status of this Definitive Contract. In the event
of conflict between this Definitive Contract and said Letter
Contract, this Definitive Contract shall prevail.
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INDEX OF GENERAT) DROVISIONS
1.
:DEFINITIONS ,. .....,... ................................
1
2.
CHANGES ....,. ..........................................
1
3.
LIMITATION OF COST ....................................
2
4.
ALLOWABLE COST, FIXED FEE, AND PAYMENT .................
3
5.
RECORDS ......................................?........
5
6.
GOVERNMENT PROPERTY ...................................
7
7.
INSURANCE-LIABILITY TO THIRD PERSONS ..................
11
8.
INSPECTION AND CORRECTION OF DEFECTS ..................
13
9.
EXCUSABLE DELAYS ......................................
15
10.
SUBCONTRACTS ..........................................
16
11.
NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT ...
17
12.
FILING OF PATENT APPLICATIONS .........................
17
13.
PATENT RIGHTS .........................................
18
14.
AUTHORIZATION AND CONSENT ..................?.... .....
24
15.
COPYRIGHT ......... ....................................
24
1.6.
REPRODUCTION AND USE OF TECHNICAL DATA .,....,.........
25
17.
REPORTING OF ROYALTIES ................................
25
18.
DISPUTES ..............................................
27
19.
BUY AMERICAN ACT ......................................
28
20.
OFFICIALS NOT TO BENEFIT ..............................
29
21.
COVENANT AGAINST CONTINGENT FEES ......................
29
22.
CONVICT LABOR .........................................
29
23,
EIGHT-HOUR LAY' OF 1912 ................................
29
24.
NONDISCRIMINATION IN EMPLOYMENT .......................
30
25.
WALSH-HEALEY PUBLIC CONTRACTS ACTS ....................
30
26.
GRATUITIES ............................................
31
27.
EMPLOYMENT OF ALIENS ..................................
31
28.
ASSIGNMENT OF CLAIMS ..................................
31
29.
MILITARY SECURITY REQUIREMENTS ........................
32
30.
UTILIZATION OF SMALL BUSINESS CONCERNS ................
34
31.
SUPERSEDING SPECIFICATIONS ...........................
34
32.
TERMINATION ...........................................
34
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1. DEFINITIONS
As used throughout this contract, the following terms shall have
the meanings set forth below:
(a) The term "Secretary" means the Secretary, the Under Secretary,
or any Assistant Secretary of the Department and the head or any assist-
ant head of the executive agency, and the term "his duly authorized
representative" moans any person or persons or board (other than the
Contracting Officer) authorized to act for the Secretary.
(b) The term "Contracting Officer" means the person executing this
contract on behalf of the Government, and any other officer or civilian
employee who is a properly designated Contracting Officer; and the term
includes, except as otherwise provided in this contract, the authorized
representative of a Contracting Officer acting within the limits of his
authority.
(c) The term "Department" means the department or executive agency
of the Government represented by the Contracting Officer executing this
contract on behalf of the Government.
(d) Except as otherwise provided in this contract, the term "sub--
contracts" includes purchase orders under this contract.
(e) The term "contract work" means all work to be performed under
this contract including any studies covering fundamental, theoretical,
or experimental investigations; any extension of the investigative find-
ings; and theories of a scientific or technical nature into practical
application; any tangible items, hereinafter referred to as "supplies,"
if called for herein, furnished to the Government; and any reports, data,
computations, plans, drawings, and specifications with respect to any of
the foregoing.
The Contracting Officer may at any time, by a written order, make
changes in or additions to the drawings and specifications, issue addi-
tional instructions, or require additional work within the general scope
of the contract. If any such change causes an increase or decrease in
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the estimated cost of, or the time required for performance of this con-
tract, or otherwise affects any other provision of this contract, an
equitable adjustment shall be made (i) in the estimated cost or delivery
schedule,, or both, (ii) in the amount of any fixed fee to be paid to the
Contractor, arLd (iii) in such other provisions of the contract as may be
so affected, and the contract shall be modified in writing accordingly.
Any claim by the Contractor for adjustment under this clause must be as-
sorted within sixty (60) days from the date of receipt by the Contractor
of the notification of change; Provided, however, That the Contracting
Officer, if he decides that the facts justify such action, may receive
and act upon any such claim asserted at any time prior to final payment
under this contract. Failure to agree to any adjustment 4hall be a dis-
pute concerning a question of fact within the meaning of the clause of
this contract cntitL.:d "Di.sputos." However, nothing in this clause shall
excuse the Contractor from proceeding with the contract as changed.
3. LIMITATION OF COST
(a) It is estimated that the total cost to the Government, exclusive
of any fixed foe, for the performance of this contract will not exceed
the estimated cost set forth in the Schedule, and the Contractor agrees
to use its 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 it
expects to incur in the performance of this contract in the next succeed-
ing thirty (30) days, when added to all costs previously incurred, will
exceed eighty-five percent (85%) of the estimated cost than set forth in
the Schedule, or if at any time, the Contractor has reason to believe that
the total cost to the Government, exclusive of any fixed fee, for the per-
formance 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 its 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 excess of the estimated cost set forth in the
Schedule and the Contractor shall not be obligated to continue 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 in-
creased 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 ex-
cess of such estimated cost prior to the increase in estimated cost shall
be allowable to the same extent as if such costs had been incurred after
such increase in estimated cost.
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4. ALLOWABLE COST, FIXED FEE, AND PAYMENT
(a) For the performance of this contract, the Government shall pay
to the Contractor the cost thereof determined by the Contracting Officer
to be allowable in accordance with Part 2 of Section XV of the Armed
Services Procurement Regulation as in effect on the date of this contract
and the Schedule (hereinafter referred to as "Allowable Cost"), plus such
fixed fee, if any, as may be provided for in the Schedule.
(b) Once each month (or at more frequent intervals, if approved by
the Contracting Officer) the Contractor may submit to an authorized rep-
resentative of the Contracting Officer, in such form and reasonable detail
as such representative may require, an invoice or public voucher supported
by a statement of cost incurred by the Contractor in the performance of
this contract and claimed to constitute Allowable Cost. Each statement of
cost shall be certified by an officer or other responsible official of the
Contractor authorized by it to certify such statement.
(c) As promptly as may be practicable after receipt of each invoice
or voucher and statement of cost, the Government shall, except as herein-
after provided and subject to the provisions of paragraph (d) below, make
payment thereon as approved by the Contracting Officer. After payment of
eighty-five percent (85%) of the fixed fee set forth in the Schedule, as
from time to time amended, further payment on account of the fixed fee shall
be withheld until a reserve of either (i) fifteen percent (150) of the total
fixed fee or (ii) $100,000, whichever amount is less, shall have been set
aside, such reserve or the balance thereof to be retained until the execu-
tion and delivery of a release by the Contractor as provided in paragraph
(e) hereof.
(d) At any time or times prior to final payment under this contract
the Contracting Officer may cause to be made such audit of the invoices or
vouchers and statements of cost as shall be deemed necessary. Each pay-
ment theretofore made shall be subject to reduction to the extent of amounts
included in the related invoice or voucher and statement of cost which are
found by the Contracting Officer on the basis of such audit not to consti-
tute Allowable Cost, and shall also be subject to reduction and overpay-
ments or to increase for under payments on preceding invoices or vouchers.
On receipt of the voucher or invoice designated by the Contractor as the
"completion voucher" or "completion invoice" and statement of cost, which
shall be submitted by the Contractor as promptly as may be practicable 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,
and following compliance by the Contractor with all provisions of this con-
tract (including, without limitation, provisions relating to patents and
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the provisions of paragraphs (e) and (f) of this clause), the Govern-
rent shall as promptly as may be practicable pay any balance of Allow-
able Cost.
(e) The Contractor and each assignee under an assignment entered
into under this contract and in effect ?t the time of final payment
under this contract shall execute and deliver at the time of and as a
condition precedent to firs payment under this contract, a release dis-
charging the Government, its officers, agents and employees of and from
all liabilities, obligations, and claims arising out of or under this
contract, subject only to the following exceptions:
(l)
Specified. claims in stated amounts or in estimated amounts
where the amounts are not susceptible of exact statement by
the Contractor.
(2) Claims, together with reasonable expenses incidental thereto,
based upon the liabilities of the Contractor to third parties
arising out of the performance of the contract, which are not
known to the Contractor on the date of the execution of the
release, and of which the Contractor gives notice in writing
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 pay-
ment, whichever is e^rlier.
() Claims for reimbursement of costs (other than expenses of
the Contractor by reason of its indemnification of the Gov-
ernment against patent liability), including reasonable ex-
penses incidental thereto, incurred by the Contractor under
the provisions of the contract relating to patents,
(f) The Contractor agrees that any refunds, rebates or credits (in-
cluding any interest thereon) accruing to or received by the Contractor
or any assignee which arise out of the performance of this contract and
on account of which the Contractor has received reimbursement shall be
paid by the Contractor to the Government. The Contractor and each
assignee under an assignment entered into under this contract and in ef-
fect at the time of find payment under this contract shall execute and
deliver at the tine of and as a condition precedent to final payment
under this contract, an assignment to the Government of refunds, rebates
or credits (including any interest thereon) arising out of the perfor-
mance of this contract, in form and substance satisfactory to the Con-
tracting Officer. Reasonable expenses incurred by the Contractor for
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the purpose of securing any such refunds, rebates or credits shall con-
stitute Allowable Cost when approved by the Contracting Officer.
(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 payable under
this contract, notwithstanding any provisions contained in the specifi-
cations or other documents incorporated in this contract by reference,
designating services to be performed or materials to be furnished by
the Contractor at its expense or without cost to the Government.
(h) Payment of the fixed fee shall be made to the Contractor as
provided in the Schedule subject, however, to the withholding provi-
sions of paragraph (c) hereof.
5.. RECORDS
(a)
(1) The Contractor agrees to maintain books, records, documents
and other evidence pertaining to the costs and expenses of this con-
tract (hereinafter collectively called the "records') to the extent
and in such detail as will properly reflect all net costs, direct and
indirect, of labor, materials, equipment, supplies and services, and
other costs and expenses of whatever nature for which reimbursement is
claimed under the provisions of this contract. The Contractorrs account-
ing procedures and practices shall be subject to the approval of the
Contracting Officer; provided, however, that no material change will be
required to be made in the Contractorts accounting procedures and prac-
tices if they conform to generally accepted accounting practices and if
the costs properly applicable to this contract are readily ascertainable
therefrom.
(2) The Contractor agrees to make available at the office of the
Contractor at all reasonable times during the period set forth in sub-
paragraph (4) below any of the records for inspection, audit or repro-
duction by an authorized. representative of the Department.
(3) In the event the Contracting Officer or any of his duly
authorized representatives determines that his audit of the amounts re-
imbursed 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 reimbursement voucher covering such charges or as may
be otherwise specified within two years after reimbursement of charges
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covered by any such voucher, to such representative as may be designated
for that purpose through the Contracting Officer such documentary evi-
dence in support of transportation costs as may be required by the Con-
tracting Officer 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 its records for a period of six years (unless a longer
period of time is provided by applicable statute) from the date of the
voucher or invoice submitted by the Contractor after the completion of
the work under 'he contract and designated by the Contractor as the
"completion voucher" or "completion invoice" or, in the event this con-
tract has been completely terminated, from the date of the termination
settlement agreement; provided, however, that records which relate to
(A) appeals under the clause of this contract entitled "Disputes," (B)
litigation or the settlement of claims arising out of the performance of
this contract, or (C) costs or expenses of the contract as to which ex-
ception has been taken by the Contracting Officer or any of his duly
authorized representatives, shall be retained by the Contractor until
such appeals, litigation, claims, or exceptions have been disposed of,
but in no event for less than the six-year period mentioned above.
(5) Except for documentary evidence delivered pursuant to subpara-
graph (3) above, and the records described in the proviso of subpara-
graph (4) above, the Contractor may in fulfillment of its obligation to
retain its records as required by this clause substitute photographs,
microphotographs or other authentic reproductions of such records, after
the expiration of two years following the last day of the month of reim-
bursement to the Contractor of the invoice or voucher to which such re-
cords relate, unless a shorter period is authorized by the Contracting
Officer with the concurrence of the Comptroller of the Contracting Gov-
-;- it L go-cy or his authorized representatives.
(6) The provisions of this paragraph (a), including this subpara-
graph (6), shall be applicable to and included in each subcontract here-
under which is on a cost, cost-plus-a-fixed-fee, time--and-material or
labor-hour basis.
(b) The Contractor further agrees to include in each of his sub-
contracts hereunder, other than those set forth in subparagraph (a)
(6) above, a provision to the effect that the subcontractor agrees that
the Contracting Officer or any of his duly authorized representatives,
shall, until the expiration of three years after final payment under the
subcontract, have access to and the right to examine any directly
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pertinent books, documents, papers, and records of such subcontractor in-
volving transactions related to the subcontract. The terns "subcontract,"
as used in this paragraph (b) only, excludes (i) purchase orders not ex-
ceeding $1,000 and (ii) subcontracts. or purchase orders for public utility
services at rates established for uniform applicability to the general
pt:.blic.
6. GOVERNMENT PROPERTY
(a) The Government shall deliver to the Contractor, for use in con-
nection with and under the terms of this contract, the property described
in, the Schedule or specifications, together with such related data and
information as the Contractor may request and as may reasonably be re-
quired for the intended use of such property (hereinafter referred to as
"Government-furnished property"). The delivery or performance dates for
the supplies or services to be furnished by the Contractor under this
contract are based upon the expectation that Government-furnished Prop-
erty 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 Government-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 performance dates, or all of them, and any other contract-
ual provisions affected by such delay, in accordance with the procedures
provided for in the clause of this contract entitled "Changes." In the
event that Government-furnished Property is received by the Contractor in
a condition not suitable for the intended use, the Contractor shall, upon
receipt thereof notify the Contracting Officer of such fact and, as
directed by the Contracting Officer, either (i) return such property at
the Government's expense or otherwise dispose of the property or (ii) ef-
fect 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
disposition, or the repair or modification, in accordance with the proce-
dures 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 de-
livery of Government-furnished Property or delivery of such property in a
condition not suitable for its intended use.
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(b) Title to all property furnished by the Government shall re-
main in the Government. Title to all property purchased by the Con-
tractor, for the cost of which the Contractor is entitled to be reim-
bursed 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 this contract, shall pass to and vest in the
Government upon (i) issuance for use of such property in the perfor-
mance of this contract, or (ii) commencement of processing or use of
such property in the performance of this contract, or (iii) reimburse-
ment; of the cost thereof by the Government, whichever first occurs.
All the items to be furnished by the Government, as set forth in the
Schedule or Specifications, together with all property acquired by the
Contractor title to which vests in the Government under this paragraph,
are subject to the provisions of this clause and are hereinafter col-
lectively referred to as "Government Property.tt
(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 thereof,
be or become a fixture or lose its identity as personality by reason
of affixation to any realty. The Contractor shall maintain adequate
property control records of the Government Property and shall identify
the Government Property as such in accordance with the requirements
of the "Manual for Control of Government Property in Possession of
Contractorstt as in effect on the date of this contract, which is in-
corporated herein by reference.
(d) The Government Property provided or furnished 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 program for the maintenance, repair,
protection and preservation of Government Property so as to assure its
full availability and usefulness for the performance of this contract.
The Contractor shall take all reasonable steps to comply with all
appropriate directions or instructions which the Contracting Officer
may prescribe as reasonably necessary for the protection of Government
Property.
(f) (i) 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)
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(A) which results from willful misconduct or lack of good faith on the
part of any of the Contractorts directors or officers, or on the part
of any of its managers, superintendents, or other equivalent representa-
tives, who has supervision or direction of (I) all or substantially all
of the Contractorts business, or (II) p11 or substantially all of the
Contractorts 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 performance of this con-
tract; or (B) 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 its directors, officers, or other representatives mentioned in sub-
paragraph (A) above, (I) to maintain and administer, in accordance with
sound industrial. practice, the program for maintenance, repair, protec
tection and preservation of Government Property as required by paragraph
(e) hereof, or (II) to take all reasonable steps to comply with any
appropriate written directions of the Contracting Officer under para-
graph (e) hereof; or (C) for which the Contractor is otherwise responsi-
ble under the express terms of clause or clauses designated in the
Schedule; or (D) which results from a risk expressly required to be in-
sured under this contract, but only to the extent of the insurance so
required to be procured and maintained, or to the extent of insurance
actually procured and maintained, whichever is greater; or (E) which re-
sults 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 in-
surance or reirlbursement; provided that, if more than one of the above
exceptions shall be applicable in any case, the Contractorts liability
under any one exception shall not be limited by any other exception.
This clause shall not be construed as relieving a subcontractor from
liability for loss or destruction of or damage to Government Property
in its possession or control, except to the extent that the subcontract,
with the prior approval of the Contracting Officer, may provide for the
re=lief of the subcontractor from such liability. In the absence of
such approval, the subcontract shall contain appropriate provisions re-
quiring the return of all Government Property in as good condition as
when received, except for reasonable wear and tear or for the utiliza-
tion of the property in accordance with the provisions of the prime con-
tract,
(ii) The Contractor shall not be reimbursed for, and shall not in-
clude as an item of overhead, the cost of insurance, or any provision
for a reserve, covering the risk of loss of or da :Fkge to the Government
Property, except to the extent that the Government may have required the
Contractor to carry such insurance under any other provision of this
contract.
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(iii) Upon the happening of loss or destruction of or damage to
the Government Property, the Contractor 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 no
such organization be employed), shall take all reasonable steps to pro-
tect the Government Property 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 (A) the lost, destroyed and damaged Government Property, (B) the
time and origin of the loss, destruction or damage, (C) all known in-
terests in commingled property of which the Government Property is a
part, and (D) the insurance, if any, covering any part of or interest in
such commingled property. The Contractor shall make repairs and renova-
tions of the damaged Government Property or take such other action as
the Contracting Officer directs.
(iv) In the event the Contractor is indemnified, reimbursed, or
otherwise compensated for any loss or destruction of or damage to the
Government Property, it shall use the proceeds to repair, renovate or re-
place 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 Contracting Officer. The
Contractor shall do nothing to prejudice the Government's right to re-
cover against third parties for any such loss, destruction or damage
and, upon the request of the Contracting Officer, shall, at the Govern-
ment's expense, furnish to the Government all reasonable assistance and
cooperation (including the prosecution of suit and the execution of in-
struments 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
Contractor shall enforce the liability of the subcontractor for .uch loss
or destruction of or damage to the Government Property for the benefit
of the Government.
(g) The Government shall at all reasonable times have access to the
premises where any of the Government 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 in-
terests of the Government require removal of such property. In such
case the Contractor shall promptly take such action as the Contracting
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Officer may direct with respect to the removal and shipping of Govern-
ment Property. In any such instance, the contract may be amended to
accomplish an equitable adjustment in the terms and provisions thereof.
(i) Upon the completion of this contract, or at such earlier date
as rm).y be fixed by the Contracting Officer, the Contractor shall submit
to the Contracting Officer in a form acceptable to him inventory
schedules covering all items of the Government Property not consumed in
the performance of this contract (including any resulting scrap), or
not theretofore delivered to the Government, and shall deliver or make
such other disposal of the Government Property as may be directed by
the Contracting Officer. Recoverable scrap shall be reported in accord-
ance with a procedure and in such form as the Contracting Officer may
direct. The net proceeds of any such disposal approved by the Contract-
ing Officer shall be credited to the cost of the work covered by the con-
tract or shall be paid in such manner as the Contracting Officer may
direct..
(j) Unless otherwise provided herein, the Government shall not be
under any duty or obligation to restore or rehabilitate, or to pay the
costs of the restoration or rehabilitation of the Contractorts 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.
7. INSURANCE-LIABILITY TO THIRD PERSONS
(a) The Contractor shall procure and thereafter maintain workmenls
compensation, employerts liability, comprehensive general liability
(bodily injury) and comprehensive automobile liability (bodily 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 performance under this contract;
provided, that the Contractor in fulfillment of its obligation to pro-
cure workments compensation insurance may, with the approval of the Con-
tracting Officer and pursuant to statutory authority, maintain a self-
insurance program. 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.
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(b),,The C.a..tractor agrees, to the extent and in the manner re-
q~irbT the Contracting Officer, to submit forthe 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 allo-
cable to this contract of the reasonable cost of insurance as required
or approved pursuant 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 Contractor or (B) in the care, custody, or control of the Con-
tractor), or for death or bodily injury, not compensated by insurance
or otherwise, arising out of the performance of this contract, whether
or not caused by the negligence of the Contractor, its agents, servants
or employees, provided such liabilities are represented by final judg-
ments or by settlements approved in writing by the Government, and ex-
penses incidental to such liabilities, except liabilities (I) for which
the Contractor is otherwise responsible under the express terms of the
clause or clauses, if any, specified in the Schedule, or (II) with re-
spect to which the Contractor has failed to insure as required or main-
tain insurance as approved by the Contracting Officer or (III) which re-
sults from willful misconduct or lack of good faith on the part of any
of the Contractorls directors or officers, or on the part of any of its
managers, superintendents, or other equivalent representatives, who has
supervision or direction of (1) all or,substantially all of the Con-
tractorts business, or (2) all or substantially all of the Contractorts
operations at any one plant or separate location in wlich 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 maintained by the, Contractor in connection
tlith the performance' of this contract, other than insurance required to
be s-abmitted for approval or required to be procured and maintained
pursuant to the provisions of this clause, provided such cost would con-
stitute allowable cost under the clause of this contract entitled
a'ble Cost, Fixed Fee and Payment."
(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'performance of this
contract, the cost and expense of which may be reiiibursable`to the Con-
tractor under the provisions of this contract, and the risk of which is
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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. If the
amount of the liability claimed exceeds the amount of coverage, the
Contractor shall authorize representatives of the Government to colla-
borate 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 defend any such claim
and to represent the Contractor in or take charge of any litigation in
connection therewith: Provided, however, That the Contractor may, at
its own expense, be associated with the representatives of the Govern-
ment in the settlement or defense of any such claim or litigation.
8. INSPECTION AND CORRECTION OF DEFECTS
(a) All supplies (which term throughout this clause includes with-
out limitation raw materials, components, intermediate assemblies, and
end products) shall be subject to inspection and test by the Government,
to the extent practicable at all times and places including the period
of manufacture, and in any event prior to final acceptance. The Con-
tractor shall provide and maintain an inspection system acceptable to
the Government covering the supplies, fabricating methods, and special
tooling hereunder. The Government, through any authorized representa-
tive, may inspect the plant or plants of the Contractor or of any of its
subcontractors engaged in the performance of this contract. If any in-
spection or test is made by the Government on the premises of the Con-
tractor or a subcontractor, the Contractor shall provide and shall re-
quire subcontractors to provide all reasonable facilities and assistance
for the safety and convenience of the Government inspectors in the per-
formance of their duties. All inspections and tests by the Government
shall be performed in such a manner as will not unduly delay the work.
Except as otherwise provided in this contract, final acceptance of any
supplies or lots of supplies shall be made as promptly as practicable
after delivery thereof and shall be deemed to have been made no later
than sixty (60) days after the date of such delivery, if final accept-
ance has not been made earlier within such period.
(b) At any time during performance of this contract, but not later
than six (6) months (or such other period as may be provided in the
Schedule) after final acceptance of the supplies or lots of supplies
last delivered in accordance with the requirements of this contract, the
Government may require the Contractor to remedy by correction or re-
placement, as directed by the Contracting Officer, any supplies or lots
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of supplies which at the time of delivery thereof are defective in
material or workmanship or otherwise not in conformity with the re-
quirements of this contract. Except as otherwise provided in para-
graph (c) hereof, the cost of any such replacement or correction shall
be included in Allowable Cost determined as provided in the clause of
this contract entitled "Allowable Cost, Fixed Fee and Payment," but no
additional fee shall be payable with respect thereto. Such supplies
or lots of supplies shall not be tendered again for acceptance unless
the former tender and the requirement of correction be disclosed. If
the Contractor fails to proceed with reasonable promptness to replace
or correct such supplies or lots of supplies, the Government (i) may
by contract or otherwise replace or correct such supplies and charge to
the Contractor any increased cost occasioned the Government thereby, or
may reduce any fixed fee payable under this contract (or require repay-
ment of any fixed fee theretofore paid) in such amount as may be equit-
able under the circumstances, or (ii) in the case of supplies not de-
livered, may require the delivery of such supplies, and shall have the
right to reduce any fixed fee payable under this contract (or to require
payment of any fixed fee theretofore paid) in such amount as may be
equitable under the circumstances, or (iii) may terminate this contract
for default as provided in the clause of this contract entitled "Termin-
ation." Failure to agree to the amount of any such increased cost to
be charged to the Contractor or to such reduction in, or repayment of,
the fixed fee shall 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) hereof, the
Government may at any time require the correction or replacement by the
Contractor, without cost to the Government, of supplies or lots of sup-
plies which are defective in material or workmanship, or otherwise not
in conformity with the requirements of this contract, if such defects or
failures are due to fraud, lack of good faith or willful misconduct on
the part of any of the Contractorts directors or officers, or on the
part of any of its managers, superintendents, or other equivalent repre-
sentatives, who has supervision or direction of (i) all or substantially
all of the Contractorts business, or (ii) all or substantially all of the
Contractorts 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 performance of this contract.
Fraud, lack of good faith on willful misconduct on the part of any of
such supervisory personnel shall be deemed to include the selection of
individual employees or the retention of employees after any of such
supervisory personnel has reason to believe that such employees are
habitually careless or otherwise unqualified.
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(d) Corrected supplies or replaced supplies shall be subject to
the provisions of this clause in the same manner and to the same ex-
tent as supplies originally delivered under this contract.
(e) The Contractor shall make its 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 supplies or lots of supplies 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 Government
and delivered or otherwise made available to the Contractor) shall be
governed by the provisions of the clause of this contract entitled
"Government Property."
9. EXCUSABLE DELAYS
The Contractor shall not be in default by reason of any failure in
performance of this contract in accordance with its terms (including
any failure by the Contractor to make progress in the prosecutira of
the work hereunder which endangers such performance) if such failure
arises out of causes beyond the control and without the fault or negli-
gence of the Contractor. Such causes include, but are not restricted
to: acts of God or of the public enemy; acts of the Government; fires;
floods; epidemics; quarantine restrictions; strikes; freight embargoes;
unusually severe weather; and failure of subcontractors to perform or
make progress due to such causes, unless the Contracting Officer shall
have determined that the supplies or services to be furnished under the
subcontract were obtainable from other sources and shall have ordered
the Contractor in writing to procure such services or supplies from
such other sources, and the Contractor shall have failed reasonably to
comply with such order. Upon request of the Contractor, the Contract-
ing Officer shall ascertain the facts and extent of such failure and, if
he shall determine that such failure was occasioned by any one or more of
the said causes, the delivery schedule shall be revised accordingly, sub-
ject to the rights of the Government under the clause hereof entitled
"Termination."
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(a) The Contractor shall give advance notification to the Con-
tracting Officer of any proposed subcontract hereunder which (i) is
on a cost or cost-plus-a-fixed-fee 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) 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-fixed-fee basis, or (ii) is on a fixed-price
basis exceeding in dollar amount either $25,000 or five percent (5%)
of the total estimated cost of this contract, or (iii) provides for
the fabrication, purchase, rental, 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) involves research and development work. The Con-
tracting Officer may, in his discretion, ratify in writing any such
subcontract; such action shall constitute the consent of the Contract-
ing Officer as required by this paragraph (b).
(c) The Contractor agrees that no subcontract placed under this
contract shall provide for payment on a cost-plus-a-percentage-of-
cost basis,
(d) 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
required by this cause shall not be construed to constitute a deter-
mination of the allowability of any cost under this contract, unless
such approval. specifically provides that it constitutes a determina-
tion of the allowability of such cost.
(e) 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.
(f) The Contracting Officer may approve all or any part of the
Contractor's purchasing system and from time to time rescind or rein-
state such approval. Such approval shall be deemed to fulfill the re-
quirements for obtaining the Contracting Officer's consent to subcon-
tracts as prescribed in paragraph (b) above,
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11. NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT
The provisions of this clause shall be applicable only if the
amount of this contract is in excess of $5,000.
(a) The Contractor shall report to the Contracting Officer,
promptly and in reasonable written detail, each notice or claim of
patent infringement based on the performance of this contract of
which the Contractor has knowledge.
(b) In the event of litigation against the Government on
account of any claim of patent infringement arising out of the per-
formance of this contract or out of the use of any supplies furnished
or work or services performed hereunder, the Contractor shall furnish
to the Government, upon request, all evidence and information in
possession of the Contractor pertaining to such litigation. Such
evidence and information shall be furnished at the expense of the
Government except in those cases in which the Contractor has agreed
to indemnify the Government against the claim being asserted.
12. FILING OF PATENT APPLICATIONS
(a) Before filing or causing to be filed a patent application
disclosing any subject matter of this contract, which subject matter
is classified "Secret" or higher, the Contractor shall, citing the
thirty (30) day provision below, transmit the proposed application
to the Contracting Officer for determination whether, for reasons of
national security, such application should be placed under an order
of secrecy or sealed in accordance with the provisions of 35 U.S.
Code 181-188 or the issuance of a patent should be otherwise delayed
under pertinent statutes or regulations; and the Contractor shall
observe any instructions of the Contracting Officer with respect to
the manner of delivery of the patent application to the U.S. Patent
Office for filing, but the Contractor shall not be denied the right
to file such patent application. If the Contracting Officer shall
not have given any such instructions within thirty (30) days from the
date of mailing or other transmittal of the proposed application,
the Contractor may file the application.
(b) The Contractor shall furnish to the Contracting 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 determination whether, for reasons of
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national security, 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 within the scope of
this clause, the Contractor shall observe all applicable security
regulations covering the transmission of classified subject matter.
13. PATENT RIGHTS
(a) As used in this clause, the following terms shall have the
meanings set forth below:
(i) The term "Subject Invention" means any invention, im-
provement or discovery (whether or not patentable) conceived or
first actually reduced to practice either (A) in the performance of
the experimental, developmental, or research work called for or re-
quired under this contract, or (B) in the performance of any experi-
mental, developmental, or research work relating to the subject mat-
ter of this contract which was done upon an understanding in writing
that a contract would be awarded; provided that the term "Subject
Invention" 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 em-
ployed 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 subcontracts
are set forth in paragraphs (g), (h), and (i) of this clause) who,
by reason of the nature of his duties in connection with the perfor-
mance of this contract, would reasonably be expected to make inven-
tions.
(iii) The terms "subcontract" and "subcontractor" mean
any subcontract or subcontractor of the Contractor, and any lower-
tier subcontract or subcontractor under this contract.
(b) The Contractor agrees to and does hereby grant to the Gov-
ernment an irrevocable, nonexclusive, nontransferable, 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; provided, however,
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that with respect to (i) any Subject Invention made by other than
Technical Personnel, (ii) any Subject Invention conceived prior to,
but first actually reduced to practice in the course of, any of the
experimental, developmental, or research work specified in paragraph
(a) (i) above, and (iii) the practice of any Subject Invention in
foreign countries, the obligation of the Contractor to grant the
aforesaid license and the other rights hereinafter provided in this
clause shall be limited to the extent of the Contractors right to
grant the same without incurring any obligation to pay royalties or
other compensation to others solely on account of said grant. No
license granted herein shall convey any right to the Government to
man+zfacture, have manufactured, or use any Subject Invention for the
p~spose of providing services or supplies to the general public in
competition with the Contractor or the Contractor's commercial
licensees in the licensed fields. Nothing contained in this para-
graph shall be deemed to grant any license under any invention other
than a Subject Invention.
(c) The Contractor shall:
(i) Make a written disclosure to the Contracting Officer
promptly after conception or first acrn.1 reduction to practice of
each Subject Invention which reasonably appears to be patentable;
(ii) Certify to the Contracting Officer not less often
than every twelve months, commencing with the date of this contract,
whether or not any Subject Inventions were conceived or first actually
reduced to practice during the preceding twelve months; and
(iii) Prior to final settlement of this contract, make a
summary report of all those Subject Inventions previously disclosed
and of those Subject Inventions conceived or first actually reduced
to practice after the last certification but prior to the summary
report.
(d) The Contractor shall also, in connection with each Subject
Invention referred to in paragraph (c)(i) above:
(i) Specify, at the time of making written disclosure, whe-
ther or not a United States Patent application claiming such Invention
has been or will be filed by or on behalf of the Contractor. If the
Contractor specifies that a United States Patent application will be
filed claiming such Invention, the Contractor shall file or cause to
be filed such application in due form and time. If the Contractor
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decides not to file or cause to be filed said application after having
specified that it would file, the Contractor shall so notify the Con-
tracting Officer at the earliest practicable date and in any event
not later than eight months after first publication, public use or
sale;
(ii) In the event the Contractor specifies that it has not
filed and will not file (or having specified that it will file,
thereafter notified the Contracting Officer to the contrary), (A) in-
form the Contracting Officer in writing at the earliest practicable
date of any publication of such Invention made by or known to the
Contractor or, where applicable, of any contemplated publication by
the Contractor, stating the date and identity of such publication or
contemplated publication, and (B) convey to the Government the Con-
tractorls entire right, title and interest in such Invention by de-
livering to the Contracting Officer upon written request such duly
executed instruments (prepared by the Government) of assignment, ap-
plication and 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 cover-,
ing such Invention throughout the world, subject, however, to the right
reserved to the Contractor in paragraph (e) to file foreign applica-
tions, and subject further to the reservation of a nonexclusive and
royalty-free license to the Contractor (and to its existing and future
associated and affiliated companies, if any, within the corporate
structure of which the Contractor is a part) which license shall be
assignable to the successor of that part of the Contractorts business
to which the Subject Invention pertains;
(iii) Furnish promptly to the Contracting Officer on re-
quest an irrevocable power of attorney to inspect and make copies of
each United States patent application filed by or on behalf of the
Contractor covering any Subject Invention;
(iv) In the event the Contractor, or those deriving rights
from the Contractor, elects not to continue prosecution of any such
United States patent application filed by or on behalf of the Con-
tractor, so notify the Contracting Officer not less than sixty (60)
days before the expiration of the response period and, upon written
request, deliver to the Contracting Officer such duly executed instru-
ments (prepared by the Government) as are deemed necessary to vest in
the Government the Contractor's entire right, title and interest in
the Subject Invention and the application, subject to the reservations
as specified in (ii) above; and
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(v) Deliver to the Contracting Officer duly executed in-
struments fully confirmatory of any license rights herein agreed to
be granted to the Government.
(e) The Contractor, or those deriving rights from the Contractor,
has the option of filing patent applications in foreign countries on
Subject Inventions. If this option is not exercised in the time and
manner set forth below, the Government shall have the right to file
applications in each foreign country in which the Contractor has not
exercised its option.
(i) In the event that the Contractor specifies under the
provisions of paragraph (d) that it has not filed and will not file a
United States patent application (or having specified that it will
file, thereafter notifies the Contracting Officer to the contrary) the
Contractor shall have six months from the date of making the written
disclosure required by paragraph (c)(i) to file foreign patent applica-
tions.
(ii) In the event that a United States patent application
is filed by or on behalf of the Contractor under the provisions of
paragraph (d), the Contractor shall have six months from the date of
the United States application, or six months from the date permission
is granted to file foreign applications where such filing had been
prohibited for security reasons, within which to file foreign patent
applications. With respect to each Subject Invention on which it
has specified that a United States patent application has been or will
be filed by or on behalf of the. Contractor, the Contractor shall (A)
inform the Contracting Officer in writing of each foreign patent ap-
plication for such Invention filed by or on behalf of the Contractor
within six months after the filing by the Contractor of the corres-
ponding United States application, and, if practicable, prior to the
publication of the Subject Invention in any country, (B) inform the
Contracting Officer in writing at the earliest practicable date of
any publication of the Subject Invention made by or known to the Con-
tractor or, where applicable, of any contemplated publication by the
Contractor, stating the date and identity of such publication or con-
templated publication, (C) upon written request of the Contracting.
Officer, convey to the Government the Contractorts entire right, title,
and interest in such Invention in those countries in which the Con-
tractor has not, within six months after the filing of the correspond-
ing United States application, filed foreign patent applications, and
deliver to the Contracting Officer, upon written request, such duly
executed instruments (prepared by the Government) of assignment,
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application, and other papers as are deemed necessary to vest in
the Government the Contractorts right, title, and interest as afore-
said and the right to apply for and maintain patents covering such
invention, subject, however, to the reservation of a nonexclusive
and roylaty-free license to the Contractor (and to its existing and
future associated and affiliated companies, if any, within the
corporate structure of which the Contractor is a part) which license
shall be assignable to the successor of that part of the Contractorts
business to which the Subject Invention pertains, and (D) in the
event that the Contractor, or those deriving rights from the Con-
tractor, elects not to continue the prosecution of any foreign ap-
plication which has been filed by or on behalf of the Contractor, or
elects not to maintain any patent granted on such application, so
notify the Contracting Officer not less than ninety days before the
expiration of the response period or patent lapse date and, upon
written request, deliver to the Contracting Officer such duly executed
instruments (prepared by the Government) as will convey to the Gov-
ernment the Contractorts entire right, title, and interest in the ap-
plication or patent, subject to a reservation as specified in (C)
above.
(f) If the Contractor fails to deliver to the Contracting Officer
the certificates required by paragraph (c)(ii) of this clause or fails
to furnish the written disclosures for all Subject Inventions required
by paragraph (c)(i) of this clause shown to be due in accordance with
any certificate delivered under paragraph (c)(ii), there shall be
withheld from payment until the Contractor shall have corrected such
failures either (i) ten percent (10%) of the amount of this contract,
as from time to time amended, or (ii) ''5,000, whichever is less.
After payment of eighty percent (80%) of the amount of this contract,
as from time to time amended, payment shall be withheld until a re-
serve of either (i) ten percent (10%) of such amount, or (ii) '5,000,
whichever amount 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 (A) the summary report required by
paragraph (c)(iii) of this clause, (B) written disclosures for all
Subject Inventions required by paragraph (c)(i) of this clause which
are shown to be due in accordance with certificates delivered under
paragraph (c)(ii) or in accordance with such summary report, and (C)
the information as to any subcontractor required by paragraph (h) of
this clause. The maximum amount which may be withheld under this
paragraph shall not exceed ten percent (io%) of the amount of this
contract or $5,000, whichever is less, and no amount shall be withheld
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under this paragraph when the minimum amount specified by this para-
graph is being withheld under other provisions of this contract.
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. This paragraph shall not be
construed as requiring the Contractor to withhold any amounts from
a subcontractor to enforce compliance with the patent provisions of
a subcontract.
(g) The Contractor shall exert all reasonable effort to nego-
tiate for the inclusion of this Patent Rights clause in any subcon-
tract hereunder of $3,000 or more having experimental, developmental,
or research work as one of its purposes. In the event of refusal by
a subcontractor to accept the Patent Rights clause, the Contractor
shall not proceed with the subcontract without written authorization
of the Contracting Officer, and upon obtaining such authorization,
shall cooperate with the Government in the negotiation with such sub-
contractor of an acceptable patent rights clause; provided, however,
that the Contractor shall in any event require the subcontractor to
grant to the Government patent rights under Subject Inventions of no
less scope and on no less favorable terms than those which the Con-
tractor has under such subcontract, except that in no event shall the
subcontractor be required to grant to the Government patent rights in
excess of those herein agreed to be granted to the Government by the
Contractor.
(h) The Contractor shall, at the earliest practicable date,
notify the Contracting Officer in writing of any subcontract contain-
ing a patent rights clause, furnish the Contracting Officer a copy of
such clause, and notify the Contracting Officer when such subcontract
is completed. It is understood that with respect to such subcontract
clause, the Government is a third party beneficiary; and the Con-
tractor hereby assigns to the Government all the rights that the Con-
tractor would have to enforce the subcontractor's obligations for the
benefit of the Government with respect to Subject Inventions. The
Contractor shall not be obligated to enforce the agreements of any
subcontractor hereunder relating to Subject Inventions.
(i) When the Contractor shows that it has been delayed in
the performance of this contract by reason of its inability to obtain
in accordance with paragraph (g) a suitable patent rights clause from
a. qualified subcontractor for any item or service required under this
contract for which the Contractor itself does not have available facili-
ties or qualified personnel, the Contractorts delivery dates shall be
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extended for a period of time equal to the duration of such delay; and,
upon request of the Contractor, the Contracting Officer shall deter-
mine to what extent, if any, an additional extension of the delivery
dates and an increase in contract prices based upon additional costs
incurred by such delay are proper under the circumstances; and the con-
tract shall be modified accordingly. If the Contractor, after exerting
all reasonable effort, is unable to obtain a qualified subcontractor as
set forth above, the Contractor may submit to the Contracting Officer a
written request for waiver or modification of the requirement that a
suitable patent rights clause be included in the subcontract.. Such re-
quest shall specifically state that the Contractor has used all reason-
able effort to obtain such qualified subcontractor, and shall cite the
waiver or termination provision hereinafter set fcr th. If, within
thirty-five (35) days after the date of receipt of such request for a
waiver or modification of said requirement, the Contracting Officer
shall fail to deny in writing such request, the requirement shall be
deemed to have been waived by the Government. If within such period
the Contractor shall receive a written denial of such request by the
Contracting Officer, this contract shall thereupon automatically ter-
minate and the rights and obligations of the parties shall be governed
by the provisions of the clause of this contract entitled "Termination*
for the Convenience of the Government."
14. AUTHORIZATION AND CONSENT
The Government hereby gives its authorization and consent for all
use and manufacture of any patented invention in the performance of
this contract or any part hereof or any amendment hereto or any sub-
contract hereunder (including any lower-tier subcontract).
15. COPYRIGHT
(a) The Contractor agrees to and does hereby grant to the Govern-
ment, and to its officers, agents and employees acting within the scope
of their official duties, (i) a royalty-free, nonexclusive and irrevoc-
able license to reproduce, translate, publish, use, and dispose of, and
to authorize others so to do, all copyrightable material first produced
or composed and delivered to the Government under this contract by the
Contractor, its employees or any individual or concern specifically employed or assigned to originate and prepare such material; and (ii) a
license as aforesaid under any and all copyrighted or copyrightable work
not first produced or compceod by the Contractor in the performance of
this contract but which is incorporated in the material furnished under
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the contract, provided that such license shall be only to the extent
the Contractor now has, or prior to completion or final settlement
of the contract may acquire, the right to grant such license without
becoming liable to pay compensation to others solely because of such
grant.
(b) The Contractor agrees that it will exert all reasonable ef-
fort to advise the Contracting Officer, at the time of delivering any
copyrightable or copyrighted work furnished under this contract, of
any adversely held copyrighted or copyrightable material incorporated
in any such work and of any invasion of the right of privacy therein
contained.
(c) The Contractor agrees to report to the Contracting Officer,
promptly and in reasonable written detail, any notice or claim of
copyright infringement received by the Contractor with respect to any
material delivered under this contract.
16. REPRODUCTION AND USE OF TECHNICAL DATA
The Contractor agrees to and does hereby grant to the Government,
to the full extent of the Contractorts right to do so without payment
of compensation to others, the right to reproduce, use, and disclose
for governmental purposes (including the right to give to foreign
governments for their use as the national interest of the United States
may demand) all or any part of the reports, drawings, blueprints, data,
and technical information specified to be delivered by the Contractor
to the Government under this contract; provided, however, that nothing
contained in this paragraph shall be deemed, directly or by iraplica--
tion, to grant any license under any patent now or hereafter issued
or to grant any right to reproduce anything else called for by this
contract.
The provisions of this clause shall be applicable only if the
amount of the contract is in excess of x"10,000.
(a) The Contractor shall report in writing (in quadruplicate)
to the Contracting Officer as soon as practicable after execution of
this contract whether or not any royalties in excess of $250 have been
paid or are to be paid by the Contractor directly to any person or
firm in connection with the performance of this contract. If royalties
in excess of $250 have been paid or are to be paid to any person or
firm, the report shall include the following items of information with
respect to such royalties (including the intial $250):
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(1) The name and address of each licensor to whom
royalties in excess of $250 have been paid or are to be paid,
(2) The patent numbers, patent application serial num-
bers (with filing dates), or other identification of the basis for
such royalties,
(3) The manner of computing the royalties consisting
of (i) a brief identification of each royalty-bearing unit or pro-
cess, (ii) the total amount or royalties, and (iii) the percentage
rate of dollars and cents amount of royalties on each such unit or
process; provided that if the royalties cannot be computed in terms
of units or dollars and cents value, then other data showing the
manner in which the Contractor computes the royalties.
(b) In lieu of furnishing a report under paragraph (a),
the Contractor may furnish a single, consolidated report for each
accounting period of the Contractor during which the Contractor has
contracts with the Government, provided the Contractor has requested
and obtained the prior written approval of the Contracting Officer.
Such consolidated report shall be furnished, when the furnishing
thereof has been approved, in the number of copies as approved, as
soon as practicable after the close of the accounting period covered
by the report. Such consolidated report shall be made in accordance
with Contractorts established accounting practice and shall include,
for the accounting period, the total amount of royalties accruing to
each licensor at a rate in excess of $1,000 per annum on the Con-
tractorts over-all business, together with (i) the name and address
of each such licensor, (ii) the patent numbers, patent application
serial numbers (with filing dates), or other identification of the
basis for such royalties, (iii) a brief description of the subject
matter of the license under which royalties are charged, (iv) the
percentage rate or unit amount, or if the royalties do not accrue
by rate or unit amount, such other data showing the manner by which
the royalties accrue to licensor, and (v) an estimate or approxima-
tion (without detailed accounting) of the portion of such royalties
that may be attributable to Government contracts. The Contractor
shall, if requested by the Government, furnish at Government expense
a more detailed allocation of such royalty payments attributable to
Government contracts.
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(c) In the event that the Contractor requests written ap-
proval to furnish consolidated reports under paragraph (b) above,
the Contracting Officer shall promptly consider the request and fur-
nish to the Contractor a letter stating whether or not the request
is approved and, notwithstanding any such approval, the Contracting
Officer shall have the right to question any such subsequently fur-
nished report as to accuracy or completeness of data and to ask for
additional information. The Contractor shall furnish a copy of such
letter of approval to the Contracting Officer administering this
contract.
(d) After payment of eighty percent (80%) of the amount
of this contract, as from time to time amended, further payment
shall be withheld until a reserve of either (i) ten percent (10%)
of such amount or (ii) $5,000, whichever is less, shall have been
set aside, such reserve or the balance thereof to be retained until
the Contractor shall have furnished to the Contracting Officer the
report called for by paragraph (a) hereof or the copy of the letter
approving the Contractorts request to furnish the report under para-
graph (b); provided that no amount shall continue to be withheld
from payment for the causes specified in this paragraph (d) if the
Contracting Officer shall find that the Contractor has not been fur-
nished a letter as required by paragraph (c) within a reasonable
time after making written request to submit a single, consolidated
report under the provisions of paragraph (b) of this clause; and pro-
vided further that the Contracting Officer may, in his discretion,
order payment to be withheld in the amount and manner above provided
if the report called for by paragraph (a) is unsatisfactory or if
the report called for by paragraph (b) is due but has not been re-
ceived, or if received, is found to be unsatisfactory. No amount
shall be withheld under this paragraph when the minimum amount spe-
cified by this paragraph is being withheld under other provisions
of this contract. The withholding of any amount or subsequent pay-
ment thereof to the Contractor shall not be construed as a waiver
of any right accruing to the Government under this contract.
Except as otherwise provided in this contract, any dispute con-
cerning 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 fur-
nish a copy thereof to the Contractor. Within 30 days from the date
of receipt of such copy, the Contractor may appeal by mailing or
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otherwise furnishing to the Contracting Officer a written appeal
addressed to the Secretary, and the decision of the Secretary or
his duly authorized representative for the hearing of such appeals
shall, unless determined by a court of competent jurisdiction to
have been fraudulent or capricious or arbitrary or so grossly
erroneous as necessarily to imply bad faith, or not supported by
substantial evidence, be final and conclusive; provided that, if
no such appeal is taken, the decision of the Contracting Officer
shall be final and conclusive. In connection with any appeal pro-
ceeding under this clause, the Contractor shall be afforded an op-
portunity to be heard and to offer evidence in support of its appeal.
Pending final decision of a dispute hereunder, the Contractor shall
proceed diligently with the performance of the contract and in ac-
cordance with the Contracting Officerts decision.
19. BUY ANURICAN ACT
The Contractor agrees that there will be delivered under this
contract only such unmanufactured articles, materials and supplies
(which term "articles, materials, and supplies" is hereinafter
referred to in this clause as "supplies") as have been mined or
produced in the United States, and only such manufactured supplies
as have been manufactured in the United States substantially all
from supplies mined, produced, or manufactured, as the case may be,
in the United States. Pursuant to the Buy American Act (41 U.S.
Code lOa-d), the foregoing provision shall not apply (i) with re-
spect to supplies excepted by the Secretary from the application of
that Act, (ii) with respect to supplies for use outside the United
States, or (iii) with respect to the supplies to be delivered under
this contract which are of a class or kind determined by the Secre-
tary or his duly authorized representative not to be mined, pro-
duced, or manufactured, as the case may be, in the United States in
sufficient and reasonably available commercial quantities and of a
satisfactory quality, or (i7) with respect to such supplies, from
which the supplies to be delivered under this Contract are manu-
factures, as are of a class or kind determined by the Secretary or
his duly authorized representative not to be mined, produced, or
manufactured, as the case may be, in the United States in sufficient
and reasonably available commercial quantities and of a satisfactory
quality: Provided, That this exception (iv) shall not permit delivery
of supplies manufactured outside the United States if such supplies
are manufactured in the United States in sufficient and reasonably
available commercial quantities and of a satisfactory quality.
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20. OFFICIALS NOT TO BENEFIT
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.
21. COVENANT AGAINST CONTINGENT FEES
The Contractor warrants that no person or selling agency has
been employed or retained to solicit or secure this contract upon
an agreement or understanding for a commission, percentage, broker-
age, or contingent foe, excepting bona fide employees or bona fide
established commercial or selling agencies maintained by the Con-
tractor for the purpose of securing business. For breach or viola-
tion of this warranty the Government shall have the right to annul
this contract without liability or in its discretion to deduct from
the contract price or consideration the full amount of such commis-
sion, percentage, brokerage or contingent fee.
In connection with the performance of work under this contract,
the Contractor agrees not to employ any person undergoing sentence
of imprisonment at hard labor.
23. EIGHT-HOUR LAW OF 1912
This contract, to the extent that it is of a character specified
in the Eight-Hour Law of 1912 as amended (40 U.S. Code 324-326) and
is not covered by the Walsh-Healey Public Contracts Act (41 U.S.
Code 35-45), is subject to the following provisions and exceptions
of said Eight-Hour Law of 1912 as amended, and to all other provisions
and exceptions of said Law:
No laborer or mechanic doing any part of the work contem-
plated by this contract, in the employ of the Contractor or any sub-
contractor contracting for any part of the said work, shall be re-
quired or permitted to work more than eight hours in any one calen-
dar day upon such work, except upon the condition that compensation
is paid to such laborer or mechanic in accordance with the provi-
sions of this clause. The wages of every such laborer and mechanic
employed by the Contractor or any subcontractor engaged in the
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performance of this contract shall be computed on a basic day rate
or eight hours per day; and work in excess of eight hours per day
is permitted only upon the condition that every such laborer and
mechanic shall be compensated for all hours worked in excess of
eight hours per day at not less than one and one-half times the
basic rate of pay. For each violation of the requirements of this
clause a penalty of five dollars shall be imposed upon the Con-
tractor for each such laborer or mechanic for every calendar day in
which such employee is required or permitted to labor more than
eight hours upon said work without receiving compensation computed
in accordance with this clause; and all penalties thus imposed shall
be withheld for the use and benefit of the Government.
24. NONDISCRIMINATION IN ETAPLOYMENT
(a) In connection with the performance of work under this con-
tract, the Contractor agrees not to discriminate against any em-
ployee or applicant for employment because of race, religion, color,
or national origin. The aforesaid provision shall include, but not
be limited to, the following: employment, upgrading, demotion, or
transfer; recruitment or recruitment advertising; layoff or termina-
tion; rates of pay or other forms of compensation; and selection for
training, including apprenticeship. The Contractor agrees to post
hereafter in conspicuous places, available for employees and appli-
cants for employment,notices to be provided by the Contracting Of-
ficer setting forth the provisions of the nondiscrimination clause.
(b) The Contractor further agrees to insert the foregoing pro-
vision in all subcontracts hereunder, except subcontracts for
standard commercial supplies or raw materials.
25. WALSH-HEALEY PUBLIC CONTRACTS ACTS
If this oontract is for the manufacture or furnishing of ma-
terials, supplies, articles or equipment 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. Code 35-45), there are
hereby incorporated by reference all representations and stipulations
required by said Act and regulations issued thereunder by the Secre-
tary of Labor, such representations and stipulations being subject to
all applicable rulings and interpretations of the Secretary of Labor
which are now or may hereafter be in effect.
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26. GRATUITIES
(a) The Government may, by written notice to the Contractor,
terminate the right of the Contractor 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 en-
tertainment, gifts, or otherwise) were offered or given by the Con-
tractor, 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 award-
ing 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 findings 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 damages to which it may be entitled
by law, to exemplary damages in an amount (as determined by the Sec-
retary or his duly authorized representative) which shall be not less
than three not more than ten times the costs incurred by the Con-
tractor in providing any such gratuities to any such officer or em-
ployee.
(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.
No aliens employed by the Contractor shall be permitted to have
access to the plans or specifications, or the work under construction,
or to participate in the contract trials, without the written consent
beforehand of the Secretary or his duly authorized representative.
(a) Pursuant to the provisions of the Assignment of Claims Act
of 1940 as amended (31 U.S. Code 203, 41 U.S. Code 15), if this con-
tract provides for payments aggregating $1,000 or more, claims for
moneys due or to become due the Contractor from the Government under
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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 in-
stitution. Any such assign:.nent or reassignment 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 assign-
ment or reassignment may be made to one party as agent or trustee for
two or more parties participating in such financing. Notwithstanding
any other provision of this contract, payments to an assignee of any
moneys 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 Secrets' "Secret," or "Confidential,"
be furnished to any assignee of any claim arising under this con-
tract or to any other person not entitled to receive the same; pro-
vided, that a copy of any part or all of this contract so marked may
be furnished, or any information contained therein may be disclosed
to such assignee upon the prior written authorization of the Con-
tracting Officer.
29. MILITARY SECURITY REQUIREMENTS
(a) The provisions of this clause shall apply to the extent that
this contract involves access to security information classified
"Top Secret," "Secret," or "Confidential."
(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.
(c) To the extent the Government has indicated as of the date
of this contract, or thereafter indicates, security classification
under this contract as provided in paragraph (b) above, the Con-
tractor shall safeguard all classified elements of this contract and
shall provide and maintain a system of security controls within its
own organization in accordance with the requirements of (i) the De-
partment of Defense Industrial Security Manual for Safeguarding
Classified Security Information as in effect on date of this con-
tract, which Manual is hereby incorporated by reference and made a
part of this contract, (ii) any ai:iend?ients to said Manual required by
the demands of national security as determined by the Government and
made after the
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date of this contract, notice of which has been furnished to the Con-
tractor by the Contracting Officer, and (iii) those provisions of
written agreements entered into by the parties pertaining to the
adaptation of the Manual to the Contractor's business.
(d) Designated representatives of the Contracting Officer re-
sponsible for inspection pertaining to industrial security shall have
the right to inspect at reasonable intervals the procedures, methods,
and facilities utilized by the Contractor in complying with the re-
quirements of the terms and conditions of this clause. Should the
Contracting Officer, through its authorized representative, deter-
mine that the Contractor has not complied with such requirements,
the Contracting Officer shall inform the Contractor in writing of the
proper actions to be taken in order to effect compliance with such
requirements.
(e) If, subsequent to the date of this contract, the security
classifications or requirements under this contract are changed by
the Contracting Officer as provided in this clause, and if such
changes cause an increase or decrease in the estimated cost of per-
formance of this contract, the estimated cost and fixed fee, shall,
to the extent appropriate, be subject to an equitable adjustment.
Any such equitable adjustment shall be accomplished in the manner
set forth in the clause of this contract entitled "Changes."
(f) The Contractor agrees to insert, in all subcontracts here-
under which involve access to classified security information, pro-
visions which shall conform substantially to the language of this
clause, including 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 ad-
justments to be made in the subcontract price or in the estimated
cost and fixed fee of the subcontract (as appropriate to the type of
subcontract involved) on account of changes in security classifica-
tions or requirements made under the provisions of this clause sub-
sequent to the date of the subcontract involved.
(g) The Contractor also agrees that it shall determine that any
subcontractor proposed by it for the furnishing of supplies and
services which will involve access to classified security informa-
tion in the Contractor's custody has been granted an appropriate
facility security clearance, which is still in effect, prior to being
accorded access to such classified security information.
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30. UTILIZATION OF SMALL BUSINESS CONCERNS
(a) It is the policy of the Government as declared by the Con-
gress to bring about the greatest utilization of small business con-
cerns which is consistent with efficient production.
(b) The Contractor agrees to accomplish the maximum amount of
subcontracting to small business concerns that the Contractor finds
to be consistent with the efficient performance of this contract.
31. SUPERSEDING SPECIFICATIONS
All references in any Government Specification incorporated herein
to other Government specifications shall be deemed to include all
specifications supplementary to or superseding the specifications so
referred to, to the extent that such supplementary or superseding
specifications are in effect at the date of Contractorts latest quo-
tation, if the Contractor was furnished or otherwise notified of the
existence of such supplementary or superseding specification at the
time of said quotation.
32,. TERMINATION
(a) The performance of work under the contract may be termin-
ated by the Government in accordance with this clause in whole, or
from time to time in part, (1) whenever the Contractor shall default
in performance of this contract in accordance with its terms (in-
cluding in the term "default" any such failure by the Contractor to
make progress in the prosecution of the work hereunder as endangers
such performance), and shall fail to cure such default within a
period of ten days (or such longer periods as the Contracting Offi-
cer may allow) after receipt from the Contracting Officer of a notice
specifying the default, or (2) whenever for any reason the Contract-
ing Officer shall determine that such termination is in the best in-
terests of the Government. Any such termination shall be effected by
delivery to the Contractor of a Notice of Termination specifying
whether termination is for the default of the Contractor or for the
convenience of the Government, the extent to which performance of
work under the contract is terminated, and the date upon which such
termination becomes effective. If, after notice of termination of
this contract for default under (1) above, it is determined that the
Contractorts failure to perform 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 provisions of the clause of this
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contract relating to excusable delays, the Notice of Termination
shall be deemed to have been issued under (2) above, and the rights
and obligations of the parties hereto shall in such event be gov-
erned accordingly.
(b) After receipt of a Notice of Termination and except as
otherwise directed by the Contracting Officer, the Contractor shall
(1) stop work under the contract on the date and to the extent spe-
cified in the Notice of Termination; (2) 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; (3) terminate all orders and subcon-
tracts to the extent that they relate to the performance of work
terminated by the Notice of Termination; (4) assign to the Govern-
nont., 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; (5) 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 termination of orders and subcontracts, the cost of
which would be reimbursable in whole or in part, in accordance with
the provisions of this contract; (6) transfer title (to the extent
that title has not already been transferred) and, in the manner, to
the extent, and at the times directed by the Contracting Officer,
deliver to the Government (i) the fabricated or unfabricated parts,
work in process, completed work, supplies, and other material pro-
duced as a part of, or acquired in respect of the performance of,
the work terminated by the Notice of Termination, (ii) the com-
pleted 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 (iii) the jigs, dies,
and fixtures, and other special tools and tooling acquired or manu-
factures for the performance of this contract for the cost of which
the Contractor has been or will be reimbursed under this contract;
(7) use its 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 pro-
vision (6) of this paragraph, provided, however, that the Contractor
(i) shall not be required to extend credit to any purchaser, and
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(ii) 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 dis-
position shall be applied in reduction of any payments to be made
by the Government to the Contractor 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 Offi-
cer may direct; (8) complete performance of such part of the work
as shall not have been terminated by the Notice of Termination, and
(9) take such action as may be necessary, or as the Contracting
Officer may direct, for the protection and preservation of the pro-
perty related to this contract which is in the possession of the
Contractor in which the Government has or may acquire an interest.
The Contractor shall proceed immediately with the performance of
the above obligations notwithstanding any delay in determining or
adjusting the amount of the fixed-fee, or any item of reimbursable
cost, under this clause. At any time after expiration of the plant
clearance period, as defined in Section VIII, Armed Services Pro-
curement Regulation, 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 in-
ventory not previously disposed of, exclusive of items the disposi-
tion of which has been directed or authorized by the Contracting
Officer, and may request the Government to remove such items or
enter into a storage agreement covering them. Not later than fif-
teen (15) days thereafter, the.Government will accept title to such
items and remove them or enter into a storage agreement covering
the same, provided that the list submitted shall be subject to veri-
fication 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 submitted shall be made prior to final settlement.
(c) After receipt of a Notice of Termination, the Contractor
shall submit to the Contracting Officer its termination claim in
the form and with the certification prescribed by the Contracting
Officer. Such claim shall be submitted promptly but in no event
later than two years 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
two-y,ar period or authorized extension thereof. However, if the
Contracting Officer determines that the facts justify such action,
he may receive and act upon any such termination claim at any time
after such two-year period or any extension thereof. Upon failure
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of the Contractor to submit its termination claim within the time
allowed, the Contracting Officer may determine, on the basis of
information available to him, the amount, if any, due to the Con-
tractor by reason of the termination and shall thereupon pay to
the Contractor the amount so determined.
(d) Subject to the provisions of paragraph (c), 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
fixed-fee) to the Contractor by reason of the total or partial term-
ination 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 para-
graph (d) above, as to the amounts with respect to costs and fixed-
fee, or as to the amount of the fixed-fee, to be paid. to the Contractor
in connection with the termination of work pursuant to this clause,
the Contracting Officer shall 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:
(1) If the settlement includes cost and fixed-fee:
(i) There shall be included therein all costs and expenses reim-
bursable in accordance with this contract, not previously paid
to tie Contractor for the performance of this contract prior
to the effective 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 practicable to discontinue such costs.
(ii) There shall be included therein so far as not included under
(i) above, the cost of settling and paying claims arising out of
the termination of work under subcontracts or orders, as provided
in paragraph (b)(5) above, which are properly chargeable to the
terminated portion of the contract.
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(iii)There shall be included therein the reasonable costs of
settlement, including accounting, legal, clerical, and
other expenses reasonably necessary for the preparation
of settlement claims and supporting data with respect to
the terminated portion of the contract and for the termina-
tion and settlement of subcontracts thereunder, together
with reasonable storage, transportation, and other costs
incurred in connection with the protection or disposition
of termination inventory; provided, however, that if the
termination is for default of the Contractor there shall
be included any amounts for the preparation of the Con-
tractor's settlement proposal.
(iv) There shall be included therein a portion of the fixed-fee
payable under the contract determined as follows:
(A) In the event of the termination of this contract for
the convenience of the Government and not for the de-
fault of the Contractor, there shall be paid a percent-
age of the fee equivalent to the percentage of the com-
pletion of work contemplated by the contract, less
fixed-fee payments previously made hereunder.
(B) In the event of the termination of this contract for
the default of the Contractor, the total fixed-fee pay-
able 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 types of article under consideration) as the total
number of articles delivered to and accepted by the
Government bears to the total number of articles of a
like kind called for by this contract.
If the amount determined under this paragraph is less
than the total payment of fixed-fee theretofore made
to the Contractor, the Contractor shall repay to the
Government the excess amount.
(2) If the settlement includes only the fixed fee, the amount thereof
will be determined in accordance with subparagraph (e)(l)(iv)
above.
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(f) The Contractor shall have the right of appeal, 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 its claim within
the time provided in paragraph (c) above and has failed to request
extension of such time, he shall have no such right of appeal. In
any case where the Contracting Officer has made a determination of
the amount due under paragraph (c) or (e) above, the Government shall
pay to the Contractor the following: (i) if there is no right of
appeal hereunder or if no timely appeal has been taken, the amount
so determined by the Contracting Officer, or (ii) if an appeal has
been taken, the amount finally determined on such appeal.
(g) In arriving at the amount due the Contractor under this
clause there shall be deducted (1) all unliquidated advance or other
unliquidated payments theretofore made to the Contractor, (2) any
claim which the Government may have against the Contractor in connec-
tion with this contract, and (3) the agreed price for, or the pro-
ceeds 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 credited to the Government.
(h) In the event of a partial termination, the portion of the
fixed-fee which is payable with respect to the work under the con-
tinued portion of the contract shall be equitably adjusted by agree-
ment between the Contractor and the Contracting Officer, and such
adjustment shall be evidenced by an amendment to this contract.
(i) The Government may from time to time, under such terms and
conditions as it may prescribe, make partial payments and payments on
account against costs incurred by the Contractor in connection with
the terminated portion of the contract 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 due under this clause, such excess shall be payable by the Con-
tractor to the Government upon demand, together with interest com-
puted at the rate of 6% 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 shall be charged with respect to any such excess payment
attributable to a reduction in the Contractor's claim by reason of
retention or other disposition of termination inventory until ten days
after the date of such retention or disposition.
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(j) The pro risic n of t%' s clause relating to the f t ed-ice etiai.l
be trapn1i,^Ph1e if t, ^i5 contract, does not provide for payment ot a .fi I-:
fee.
(k) Unless oth-,-- ?rise provided for in this contract, r.,r by a.npliceble
stF+.tu P, the '"nrt rr,~? o ? from the P f' etive date of terrai.-. tio:- ?~nd for a
periodd of six ye' after f;nrJ. s-ttlarent a dor tt . contract, shall
r+resek`v zaTld make nvaila+-1e to tha rovernrwnt at; Evil r-eaeonable tied at
the oo_t'fice- r> th%e but, irithout direct, charge to the Grwrunert,
all", its bnoks, records, lo.cui eats, and other evidence bo rirt on tie cost,
and cx-p uses of the :ertractor under thie contract and relatir.,LL, to the wrork
termi. ia..ed hereunder, or to the nxtert approved by the Contrmt :ntr Office ^,
photo ;ran ks, uuuouuug0-' omit to
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the Contracting Officer a written request for waiver or modification of
the requirement that a suitable patent rights clause be included in the
subcontract.
Such request shall specifically state that the Contractor has used
all reasonable effort to obtain such qualified subgontractor, and shall
cite the waiver or termination provision hereinaftei'set forth. If
within thirty-five (35) days after the date of receipt of such request
for a waiver or modification of said requirement, the Contracting Offi-
cer shall fail to deny in writing such request, the requirement shall
be deemed to have been waived by the Government. If within such period
the Contractor shall receive a written denial of such request by the
Contracting Officer, this contract shall thereupon automatically ter-
minate and the rights and obligations of the parties shall be governed
by the provisions of the clause of this contract providing for termina-
tion for the convenience of the Government.
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