NEGOTIATED CONTRACT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00487R000400790039-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 50
• Document Creation Date: December 22, 2016
• Document Release Date: June 20, 2012
• Sequence Number: 39
• Publication Date: June 15, 1957
• Content Type: MISC

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Lockheed Aircraft Corporation
Burbank, California
Contract for: (See Schedule)
Mail Invoices to:
DOCUM:NT NO. _- ~ No L.~ J
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DATE: 1- ?-
Administrative Data:
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CONTRACT No. SP-1915
Amount: $2,750,000.00
Performance Period/Delivery
Schedule:- 1 July 57 - 30 June 1958
See Schedule
Inspection Point:
Contractor's Plant, Burbank
and/or Bakersfield California
This contract is entered into, by and between the United States of
America, hereinafter called the Government, represented by the Contrac-
ting Officer executing this contract, and the above named Contractor
which is a Corporation, incorporated in the State of California, herein-
after called the Contractor.
The parties hereto agree that the Contractor shall furnish the
facilities and deliver all supplies and perform all the services set
forth in the attached Schedule issued hereunder, for the consideration
stated therein.
The rights and obligations of the parties to this contract shall
be subject to and governed by the attached Schedule, Appendix I and
General Provisions, which together with this signature page and the ac-
companying certificate comprise this Contract No. SP-1915. In the
event of any inconsistency between the Schedule and the General Provi-
sions, the Schedule shall control.
IN WITNESS WHEREOF, the parties hereto have executed this contract
as of 15 June , 1957?
Signatures:
Contracting Officer
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Contract No. SP-1915
C E R T I F I C A T E
I, certify that I am the Secretary of the
Corporation named as Contractor herein; that Clarence L. Johnson
who signed this contract on behalf of the Contractor was then Vice
President of said corporation; that said contract was duly signed
for and in behalf of said Corporation by authority of its governing
body, and is within the scope of its Corporate powers.
(Corporate Seal)
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Contract No. SP-1915
PART I SUPPLIES AND SERVICES TO BE FURNISHED . . . . . . . . . . . 4
PART II CONSIDERATION AND PAYMENT . . . . . . . . . . . . . . . . . 4
PART III DELIVERY SCMM)ULE . . . . . . . . . . . . . . . . . . . . . 4
PART IV PRICE REDST NATION . . . . . . . . . . . . . . . . . . . 5
PART V PROGRESS PAYMENTS . . . . . . . . . . . . . . . . . . . . . 6
PART VI INSPECTION AND ACCEPTANCE OF SUPPLIES AND
CORRECTIONS OF DEFECTS . . . . . . . . . . . . . . . . . 8
PART VII FURNISHING OF MATERIALS AND SUPPLIES AT THE GOVERNMENT'S
OPTION . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART VIII WAIVER OF REQUIREMENTS OF GENERAL PROVISIONS . . . . . . . 9
PART IX SPECIAL SECURITY RESTRICTIONS . . . . . . . . . . . . . . . 10
PART X INSPECTION AND AUDIT . . . . . . . . . . . . . . . . . . . 10
PART XI SUBCONTRACTS FOR WORK OR SERVICES . . . . . . . . . . . . . 10
APPENDIX I . . . . . . . . . . . . . . . . .
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . .
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Contract No. SP-1915
PART I - SUPPLIES AND SERVICES TO BE FURNISHED
The Contractor shall provide the supplies and services set forth
in the attached Appendix I, such Appendix I being a part of the
Schedule under this contract.
PART II - CONSIDERATION AND PAYMENT
a. In accordance with the clause of this contract entitled
"PAIMENTS," and subject to redetermination of the price in accord-
ance with the part of this Schedule entitled "PRICE RiATION,"
the Government shall pay the Contractor upon satisfactory performance
of this contract, as full payment for the supplies and services to
be furnished hereunder, the amount of $2,750,000.00 which
amount is the total price set forth in Appendix I hereto.
b. As of the date of execution of this contract, there has
been allotted for this contract the amount set forth above. This
amount is subject to increase or decrease, in accordance with the
part of this Schedule entitled, "PRICE REDET NATION." In addi-
tion, the Government may increase this amount from time to time
solely at its discretion, such increased amount to be subject at
the proper time to the redetermination provisions of the part of
this Schedule entitled "PRICE REDETERMINATION." If at any time the
Contractor has reason to believe that by reason of performance by
it, of this contract, the amount due it will exceed the sum allotted
to this contract, it shall notify the Contracting Officer to that
effect. Notwithstanding any other provision of this contract, the
Contractor shall not be obligated to furnish any services pursuant
to this contract, if in the best judgment of the Contractor, the
cost of such services will exceed the amount allotted to this con-
tract. The Government shall not be obligated to pay the Contractor
under this contract any amount in excess of the sum allotted.
PART III - DELIVERI SCHEDULE
Except as otherwise specified pursuant to the clause hereof
entitled "changes" the equipment and/or supplies covered hereunder
shall be delivered to the Government f.o.b. such transportation as
the Government may specify at the contractor's plant at Bakersfield
or Burbank, California and/or test site(s).
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Contract No. SP-1915
PART IV - PRICE ON
a. Because of the experimental and developmental nature of the
work called for by this contract and the great uncertainty as to the
cost of performance hereunder, the parties agree that the contract
prices set forth in Appendix I hereof may be increased or decreased
in accordance with the provisions of this clause.
b. Upon expenditure of 75 percent of the total contract amount
as set forth in Part II hereof, the parties shall negotiate to revise
the price of all items theretofore and thereafter to be delivered.
c. As soon as practicable and in no case more than 45 days after
expenditure of funds referred to above, the contractor shall furnish
to the Contracting Officer a statement showing in such form and detail
as the Contracting Officer may prescribe the Contractor's cost of pro-
ducing the supplies or furnishing the services called for hereunder,
together with such information as may be pertinent in the negotiations
for a revised price pursuant to this clause. Such statement of cost
shall fairly reflect the normal operation of the Contractor's cost
system except to such extent, if any, as security restrictions neces-
sitate minor departures therefrom.
d. Upon the filing of the statement and other pertinent informa-
tion required by paragraph (c) of this Clause, the Contractor and the
Contracting Officer will promptly negotiate in good faith to agree
upon a reasonable revised price for the entire contract which, upon
the basis of such statement and other pertinent information, will con-
stitute fair and just compensation to the Contractor for the perform-
ance of this contract. In determining the extent of any estimated
allowance for profit to be taken into account in fixing such revised
price, consideration will be given to the extent to which the Con-
tractor has performed the contract with efficiency, economy, and in-
genuity. The. revised price shall be evidenced by a supplemental agree-
ment to this contract, and in the event that the negotiations for price
revision in accordance with this Clause indicate that the uncertainty
as to the cost of complete performance is still so great as to prevent
a realistic determination of the final price for the over-all comple-
tion of this contract, provision may be made for such future revision
of the price as may be appropriate to the circumstances at that time.
e. If within 60 days after expenditure of funds referred to in
(b) above the parties shall fail to agree upon a revised price in
accordance with the provisions of this Clause, the failure to agree
shall be deemed to be a disagreement as to a question of fact which
shall be disposed of in accordance with the Clause hereof entitled
"Disputes."
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Contract No. SP-1915
f. In the event of a price increase the Government will pay or
credit to the Contractor the amount by which the revised prices
shall exceed the contract price aforesaid. In the event of a de-
crease in price, the Contractor will repay or credit the amount of
such decrease to the Government in such manner as the Contracting
Officer may direct.
PART V - PROGRESS PAThENTS
a. Progress payments, which are hereby defined as
to acceptance on work in progress payments for the Government under this prior
his con-
tract, may be made upon the following terms and conditions.
b. The Contracting Officer may, from time to time, authorize
progress payments to the Contractor upon property acquired or pro-
duced and services performed by it for the performance of this con-
tract: PROVIDED, that such progress payments shall not exceed 90
percent of the cost to the Contractor of the property and services
upon which payment is made, which costs shall be determined from
evidence submitted by the Contractor and which must be such as is
satisfactory to the Contracting Officer as being representative of
the value of the work already performed; Provided further, that in
no event shall the total of unliquidated progress payments (see (e)
below) and of unliquidated advance payments, if any, made under this
contract, exceed 80 percent of the total contract price of supplies
or services still to be delivered.
c. Upon the making of any progress payments under this con-
tract, title to all parts, materials, inventories, work in process
and nondurable tools theretofore acquired or produced by the Con-
tractor for the performance of this contract, and properly chargeable
thereto under sound accounting practice, shall forthwith vest in the
Government; and title to all like property thereafter acquired or
produced by the contractor for the performance of this contract and
properly chargeable thereto as aforesaid shall vest in the Government
forthwith upon said acquisition or production: Provided, that nothing
herein shall deprive the Contractor of any further progress or final
payments due or to become due hereunder; or relieve the Contractor or
the Government of any of their respective rights or obligations under
this contract.
d. The Contractor represents and warrants that the property,
upon which any progress payment is made hereunder, shall be cleared
of all liens and encumbrances of any kind whatsoever upon receipt of
any progress payment.
e. In making payment for the supplies furnished hereunder, there
shall be deducted from the contract price therefor a proportionate
amount of the progress payments theretofore made to the Contractor,
under the authority herein contained.
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Contract No. SP-1915
f. It is recognized that property (including, without limita-
tion completed supplies, spare parts, drawings, information, par-
tially completed supplies, work in process, materials, fabricated
parts and other things called for herein) title to which is or may
hereafter become vested in the Government pursuant to this Clause
will from time to time be used by or put in the care, custody or
possession of the Contractor in connection with the performance of
this contract. The Contractor, either before or after receipt of
Notice of Termination at the option of the Government, may acquire
or dispose of property to which title is vested in the Government
under this clause, upon terms approved by the Contracting Officer;
provided, that after receipt of Notice of Termination any such pro-
perty that is a part of termination inventory may be acquired or
disposed of only in accordance with the provisions of the termination
clause of this contract and applicable laws and regulations. The
agreed price (in case of acquisition by the Contractor) or the pro-
ceeds received by the Contractor (in case of any other disposition),
shall, to the extent that such price and proceeds do not exceed the
unliquidated balance of progress payments hereunder, be paid or
credited to the Government as the Contracting Officer shall direct;
and such unliquidated balance shall be reduced accordingly. Current
production scrap may be sold by the Contractor without approval of the
Contracting Officer but the proceeds will be applied as provided in
this paragraph (f), provided that any such scrap which is a part of
termination inventory may be sold only in accordance with the provi-
sions of the termination clause of this contract and applicable laws
and regulations. Upon liquidation of all progress payments hereunder
or upon completion of deliveries called for by this contract, title
to all property (or the proceeds thereof) which had not been delivered
to and accepted by the Government under this contract or which has not
been incorporated in supplies delivered to and accepted by the Govern-
ment under this contract and to which title has vested in the Govern-
ment under this Clause shall vest in the Contractor.
g. The provisions of this contract referring to "Liability for
Government-furnished Property" and any other provisions of this con-
tract defining liability for Government-furnished property shall be
inapplicable to property to which the Government shall have acquired
title solely by virtue of the provisions of this Clause. The provi-
sions of this Clause shall not relieve the Contractor from risk of
loss or destruction of or damage to property to which title vests in
the Government under the provisions hereof.
h. If this contract (as heretofore or hereafter supplemented
or amended) contains provisions for Advance Payments, and in addition
if at the time any progress payment is to be made to the Contractor
under the provisions of this progress payments clause any unliquidated
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Contract No. SP-1915
balance of advance payments is outstanding, then notwithstanding any
other provision of the Advance Payments Clause of this contract the
net amount, after appropriate deduction for liquidation of the advance
payment of such progress payment shall be deposited in the special
bank account or accounts maintained as required by the provisions of
the Advance Payments Clause, and shall thereafter be withdrawn only
pursuant to such provisions.
PART VI - INSPECTION AND ACCEPTANCE OF SUPPLIES AND CORRECTIONS OF DEFECTS
a. The Contractor shall provide and maintain an inspection
system acceptable to the Contracting Officer covering the supplies
hereunder.
b. All supplies (including raw materials, components, intermediate
assemblies and end products) may be inspected by the Contracting Officer
at any time during the period of manufacture. If the Contracting Officer
so elects by notice in writing to the Contractor, the Contractor shall
tender the supplies for acceptance at the specified delivery points
specified in Part III hereof, in which event the Contracting Officer
may accept them or, if they are defective in material or workmanship or
otherwise not in conformity with the requirements of this contract, may
reject them or require their correction. In the event the Contracting
Officer does not so elect, supplies delivered shall be deemed to be ac-
cepted upon the mailing by the Contractor to the Contracting Officer of
a certificate of the Contractor, reading substantially as follows:
I hereby certify that I did, on the day of
, ship via
pursuant to Contract No.
units (or___,_ per cent) of the supplies called for
in Item therein: that such supplies were
of the quality called for and were in all respects
in accord with the applicable specifications.
c. Upon completion of performance and final payment by the Govern-
ment, all the supplies called for herein shall be deemed to be finally
accepted, subject to the following guaranty:
The Contractor guarantees that at the time of delivery
thereof, the articles and/or equipment provided for under
this contract will be free from any defects in material or
workmanship and will conform to the requirements of this
contract. Notice of any such defect or nonconformance shall
be given by the Government to the Contractor within six
months of the delivery of the defective or nonconforming
article and/or equipment. If required by the Government
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Contract No. SP-1915
within a reasonable time after such notice, the Con-
tractor shall with all possible speed correct or replace
the defective or nonconforming article and/or equipment
or part thereof. When such correction or replacement
requires transportation of the article and/or equipment
or part thereof, shipping costs, not exceeding usual
charges from the delivery point to the Contractor's plant
and return, shall be borne by the Contractor; the Gov-
ernment shall bear all other shipping costs. This
Guaranty shall then continue as to corrected or replacing
articles and/or equipment or parts thereof, until six
months after the date of redelivery. If the Government
does not require correction or replacement of a defective
or nonconforming article and/or equipment or a part thereof,
the Contractor, if required by the Contracting Officer
within a reasonable time after the notice of defect or
nonconformance shall repay such portion of the contract
price of the article as is equitable in the circumstances.
PART VII - FURNISHING OF MATERIALS AND SUPPLIES AT THE GOVERNMENV S
O PIO
The Government may at its option, from time to time, furnish
the Contractor with materials or supplies not obtainable in the
open market and which are required by the Contractor for the per-
forma nce of this contract. In such event an equitable reduction in
the contract price shall be made prior to the delivery of such
materials or supplies to the Contractor, or as soon thereafter as
possible, but in no event later than thirty (30) days after such
delivery.
PART VIII - WAIVER OF REQUIIITS OF GENERAL PROVISIONS
Notwithstanding the requirements of any of the General Provi-
sions 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 Contractor shall call the attention of the Con-
tracting Officer to such conflict and the Contracting Officer or his
duly authorized representative for security matters shall (i) modify
or rescind such security requirements or (ii) the Contracting Officer
shall issue to the Contractor a waiver of compliance with the require-
ments of the General Provisions conflicting with such security require-
ments. 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 of
waiver of any clauses of the General Provisions in conflict with the
stipulations of such subcontract.
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Contract No. SP-1915
PART' IX - SPECIAL SECURITY 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 sponsor-
ing this contract and the work thereunder except as the Contractor
is directed or permitted to reveal such information by the Contracting
Officer or by his duly authorized representative for security matters,
and notwithstanding any clause or section of this contract to the
contrary, the Contractor shall not interpret any clause or section
of this contract as requiring or permitting divulgence of such in-
formation to any person, public or private, or to any officer or
department of the Government without the express consent of the Con-
tracting Officer or his duly authorized representative for security
matters.
PART X - INSPECTION AND AUDIT
a. The Contractor agrees that its books and records and its
plants, or such part thereof as may be engaged in the performance of
this contract shall at all reasonable times be subject to inspection
and audit when and to the extent authorized by the Contracting Officer.
b. The Contractor agrees to include in each of his subcontracts
hereunder which is on a cost or cost-plus-a-fixed fee or a price re-
determination basis, or on a time-and-material or labor-hour basis,
provision for audit of such subcontract by the Contractor. The Con-
tractor shall conduct an audit of any such subcontract when requested
to do so by the Contracting Officer.
PART XI - SUBCONTRACTS FOR WORK OR SERVICES
a. No contract shall be made by the Contractor with any other
party for furnishing any of the completed or substantially completed
articles, spare parts or work, herein contracted for, without the
written approval of the Contracting Officer as to sources.
'b. The Contractor shall give specific advance notification to
the Contracting Officer of any proposed subcontract hereunder which
(1) is on a cost or cost-plus-a-fixed-fee basis, or (2) is on a
fixed-price basis exceeding in dollar amount either $25,000 or five
percent (5%) of the total amount of this contract.
c. The Contractor shall not, without the prior written consent
of the Contracting Officer, place any subcontract which (1) is on a
cost or cost-plus-a-fixed-fee basis, or (2) is on a fixed-price basis
exceeding in dollar amount either $25,000 or five percent (5%) of the
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Contract No. SP-1915
total amount of this contract, or (3) provides for the fabrication,
purchase, rental, installation or other acquisition, of any item of
industrial facilities, or of special tooling having a value in ex-
cess of $1,000 or (4) is on a time-and-material or labor-hour basis.
The Contracting Officer may, in his discretion, ratify in writing
any such subcontract; such action shall constitute the consent of
the Contracting Officer as required by this paragraph c.
d. The Contractor agrees that no subcontract placed under this
contract shall provide for payment on a cost-plus-a-percentage-of
cost basis.
e. The Contracting Officer may, in his discretion, specifically
approve in writing any of the provisions of a subcontract. However,
such approval or the consent of the Contracting Officer obtained as
required by this clause shall not be construed to constitute a deter-
mination of the acceptability of the subcontract price, unless such
approval specifically provides that it constitutes a determination of
the acceptability of the subcontract price.
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
requirements for obtaining the Contracting Officer's consent to sub-
contracts as prescribed in paragraph c above.
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Contract No. SP-1915
The sections set forth hereunder shall constitute the Appendix to
Contract No. SP-1915 as referenced in Part I of the Schedule and indicate
the supplies and servic es to be furnished by the Contractor under Contract
To. SP-1915. Such scope of work may from tine-to-time be readjusted to re-
flect the development of the program.
Section A - Plight Test Program - Estimated Price
$250,000
The Contractor shall furnish such personnel as are required by the
customer and available to the Contractor to support a flight test program
at a site or sites to be designated by the customer. It is contemplated
that such sites shall be located within the Continental gaited States.
Estimated costs in commotion with such program shall be in general agreement
with the arrangements as set forth in Contractor's letter of May 27, 1957 to
the customer and as accepted by the customer in customer's letter of 5 June
1957 to the Contractor.
Section D - Ieuisment and/or Materiel Procurement, Installation, Modification,
Fabrication and repair, as reea :
(1) - Research and Development and Application
Estimated Price $450,000
Repair and/or modification & main-
(2) tsn.m of 3 SP-1913 aircraft - Estimated Price *300j,000,
(3) Accommodation Sales - Estimated Price $ 50,000
Section C - Mafor Modification of an Estimated Sit SP-1913 or Similar Airplanes
Estimated Price $1,700,000
Reference is made to Contractor's proposal of June 7, 1957, which proposal
is the basis for the above estimates, plus an estimated amount in addition thereto
for associated costs of flight testing, spare parts, support equipment and services,
etc.
lotwithstanding the allocation above of estimated prices to certain exist-
ing requirements stated above, it is the intent of the contracting parties that
funds obligated hereunder may be readjusted as required in the future to reflect
actual expenditures against such stated requirements, or allocated to similar
requirements which may from time-to-time be substituted for or added to the s~
above stated requirements, in order that an integrated program may be carried
forward.
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Article No.
Page No.
1. DEFINITIONS . . . . . . . . . . . . . .
.
1
2. CHANGES . . . . . . . . . . . . . . . .
1
3. EX'T'RAS . . . . . . . . . . . . . . . .
2
4. VARIATION IN QUANTITY . . . . . . . .
.
2
5. INSPECTION . . . . . . . . . . . . . .
.
2
6. RESPONSIBILITY FOR SUPPLIES . . . . . .
.
3
7. ASSIGNMENT OF CLAIMS . . . . . . . . .
.
3
8. AMI'TIONAL BOND SECURITY . . . . . . .
.
4
9. FEDERAL STATE & LOCAL TAXES . . . . . .
.
4
10. DISPUTES . . . . . . . . . . . . . . .
.
6
11. BUY AMERICAN ACT . . . . . . . . . . .
.
7
12. EIGHT HOUR LAW OF 1912 . . . . . . . .
.
7
13. WALSH-HEALEY PUBLIC CONTRACTS ACT . . .
8
14. NONDISCRIMINATION IN E PLOYMrNT . . . .
8
15. OFFICIALS NOT TO BENEFIT . . . . . . .
.
9
16. COVENANT AGAINST CONTINGENT FEES . . .
.
9
17. AIRCRAFT IN THE OPEN . . . . . . . . .
.
9
18. MILITARY SECURITY REQUIREMENTS . . .
.
11
19. UTILIZATION OF SMALL BUSINESS CONCERNS
13
20. EXAMINATION OF RECORDS . . . . . . . .
..
13
21. GRATUITIES . . . . . . . . . . . . . .
..
13
22. CONVICT LABOR . . . . . . . . . . .
14
23. NOTICE & ASSISTANCE REGARDING PATENT
INFRINGEMENT . . . . . . . . . . . .
..
14
24. REPORTING OF ROYALTIES . . . . . . . .
14
25. FILING OF PATENT APPLICATIONS . . . . .
.
16
26. AUTHORIZATION & CONSENT . . . . . . . .
.
17
27. PATENT RIGHTS . . . . . . . . . . . . .
.
17
28. COPYRIGHT . . . . . . . . . . . . . . .
.
22
29. REPR!)DUCTI)N AND USE CF TECHNICAL DATA
.
22
30. GOVERNMENT FURNISHED PROPERTY . . . . .
.
23
31. TERMINATION FOR CONVENIENCE OF THE
GOVERNMENT . . . . . . . . . . . . .
27
32- PAYMENTS . . . . . . . . . . . . . . .
31
33. DEFAULT . . . . . . . . . . . . . . . .
.
32
34. ALTERATIONS IN CONTRACT . . . . . . . .
.
33
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GENERAL PROVISIONS
As used throughout this contract, the following terms shall
have the meanings set forth below:
(a) The term "Secretary" means the Secretary, the Under Secre-
tary, or any Assistant Secretary of the Department and the head or
any assistant head of the executive agency; and the term "his duly
authorized representative" means any person or persons or board (other
than the Contracting Officer) authorized to act for the Secretary;and
the tern "Department" cleans that component of the Government having
cognizance of this contract and represented by the Contracting Officer
executing this contract.
(b) The terra "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) Except as otherwise provided in this contract, the term
"subcontracts" includes purchase orders under this contract.
(d) The term "contract work" means all work to be performed
under this contract including any studies covering fundamental, theo-
retical, or experimental investigations; any extension of the inves-
tigative findings and theories of a scientific and technical nature
into practical application; any tangible terms, hereinafter referred
to as supplies, if called for herein, furnished to the Government;
and any reports, data, computations, plans, drawings, and specifica-
tions with respect to the foregoing
The Contracting Officer may at any time, by a written order, and
without notice to the sureties, make changes, within the general scope
of this contract, in any one or more of the following: (i) drawings,
designs, or specifications, where the supplies to be furnished are to
be specially manufactured for the Government in accordance therewith;
(ii) method of shipment or packing; and (iii) place of delivery. If
any such change causes an increase or decrease in the cost of, or the
time required for, performance of this contract, an equitable adjust-
rient shall be riade in the contract price or delivery schedule, or
both, and the contract shall be modified in writing accordingly. Any
claim by the Contractor for adjustment under this clause must be as-
serted within 1F days from the date of receipt by the Contractor of
the notification of change; PROVIDED, however, that the Contracting
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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 pay-
ment under this contract. Failure to agree to any adjustment shall
be a dispute concerning a question of fact within the meaning of the
clause of this contract entitled "Disputes." However, nothing in
this clause shall excuse the Contractor from proceeding with the con-
tract as changed.
3. EXTRAS
Except as otherwise provided in this contract, no paylaent for
extras shall be made unless such extras and the price therefor have
been authorized in writing by the Contracting Officer.
4. VARIATION IN QUANTITY
No variation in the quantity of any item called for by this con-
tract will be accepted unless such variation has been caused by con-
ditions of loading, shipping, or packing, or allowances in uanufac-
turing processes, and then only to the extent, if any, specified
elsewhere in this contract.
(a) All supplies (which terra throughout this clause includes
withou li;.aitation raw materials, co::_ponents, intermediate assemblies,
and end p ducts) shall be subject to inspection and test by the Gov-
ernment, to e extent practicable at all tines and places including
the period of manufacture, and in any event prior to final acceptance.
(b) In case ansupplies or lots of supplies arc defective in
material or workmanship r otherwise not in conformity with the re-
quirements of this contra the Governi:.ent shall have, the right
either to reject them (with without instructions as to their dis-
position) or to require their e reetion. Supplies or lots of sup-
plies which have been rejected or quired to be corrected shall be
removed or corrected in place, as rested by the Contracting Officer,
by and at the expense of the Contractor romptly after notice, and
shall not again be tendered for acceptance nless the for,.ler tender and
either the rejection or requirement of correc 'on is disclosed. If
the Contractor fails promptly to remove such supplies or lots of sup-
plies, when requested by the Contracting Officer, and to proceed
promptly with the replacement or correction thereof, the Government
either (i) may by contract or otherwise replace or correct such sup-
plies and charge to the Contractor the cost occasioned the Government
thereby, or (ii) may terminate this contract for default as pr vided
in the clause of this contract entitled "Default". Unless the
tractor elects to correct or replace the supplies which the Goverrua t
has a right to reject and is able to make such correction or replace?-
ment within the required deliv`ry schedule, the Contracting Officer
iia3crequire the ?~__ . y of side- rl?c at
w b a t ee6etlon it> c~a_
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N uction of price shall be a dispute concerning a question of fact
wit n the meaning of the clause of this contract entitled "Disputes".
(
premises
If any inspection or test is made by the Government on the
f the Contractor or a subcontractor, the Contractor without
harge shall provide all reasonable facilities and assist-
additional
ance for the
the performanc
afety and convenience of the Government inspectors in
of their duties. If Government inspection or test is
made at a point
her than the premises of the Contractor or a sub-
contractor, it shn
that in case of re jc:
be at the expense of the Government, PROVIDED,
ion the Government shall not be liable for any
reduction in value of
or test. All inspection
:iples used in connection with such inspection
and tests by the Government shall be Per-
ot to unduly delay the work. The Govern-
formed in such a manner as
vent res--rves the right to
axge to the Contractor any additional
cost of Government inspection
the time such inspection and to
d test when supplies are not ready at
is requested by the Contractor. Final
lies shall be made as promptly as
acceptance or rejection of the su
practicable after delivery, except
tract; but failure to inspect and ac
otherwise provided in this con-
;~pt or reject supplies shall
neither relieve the Contractor from res
as are not in accordance with the contrac
liability on the Government therefor.
nsibility for such supplies
requirements nor impose
(d) The inspection and test by the Goveri. nt of any supplies
or lots thereof does not relieve the Contractor om any responsibility
regarding defects or other failures to meet the con - act requirements
which may be discovered prior to final acceptance. wept as other-
wise provided in this contract, final acceptance shall e conclusive
except as regards latent defects, fraud, or such gross :u. takes as
amount to fraud.
(e) The Contractor shall provide and maintain an inspect n
system acceptable to the Government covering the supplies hereun r
Records of all inspection work by the Contractor shall be kept com-
plete and available to the Government during the performance of this
contract and for such longer period as may be specified elsewhere in
+_h; o nnn+rnr?f
Except as otherwise provided in this contract, (i) the Contractor
shall be responsible for the supplies covered by this contract until
they are delivered at the designated delivery point, regardless of
the point of inspection; and (ii) the Contractor shall bear all
risks as to rejected work after notice of rejection.
Pursuant to the e ssignment of Claims Act
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cnts aggregating $1,000 or. ^r~_.acl-n'irus
fo aoneys due or to become due to the Contractor from the Govern-
ment der this contract may be assigned to a bank, trust company,
or othe inancing institution, including any Federal lending agency,
and may the after be further assigned and reassigned to any such
institution. y such assignment or reassignment shall cover all
amounts payable der this contract and not already paid, and shall
not be made to more han one party, except that any such assignment
or reassignment may be. de to one party as agent or trustee for two
or more parties particip 'ng in such financing. Notwithstanding any
provision of this contract, ayient to an assignee of any moneys due
or to become due under this co ract shall not, to the extent provided
in said Act as amended, be subjec to reduction or set-off.
(b) In no event shall copies of
specifications, or other similar docunent'.6
this contract, if ::larked "TOP SECRET," "SE
be furnished to any assignee of any claim arisi
or to any other person not entitled to receive th
that a copy of any part or all of this contract so
under this contract
ai:ie; PROVIDED,
nished, or any information contained therein may be dis
ed may be fur-
osed, to such
assignee upon the prior written authorization of the Cont?
ting Officer
(c) The Contractor shall obtain the written authorization
the Contracting Officer prior to the assignment of any rights undo
tip-~r~.trn ~+
8. ADDITIONAL BOND SECURITY
If any surety upon any bond furnished in connection with this
contract becomes unacceptable to the Governm_ient, or if any such
surety fails to furnish reports as to his financial condition from
time to time as requested by the Government, the Contractor shall
promptly furnish such additional security as may be required from
time to tin.2 to protect the interests of the Government and of per-
sons supplying labor or materials in the prosecution of the work
contemplated by this contract.
9. FEDERAL, STATE AND LOCAL TAXES
(a) DEFINITIONS. As used throughout this clause, the following
terms shall have the meanings set forth below:
(3.) The term "direct tax" means any tax or duty
directly applicable to the completed supplies or
services (as distinguished from taxes directly ap-
plicable to materials and components used in the
manufacture or furnishing of the completed supplies
or services) covered by this contract or any other
tax or duty from which the Contractor or this trans-
action is exempt. It includes any tax or duty directly
FP (Oct. 8, 195
Price Rcv.
s contract or of any plans,
relating to work under
T," "CONFIDENTIAL,
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applicable to the importation, production, processing,
manufacture, construction, sale, or use of such sup-
plies or services; it also includes any tax levied on,
with respect to, or measured by sales, receipts from
sales, or use of the supplies or services covered by
this contract. The term does not include transportation
taxes, unemployment compensation taxes, social security
taxes, income taxes, excess profits taxes, capital stock
taxes, property taxes, and such other taxes as are not
within the definition of the term "direct tax" as set
forth above in this paragraph.
(ii) The term "contract data" means the effective
date of this contract if it is a negotiated contract
or the date set for the opening of bids if it is a
contract entered into as a result of formal advertising.
For the purpose of any additional procurement of supplies
or services called for by any agreement supplemental
hereto, the term "contract date" shall refer to the date
of such suppleliiental agreement.
(b) FEDERAL TAXES. Except as may be otherwise provided in this
contract, the contract price includes all applicable Federal taxes in
effect on the contract date.
(c) STATE OR LOCAL TAXES. Except as may be otherwise provided
in this contract, the contract price does not include any State or
local direct tax in effect on the contract date.
(d) EVIDENCE OF E'TION: The Government agrees, upon request
of the Contractor, unless there exists no legal basis to sustain an
exemption, to furnish a Tax Exemption Certificate or other similar
evidence of exemption with respect to any direct tax not included in
the contract price pursuant to this clause; and the Contractor agrees,
in the event of the refusal of the applicable taxing authority to ac-
cept such evidence of exemption, (i) promptly to notify the Contracting
Officer of such refusal, (ii) to cause the tax in question to be paid
in such manner as to preserve all rights to refund thereof, and (iii)
if so directed by the Contracting Officer, to take all necessary action,
in cooperation with and for the benefit of the Government, to secure
a refund of such tax (in which event the Government agrees to reim-
burse the Contractor for any and all reasonable expenses incurred at
its direction).
(e) PRICE ADJUSTMENT. If, after the contract date, (i) the
Federal Government or any State or local government either imposes
or increases (or removes an exemption with respect to) any direct
tax, or any tax directly applicable to the materials or components
used in the manufacture or furnishing of the completed supplies or
services covered by this contract, or (ii) the Federal Government or
any State or local government refuses to accept the evidence of exemp-
tion, furnished under paragraph (d) hereof, with respect to any direct
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tax excluded from the contract price, or (iii) the Federal Government
does not furnish a tax exemption certificate or other similar evidence
of exemption with respect to any direct tax excluded from the contract
price, and if under either (i), (ii), or (iii) the Contractor is
obliged to and does pay or bear the burden of any such tax (and does
not secure a refund thereof), the contract price shall be correspondingly
increased, and if interest and penalties are incurred by reason of
delay in payment of such tax on the instruction of the Contracting
Officer, and such interest and penalties are legally imposed, the con-
tract price shall be correspondingly increased, If, after the contract
date, the Contractor is relieved in whole or in part from the payment
or the burden of any direct tax included in the contract price, or any
tax directly applicable to the materials or components used in the
manufacture or furnishing of the completed supplies or services covered
by this contract, the Contractor agrees promptly to notify the Contrac-
ting Officer of such relief, and the contract price shall be corres-
pondingly decreased or the amount of such relief paid over to the
Government. Invoices or vouchers covering any increase or decrease
in contract price pursuant to the provisions of this paragraph shall
state the amount thereof, as e separate added or deducted item, and
shall identify the particular tax imposed, increased, eliminated, or
decreased
(f) REFUND OR DRAWBACK. If any tax or duty has been included
in the contract price or the price as adjusted under paragraph (e) of
this clause, and if the Contractor is entitled to a refund or drawback
by reason of the export or re-export of supplies covered by this con-
tract, or of materials or components used in the manufacture or fur-
nishing of the completed supplies or services covered by this contract,
the Contractor agrees that he will promptly notify the Contracting
Officer thereof and that the amount of any such refund or drawback
obtained will be paid over to the Government or credited against amounts
due from the Government under this contract, PROVIDED, however, that
the Contractor shall not be required to apply for such refund or draw-
back unless so requested by the Contracting Officer.
Except as otherwise provided in this contract, any dispute c:,n-
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 furnish
a copy thereof to the Contractor. Within thirty (30) days from the
date of receipt of such copy, the Contractor may appeal by mailing of
otherwise furnishing to the Contracting Officer a written appeal ad-
dressed to the Secretary, and the decision of the Secretary or his
duly authorized representative for the hearing (-f such appeals shall,
unless determined by a court of competent jurisdiction to have been
fraudulent or capricious or arbitrary or so grossly erroneous as neces-
sarily 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
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connection with any appeal proceeding under this clause, the Contractor
shall be afforded an opportunity to be heard and to offer evidence in
support of its appeal. Pending final decision of a dispute hereu'ader,
the Contractor shall proceed diligently with the performance of the
contract and in accordance with the Contracting Officer's decision.
The Contractor agrees that there will be delivered under this con-
tract 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 manufa:::tured, as the case may be, in the United States. Pursuant
to the B: American Act (41 U. S. Code lOa-d), the foregoing provision
shall not apply (i) with respect 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 Secretary or his duly authorized representative not to be mined, pro-
duced, or manufactured, as the case may be, in the United States in suf-
ficient and reasonably available commercial quantities and of a satis-
factory quality, or (iv) with respect to such supplies from which the
supplies to be delivered under this contract are manufactured, as are
or 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 anu reasonably available com-
mercial quantities and of a satisfactory quality: PROVIDED, That this
exception (iv) shall not permit delivery of supplies manufactured out-
side the United States if such supplies are manufactured in the Uri-bed
States in sufficient and reasonably available commercial quantities and
of a satisfactory quality,
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 previsions and ex-
ceptions of said Law.
No laborer or mechanic doing any part of the work contempla-
ted 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 cal-
endar day upon such work, except upon the condition that compen-
sation is paid to such laborer or mechanic in accordance with the
provisions cf this clause. The wages of every such laborer and
mechanic employed by the Contractor or any subcontractor engaged
in the performance of this contract shall be computed on a basic day rate of
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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 fi`e dollars shall be imposed upon the Contractor 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
wDrk 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.
13. WALSH-HEALEY PUBLIC CGNTP,ACTS ACT
If this contract is for the manufacture or furnishing of mater-
ials, 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 incor-
porated by reference all representations and stipulations required by
said. Act and regulations issued thereunder by the Secretary of Labor,
such representations and stipulations being subject to all applicable
rulings and interpretations of the Secretary of Labor which are now
or may hereafter be in effect, except that the Contractor shall not
be required to include this clause in subcontracts issued hereunder
when the inclusion of this clause in a subcontract would jeo-
pardize
or conflict with the security considerations established in connec-
tion with this contract.
14. NONDISCRIMINATION IN EMPLOYMENT
(a) In connection with the performance of work under this con-
tract, the Contractor agrees not to discriminate against any employee
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
applicants for employment, notices to be provided by he Contracting
Officer setting forth the provisions of the nondiscrimination clause.
(b) The Contractor further agrees to insert the foregoing pro-
vision in all subcontracts issued hereunder, except subcontracts for
standard commercial supplies or raw materials, and except as insertion
of the foregoing provision in a subcontract would jeopardize or con-
flict with the securit considerations established in connection with
this contract.
FR (Oct. 8, 1956)
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15. 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 .cn-
struee'. to extend to this contract if made with a corporation for its
general benefit.
16. 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 cersnissi.on, percentage, brokerage, or contingent
fee, excepting bona fide employees or bona fide esl:ablished commercial
or selling ,.:~encies maintained by the contractor for the purpose of
securing bu_.L.tesEs For breach or violation of this v rranty the Govern-
ment shall have the rig.-it to annul this contract without liability or in
its discretion toadact from the contract price or consideration the
full amount of such comm:icsion, percentage, brokerage, or contingent fee.
17. AIRCRAFT IN ? OPEN
If this contract is a negotiated fixed-price type of contract for
production or modification of aircraft (or missiles having the general
characteristics of aircraft) the clause set forth below shall apply:
(a) Subject to the definitions and limitations ?prescribed in
this clause, the Government assumes the risk of L'.amage to or loss or
dcstruc'.ion of aircraft (or missiles 'having the general c::araeteristics
of aircraft) in the open; PROVIDED, that such damage, loss, or destruc-
ticn is caused by any of the following perils;
(i) Fire; lightning, windstorm, cyclone, tornado, hail; explosion;
riot, riot attending a strike, civil commotion., vandalism and malicious
mischief; sabotage; aircraft or objects falling therefrom, vehicles running
on land or tracks, excluding vehicles owned or operated by the Contractor
or any agent or employee of the Contractor; smoke; earthquake or volcanic
eruption; flood, meaning thereby rising of a body of water, hostile or
warlike action, including action in hindering, combating, or defending
against an actual, impending or expected attack by any government or
sovereign power (de jure or de facto), or by any authority using military,
naval, or air forces, or by any agent of any such government, power, auth-
ority, or forces; or
(ii) Other peril of a type not listed above, if such other peril
is customarily covered by insurance (or by a reserve for self-insurance)
in accordance with the normal practice of the Contractor, or a prevailing
practice in the industry in which the Contractor is engaged with respect
to similar property.
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(b) For purposes of this clause:
(i) The term "Aircraft" means aircraft to be furnished to
the Government under this contract, including complete aircraft; and
aircraft in the course of manufacture or modification, including en-
gine's, instruments, subassemblies, parts, and equipment installed
therein, or in process of installation, and all uninstalled property
withdrawn from stores for installation in aircraft in the open or
temporarily removed from such aircraft, provided such uninstalled pro-
perty is in the open.
(ii) The term "in the open" means located wholly outside of
buildings or roofed structures.
(e) The Government's obligation under this clause shall extend
only to aLccraft in the open under conditions approved by the Contrac-
ting Officer, and shall not extend to the follovi-:?.e :
(i) loss, destruction, or damage resulting from failure of
the Contractor, due to willful misconduct or lack of good faith of any
of the Contractor's managerial personnel, to maintain and administer a
program for the maintenance, repair, protection, and preservation of
aircraft in the open, in accordance with sound industrial practice. The
term "Contractor's managerial personnel" means the Contractor's directors,
officers, and any of its managers, superintendents, or other equivalent
representatives who have supervision or direction of all or substantially
all of the Contractor's business, or all or substantially all of the
Contractor's operation at any one plant or separate location at which
this contract is performed, or a separate and complete major industrial
operation in connection with the performance of this contract;
(ii) loss, destruction or damage to aircraft in the possession
or control of any subcontractor, except to tai: extent that the subcon-
tract, with the approval of the Contracting Officer and consistent with
this clause, may otherwise provide.
(d) The Contractor warrants that the contract price does not
and will not include any charge or reserve for insurance (including
self-insurance funds or reserves) covering damage to or loss or destruc-
tion of aircraft in the open caused by any of the perils set forth in
paragraph (&)' hereof.
(e) In the event of damage to or loss or destruction of air-
craft; in the open, the Contractor shall take all reasonable steps to
protect such aircraft from further damage, separate damaged and undam-
aged aircraft, put all aircraft in the best possible order, and furnish
to the Contracting Officer a statement of:
(i) the lost, destroyed, or damaged aircraft;
(ii) the time and origin of the loss, destruction, or damage;
(iii) all known interests in commingled property of which
aircraft in the open are a part;
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(iv) the insurance, if any, covering any part of the interest
in such commingled property.
The Contractor shall be reimbursed for expenditures made by it in
performing its obligations under this paragraph, to the extent approved
by the Contracting Officer and this contract shall be modified in writ-
ing accordingly.
(f) If prior to acceptance by and delivery to the Government
any aircraft in the open is lost, destroyed, or damaged due to any of
the perils set forth in paragraph (a) hereof, the Government may, unless
otherwise provided in this contract, elect to require that such aircraft
be replaced by the Contractor or restored by the Contractor to the condi-
tion in which it was immediately prior to such damage. If the Government
requires the aircraft to be replaced or restored, an equitable adjust-
ment shall be made in the amount due under this contract and in the time
required for its performance, and this contract shall be modified in
writing accordingly. Alternatively, the Government may elect to termi-
nate this contract as to any such lost, destroyed, or damaged aircraft,
and in that event the rights of the parties shall be as provided in the
clause entitled Termination for Convenience of the Government.
(g) In the event the Contractor is at any time reimbursed or
compensated by any third person for any damage to or less or destruction
of any aircraft in the open caused by any peril set forth in paragraph
(a) hereof for which the Contractor has been compensated by the Govern-
ment, it shall equitably reimburse the Government. The Contractor shall
do nothing to prejudice the Government's rights to recover against
third parties for any such loss, destruction or damage and, upon the
request of the Contracting Officer, shall at the Government's expense,
furnish to the Government all reasonable assistance and cooperation
(including the prosecution of suit and the execution of instruments of
assignment or subrogation in favor of the Government) in obtaining re-
covery.
(h) Any loss or destruction of, or damage to, property fur-
nished by the Government will be governed by the clause of this con-
tract entitled "Government-Furnished Property," to the extent that
such clause is, by its terms, applicable.
(i) Any loss, or destruction of, or damage to, aircraft oc-
curring in connection with operations of said aircraft will be governed
by the clause of this contract entitled "Flight Risk," to the extent
that such clause is, by its terms, applicable.
18. MILITARY SECURITY REQUIREMENTS
(a) The provisions of this clause shall apply to the extent that
this contract involves access to security information classified "Con-
fidential" including "Confidential - Modified Handling Authorized" or
higher.
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(b) The Government shall notify the Contractor of the security
classification of this contract and the elements thereof, and of any
subsequent revisions in such security classification, by the use of a
Security Requirements Check List (DD Form 254 and 254-3:).
(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 Contractor 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 Security Agreement (DD Form 441), 5ncluding the Department
of Defense Industrial Security Manual for Safeguc,.r-ling Classified Infor-
mation as in effect on date of this contract, and any modification to
the Security Agreement for the purpose of adapting the Manual to the
Contrector's business; and
(ii) any amendments to said Manual made after the date of this
contract, notice of which has been furnished to the Contractor by the
Security Office of the Military Department having security cognizance
over the facility.
(d) Representatives of the Military Department having security
cognizance over the facility and representatives of the contracting
Military Department shall have the right to inspect at reasonable inter-
vals the procedures, methods, and facilities utilized by the Contractor
in complying with the security requirements under this contract. Should
the Government, through its authorized representative, determine that
the Contractor has not complied with such requirements, the Government
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 Government as provided in this clause and the security costs under
this contract are thereby increased or decreased, the contract price
shall be subject to an equitable adjustment by reason of such increased
or decreased costs. Any equitable adjustment shall be accomplished in
the same manner as if such changes were directed under the "Changes"
clause in this contract.
(f) The Contractor agrees to insert, in all subcontracts hereunder
which involve access to classified security information, provisions which
shall conform substantially to the language of this clause, including
this paragraph (f) but excluding the last sentence of paragraph (e) of
this clause.
(g) The Contractor also agrees that it shall determine that any
subcontractor proposed by it for the furnishing of supplies and ser-
vices which will involve access to classified information in the Con-
tractor's custody has been granted an appropriate facility security
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clearance, which is still in effect, prior to being accorded access
to such classified security information.
19. 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.
20. EXAMINATION OF RECORDS
The following clause will be applicable in all negotiated fixed-
price supply contracts and purchase orders in excess of $1,000.
EXAM NATION OF RECORDS
(a) The Contractor agrees that the Contracting Officer or any
of his duly authorized representatives shall, until the expiration
of three years after final payment under this contract, have access
to and the right to examine any directly pertinent books, documents,
papers and records of the Contractor involving transactions related
to this contract.
(b) The contractor further agrees to include in all his sub-
contracts hereunder 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 pertinent books, documents, papers, and records
of such subcontractor involving transactions related to the subcon-
tract. The term "subcontract" as used in this clause excludes (i)
purchase orders not exceeding $1,000 and (ii.) subcontracts or pur-
chase orders for public utility services at rates established for
uniform applicability to the general public.
21. 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
entertainment, gifts, or otherwise) were offered or given by the
Contractor, or any agent or representative of the Contractor, to any
officer or employee of the Government with a view toward securing a
contract or securing favorable treatment with respect to the awarding
or amending, or the making of any determinations with respect to the
performance of such contract; PROVIDED, That the existence of the
facts upon which the Secretary or his duly authorized representative
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makes such findings shall be in issue and may be reviewed in any com-
petent court.
(b) In the event this contract is terminated as provided in
paragraph (a) hereof, the Government shall be entitled (i) to pursue
the same remedies against the Contractor as it could pursue in the event
of a breach of the contract by the Contractor, and (ii) as a penalty in
addition to any other damages to which it may be entitled by law, to
exemplary damages in an amount (as determined by the Secretary or his
duly authorized representative) which shall be not less than three nor
more than ten times the costs incurred by the Contractor in providing
any such gratuities to any such officer or employee.
(c) The rights anal remedies of the Gove, ? ::c. nt provided in this
clause sh,~?.ll not be exclusive and are in additiou to any other rights
and remec.:.es provided by law or under this contract
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. NOTICE AND ASSISTANCE REGARDING PATENT INFRINsEI?NT
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 performance 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.
24. REPORTING OF ROYALTIES
The provisions of this clause shall be applicable only if the
amount of the contract is in excess of $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
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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 ex-
cess 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 initial $250):
(1) The name and address cf each licensor to whom royalties in
excess of $250 have been paid or are to be paid,
(2) The patent numbers, patent application serial numbers (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 process, (ii)
the total amount of royalties, and (iii) the percentage rate or dollars
and cents amount of royalties on each such unit or process; PROVIL'E'D
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 Con-
tractor computes the royalties.
(b) In lieu of furnishing a report under paragraph (a), the Con-
tractor 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 Contractor's established account-
ing 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 Contractor's 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 identi-
fication 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
C accrue by rate or unit amount, such other data showing the manner by
vhich the royalties accrue to licensor, and (v) an estimate or approxi-
mation (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.
(c) In the event that the Contractor re uests written approval to
furnish consolidated reports under paragraph (b) above, the Contracting
Officer shall promptly consider the request and furnish to the Contrac-
tor a letter stating whether or not the request is approved and, not-
withstanding any such approval, the Contracting Officer shall have the
right to question any such subsequently furnished 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 Con-
tracting (fficer administering this contract.
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at UAL I
(d) After payment of eighty percent (80%) of the amount of this
contract, as from time to time amended, further payment shall be with-
held until a reserve of either (i) ten percent (10%) of such amount or
(ii) $5,000, which ever 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 Contractor's request
to furnish the report under paragraph (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 furnished a letter as required by paragraph (c) within a
reasonable time after making written request to submit a single, con-
solidated report under the provisions of paragraph (b) of this clause;
and PROVIDED F'JRJR that the Contracting Officee:c may, in his discre-
tion, order payment to be withheld in the amour::, cnd manner above pro-
vided if the report called for by paragraph (a) i:, unsatisfactory or (b)
is dti..rrbrr...ha.s not been received, or if received., is found to be unsat-
isfactory. No amount shall be withheld under this paragraph when the
minimum amount specified by this paragraph 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 right accruing to the Government under this contract.
25. FILING OF PATENT APPLICATIONS
(a) Before filing or causing to be filed a patent application dis-
closing 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 Con-
tracting Officer for determination whether, for reasons of national
secu-?ity, such application should be placed under an order of secrecy
or scaled 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 instruc-
tions 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 appli-
cation. If the Contracting Officer shall not have given any such in-
structions 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 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 regulations.
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(c) In filing any patent application coming within the scope of
this clause, the Contractor shall observe all applicable security regu-
lations covering the transmission of classified subject matter.
26. AUTHORIZATION AvrD Comm
The following clause shall be applicable in all contracts for sup-
plies (including construction work), except purchase orders of $5,000
or less :
The Government hereby gives its authorization and consent (without
prejudice to its rights of indemnification, if such rights are provided
for in this contract) for all use and manufacture, in the performance of
this contract or any part hereof or any amendment hereto or any subcon-
tract hereunder (including any lower-tier subcontract), of any patented
invention (i) embodied in the structure or composition of any article
the delivery of which is accepted by the Government under this contract,
or (ii) utilized in the machinery, tools, or methods the use of which
necessarily results from compliance by the Contractor or the using sub-
contractor with (a) specifications or written provisions now or hereafter
forming a part of this contract, or (b) specific written instructions
given by the Contracting Officer directing the manner of performance.
The Contractor's entire liability to the Government for patent infringe-
ment shall be determined solely by the provisions of indemnity clause,
if any, included in the contract and the Government as5?:,mes liability for
all other infringement to the extent of the authorization and consent
hereinabove granted.
27 PAM TT 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, improve-
ment 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 required under this con-
tract, or (B) in the performance of any experimental, developmental, or
research work relating to the subject matter 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 inven-
tion which is specifically identified and listed in the Schedule for the
purpose of excluding it from the license granted by this clause.
(ii) The term "Technical Personnel" means any person employed
by or working under contract with the Contractor (other than a subcon-
tractor 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 performance of this con-
tract, would reasonably be expected to make inventions.
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(iii) The terms "subcontract" and "subcontractor" mean any
subcontract or subcontractor of the Contractor, and any lower-tier sub-
contract or subcontractor under this contract.
(b) (1) The Contractor agrees to and does hereby grant to the Govern-
ment 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 a:cording to law, of auy article or
material, and in the use of any method No license graaced herein shall
convey any right to the Government to manufacture, have manufactured, or
use any Subject Invention for the purpose of prc~- ding services or sup-
plies to the general public in competition ?fith ?Sze Contractor or the
Contractor's commercial licensees in the licenacw fields.
(::) With respect to:
(i) any Subject Invention made by other than Technical Per-
sonnel;
(ii) any Subject Invention conceived prior to, but first
actually reduced to practice in the course of, any of the experimental,
developmental, or research work specified in (a)(i) above: and
(iii) the practice of any Subject Invention in foreign
countries; the obligation of the Contractor to grant a license as pro-
vided in (b)(1) above, to convey title as provided in (d)(ii)(B) or (d)
(iv) below, and to convey foreign rights as provided in (e) below, shall
be limited to the extent of the Contractor's right to grant the same
without incurring any obligation to pay royalties or other compensation
to others solely on account of said grant. Nothing contained in this
Patent Rights clause shall be deemed to grant any licer.se under any in-
vention other than a Subject Invention.
(e) The Contractor shall furnish to the Contracting Officer the
following information and reports concerning Subject Inventions which
reasonably appear to be patentable:
(:.) a written disclosure promptly after conception or first
actual reduction to practice of each such Invention together with a
written statement specifying whether or not a United States patent appli-
cation claiming the Invention has been or will be filed by or on behalf
of the Contractor;
(ii) interim reports, at least every twelve months, commen-
cing with the date of this contract, each listing all such Inventions
conceived or first actually reduced to practice more than three months
prior to the date of the report, and not listed on a prior interim re-
port, or certifying that there are no such unreported Inventions; and
(iii) prior to final settlement of this contract, a final
report listing all such Inventions including all those previously listed
in interim reports.
(d) In connection with each Subject Invention referred to in
(c)(i) above, the Contractor shall do the following:
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(i) if the Contractor specifies that a United States
patent application claiming such Invention will be filed, the Con-
tractor shall file or cause to be filed such application in due
form and time; however, if the Contractor, after having specified
that such an application would be filed, decides not to file or cause
to be filed said application, the Contractor shall so notify the Con-
ti-acting Officer at the earliest practicable date and in any event
riot later than eight months after first publication, public use or
sale.
(ii) if the Contractor specifies that a United States
patent application claiming such Invention has not been filed and will
not be filed (or having specified that such an application will be
filed thereafter notifies the C utracting Officer to the contrary), the
Contractor shall:
(A) inform the Contracting Officer in writing at the
earliest practicable date of any publication of such Invention made by
or known to the 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 Contractor's entire ~,r
right, title, and interest in such Invention by delivering to the Con-
tracting Officer upon written request such duly executed instruments
(prepared by the Government) of astignment and application, and such
other papers as are deemed necessary to vest in the Goj-_~rnmert the
Contractor's right, title, and interest aforesaid, and "he r.:c;ht to
apply for and prosecute patent applications covering such Invention
throughout the world, subject, however, to the right of the Contrac-
tor specified in (e) below to file foreign applications, and subject
further to the reservation of a non-exclusive and royalty-free license
to the Contractor (and to its existing and future associated and affi-
liated companies, if any, within the corporate structure of which the
Contractor is a part) which license shall be assignable to the succes-
sor of that part of the Contractor's business to which such Invention
pertains:
(iii) the Contractor shall furnish promptly to the Con-
tw?acting Officer on request an irrevocable power of attorney to in-
spect and make copies of each United States patent application filed
by or on behalf of the Contractor covering any such Invention;
(iv) In the event the Contractor, or those other than the
Government deriving rights from the Contractor, elects not to continue
prosecution of any such United States patent application filed by or
on behalf of the Contractor, the Contractor shall so notify the Con-
tracting Officer not less than sixty days before the expiration of
the response period and, upon written request, deliver to the Contrac-
ting Officer such duly executed instruments (prepared by the Government)
as are deemed necessary to vest in the Government the Contractor's
entire right, title, and interest in such Invention and the applica-
tion, subject to the reservation as specified in (d)(ii) above; and
(v) the Contractor shall deliver to the Contracting Officer
duly executed instruments fully confirmatory of any license rights
herein agreed to be granted to the Government.
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(e) The Contractor, or those other than the Government deriving
rights from the Contractor, shall have the exclusive rights to file
applications on Subject Inventions in each foreign country within:
(i) nine months from the date a corresponding United States
application is filed;
(ii) six months from the date permission is granted to file
foreign applications where such filing had been prohibited for security
reasons; or
(iii) such longer period as may be approved by the Contrac-
ting Officer. The Contractor shall, upon written request of the Con-
tracting Officer, convey to the Government the Contractor's entire
right, title, and interest in each Subject Invention in each foreign
country in which an application has not been filed within the time
above specified, subject to the reservation of a non-exclusive and
royalty-free license to the Contractor together with the right of the
Contractor to grant sublicenses, which license and right shall be as-
signable to the successor of that part of the Contractor's business to
which the Subject Invention pertains.
(f) If the Contractor fails to deliver to the Contracting Officer
the interim reports required by (c)(ii) above, or fails to furnish the
written disclosures for all Subject Inventions required by (c)(i) above
shown to be due in accordance with any interim report delivered under
(c)(ii) or otherwise known to be unreported, there sh-:...I be withheld
from payment until the Contractor shall have correctec such -"allures
either ten percent (10%) of the amount of this contrac'_,, as from time
to time amended, or five thousand dollars ($5,000), wh::chever 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 reserve
of either ten percent (10%) of such amount, or five thousand dollars
($5,000), whichever is less, shall have been set aside,.such reserve
or balance thereof to be retained until the Contractor shall have fur-
nished to the Contracting Officer:
i) the final report required by (c) (iii) above;
ii) written disclosures for all Subject Inventions required
by (c)(i)above which are shown to be due in accordance with interim re-
ports delivered under (c)(ii) above or in accordance with such final
reports or are otherwise known to be unreported; and
(iii) the information as to any subcontractor required by (h)
below. The maximum amount which may be withheld under this paragraph
(f) shall not exceed ten percent (10%) of the amount of this contract
or five thousand dollars ($5,000), whichever is less, and no amount
shall be withheld under this paragraph (f) when the amount specified
by this paragraph (f) 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 ri hts ac-
cruing to the Government under this contract. This paragraph (f) 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.
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(g) The Contractor shall exert al reasonable effort in negotia-
ting for the inclusion of this Patent Rights clause in any subcontract
hereunder of three thousand dollars ($3,000) or more having experimen-
tal, 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 auth-
orization, shall cooperate with the Government in the negotiation with
such subcontractor cf an acceptable patent rights clause; PROVIDED,
however, that the Contractor shall in any event require the subcontrac-
tor to grant to the Government patent rights under Subject Inventions
of no less scope and on no less favorable terms than those which the
Contractor has under such subcontracts, 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 containing 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 Contractor hereby assigns to the
Government all the rights that the Contractor would have to enforce the
subcontractor's obligations for the benefit of the Government with res-
pect 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 ac-
cordance with (g) above 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 facilities or quali-
fied personnel, the Contractor's delivery dates shall be extended for a
period of time equal to the duration of such delay; and, upon request
of the Contractor, the Contracting Officer shall determine to what ex-
tent, if any, an additional extension of the delivery dates and an in-
crease in contract prices based upon additional costs incurred by such
delay are proper under the circumstances; and the contract 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 request shall specifically state that the Contractor has used
all reasonable effort to obtain such qualified subcontractor, and shall
cite the waiver or termination provision hereinafter set forth. If,
within thirty-five (35) days after the date of receipt of such request
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I
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-
:.Aaate and the rights and obligations of the parties shall be governed
by th, provisions of the clause of this contract providing for termina-
tion for the convenience of the Government.
28. 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 irrevo-
cable license to reproduce, translate, publish, use, and dispose of,
and to authorize others so to do, all eopyrightable material first pro-
duced or composed and delivered to the Government under this contract
by the Contractor, its employees or any individual or concern specifi-
cally employed or assigned to originate and prepare such materia, and
(ii) a license as aforesaid under any and all copyrighted or copyright~-
able work not first produced or composed by the Contractor in the pee-
formance of this contract but which is incorporated in the material fur-
nished under the contract, provided that such license shall be only to
the extent the Contractor now has, or prior to comple'` : on c~' final set-
tlement of the contract may acquire, the right to grc,::t sucl, license
without becoming liable to pay compensation to others _.olely aecauee
of such grant.
(b) The Contractor agrees that it will exert all reasonable effort
to advise the Contracting Officer, at the time of delivering any copy-
rightable 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 con-
tained.
(c) The Contractor agrees to report to the Contracting Officer,
prcrlptly and in reasonable written detail, any notice or claim of copy-
right infringement received by the Contractor with respect to any mater-
ial delivered under this contract.
29. REPROWCTION AND USE OF TECHNICAL DATA
The Contractor agrees to and does hereby grant to the Government,
to the full extent of the Contractor's 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 gov-
ernments 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
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contained in this paragraph shall be'deemed, directly or by implication,
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.
30. G0VERrN FURNISHED PROPERTY
(a) The Government shall deliver to the Contractor, for use in
'connection with and under the terms of this contract, the property des-
cribed in the Schedule or specifications, together with such related
data and information as the Contractor may request and as may reason-
ably be required for the intended use of such property (hereinafter
referred to as "Government-furnished Property"). The delivery or per-
formance dates for the supplies or services to be furnished by the Con-
tractor under this contract are based upon the expectation that Govern-
ment-furni^hed Property suitable for use will be delivered to the Con-
tractor at the times stated in the Schedule or, if not so stated, in
sufficient time to enable the Contractor to meet such delivery or per-
formance dates. In the event that Government-furnished Property is not
delivered to the Contractor by such time or times, the Contracting Offi-
cer shall, upon timely written request made by the Contractor, make a
determination of the delay oceasion::d the Contractor thereby, and shall
equitably adjust the delivery or performance dates or the contract price,
or both, and any other contractual provision affected by such delay, in
accordance with the procedures provided for in the clause of this con-
tract entitled "Changes." In the event the Govern:.ient-furnished Property
is received by the Contractor in a condition not suitable for the in-
tended use the Contractor shall, upon receipt thereof, notify the Con-
tracting Officer of such fact and, as directed by the Coatracting Offi-
cer, either (i) return such property at the Government's expense or
other. raise dispose of the property or (ii) effect repairs or modifica-
tions. Upon the completion of (i) or (ii) above, the Contracting Officer
upon written request of the Contractor shall equitably adjust the delivery
or performance dates or the contract price, or both, and any other con-
tractual provision affected by the rejection or disposition, or the re-
pair or modification, in accordance with the procedures provided for in
the clause of this contract entitled "Changes." The foregoing provisions
for adjustment are exclusive and the Government shall not be liable to
suit for breach of contract by reason of any delay in delivery of Gov-
ernment-furnished Property or delivery of such property in a condition
not suitable for its intended use.
(b) By notice in writing the Contracting Officer may decrease the
property furnished or to be furnished by the Government under this con-
tract. In any such case, the Contracting Officer upon the written re-
quest of the Contractor shall equitably adjust the delivery or per-
formance dates or the contract price, or both, and any other contrac-
tual provisions affected by the decrease, in accordance with the pro-
cedures provided for in the clause of this contract entitled "Changes."
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(c) Title to the Government-furnished property shall remain in
the Government. Title to Government-furnished property shall not be
affected by the incorporation or attachment thereof to any property
not owned by the Government, nor shall such Government-furnished pro-
perty, or any part thereof, be or become a fixture or lose its identity
as personalty by reason of affixation to any realty. The Contractor
shall maintain adequate property control records of Government-furnished
property in accordance with the provisions of the "Manual for the Control
of Government Property in the Possession of Contractors" (Appendix B.
Armed Services Procurement Regulation) as in effect on the date of the
contract, which Manual is hereby incorporated by reference and made a
part of this contract.
(d) The Government-furnished property 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-furnished property, until
disposed of by the Contractor in accordance with this clause. In the
event that any damage occurs to Government-furnished Property the risk
of which has been assumed by the Government under this contract, the
Government shal1 replace such items or the Contractor shall make such
repair of the property as the Government directs; pre,-'der,, however,
that if the Contractor cannot effect such repair ;h.: ;, '.me re-
quired, the Contractor shall dispose of such property :.:v_ th( :_~.a,nner
directed by the Contracting Officer. The contract price includes no
compensation to the Contractor for the performance of any repair or
replacement for which the Government is responsible, and an equitable
adjustment will be made in the contract price for any such repair or
replacement of Government-furnished property made at the direction of
the Government. Any repair or replacement for which the Contractor
is responsible under the provisions of this contract shall be accom-
plished by the Contractor at its own expense.
(f) (i) Except for loss, destruction or dm-aage resulting from a
failure of the Contractor, due to willful misconduct or lack of good
faith of any of the Contractor's r.nagerial personnel as defined
herein, to maintain and administer the program for the maintenance,
repair, protection and preservation of the Government-furnished pro-
perty as required by paragraph (e) hereof, and except as specifically
provided in clause (s)........ of this contract or in the clause or
clauses of this contract designated in the Schedule, the Contractor
shall not be liable for loss or destruction of or damage to the Gov-
ernment-furnished property (A) caused by any peril while the property
is in transit off the Contractor's premises, or (B) caused by any of
the following perils while the property is on the Contractor's or sub-
contractor's premises, or on any other premises where such property
may properly be located, or by removal therefrom because of any of the
following perils:
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G
(I) Fire; lightning; windtli;orm, cyclone, tornado, hail; explo-
sion; riot, riot attending a strike, civil commotion; vandalism and mali-
cious mischief; sabotage; aircraft or objects falling therefrom; vehicles
running on land or tracks, excluding vehicles owned or operated by the
Contractor or any agent or employee of the Contractor; smoke, sprinkler
leakage; earthquake, or vc.lcanic eruption; flood, meaning thereby rising
of a body of water; hostile or warlike action, including action in hin-
dering, combating, or defending against an actual, impending or expected
attack by any government or sovereign power (de jure or de facto), or by
any authority using military, naval, or air forces, or by an agent of any
such government, power, authority, or forces; or
(II) Other peril, of a type not listed above, if such other
peril is customarily covered by insurance (or by a reserve for self-
insurance) n accordance with the normal practice of the Contractor, or
the prevailing practice in the industry in which the Contractor is en-
gaged with respect to similar property in the same general locale.
The perils as set forth in (A) and (B) above are hereinafter called
"excepted perils."
This clause shall not be construed as relieving a subcontractor from
liability for loss or destruction of or damage to the Government-Furnished
property while in its possession or control, except to the extent that
the subcontract, with the prior approval of the Contracting Officer, may
provide for the relief of the subcontractor from such liability. In the
absence of such approval, the subcontract shall contain appropriate pro-
visions requiring the return of all Government-Furnished property in as
good condition as when received, except for reasonable wear and tear or
for t:I.ie utilization of the property in accordance with the provisions of
the prime contract.
The term "Contractor's managerial personnel" as used herein means
the Contractor's directors, officers and any of its managers, superin-
tendents, or other equivalent representatives who have supervision or
direction of (I) all or substantially all of the Contractor's business;
(II) all or substantially all of the Contractor's operation at any one
plant or separate location at which the contract is being performed.;
III) a separate and complete major industrial operation in connection
with the performance of this contract.
(ii) The Contractor represents that it is not including in the
price hereunder, and agrees that it will not hereafter include in any
price to the Government, any charge or reserve for insurance (including
self-insurance funds or reserves) covering loss or destruction of or
damage to the Government-furnished property caused by any excepted
peril.
(iii) Upon .e happening of loss or destruction of or damage
to any Government-furnished property caused by an excepted peril, the
Contractor shall notify the Contracting Officer thereof, and shall
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communicate with the Loss and Salvage Organization, if any, now or here-
after designated by the Contracting Officer, and with the assistance of
the Loss and Salvage Organization so designated (unless the Contracting
Officer has directed that no such organization be employed), shall take
all reasonable steps to protect the Government-furnished property from
further damage, separate the damaged and undamaged Government-furnished
property, put all the Government-furnished property in the best possible
order, and furnish to the Contracting Officer a statement of: (A) the
lost, destroyed and damaged Government-furnished property (B) the time
and origin of the loss, destruction or damage, (C) all known interests
in commingled property of which the Government-furnished property is a
part, and (D) the insurance, if any, covering any part of or interest
in such commingled property. The Contractor shall be reimbursed for
the expenditures made by it in performing its obligations under this sub-
paragraph (iii)(including charges made to the Contractor by the Loss and
Salvage Organization, except any of such charges the payment of which
the Government has, at its option, assumed directly), to the extent ap-
proved by the Contracting Officer and set forth in a Supplemental Agree-
ment.
(iv) With the approval of the Contracting Officer after loss
or destruction of or damage to Government-furnished property, and sub-
ject to such conditions and limitations as may be imposed by the Con-
tracting Officer, the Contractor may, in order to mini?;_.;,e the loss to
the Government or in order to permit resumption of bus`?r-ss c-c the like,
sell for the account of the Government any item of Govt: ,.invent-furnished
property which has been damaged beyond practicable repadr, or which is
so commingled or combined with property of others, including the Con-
tractor, that separation is impracticable.
(v) Except to the extent of any loss or destruction of or
damage to Government-furnished property for which the Contractor is re-
lieved of liability under the foregoing provisions of this clause, and
except for reasonable wear and tear or depreciation, or the utilization
of the Government-furnished property in accordance with the provisions
of this contract, the Government-furnished property (other than property
rermitted to be sold) shall be returned to the Government in as good
condition as when received by the Contractor in connection with this
contract, or as repaired under paragraph (e) above.
(vi) In the event the Contractor is reimbursed or compensated
for any loss or destruction of or damage to the Government-furnished
property, caused by an excepted peril, it shall equitably reimburse the
Government. The Contractor shall do nothing to prejudice the Government's
rights to recover against third parties for any such loss, destruction or
damage and, upon the request of the Contracting Officer, shall at the
Government's expense, furnish to the Government all reasonable assistance
and cooperation (including the prosecution of suit and the execution of
instruments of assignment in favor of the Government) in obtaining re-
covery. In addition, where a subcontractor has not been relieved from
Liability for any loss or destruction of or damage to the Government-
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Furnished property, the Contractor shall enforce the liability of the
subcontractor for such loss or destruction of or damage to the Govern-
ment-Furnished property for the benefit of the Government.
(vii)(Where applicable). In the event any aircraft are to be
furnished under this contract, any loss or destruction of, or damage to,
such aircraft or other Government-furnished property occurring in con-
nection with operations of said aircraft will be governed by the clause
of this contract captioned "Flight Risks", to the extent such clause is,
by its terms, applicable.
(g) The Government shall at all reasonable times have access to
the premises wherein any Government-furnished property is located.
(h) Upon the completion of this contract, or at such earlier date
as may be fixed by the Contracting Officer, the Contractor shall submit,
in a form acceptable to the Contracting Officer, inventory schedules
covering all items of Government-furnished property not consumed in the
performance of this contract (including any resulting scrap), or not
theretofore delivered to the Government, and shall deliver or make such
other disposal of such Government-furnished property, as may be directed
or authorized by the Contracting Officer. Recoverable scrap from Gov-
ernraent-furnished property shall be reported in accordance with a pro-
cedure and in such form as the Contracting Officer may direct. The not
proceeds of any such disposal shall be credited to the contract price or
shall be paid in such other manner as the Contracting Officer may direct
(i) Directions of the Contracting Officer and coxmunications of
the Contract-or shall be in sting.
(a) +L &) 4 AA-
31. STATION FOR CONVENIENCE OF THE GO'WAIMT
(a) The performance of work under this contract may be terminated
by the Government in accordance with this clause in whole, or from time
to tine in part, whenever the Contracting Officer shall determine that
such termination is in the best interest of the Government. Any such
termination shall be effected by delivery to the Contractor of a Notice
of Termination specifying the extent to which performance of work ander
the contract is terminated, and the date upon which such termination be-
comes effective.
(b) After receipt of a Notice of Termination, and except as other-
wise directed by the Contracting Officer, the Contractor shall (1) stop
work under the contract on the date and to the extent specified in the
Notice of Termination; (2) place no further orders or subcontracts for
materials, services, or facilities except as may be necessary for com-
pletion of such portion of the work under the contract as is not ter-
minated; (3) terminate all orders and subcontracts to the extent that
they relate to the performance of work terminated by the Notice of Ter-
mination; (4) assign to the Government, in the manner, at the times, and
to the extent directed by the Contracting Officer, all of the right,
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title, and interest of the Contractor under the orders and subcontracts
so tierrunavea, in wnicn case tine uovernmenti sna.Li nave tine rigni, in rtis
discretion, to settle or pay any or all claims arising out of the termina-
tion of such orders and subcontracts; (5) settle all outstanding liabi-
lities and all claims arising out of such termination of orders and sub-
with the approval or ratification of the Contracting Officer,
tc., the extent he may require, which approval or ratification shall be
final for all the purposes of this clause; (6) transfer title and deliver
to the Government, in the manner, at the times, and to the extent, if any,
directed by the Contracting Officer, (i) the fabricated or unfabricated
parts, work in process, completed work, supplies, and other material pro-
duced as a part of, or acquired in connection with the performance of,
the work terminated by the Notice of Termination, and (ii) the completed
or partially completed plans, drawings, information, and other property
which, if the contract had been completed, would have been required to
be furnished to the Government; (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 re-
ferred to in provision (6) of this paragraph, PROVIDED, HOWEVER, that the
Contractor (i) shall not be required to extend credit to any purchaser,
and (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 disposition
shall be applied in reduction of any payments to be made by the Govern-
ment 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 Officer may direct; (8) complete perfor-
mance 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, fcr the protection and preserva-
tion of the property related to this contract which is in the possession
of the Contractor and in which the Government has or ma, acquire an
interest. At any time after expiration of the plant clearance period, as
defined in Section VIII, Armed Services Procurement Regulation, as it may
be amended from tine to time, the Contractor may submit to the Contrac-
ting Officer a list, certified as to quantity and quality, of any or all
items of termination inventory not previously disposed of, exclusive of
items the disposition of which has been directed or authorized by the
Contracting Officer, and may request the Government to remove such items
or enter into a storage agreement covering them. Not later than fifteen
(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 verification by the Contrac-
ting 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
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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 writ-
ing are granted by the Contracting Officer, upon request of the Contrac-
tor .:ade in writing within such two-year period or authorized extension
thereof. However, if the Contracting Officer deterLiines 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 of the Contractor to sub=it its termination claim within
the time allowed, the Contracting Officer may determine, on the basis of
infon.iation available to him, the a-_iount, if any, due to the Contractor
by reason of the termination and shall thereupon pay to the Contractor the
amount so determined.
(d) Subject to the provisions of paragraph (c), the Contractor and
the Contracting Officer may agree upon the whole or any part of the
amount or amounts to be paid to the Contractor by reason of the total
which amount
or partial termination of work pursuant to this clause
,
or amounts may include a reasonable allowance for profit on work done.
The contract shall be ar:ended accordingly, and the Contractor shall be
paid the agreed amount. Nothing in paragraph (e) of this clause, pros-
cribing the amount to be paid to the Contractor in the event of failure
of the Contractor and the Contracting Officer to agree upon the whole
amount to be paid to the Contractor by reason of the termination of work
pursuant to this clause, shall be deemed to lLait, restrict, or otherwise
de! emine or affect the amount or amounts which may be agreed upon to be
paid to the Contractor pursuant to this paragraph (d).
(e) In the event of the failure of the Contractor and the Contrac-
tinE '.Officer to agree as provided in paragraph (d) upon the whole mount
to be paid to the Contractor by reason of the termination of work pursuant
to this clause, the Contracting Officer shall deterriine, on the basis of
information available to him, the amount, if any, due to the Contractor
by reason of the termination and shall pay t-) the Contractor the amounts
determined as follows :
(1) For completed supplies accepted by the Government (or sold
or acquired as provided in paragraph (b)(7) above) and not theretofore
paid for, a sum equivalent to the aggregate price for such supplies com-
puted in accordance with the price or prices specified in the contract,
appropriately adjusted for any saving of freight or other charges;
(2) The total of --
(i) The costs incurred in the performance of the work terriina-
ted, including initial costs and preparatory expense allocable thereto,
but exclusive of any costs attributable to supplies paid or to be laid
for under paragraph (e)(1) hereof;
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(ii) The cost of settling and paying claims arising out of the
termination of work under subcontracts or orders, as provided in para-
graph (b)(5) above, which are properly chargeable to the terminated
portion of the contract (exclusive of amounts paid or payable on account
of supplies or materials delivered or services furnished by subcontrac-
tors or vendors prior to the effective date of the Notice of Termina-
tion, which amounts shall be included in the costs payable under (i)
above).
(iii) An allowance for profit in keeping with the provisions
of the clause, "Price Redetermination," of the Schedule hereto.
(3) The reasonable costs of settlement, including accounting,
legal, clerical, and other expenses reasonably necessary for the prepara-
tion of settlement claims and supporting data with respect to the ter-
minated portion of the contract and for the termination and settlement
of ubcontraCts thereunder, together with reasonable storage, trans-
portation, and other costs incurred in connection with the protection
or disposition of property allocable to this contract.
The total sum to be paid to the Contractor under (1) and (2) of
this paragraph (e) shall not exceed the total contract price as re-
duced by the amount of payments otherwise made and as further reduced
by the contract price of work not terminated. Except for normal spoil-
age, and except to the extent that the Government shall have otherwise
expressly assumed the risk of loss, there shall be excluded from the
amounts payable to the Contractor as provided in paragraph (e)(l) and
paragraph (e)(2)(i), the fair value, as determined by the Contracting
Officer, of property which is destroyed, lost, stolen, or damaged so as
to become undeliverable to the Government, or to a buyer pursuant to
paragraph (b)(7).
(f) Any determination of costs under paragraph (c) or (e) hereof
shall be governed by the Statement of Principles for Consideration of
Costs set forth in Part 4 of Section VIII of the Armed Services Pro-
curement Regulation, as in effect on the date of this contract.
(g) 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 tinder paragraph (c) or (e) above, th,; 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 deter-
mined by the Contracting Officer, or (ii) if an appeal has been taken,
the amount finally determined on such appeal.
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(h) In arriving at the amount due the Contractor under this clause
there shall be deducted (1) all unliquidated advance or other unliquidated
payments on account theretofore made to the Contractor, (2) any claim
which the Government may have against the Contractor in connection with
this contract, and (3) the agreed price for, or the proceeds of sale of,
any materials, supplies, or other things acquired by the Contractor or
sold, pursuant to the provisions of this clause, and not otherwise re-
covered by or credited to the Government.
(i) If the termination hereunder be partial, prior to the settle-
ment of the terminated portion of this contract, the Contractor may ?ile
with the Contracting Officer a request in writing for an equitable ad-
justment of the price or prices specified in the contract relating to
the continued portion of the contract (the portion not terminated by
the Notice of Termination), and such equitable adjustment as may be
agreed upon shall be made in such price or prices
(,j) The Government may from time to time, under such terms and con-
ditions as it may prescribe, make partial payments and payments on account
against costs incurred by the Contractor in connection with the terminated
portion of this contract whenever in the opinion of the Contracting Offi-
cer the aggregate of such payments shall be within the amount to which
the Contractor will be entitled hereunder. If the total of such payments
is in excess of the amount finally agreed or determined to be due under
this clause, such excess shall be payable by the Contractor to the Gov-
ernment upon demand, together with interest computed 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 Gov-
ernment; provided, however, that no interest shall be charged with res-
pect to any such excess payment attributable to a reduction in the Con-
tractor's claim by reason of retention or other disposition of termina-
tion inventory until ten days after the date of such retention or dis-
position.
(k) Unless otherwise provided for in this contract, or by appli-
cable statute, the Contractor, from the effective date of termination
and for a period of six years after final settlement under this con-
tract, shall preserve and make available to the Government at all rea-
sonable times at the office of the Contractor but without direct charge
to the Government, all its books, records, documents, and other evidence
bearing on the costs and expenses of the Contractor under this contract
and relating to the work terminated hereunder, or, to the extent ap-
proved by the Contracting Officer, photographs, micro-photographs, or
other authentic reproductions thereof.
32 PAYMENTS
The Contractor shall be paid, upon the submission of properly cer-
tified invoices or vouchers, the prices stipulated herein for supplies
delivered and accepted or services rendered and accepted, less deductions,
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if any, as herein provided. Unless otherwise specified, payment will
be made on partial deliveries accepted by the Government when the
amount due on such deliveries so warrants; or, when requested by the
Contractor, payment for accepted partial deliveries shall be made when-
ever such payment would equal or exceed either $1,000 or 50% of the
total amount of this contract.
33. DEFAULT
(a) The Government may, subject to the provisions of paragraph
(b) below, by written Notice of Default to the Contractor, terminate
the whole or any part of this contract in any one of the following cir-
cumstances:
(i) If the Contractor fails to make delivery of the supplies or
to perform the services within the time specified herein or any exten-
sion thereof; or
(ii) It the Contractor fails to perform any of the other provi-
sions of this contract, or so fails to make progress as to endanger
performance of this contract in accordance with its terms, and in either
of these two circumstances does not cure such failure within a period
of 10 days (or such longer period as the Contracting Officer may auth-
orize in writing) after receipt of notice from the Contracting Officer
specifying such failure.
(b) The Contractor shall not be liable for any'excess costs, if
any failure to perform the contract arises out of causes beyond the
control and without the fault or negligence 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, quar-
antine restrictions, strikes, freight embargoes, unusually severe
weather, and defaults of subcontractors due to any of such causes
unless the Contracting Officer shall determine that the supplies or
services to be furnished by the subcontractor were obtainable from
other sources in sufficient time to permit the Contractor to meet the
required delivery schedule.
(c) In the event the Government terminates this contract in whole
or in part as provided in paragraph (a) of this clause, the Government
may procure, upon such terms and in such manner as the Contracting
Officer may deem appropriate, supplies or services similar to those so
terminated, and the Contractor shal]. be liable to the Government for
any excess costs for such similar supplies or services, PROVIDED that
the Contractor shall continue the performance of this contract to the
extent not terminated under the provisions of this clause.
(d) If this contract is terminated as provided in paragraph (a)
of this clause, the Government, in addition to any other rights pro-
vided in this clause, may require the Contractor to transfer title
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and deliver to the Government, in the manner and to the extent directed
by the Contracting Officer, (i) any completed supplies, and (ii) such
partially completed supplies and materials, parts, tools, dies, Jigs,
fictures, plans, drawings, information and contract rights (herein-
after called "manufacturing materials") as the Contractor has sp,eci-
fically produced or specifically acquired for the performance of such
part of this contract as has been terminated; and the Contractor shall,
upon direction of the Contracting Officer, protect and preserve pro-
perty in possession of the Contractor in which the Government has an
interest. The Government shall pay to the Contractor the contract
price for completed supplies delivered to and accepted by the Govern-
ment, and the amount agreed upon by the Contractor-and the Contrac-
ting Officer for manufacturing materials delivered to and accepted
by the Government and for the protection and preservation of property.
Failure 4o agree shall be a dispute concerning a question of fact
C within the meaning of the clause of this contract entitled "Disputes."
(e) If, after notice of termination of this contract under the
provisions of paragraph (a) of this clause, it is determined that the
failure to perform this contract is due to causes beyond the control
and without the fault or negligence of the Contractor pursuant to the
provisions of paragraph (b) of this clause, such Notice of Default
shall be deemed to have been issued pursuant to the clause of this
contract entitled "Termination for Convenience of the Government," and
t'-,e rights and obligations of the pariri::s hereto shall in such event
be governed by such'claus,e. Except as otherwise provided in this
contract, this paragraph (e) applies only if this contract is with a
military department.
(f) The rights and remedies of the =overnmcnt 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.
34. ALTERATIONS IN CONTRACT
The following Alterations were made in this contract prior to
signature thereof by the parties to this contract:
(a) In paragraph 2 entitled "Changes" on Page 1 of the General
Provisions change the figure "60" to read "90" in the next to last line.
(b) Delete Paragrraph 5 entitled "Inspection" on Page 2 of the
General. Provisions Section. See PART' VI of the Schedule.
(c) Delete Paragraph 7 entitled "Assignment of Claiams" on Page 3
of the General Provisions in its entirety and substitute the following
therefor :
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"T
Assignment of Claims.
(a) No assignment of claims shall be made by the
Contractor under this contract without the written
approval of the Contracting Officer under this
contract.
(b) If the Government determines at any future
time that the aftinistration of this contract should
be assigned or transferred by it to any other agency
of the Government, it will notify the Contractor and
the parties shell review the procedures applicable
hereto, and shall negotiate such revisions thereof
and of this contract as may be appropriate, which
revisions aha17 be evidenced by an amendment of this
contract."
(d) In Paragraph 2T(d)(ii)(s) entitled "Patent Rights" on Page 19
of the":4eneral Provisions after the words "to Mich the Subject Invention
pertains:* add the following :
"and subject also to the obligations, if any, of the
Contractor, under all the terms and conditions not
forth in that agreement known as the Cross License
Agreement of the Manufacturers' Aircraft Association
Inc., in effect as of 31 Deeember 1928 as supplemented
by the agreement of 30 September 1935."
(e) In Paragraph 30 entitled "Government Furnished Property" add
the following sub-clan ex:
"(j) Where the words "managers, superintendents or
othbrf.: equivalent representatives" are used or re-
ferred to, they shall be construed for the purpose
of this clause as meaning "manufacturing managers,
plant managers, production managers, work managers,
division superintendents, or other equivalent repre-
sentatives."
"(k) The provision of this clwse shall apply to
all supplies accepted and delivered but left in the
possession of the Contractor for modification, testing,
or any other reason or purpose in connection with this
contract."
(f) Add the following Paragraphs to the General Provisions:
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"35 ? FLIOT BI
(a) bah and every operation of any aircraft (including
in the term "operation" tests of aircraft, test of equipment and
accessories installed therein, and the operation of any power plant
installed therein, whether or not the aircraft is in motion during
the making of any such test or the operation of any such power
plant)(1) to be furnished to the Goverment under this contract,
or (2) furnished to the Contractor by the Goverment for the per-
formance of this contract, whether conducted by the Contractor,
by the Goverment or by any person authorized by the Government,
shall be conducted at the risk of the Government insofar as loss
or destruction of or damage to such aircraft (including equipment
and accessories installed therein) is concerned., notwithstanding
any other provision of this agreement; provided that if personnel
conducting such operation are not either furnished by the Govern-
ment or approved in writing by the Contracting Officer as defined
herein, such operation sha11 be conducted at the risk of the Con-
tractor and the Contractor shall be liable for loss and destruction
of and damage to Government property occurring in the course of
such operation, and further provided that the Contractor shall bear
the risk of and, with respect to Goverment-owned property, shall
be liable for loss and destruction of and damage to such aircraft,
equipment and accessories occurring in the course of such operation
and resulting from willful misconduct or failure to exercise good
faith on the part of Contractor's managerial personnel as defined
in Paragraph *(f)(i) hereof.
(b) If prior to final acceptance by the Government any
aircraft defined under paragraph (a)(1) above, are lost, destroyed,
or damaged during such operation thereof and if the risk of such
loss, 4soage or destruction is borne by the Government under para-
graph (a) hereof, the Government shall have the right to terminate
this contract with respect to such aircraft, or in case such air-
craft is irmaged, the Goverment may elect to require that such
aircraft be restored by the Contractor to the condition in which
it was imsrdiately prior to such damage. If the Government elects
to terminate this contract with respect to such aircraft, the Con-
tractor shall deliver to the Government at the place at or from
which such operation is conducted all or such parts of such aircraft
as the Contracting Officer may designate, and the Contractor shall
be paid the contract price for said aircraft less such amount as
shall be determined by the Contracting Officer as the reasonable
value of any portion of said aircraft not completed at the commence-
ment of said operation. If the Goverment requires the aircraft,
if damaged, to be restored as aforesaid, an equitable adjustment
shall be made in the amount due under this contract and in the time
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required for its performance and this contract shall be
modified in writing accordingly. Any disputes that may
arise under the provisions of this Clause shall be deter-
mined as provided in the Clause hereof entitled "Disputes".
(a) This Clause shall be deemed to cover the
operations by the Contractor of aircraft manufactured under
the tern of this contract notwithstanding the fact that such
an aircraft may have become the property of the Government and
provided that such operations shall be sub ect to any authori-
sations or approval required in paragraph (a) above.
36. RIPO S
The Contractor shall submit, at intervals of approxi-
mately six weeks, reports of progress in order that the Con-
tracting Officer may have a current record of the status of
perfoz nee.
37. PAMT IEITZ
(a) The Contractor agrees to {Msemni*y the Government
and its officers, agents and employees against liability, in-
cluding costs and expenses, for infringement upon any Letters
Patent of the Tanited States (except Letters Patent issued upon
an application 'which is now or may hereafter be, for reasons
of aationsl security, ordered by the Government to be kept secret
or otherwise withheld trod issue) arising out of the performance
of this contract or out of the use or disposal by or for the
account of the Goverment of supplies furnished or construction
work performed hereunder. The foregoing indemnity shall not
apply unless the Contractor shall have been informed as soon
as practicable by the Government of the suit or action alleging
such iatrin t and shall have been given an opportunity to
present reco^rrenfdations as to the defense thereof; and further,
such inda^ni shall not apply in any one of the following
situations: (i) any infringement resulting from the addition
to any such supplies of other supplies not furnished by the Con-
tractor for the purpose of such addition: (ii) any settlement
of a claim of infringement made without the consent of the Con-
tractor,' unless required by final decree of a court of competent
jurisdiction: (iii) any claim of infringement arising from use
or disposal outside the scope of any license limitation under
ieh the Contractor is bound: Prcded.
. That the Contractor
has notified the Government of the ].imitation prior to first
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delivery under this contract; (iv) any infringMAnt necessarily
resulting from changes (other than the substitution of another
standard commercial part or cavonent aanufactured or supplied
by the Contractor) acted red pursuant to this contract, or from
specific written instructions given by the Contracting Officer
directing a suer of performing the contract not normally
utilised by the Contractor.
(b) The foregoing indaazity shall apply only to contract
ite n or parts thereof which are standard coeercial supplies.
38. MR0021A'2'IO&-Vn18OH-2RAIL. ACT
This contract shall not be subject either to the pro-
visions of the Vinson-Tramml Act as asendsd and extended (34
U.B. Cods X96, and 10 U. B. Code 311) or to any other act of the
Congress, iibsther heretofore or hereafter enacted, providing for
the renegotiation of Goverment contracts."
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