SECTION D FIXED PRICE RESEARCH AND DEVELOPMENT PROVISIONS
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP89B00552R000700050013-3
Release Decision:
RIFPUB
Original Classification:
K
Document Page Count:
15
Document Creation Date:
December 20, 2016
Document Release Date:
January 7, 2004
Sequence Number:
13
Case Number:
Publication Date:
October 31, 1975
Content Type:
REGULATION
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CIA-RDP89B00552R000700050013-3.pdf | 2.04 MB |
Body:
Approved FRelease 2006/10/20: CIA-RDP89B0(,2R000700050013-3
SECTION D
FIXED PRICE RESEARCH AND DEVELOPMENT
PROVISIONS
Article
Page
No.
Alterations in Contracts ........................
23
14
Audit .......................... ..........
5
3
Authorization and Consent .....................
14
6
Changes .....................................
10
4
Competition in Subcontracting .................
4
3
Default .....................................
13
5
Examination of Records .......................
2
1
Federal, State, and Local Taxes .................
16
8
Government Delay of Work ....................
18
11
Government Property .........................
17
9
Ground and Flight Risk .......................
15
6
Inspection ...................................
9
4
Page
Article No.
Payments ................................... 7 4
Patent Rights (Title) 22 12
Price Reduction for Defective Cost or Pricing Data . 3 2
Pricing of Adjustments ....................... 19 11
Reports of Work ............ ................. 11 5
Standards of Work 8 4
Stop Work Order ............................. 20 11
Subcontractor Cost or Pricing Data ............. 6 3
Subcontracts ................................. 1 1
Termination for Convenience of the Government .. 12 5
Title and Risk of Loss 21 12
7-303.12 SUBCONTRACTS (1972 APR)
(The provisions of this clause do not apply to firm fixed-price
and fixed price with escalation contracts. However, the clause does
apply to unpriced modifications under such contracts.)
(a) As used in this clause, the term "subcontract" includes pur-
chase orders.
(b) The Contractor shall notify the Contracting Officer reason-
ably in advance of entering into any subcontract if the Contractor's
procurement system has not been approved by the Contracting
Officer and if the subcontract:
(i) is to be a cost-reimbursement, time and materials, or labor-
hour contract which it is estimated will involve an amount in ex-
cess of ten thousand dollars ($10,000) including any fee;
(ii) is proposed to exceed one hundred thousand dollars
($100,000) ; or
(iii) is one of a number of subcontracts, under this contract,
with a single subcontractor for the same or related supplies or
services which, in the aggregate, are expected to exceed one hun-
dred thousand dollars ($100,000).
(c) The advance notification required by paragraph (b) above
shall include:
(i) a description of the supplies or services to be called for by
the subcontract;
(ii) identification of the proposed subcontractor and an ex-
planation of why and how the proposed subcontractor was se-
lected, including the competition obtained;
(iii) the proposed subcontract price, together with the Con-
tractor's cost or price analysis thereof;
(iv) the subcontractor's current, complete, and accurate cost
or pricing data and Certificate of Current Cost or Pricing Data,
when such data and certificates are required by other provisions of
this contract to be obtained from the subcontractor;
(v) identification of the type of subcontract to be used;
(vi) a memorandum of negotiation which sets forth the princi-
pal elements of the subcontract price negotiations. A copy of this
memorandum shall be retained in the contractor's file for the use of
Government reviewing authorities. The memorandum shall be in
sufficient detail to reflect the most significant considerations con-
trolling the establishment of initial or revised prices. The memo-
randum should include an explanation of why cost or pricing data
was, or was not required, and, if it was not required in the case of
any price negotiation in excess of $100,000, a statement of the basis
for determining that the price resulted from or was based on ad-
equate price competition, established catalog or market prices of
commercial items sold in substantial quantities to the general public,
FORM ~ 424D OBSOLETE PREVIOUS
4-73 EDITIONS
or prices set by law or regulation. If cost or pricing data was sub-
mitted and a certificate of cost or pricing data was required, the
memorandum shall reflect the extent to which reliance was not
placed upon the factual cost or pricing data submitted and the ex-
tent to which this data was not used by the contractor in determin-
ing the total price objective and in negotiating the final price. The
memorandum shall also reflect the extent to which it was recog-
nized in the negotiation that any cost or pricing data submitted by
the subcontractor was not accurate, complete, or current; the action
taken by the contractor and the subcontractor as a result; and the
effect, if any, of such defective data on the total price negotiated
Where the total price negotiated differs significantly from the con-
tractor's total price objective, the memorandum shall explain this
difference; and
(vii) when incentives are used, the memorandum of nego-
tiation shall contain an explanation of the incentive fee/profit plan
identifying each critical performance element, management deci-
sions used to quantify each incentive element, reasons for incen-
tives on particular performance characteristics, and a brief sum-
mary of trade-off possibilities considered as to cost, performance,
and time.
(d) The Contractor shall not enter into any subcontract for
which advance notification to the Contracting Officer is required
by this clause, without the prior written consent of the Contracting
Officer; provided that the Contracting Officer, in his discretion,
may ratify in writing any subcontract. Such ratification shall con-
stitute the consent of the Contracting Officer required by this
paragraph.
(e) Neither consent by the Contracting Officer to any subcon-
tract or any provisions thereof nor approval of the Contractor's
procurement system shall be construed to be a determination of
the acceptability of any subcontract price or of any amount paid
under any subcontract or to relieve the Contractor of any responsi-
bility for performing this contract, unless such approval or con-
sent specifically provides otherwise.
(f) The Contractor agrees that no subcontract placed under this
contract shall provide for payment on a cost-plus-a-percentage-of-
cost basis.
7-302.6 EXAMINATION OF RECORDS (1971 MAR)
(AMENDED)
(a) This clause is applicable if the amount of this contract
exceeds $2,500 and was entered into by means of negotiation,
including small business restricted advertising, but is not applicable
if this contract was entered into by means of formal advertising.
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(b) The Contractor agrees that the Appropriate Audit Repre-
sentative of the Government or any of his duly authorized repre-
sentatives shall, until the expiration of three years after final
payment under this contract or such lesser time specified in either
Appendix M of the Armed Services Procurement Regulation or
the Federal Procurement Regulations Part 1-20, as appropriate,
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.
(c) The Contractor further agrees to include in all his sub-
contracts hereunder a provision to the effect that the subcontractor
agrees that the Appropriate Audit Representative of the Govern-
ment or any of his duly authorized representatives shall, until
the expiration of three years after final payment under the sub-
contract or such lesser time specified in either Appendix M of the
Armed Services Procurement Regulation or the Federal Procure-
ment Regulations Part 1-20, as appropriate, have access to and the
right to examine any directly pertinent books, documents, papers,
and records of such subcontractor, involving transactions related
to the subcontract. The term "subcontract" as used in this clause,
excludes (i) purchase orders not exceeding $2,500 (ii) subcon-
tracts or purchase orders for public utility services at rates estab-
lished for uniform applicability to the general public.
(d) The periods of access and examination described in (b)
and (c) above for records which relate to (i) appeals under the
"Disputes" clause of this contract, (ii) litigation or the settlement
of claims arising out of the performance of this contract, or (iii)
costs and expenses of this contract as to which exception has been
taken by the Appropriate Audit Representative of the Government
or any of his duly authorized representatives, shall continue until
such appeals, litigation, claims or exceptions have been disposed
of.
7-303.16 PRICE REDUCTION FOR DEFECTIVE COST OR
PRICING DATA (1970 JAN)
(a) The following clause shall be inserted in negotiated con-
tracts which when entered into exceed $100,000, except where the
price is based on adequate price competition, established catalog
or market prices of commercial items sold in substantial quantities
to the general public, or prices set by law or regulation. In addi-
tion the Contracting Officer shall include this clause in other
negotiated contracts for which he has obtained a Certificate of
Current Cost or Pricing Data in accordance with 3-807.3(a) (iii)
in connection with the initial pricing of the contract, or for which
he has obtained partial cost or pricing data in accordance with
3-807.3(e).
PRICE REDUCTION FOR DEFECTIVE COST OR PRICING
DATA (1970 JAN)
If any price, including profit or fee, negotiated in connection
with this contract or any cost reimbursable under this contract was
increased by any significant sums because:
(i) the Contractor furnished cost or pricing data which was
not complete, accurate and current as certified in the Contractor's
Certificate of Current Cost or Pricing Data;
(ii) a subcontractor, pursuant to the clause of this contract
entitled "Subcontractor Cost or Pricing Data" or "Subcontractor
Cost or Pricing Data-Price Adjustments" or any subcontract
clause therein required, furnished cost or pricing data which was
not complete, accurate and current as certified in the subcon-
tractor's Certificate of Current Cost or Pricing Data;
(iii) a subcontractor or prospective subcontractor furnished
cost or pricing data which was required to be complete, accurate
and current and to be submitted to support a subcontract cost
estimate furnished by the Contractor but which was not com-
plete, accurate and current as of the date certified in the Con-
tractor's Certificate of Current Cost or Pricing Data; or
(iv) the Contractor or a subcontractor or prospective sub-
contractor furnished any data, not within (i), (ii) or (iii) above,
which was not accurate as submitted;
the price or cost shall be reduced accordingly and the contract
shall be modified in writing as may be necessary to reflect such
reduction. However, any reduction in the contract price due to
defective subcontract data of a prospective subcontractor when
the subcontract was not subsequently awarded to such subcon-
tractor, will be limited to the amount (plus applicable overhead
and profit markup) by which the actual subcontract, or actual
cost to the Contractor if there was no subcontract, was less than
the prospective subcontract cost estimate submitted by the Con-
tractor, provided the actual subcontract price was not affected
by defective cost or pricing data.
Note: Since the contract is subject to reduction under this clause
by reason of defective cost or pricing data submitted in connection
with certain subcontracts, it is expected that the contractor may
wish to include a clause in each such subcontract requiring the
subcontractor to appropriately indemnify the contractor. However,
the inclusion of such a clause and the terms thereof are matters
for negotiation and agreement between the contractor and the
subcontractor, provided that they are consistent with ASPR 23-203
relating to Disputes provisions in subcontracts. It is also expected
that any subcontractor subject to such indemnification will gen-
erally require substantially similar indemnification for defective
cost or pricing data required to be submitted by his lower tier
subcontractors.
(b) Insert the following clause in all contracts, both formally
advertised and negotiated, which when entered into exceed
$100,000 except those containing the clause set forth in (a) above.
PRICE REDUCTION FOR DEFECTIVE COST OR PRICING
DATA-PRICE ADJUSTMENTS (1970 JAN)
(a) This clause shall become operative only with respect to any
modification of this contract which involves aggregate increases
and/or decreases in costs plus applicable profits in excess of
$100,000 unless the modification is priced on the basis of adequate
competition, established catalog or market prices of commercial
items sold in substantial quantities to the general public, or prices
set by law or regulation. The right to price reduction under this
clause is limited to defects in data relating to such modification.
(b) If any price, including profit, or fee, negotiated in con-
nection with any price adjustment under this contract was in-
creased by any significant sums because:
(i) the Contractor furnished cost or pricing data which was
not complete, accurate and current as certified in the Contractor's
Certificate of Current Cost or Pricing Data;
(ii) a subcontractor, pursuant to the clause of this contract
entitled "Subcontractor Cost or Pricing Data" or "Subcontractor
Cost or Pricing Data-Price Adjustments" or any subcontract clause
therein required, furnished cost or pricing data which was not
complete, accurate and current as certified in the subcontractor's
Certificate of Current Cost or Pricing Data;
(iii) a subcontractor or prospective subcontractor furnished
cost or pricing data which was required to be complete, accurate
and current and to be submitted to support a subcontract cost
estimate furnished by the Contractor but which was not complete,
accurate and current as of the date certified in the Contractor's
Certificate of Current Cost or Pricing Data; or
(iv) the Contractor or a subcontractor or prospective subcon-
tractor furnished any data, not within (i), (ii) or (iii) above,
which was not accurate as submitted;
the price shall be reduced accordingly and the contract shall be
modified in writing as may be necessary to reflect such reduction.
However, any reduction in the contract price due to defective
subcontract data of a prospective subcontractor, when the sub-
contract was not subsequently awarded to such subcontractor, will
be limited to the amount (plus applicable overhead and profit
markup) by which the actual subcontract, or actual cost to the
Contractor if there was no subcontract, was less than the prospec-
tive subcontract cost estimate submitted by the Contractor, pro-
vided the actual subcontract price was not affected by defective
cost or pricing data.
Approved For Relea e 2006/10/20: CIA-RDP89BOO552RO700050013-3
Approved For Z~please 2006/10/20: CIA-R DP89B0055.000700050013-3
Note: Since the contract is subject to reduction under this
clause by reason of defective cost or pricing data submitted in
connection with certain subcontracts, it is expected that the con-
tractor may wish to include a clause in each such subcontract
requiring the subcontractor to appropriately indemnify the con-
tractor. However, the inclusion of such a clause and the terms
thereof are matters for negotiation and agreement between the
contractor and the subcontractor, provided that they are consistent
with ASPR 23-203 relating to Disputes provisions in subcontracts.
It is also expected that any subcontractor subject to such indemni-
fication will generally require substantially similar indemnification
for defective cost or pricing data required to be submitted by his
lower tier subcontractors.
7-303.27 COMPETITION IN SUBCONTRACTING (1962 APR)
The Contractor shall select subcontractors (including suppliers)
on a competitive basis to the maximum practical extent consistent
with the objectives and requirements of the contract.
(e) Availability. The materials described in (b), (c) and (d)
above shall be made available at the office of the Contractor, at
all reasonable times, for inspection, audit, or reproduction, until
the expiration of three years from the date of final payment under
this contract or such lesser time specified in Appendix M of the
Armed Services Procurement Regulation, and for such longer
period, if any, as is required by applicable statute, or by other
clauses of this contract, or by (1) and (2) below:
(1) If this contract is completely or partially terminated, the
records relating to the work terminated shall be made available
for a period of three years from the date of any resulting final
settlement.
(2) Records which relate to appeals under the "Disputes"
clause of this contract, or litigation or the settlement of claims
arising out of the performance of this contract, shall be made
available until such appeals, litigation, or claims have been dis-
posed of.
(f) The Contractor shall insert a clause containing all the pro-
visions of this clause, including this paragraph (f), in all sub-
contracts hereunder, except altered as necessary for proper iden-
tification of the contracting parties and the Contracting Officer
under the Government prime contract.
7-303.28 AUDIT (1971 APR) (AMENDED)
(a) Insert the clause set forth below in all contracts other than
contracts entered into by formal advertising which are not expected
to exceed $100,000.
AUDIT (1971 APR) (AMENDED)
(a) General. The Contracting Officer or his representatives
shall have the audit and inspection rights described in the ap-
plicable paragraphs (b), (c) and (d) below.
(b) Examination of Costs. If this is a cost reimbursement type,
incentive, time and materials, labor hour, or price redeterminable
contract, or any combination thereof, the Contractor shall maintain,
and the Contracting Officer or his representatives shall have the
right to examine books, records, documents, and other evidence
and accounting procedures and practices, sufficient to reflect
properly all direct and indirect costs of whatever nature claimed
to have been incurred and anticipated to be incurred for the
performance of this contract. Such right of examination shall in-
clude inspection at all reasonable times of the Contractor's plants,
or such parts thereof, as may be engaged in the performance of this
contract.
(c) Cost or Pricing Data. If the Contractor submitted cost or
pricing data in connection with the pricing of this contract or
any change or modification thereto, unless such pricing was based
on adequate price competition, established catalog or market
prices of commercial items sold in substantial quantities to the
general public, or prices set by law or regulation, the Contracting
Officer or his representatives who are employees of the United
States Government shall have the right to examine all books,
records, documents and other data of the Contractor related to
the negotiation, pricing or performance of such contract, change or
modification, for the purpose of evaluating the accuracy, com-
pleteness and currency of the cost or pricing data submitted.
Additionally, in the case of pricing any change or modification
exceeding $100,000 to formally advertised contracts, the Appro-
priate Audit Representative of the Government or his representa-
tives who are employees of the United States Government shall
have such rights. The right of examination shall extend to all
documents necessary to permit adequate evaluation of the cost or
pricing data submitted, along with the computations and pro-
jections used therein.
(d) Reports. If the Contractor is required to furnish Cost In-
formation Reports (CIR) or Contract Fund Status Reports
(CFSR), the Contracting Officer or his representatives shall have
the right to examine books, records, documents, and supporting
materials, for the purpose of evaluating (i) the effectiveness of the
Contractor's policies and procedures to produce data compatible
with the objectives of these reports, and (ii) the data reported.
ARTICLE 6
7-303.29 SUBCONTRACTOR COST OR PRICING DATA
(1970 JAN)
(a) The following clause shall be inserted in all negotiated con-
tracts expected to exceed $100,000, except where the price is based
on adequate price competition, established catalog or market prices
of commercial items sold in substantial quantities to the general
public, or prices set by law or regulation. The Contracting Officer
may include this clause, with appropriate reduction in the dollar
amounts included therein, in other negotiated contracts where a
Certificate of Current Cost or Pricing Data is required (see
3-807.3 (a) (iii) ) in connection with initial pricing of the contract.
SUBCONTRACTOR COST OR PRICING DATA (1970 JAN)
(a) The Contractor shall require subcontractors hereunder to
submit, actually or by specific identification in writing, cost or
pricing data under the following circumstances: (i) prior to the
award of any subcontract the amount of which is expected to
exceed $100,000 when entered into; (ii) prior to the pricing of
any subcontract modification which involves aggregate increases
and/or decreases in costs plus applicable profits expected to
exceed $100,000; except where the price is based on adequate
price competition, established catalog or market prices of com-
mercial items sold in substantial quantities to the general public,
or prices set by law or regulation.
(b) The Contractor shall require subcontractors to certify, in
substantially the same form as that used in the certificate by the
Prime Contractor to the Government, that to the best of their
knowledge and belief, the cost and pricing data submitted under
(a) above is accurate, complete, and current as of the date of
agreement on the negotiated price of the subcontract or sub-
contract change or modification.
(c) The Contractor shall insert the substance of this clause
including this paragraph (c) in each subcontract hereunder which
exceeds $100,000 when entered into except where the price thereof
is based on adequate price competition, established catalog or
market prices of commercial items sold in substantial quantities
to the general public, or prices set by law or regulation. In each
such excepted subcontract hereunder in excess $100,000, the
Contractor shall insert the substance of the following clause:
SUBCONTRACTOR COST OR PRICING DATA-PRICE AD-
JUSTMENTS
(a) Paragraph (b) and (c) of this clause shall become op-
erative only with respect to any modification made pursuant to
one or more provisions of this contract which involves aggregate
increases and/or decreases in costs plus applicable profits ex-
pected to exceed $100,000. The requirements of this clause shall
be limited to such contract modifications.
Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3
Approved For Re4ase 2006/10/20: CIA-RDP89B00552I 0700050013-3
Note: Since the contract is subject to reduction under this
clause by reason of defective cost or pricing data submitted in
connection with certain subcontracts, it is expected that the con-
tractor may wish to include a clause in each such subcontract
requiring the subcontractor to appropriately indemnify the con-
tractor. However, the inclusion of such a clause and the terms
thereof are matters for negotiation and agreement between the
contractor and the subcontractor, provided that they are consistent
with ASPR 23-203 relating to Disputes provisions in subcontracts.
It is also expected that any subcontractor subject to such indemni-
fication will generally require substantially similar indemnification
for defective cost or pricing data required to be submitted by his
lower tier subcontractors.
7-303.27 COMPETITION IN SUBCONTRACTING (1962 APR)
The Contractor shall select subcontractors (including suppliers)
on a competitive basis to the maximum practical extent consistent
with the objectives and requirements of the contract.
7-303.28 AUDIT (1971 APR) (AMENDED)
(a) Insert the clause set forth below in all contracts other than
contracts entered into by formal advertising which are not expected
to exceed $100,000.
AUDIT (1971 APR) (AMENDED)
(a) General. The Contracting Officer or his representatives
shall have the audit and inspection rights described in the ap-
plicable paragraphs (b), (c) and (d) below.
(b) Examination of Costs. If this is a cost reimbursement type,
incentive, time and materials, labor hour, or price redeterminable
contract, or any combination thereof, the Contractor shall maintain,
and the Contracting Officer or his representatives shall have the
right to examine books, records, documents, and other evidence
and accounting procedures and practices, sufficient to reflect
properly all direct and indirect costs of whatever nature claimed
to have been incurred and anticipated to be incurred for the
performance of this contract. Such right of examination shall in-
clude inspection at all reasonable times of the Contractor's plants,
or such parts thereof, as may be engaged in the performance of this
contract.
(c) Cost or Pricing Data. If the Contractor submitted cost or
pricing data in connection with the pricing of this contract or
any change or modification thereto, unless such pricing was based
on adequate price competition, established catalog or market
prices of commercial items sold in substantial quantities to the
general public, or prices set by law or regulation, the Contracting
Officer or his representatives who are employees of the United
States Government shall have the right to examine all books,
records, documents and other data of the Contractor related to
the negotiation, pricing or performance of such contract, change or
modification, for the purpose of evaluating the accuracy, com-
pleteness and currency of the cost or pricing data submitted.
Additionally, in the case of pricing any change or modification
exceeding $100,000 to formally advertised contracts, the Appro-
priate Audit Representative of the Government or his representa-
tives who are employees of the United States Government shall
have such rights. The right of examination shall extend to all
documents necessary to permit adequate evaluation of the cost or
pricing data submitted, along with the computations and pro-
jections used therein.
(d) Reports. If the Contractor is required to furnish Cost In-
formation Reports (CIR) or Contract Fund Status Reports
(CFSR), the Contracting Officer or his representatives shall have
the right to examine books, records, documents, and supporting
materials, for the purpose of evaluating (i) the effectiveness of the
Contractor's policies and procedures to produce data compatible
with the objectives of these reports, and (ii) the data reported.
(e) Availability. The materials described in (b), (c) and (d)
above shall be made available at the office of the Contractor, at
all reasonable times, for inspection, audit, or reproduction, until
the expiration of three years from the date of final payment under
this contract or such lesser time specified in Appendix M of the
Armed Services Procurement Regulation, and for such longer
period, if any, as is required by applicable statute, or by other
clauses of this contract, or by (1) and (2) below:
(1) If this contract is completely or partially terminated, the
records relating to the work terminated shall be made available
for a period of three years from the date of any resulting final
settlement.
(2) Records which relate to appeals under the "Disputes"
clause of this contract, or litigation or the settlement of claims
arising out of the performance of this contract, shall be made
available until such appeals, litigation, or claims have been dis-
posed of.
(f) The Contractor shall insert a clause containing all the pro-
visions of this clause, including this paragraph (f), in all sub-
contracts hereunder, except altered as necessary for proper iden-
tification of the contracting parties and the Contracting Officer
under the Government prime contract.
7-303.29 SUBCONTRACTOR COST OR PRICING DATA
(1970 JAN)
(a) The following clause shall be inserted in all negotiated con-
tracts expected to exceed $100,000, except where the price is based
on adequate price competition, established catalog or market prices
of commercial items sold in substantial quantities to the general
public, or prices set by law or regulation. The Contracting Officer
may include this clause, with appropriate reduction in the dollar
amounts included therein, in other negotiated contracts where a
Certificate of Current Cost or Pricing Data is required (see
3-807.3(a) (iii) ) in connection with initial pricing of the contract.
SUBCONTRACTOR COST OR PRICING DATA (1970 JAN)
(a) The Contractor shall require subcontractors hereunder to
submit, actually or by specific identification in writing, cost or
pricing data under the following circumstances: (i) prior to the
award of any subcontract the amount of which is expected to
exceed $100,000 when entered into; (ii) prior to the pricing of
any subcontract modification which involves aggregate increases
and/or decreases in costs plus applicable profits expected to
exceed $100,000; except where the price is based on adequate
price competition, established catalog or market prices of com-
mercial items sold in substantial quantities to the general public,
or prices set by law or regulation.
(b) The Contractor shall require subcontractors to certify, in
substantially the same form as that used in the certificate by the
Prime Contractor to the Government, that to the best of their
knowledge and belief, the cost and pricing data submitted under
(a) above is accurate, complete, and current as of the date of
agreement on the negotiated price of the subcontract or sub-
contract change or modification.
(c) The Contractor shall insert the substance of this clause
including this paragraph (c) in each subcontract hereunder which
exceeds $100,000 when entered into except where the price thereof
is based on adequate price competition, established catalog or
market prices of commercial items sold in substantial quantities
to the general public, or prices set by law or regulation. In each
such excepted subcontract hereunder in excess $100,000, the
Contractor shall insert the substance of the following clause:
SUBCONTRACTOR COST OR PRICING DATA-PRICE AD-
JUSTMENTS
(a) Paragraph (b) and (c) of this clause shall become op-
erative only with respect to any modification made pursuant to
one or more provisions of this contract which involves aggregate
increases and/or decreases in costs plus applicable profits ex-
pected to exceed $100,000. The requirements of this clause shall
be limited to such contract modifications.
Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3
Approved For Re#aase 2006/10/20: CIA-RDP89B00552 OF, D700050013-3
be a dispute concerning a question of fact within the meaning
of the clause of this contract entitled "Disputes." However, noth-
ing in this clause shall excuse the Contractor from proceeding
with the contract as changed.
7-304.6 REPORTS OF WORK (1960 JUL)
(a) The Contractor shall submit reports making full disclosure
of all work done and the results thereof, in the manner, at the
times, and to the extent set forth in the Schedule; provided that,
unless otherwise specified in the Schedule, the Contractor shall
submit such reports in triplicate from time to time as requested
and upon completion (or earlier termination) of the work. Except
as may be otherwise specified in the Schedule, or unless the
Contractor is otherwise instructed, the Contractor shall, upon
completion (or earlier termination) of the work, deliver any work-
ing drawings and specifications of any prototypes as may have
been developed.
(b) If the Contractor becomes unable to complete the contract
work and to deliver at the time specified in the Schedule because
of technical difficulties, notwithstanding the exercise of good faith
and diligent efforts in performance of the work, he shall give the
Contracting Officer written notice of the anticipated delays with
reason therefor not less than forty-five (45) days before the
completion date specified in the Schedule or within such time as
the Contracting Officer deems sufficient. When notice is so re-
quired, the Contracting Officer may, in his discretion, extend
the time specified in the Schedule for such period as he deems
advisable.
7-302.10 TERMINATION FOR THE CONVENIENCE OF THE
GOVERNMENT (1973 APR)
(a) The performance of work under this contract may be
terminated, in whole or from time to time in part, by the Go-
ernment whenever for any reason the Contracting Officer shall
determine that such termination is in the best interest of the
Government. Termination of work hereunder shall be effected
by delivery to the Contractor of a Notice of Termination specifying
the extent to which performance of work under the contract is
terminated and the date upon which such termination becomes
effective.
(b) After receipt of the Notice of Termination the Contractor
shall cancel his outstanding commitments hereunder covering the
procurement of materials, supplies, equipment and miscellaneous
items. In addition the Contractor shall exercise all reasonable
diligence to accomplish the cancellation or diversion of his out-
standing commitments covering personal services and extending
beyond the date of such termination to the extent that they
relate to the performance of any work terminated by the notice.
With respect to such cancelled commitments the Contractor agrees
to (i) settle all outstanding liabilities and all claims arising out
of such cancellation of commitments, with the approval or ratifica-
tion of the Contracting Officer, to the extent he may require,
which approval or ratification shall be final for all purposes of
this clause, and (ii) assign to the Government, in the manner
at the time, and to the extent directed by the Contracting Officer,
all of the right, title, and interest of the Contractor under the
orders and subcontracts so terminated, in which case the Govern-
ment shall have the right, in its discretion, to settle or pay any
or all claims arising out of the termination of such orders and
subcontracts.
(c) The Contractor shall submit his termination claim to the
Contracting Officer promptly after receipt of a Notice of Termi-
nation, but in no event later than one year from the effective date
thereof, unless one or more extensions in writing are granted by the
Contracting Officer upon written request of the Contractor within
such one year period or authorized extension thereof. Upon failure
of the Contractor to submit his termination claim within the time
allowed, the Contracting Officer may determine, on the basis of
information available to him, the amount, if any, due to the Con-
tractor by reason of the termination and shall thereupon pay to
the Contractor the amount so determined.
(d) Any determination of costs under paragraph (c) shall be
governed by the cost principles set forth in Section XV, Part 3, of
the Armed Services Procurement Regulation, as in effect on the
date of this contract.
(e) Subject to the provisions of paragraph (c) above, the Con-
tractor 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 termination under this clause, which amount or
amounts may include any reasonable cancellation charges thereby
incurred by the Contractor and any reasonable loss upon outstand-
ing commitments for personal services which he is unable to cancel;
provided, however, that in connection with any outstanding com-
mitments for personal services which the Contractor is unable to
cancel, the Contractor shall have exercised reasonable diligence
to divert such commitments to his other activities and operations.
Any such agreement shall be embodied in an amendment to this
contract and the Contractor shall be paid the agreed amount.
(f) The Government may from time to time, under such terms
and conditions as it may prescribe, make partial payments against
costs incurred by the Contractor in connection with the terminated
portion of this contract, whenever, in the opinion of the Contract-
ing Officer, the aggregate of such payments is within the amount
to which the Contractor will be entitled hereunder.
(g) The Contractor agrees to transfer title and deliver to the
Government, in the manner, at the time, and to the extent, if any,
directed by the Contracting Officer, such information and items
which, if the contract had been completed, would have been re-
quired to be furnished to the Government, including:
(i) completed or partially completed plans, drawings and in-
formation; and
(ii) materials or equipment produced or in process or acquired
in connection with the performance of the work terminated by the
notice.
Other than the above, any termination inventory resulting from the
termination of the contract may, with the written approval of the
Contracting Officer, be sold or acquired by the Contractor under
the conditions prescribed by and at a price or prices approved by
the Contracting Officer. The proceeds of any such 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 work covered by this contract or paid
in such other manner as the Contracting Officer may direct. Pend-
ing final disposition of property arising from the termination, the
Contractor agrees to take such action as may be necessary, or as
the Contracting Officer may direct, for the protection and pres-
ervation of the property related to this contract which is in the
possession of the Contractor and in which the Government has or
may acquire an interest.
(h) Any disputes as to questions of fact which may arise here-
under shall be subject to the "Disputes" clause of this contract.
7-302.9 DEFAULT (1969 AUG)
(a) The Government may, subject to the provisions of paragraph
(c) of this clause, by written Notice of Default to the Contractor
terminate the whole or any part of this contract in any one
of the following circumstances:
(i) if the Contractor fails to perform the work called for
by this contract within the time(s) specified herein or any ex-
tension thereof; or
(ii) if the Contractor fails to perform any of the other pro-
visions of this contract, or so fails to prosecute the work 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 authorize in writing) after receipt
of notice from the Contracting Officer specifying such failure.
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(b) 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, work similar to the
work so terminated and the Contractor shall be liable to the Gov-
ernment for any excess costs for such similar work; provided,
that the Contractor shall continue the performance of this contract
to the extent not terminated under the provisions of this clause.
(c) Except with respect to defaults of subcontractors, the Con-
tractor shall not be liable for any excess costs if the failure to
perform the contract arises out of causes beyond the control and
without the fault or negligence of the Contractor. Such causes may
include, but are not restricted to, acts of God or of the public
enemy, acts of the Government in either its sovereign or contrac-
tual capacity, fires, floods, epidemics, quaratine restrictions, strikes,
freight embargoes, and unusually severe weather; but in every case
the failure to perform must be beyond the control and without
the fault or negligence of the Contractor. If the failure to perform
is caused by the default of a subcontractor, and if such default
arises out of causes beyond the control of both the Contractor and
subcontractor, and without the fault or negligence of either of
them, the Contractor shall not be liable for any excess costs for
failure to perform, unless the supplies or service to be furnished
by the subcontractor were obtainable from other sources in suffi-
cient time to permit the Contractor to meet the required delivery
schedule or other performance requirements.
(d) If this contract is terminatd as provided in paragraph (a)
of this clause, the Government, in addition to any other rights
provided in this clause, may require the Contractor to transfer
title and deliver to the Government, in the manner and to the
extent directed by the Contracting Officer any of the completed
or partially completed work not theretofore delivered to, and
accepted by, the Government and any other property, including
contract rights, specifically produced or specifically acquired for
the performance of such part of this contract as has been termi-
nated; and the Contractor shall, upon the direction of the Con-
tracting Officer, protect and preserve property in the possession
of the Contractor in which the Government has an interest. The
Government shall pay to the Contractor the contract price, if
separately stated, for completed work accepted by the Government
and the amount agreed upon by the Contractor and the Contract-
ing Officer for (i) completed work for which no separate price is
stated, (ii) partially completed work, (iii) other property described
above which is accepted by the Government and, (iv) the pro-
tection and preservation of property. Failure to agree shall be a
dispute concerning a question of fact within the meaning of the
clause of this contract entitled "Disputes." The Government may
withhold from amounts otherwise due the Contractor for such
completed supplies or manufacturing materials such sum as the
Contracting Officer determines to be necessary to protect the
Government against loss because of outstanding liens or claims of
former lien holders.
(e) If, after notice of termination of this contract under the
provisions of this clause, it is determined for any reason that the
Contractor was not in default under the provisions of this clause,
or that the default was excusable under the provisions of this
clause, the rights and obligations of the parties shall, if the
contract contains a clause providing for termination for con-
venience of the Government, be the same as if the notice of
termination had been issued pursuant to such clause.
(f) The rights and remedies of the Government provided in
this clause shall not be exclusive and are in addition to any other
rights and remedies provided by law or under this contract.
(g) As used in paragraph c of this clause, the terms "sub-
contractor" and "subcontractors" mean subcontractor (s) at any
tier.
7-302.21 AUTHORIZATION AND CONSENT (1981 JAN)
The government hereby gives its authorization and consent for
all use and manufacture of any invention described in and covered
by a patent of the United States in the performance of this con-
tract or any part hereof or any amendment hereto or any subcon-
tract hereunder (including any lower-tier subcontract).
(a) Notwithstanding any other provisions of this contract, ex-
cept as may be specifically provided in the Schedule as an excep-
tion to this clause, the Government, subject to the definitions and
limitations of this clause, assumes the risk of damage to, or loss
or destruction of, aircraft "in the open," during "operation," and
"flight," as these terms are defined below, and agrees that the
Contractor shall not be liable to the Government for any such
damage, loss, or destruction, the risk of which is so assumed by
the Government.
(b) For the purposes of this clause:
(i) Unless otherwise specifically provided in the Schedule,
the term "aircraft" means-
(A) aircraft (including (I) complete aircraft, and (II) air-
craft in the course of being manufactured, disassembled, or re-
assembled; provided, that an engine or a portion of a wing or a
wing is attached to a fuselage of such aircraft) to be furnished
to the Government under this contract (whether before or after
acceptance by the Government); and
(B) aircraft (regardless of whether in a state of dis-
assembly or reassembly) furnished by the Government to the
Contractor under this contract; including all property installed
therein, or in the process of installation, or temporarily removed
from such aircraft; provided, however, that such aircraft and
property are not covered by a separate bailment agreement.
(ii) The term "in the open" means located wholly outside
of buildings on the Contractor's premises or at such other places
as may be described in the Schedule as being in the open for the
purposes of this clause, except that aircraft furnished by the
Government shall be deemed to be in the open at all times while
in Contractor's possession, care, custody, or control.
(iii) The term "flight" means any flight demonstration, flight
test, taxi test, or other flight, made in the performance of this
contract, or for the purpose of safeguarding the aircraft, or pre-
viously approved in writing by the Contracting Officer. With
respect to land based aircraft, "flight" shall commence with the
taxi roll from a flight line on the Contractor's premises, and
continue until the aircraft has completed the taxi roll in returning
to a flight line on the Contractor's premises; with respect to sea-
planes, "flight" shall commence with the launching from a ramp
on the Contractor's premises and continue until the aircraft has
completed its landing run upon return and is beached at a ramp
on the Contractor's premises; with respect to helicopters, "flight"
shall commence upon engagement of the rotors for the purpose
of take-off from the Contractor's premises and continue until the
aircraft has returned to the ground on the Contractor's premises
and the rotors are disengaged; and with respect to vertical take-
off aircraft, "flight" shall commence upon disengagement from
any launching platform or device on the Contractor's premises and
continue until the aircraft has been re-engaged to any launching
platform or device on the Contractor's premises; provided, however,
that the aircraft off the Contractor's premises shall be deemed
to be in flight when on the ground or water only during periods
of reasonable duration following emergency landing, other landings
made in the performance of this contract, or landings approved
by the Contracting Officer in writing.
(iv) The term "Contractor's premises" means those premises
designated as such in the Schedule or in writing by the Contract-
ing Officer, and any other place to which the aircraft are moved
for the purpose of safeguarding the aircraft.
(v) The term "operation" means operations and tests, other
than on any production line, of aircraft, when not in flight, whether
or not the aircraft is in the open or in motion during the making
of any such operations or tests, and includes operations and tests
of equipment, accessories, and power plants, only when installed
in aircraft.
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(b) 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, work similar to the
work so terminated and the Contractor shall be liable to the Gov-
ernment for any excess costs for such similar work; provided,
that the Contractor shall continue the performance of this contract
to the extent not terminated under the provisions of this clause.
(c) Except with respect to defaults of subcontractors, the Con-
tractor shall not be liable for any excess costs if the failure to
perform the contract arises out of causes beyond the control and
without the fault or negligence of the Contractor. Such causes may
include, but are not restricted to, acts of God or of the public
enemy, acts of the Government in either its sovereign or contrac-
tual capacity, fires, floods, epidemics, quaratine restrictions, strikes,
freight embargoes, and unusually severe weather; but in every case
the failure to perform must be beyond the control and without
the fault or negligence of the Contractor. If the failure to perform
is caused by the default of a subcontractor, and if such default
arises out of causes beyond the control of both the Contractor and
subcontractor, and without the fault or negligence of either of
them, the Contractor shall not be liable for any excess costs for
failure to perform, unless the supplies or service to be furnished
by the subcontractor were obtainable from other sources in suffi-
cient time to permit the Contractor to meet the required delivery
schedule or other performance requirements.
(d) If this contract is terminatd as provided in paragraph (a)
of this clause, the Government, in addition to any other rights
provided in this clause, may require the Contractor to transfer
title and deliver to the Government, in the manner and to the
extent directed by the Contracting Officer any of the completed
or partially completed work not theretofore delivered to, and
accepted by, the Government and any other property, including
contract rights, specifically produced or specifically acquired for
the performance of such part of this contract as has been termi-
nated; and the Contractor shall, upon the direction of the Con-
tracting Officer, protect and preserve property in the possession
of the Contractor in which the Government has an interest. The
Government shall pay to the Contractor the contract price, if
separately stated, for completed work accepted by the Government
and the amount agreed upon by the Contractor and the Contract-
ing Officer for (i) completed work for which no separate price is
stated, (ii) partially completed work, (iii) other property described
above which is accepted by the Government and, (iv) the pro-
tection and preservation of property. Failure to agree shall be a
dispute concerning a question of fact within the meaning of the
clause of this contract entitled "Disputes." The Government may
withhold from amounts otherwise due the Contractor for such
completed supplies or manufacturing materials such sum as the
Contracting Officer determines to be necessary to protect the
Government against loss because of outstanding liens or claims of
former lien holders.
(e) If, after notice of termination of this contract under the
provisions of this clause, it is determined for any reason that the
Contractor was not in default under the provisions of this clause,
or that the default was excusable under the provisions of this
clause, the rights and obligations of the parties shall, if the
contract contains a clause providing for termination for con-
venience of the Government, be the same as if the notice of
termination had been issued pursuant to such clause.
(f) The rights and remedies of the Government provided in
this clause shall not be exclusive and are in addition to any other
rights and remedies provided by law or under this contract.
(g) As used in paragraph c of this clause, the terms "sub-
contractor" and "subcontractors" mean subcontractor (s) at any
tier.
7-302.21 AUTHORIZATION AND CONSENT (1961 JAN)
The government hereby gives its authorization and consent for
all use and manufacture of any invention described in and covered
by a patent of the United States in the performance of this con-
tract or any part hereof or any amendment hereto or any subcon-
tract hereunder (including any lower-tier subcontract).
(a) Notwithstanding any other provisions of this contract, ex-
cept as may be specifically provided in the Schedule as an excep-
tion to this clause, the Government, subject to the definitions and
limitations of this clause, assumes the risk of damage to, or loss
or destruction of, aircraft "in the open," during "operation," and
"flight," as these terms are defined below, and agrees that the
Contractor shall not be liable to the Government for any such
damage, loss, or destruction, the risk of which is so assumed by
the Government.
(b) For the purposes of this clause:
(i) Unless otherwise specifically provided in the Schedule,
the term "aircraft" means-
(A) aircraft (including (I) complete aircraft, and (II) air-
craft in the course of being manufactured, disassembled, or re-
assembled; provided, that an engine or a portion of a wing or a
wing is attached to a fuselage of such aircraft) to be furnished
to the Government under this contract (whether before or after
acceptance by the Government); and
(B) aircraft (regardless of whether in a state of dis-
assembly or reassembly) furnished by the Government to the
Contractor under this contract; including all property installed
therein, or in the process of installation, or temporarily removed
from such aircraft; provided, however, that such aircraft and
property are not covered by a separate bailment agreement.
(ii) The term "in the open" means located wholly outside
of buildings on the Contractor's premises or at such other places
as may be described in the Schedule as being in the open for the
purposes of this clause, except that aircraft furnished by the
Government shall be deemed to be in the open at all times while
in Contractor's possession, care, custody, or control.
(iii) The term "flight" means any flight demonstration, flight
test, taxi test, or other flight, made in the performance of this
contract, or for the purpose of safeguarding the aircraft, or pre-
viously approved in writing by the Contracting Officer. With
respect to land based aircraft, "flight" shall commence with the
taxi roll from a flight line on the Contractor's premises, and
continue until the aircraft has completed the taxi roll in returning
to a flight line on the Contractor's premises; with respect to sea-
planes, "flight" shall commence with the launching from a ramp
on the Contractor's premises and continue until the aircraft has
completed its landing run upon return and is beached at a ramp
on the Contractor's premises; with respect to helicopters, "flight"
shall commence upon engagement of the rotors for the purpose
of take-off from the Contractor's premises and continue until the
aircraft has returned to the ground on the Contractor's premises
and the rotors are disengaged; and with respect to vertical take-
off aircraft, "flight" shall commence upon disengagement from
any launching platform or device on the Contractor's premises and
continue until the aircraft has been re-engaged to any launching
platform or device on the Contractor's premises; provided, however,
that the aircraft off the Contractor's premises shall be deemed
to be in flight when on the ground or water only during periods
of reasonable duration following emergency landing, other landings
made in the performance of this contract, or landings approved
by the Contracting Officer in writing.
(iv) The term "Contractor's premises" means those premises
designated as such in the Schedule or in writing by the Contract-
ing Officer, and any other place to which the aircraft are moved
for the purpose of safeguarding the aircraft.
(v) The term "operation" means operations and tests, other
than on any production line, of aircraft, when not in flight, whether
or not the aircraft is in the open or in motion during the making
of any such operations or tests, and includes operations and tests
of equipment, accessories, and power plants, only when installed
in aircraft.
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(vi) The term "flight crew members" means the pilot, the co-
pilot and, unless otherwise specifically provided in the Schedule,
the flight engineer, navigator, bombardier-navigator, and defensive
systems operator, when required, or assigned to their respective
crew positions, to conduct any flight on behalf of the Contractor.
(c) (1) The Government's assumption of risk under this clause,
as to aircraft in the open, shall continue in effect unless termi-
nated pursuant to subparagraph (3) below. Where the Con-
tracting Officer finds that any of such aircraft is in the open
under unreasonable conditions, he shall notify the Contractor in
writing of the conditions he finds to be unreasonable and require
the Contractor to correct such conditions within a reasonable
time.
(2) Upon receipt of such notice, the Contractor shall act
promptly to correct such conditions, regardless of whether he
agrees that such conditions are in fact unreasonable. To the extent
that the Contracting Officer may later determine that such con-
ditions were not in fact unreasonable, an equitable adjustment shall
be made in the contract price to compensate the Contractor for
any additional costs he incurred in correcting such conditions and
the contract shall be modified in writing accordingly. Any dispute
as to the unreasonableness of such conditions or the equitable
adjustment shall be deemed to be a dispute concerning a question
of the fact within the meaning of the clause of this contract
entitled "Disputes."
(3) If the Contracting Officer finds that the Contractor has
failed to act promptly to correct such conditions or has failed
to correct such conditions within a reasonable time, he may termi-
nate the Government's assumption of risk under this clause, as
to any of the aircraft which is in the open under such conditions,
such termination to be effective at 12:01 A.M. on the fifteenth
day following the day of receipt by the Contractor of written notice
thereof. If the Contracting Officer later determines that the Con-
tractor acted promptly to correct such conditions or that the time
taken by the Contractor was not in fact unreasonable, an equitable
adjustment shall, notwithstanding paragraph (g) of this clause,
be made in the contract price to compensate the Contractor for
any additional costs he incurred as a result of termination of the
Government's assumption of risk under this clause and the contract
shall be modified in writing accordingly. Any dispute as to whether
the Contractor failed to act promptly to correct such conditions,
or as to the reasonableness of the time for correction of such
conditions, or as to such equitable adjustment, shall be deemed to
be a dispute concerning a question of fact within the meaning
of the clause of this contract entitled "Disputes."
(4) In the event the Government's assumption of risk under
this clause is terminated in accordance with (3) above, the risk
of loss with respect to Government-furnished property shall be
determined in accordance with the clause of this contract, if any,
entitled "Government-Furnished Property" until the Government's
assumption of risk is reinstated in accordance with (5) below.
(5) When unreasonable conditions have been corrected, the
Contractor shall promptly notify the Government thereof. The
Government may elect to again assume the risks and relieve the
Contractor of liabilities as provided in this clause, or not, and the
Contracting Officer shall notify the Contractor of the Govern-
ment's election. If, after correction of the unreasonable condi-
tions the Government elects to again assume such risks and relieve
the Contractor of such liabilities, the Contractor shall he entitled
to an equitable adjustment in the contract price for costs of in-
surance, if any, extending from the end of the third working day
after the Contractor notifies the Government of such correction
until the Government notifies the Contractor of such election.
If the Government elects not to again assume such risks, and such
conditions have in fact been corrected, the Contractor shall be
entitled to an equitable adjustment for costs of insurance, if any,
extending after each third working day.
(d) The Government's assumption of risk shall not extend to
damage to, or loss or destruction of, such aircraft:
(i) resulting from failure of the Contractor, due to willful
misconduct or lack of good faith of any of the Contractor's man-
agerial personnel, to maintain and administer a program for the
protection and preservation of aircraft in the open, and during
operation, in accordance with sound industrial practice (the term
"Contractor's managerial personnel" means the Contractor's di-
rectors, officers, and any of his managers, superintendents, or other
equivalent representatives, who has supervision or direction of all
or substantially all of the Contractor's business, or all or sub-
stantially all of the Contractor's operations at any one plant or
separate location at which this contract is performed, or a separate
and complete major industrial operation in connection with the
performance of this contract);
(ii) sustained during flight if the flight crew members con-
ducting such flight have not been approved in writing by the
contracting officer;
(iii) while in the course of transportation by rail, or by
conveyance on public streets, highways, or waterways, except for
Government-furnished property;
(iv) to the extent that such damage, loss or destruction is
in fact covered by insurance;
(v) consisting of wear and tear, deterioration (including rust
and corrosion), freezing, or mechanical, structural, or electrical
breakdown or failure, unless such damage is the result of other
loss, damage, or destruction covered by this clause; provided,
however, in the case of Government-furnished property, if such
damage consists of reasonable wear and tear or deterioration, or
results from inherent vice in such property, this exclusion shall
not apply; or
(vi) sustained while the aircraft is being worked upon and
directly resulting therefrom, including but not limited to any
repairing, adjusting, servicing or maintenance operation, unless
such damage, loss, or destruction is of a type which would be
covered by insurance which would customarily have been main-
tained by the Contractor at the time of such damage, loss, or
destruction, but for the Government's assumption of risk under
this clause.
(e) With the exception of damage to, or loss or destruction of
aircraft in "flight," the Government's assumption of risk under
this clause shall not extend to the first $1,000 of loss or damage
resulting from each event separately occurring. The Contractor
assumes the risk of and shall be responsible for the first $1,000 of
loss of or damage to aircraft "in the open" or during "operation"
resulting from each event separately occurring, except for reason-
able wear and tear and except to the extent the loss or damage
is caused by negligence of Government personnel. If the Govern-
ment elects to require that the aircraft be replaced or restored
by the Contractor to the condition in which it was immediately
prior to the damage, the equitable adjustment in the price au-
thorized by paragraph (i) below shall not include the dollar
amount of the risk assumed by the Contractor under this paragraph.
In the event the Government does not elect repair or replacement,
the Contractor agrees to credit the contract price or pay the
Government $1,000 (or the amount of the loss if smaller) as
directed by the Contracting Officer.
(f) A subcontractor shall not be relieved from liability for
damage to, or loss or destruction of aircraft while in his possession
or control, except to the extent that the subcontract, with the prior
written approval of the Contracting Officer, provides for relief
of the subcontractor from such liability. In the absence of such
approval, the subcontract shall contain appropriate provisions re-
quiring the return of such aircraft in as good condition as when
received, except for reasonable wear and tear or for the utiliza-
tion of the property in accordance with the provisions of this
contract. Where a subcontractor has not been relieved from lia-
bility for any damage, loss, or destruction of aircraft and any
damage, loss, or destruction occurs, the Contractor shall enforce
the liability of the subcontractor for such damage to, or loss or
destruction of, the aircraft for the benefit of the Government.
(g) The Contractor warrants that the contract price does not
and will not include, except as may be otherwise authorized in
this clause, any charge or contingency reserve for insurance (in-
cluding self-insurance funds or reserves) covering any damage to,
or loss or destruction of, aircraft while in the open, during opera-
tion, or in flight, the risk of which has been assumed by the
Government under the provisions of this clause, whether or not
such assumption may be terminated as to aircraft in the open.
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(h) In the event of damage to, or loss or destruction of, aircraft
in the open during operation, or in flight, the Contractor shall take
all reasonable steps to protect such aircraft from further damage,
separate damaged and undamaged aircraft, put all aircraft in the
best possible order and, further, except in cases covered by (e )
above, the Contractor should furnish to the Contracting Officer
a statement of:
(i) the damaged, lost, or destroyed aircraft;
(ii) the time and origin of the damage, loss or destruction;
(iii) all known interests in commingled property of which
aircraft are a part; and
(iv) the insurance, if any, covering any part of the interest
in such commingled property.
Except in cases covered by (e) above, an equitable adjustment
shall be made in the amount due under this contract for expendi-
tures made by the Contractor in performing his obligations under
this paragraph (h) and this contract shall be modified in writing
accordingly.
(i) If prior to delivery and acceptance by the Government any
aircraft is damaged, lost, or destroyed and the Government has
under this clause assumed the risk of such damage, loss or destruc-
tion, the Government shall either (1) require that such aircraft be
replaced or restored by the Contractor to the condition in which
it was immediately prior to such damage, or (2) shall terminate
this contract with respect to such aircraft. In the event that the
Government requires that the aircraft be replaced or restored, an
equitable adjustment 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. If, in the al-
ternative, this contract is terminated under this paragraph with
respect to such aircraft and under this clause the Government has
assumed the risk of such damage, loss, or destruction, the Con-
tractor shall be paid the contract price for said aircraft (or, if
applicable, any work to be performed on said aircraft) less such
amounts as the Contracting Officer determines (1) that it would
have cost the Contractor to complete the aircraft (or any work
to be performed on said aircraft) together with anticipated profit,
if any, on any such uncompleted work, and (2) to be the value,
if any, of the damaged aircraft or any remaining portion thereof
retained by the Contractor. The Contracting Officer shall have
the right to prescribe the manner of disposition of the damaged,
lost, or destroyed aircraft, or any remaining parts thereof; and if
any additional costs of such disposition are incurred by the Con-
tractor, a further equitable adjustment will be made in the amount
due to the Contractor. Failure of the parties to agree upon an
equitable adjustment or upon the amount to be paid in the event
of termination of the contract with respect to any aircraft, shall
be a dispute concerning a question of fact within the meaning of
the Disputes clause of this contract.
(j) In the event the Contractor is at any time reimbursed or
compensated by any third person for any damage, loss, or destruc-
tion of any aircraft, the risk of which has been assumed by the
Government under the provisions of this clause and for which
the Contractor has been compensated by the Government, he shall
equitably reimburse the Government. The Contractor shall do
nothing to prejudice the Government's rights to recover against
third parties for any such damage, loss, or destruction 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 Gov-
ernment) in obtaining recovery.
7-302.7 FEDERAL, STATE, AND LOCAL TAXES (1960 JUL)
(a) As used throughout this clause, the term "contract date"
means the date of this contract. As to additional supplies or serv-
ices procured by modification of this contract, the term "contract
date" means the date of such modification.
(b) Except as may be otherwise provided in this contract, the
contract price includes, to the extent allocable to this contract, all
Federal, State, and local. taxes which, on the contract date:
(i) by Constitution, statute, or ordinance, are applicable to
this contract, or to the transactions covered by this contract, or to
property or interests in property; or
(ii) pursuant to written ruling or regulation, the authority
charged with administering any such tax is assessing or applying
to, and is not granting or honoring an exemption for, a Contractor
under this kind of contract, or the transactions covered by this
contract, or property or interests in property.
(c) Except as may be otherwise provided in this contract, duties
in effect on the contract date are included in the contract price,
to the extent allocable to this contract.
(d) (1) If the Contractor is required to pay or bear the
burden-
(i) of any tax or duty which either was not to be included in
the contract price pursuant to the requirements of paragraphs (b)
and (c), or of a tax or duty specifically excluded from the contract
price by a provision of this contract; or
(ii) of an increase in rate of any tax or duty, whether or not
such tax or duty was excluded from the contract price; or
(iii) of any interest or penalty on any tax or duty referred
to in (i) or (ii) above;
the contract price shall be increased by the amount of such tax,
duty, interest, or penalty allocable to this contract; provided, that
the Contractor warrants in writing that no amount of such tax,
duty, or rate increase was included in the contract price as a con-
tingency reserve or otherwise; and provided further, that liability
for such tax, duty, rate increase, interest, or penalty was not
incurred through the fault or negligence of the Contractor or his
failure to follow instructions of the Contracting Officer.
(2) If the Contractor is not required to pay or bear the burden,
or obtains a refund or drawback, in whole or in part, of any tax,
duty, interest, or penalty which:
(i) was to be included in the contract price pursuant to the
requirements of paragraphs (b) and (c) ;
(ii) was included in the contract price; or
(iii) was the basis of an increase in the contract price; shall
be decreased by the amount of such relief, refund, or drawback
allocable to this contract, or the allocable amount of such relief
refund, or drawback shall be paid to the Government, as directed
by the Contracting Officer. The contract price also shall be
similarly decreased if the Contractor, through his fault or negli-
gence or his failure to follow instructions of the Contracting Officer,
is required to pay or bear the burden, or does not obtain a refund
or drawback of any such tax, duty, interest, or penalty. Interest
paid or credited to the Contractor incident to a refund of taxes
shall inure to the benefit of the Government to the extent that
such interest was earned after the Contractor was paid or reim-
bursed by the Government for such taxes.
(3) Invoices or vouchers covering any adjustment of the con-
tract price pursuant to this paragraph (d) shall set forth the
amount thereof as a separate item and shall identify the particular
tax or duty involved.
(4) This paragraph (d) shall not be applicable to social security
taxes; income and franchise taxes, other than those levied on or
measured by (i) sales or receipts from sales, or (ii) the Con-
tractor's possession of, interest in, or use of property, title to which
is in the Government; excess profits taxes; capital stock taxes; un-
employment compensation taxes; or property taxes, other than
such property taxes allocable to this contract, as are assessed
either on completed supplies covered by this contract, or on the
Contractor's possession of, interest in, or use of property, title to
which is in the Government.
(5) No adjustment of less than $100 is required to be made
in the contract price pursuant to this paragraph (d).
(e) Unless there does not exist any reasonable basis to sustain
an exemption, the Government upon request of the Contractor,
without further liability, agrees, except as otherwise provided in
this contract, to furnish evidence appropriate to establish exemp-
tion from any tax which the Contractor warrants in writing was
excluded from the contract price. In addition, the Contracting
Officer may furnish evidence appropriate to establish exemption
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from any tax that may, pursuant to this clause, give rise to either
an increase or decrease in the contract price. Except as otherwise
provided in this contract, evidence appropriate to establish exemp-
tion from duties will be furnished only at the discretion of the
Contracting Officer.
(f) (1) The Contractor shall promptly notify the Contracting
Officer of all matters pertaining to Federal, State, and local taxes,
and duties, that reasonably may be expected to result in either
an increase or decrease in the contract price.
(2) Whenever an increase or decrease in the contract price
may be required under this clause, the Contractor shall take
action as directed by the Contracting Officer, and the contract
price shall be equitably adjusted to cover the costs of such action,
including any interest, penalty, and reasonable attorneys' fees.
7-303.7 GOVERNMENT PROPERTY (FIXED PRICE) (1968
SEP)
(a) Government Property Clause. Except as provided in (b)
through (d) below, insert the following clause when the Govern-
ment is to furnish the Contractor, or the Contractor is to acquire
Government property.
GOVERNMENT PROPERTY (FIXED PRICE) (1968 SEP)
(a) Government-Furnished Property. The Government shall
deliver to the Contractor, for use in connection with and under
the terms of this contract, the property described as Government-
furnished property in the Schedule or specifications, together with
such related data and information as the Contractor may request
and as may reasonably be required for the intended use of such
property (hereinafter referred to as "Government-furnished prop-
erty"). The delivery or performance dates for the supplies or
services to be furnished by the Contractor under this contract are
based upon the expectation that Government-furnished property
suitable for use (except for such property furnished "as is") will
be delivered to the Contractor at the times stated in the Schedule
or, if not so stated, in sufficient time to enable the Contractor to
meet such delivery or performance dates. In the event that Gov-
ernment-furnished property is not delivered to the Contractor by
such time or times, the Contracting Officer shall, upon timely
written request made by the Contractor, make a determination of
the delay, if any, occasioned the Contractor thereby, and shall
equitably adjust the delivery or performance dates or the con-
tract price, or both, and any other contractual provision affected
by any such delay, in accordance with the procedures provided
for in the clause of this contract entitled "Changes." Except for
Government-furnished property furnished "as is," in the event
the Government-furnished property is received by the Contractor
in a condition not suitable for the intended use the Contractor
shall, upon receipt thereof, notify the Contracting Officer of such
fact and as directed by the Contracting Officer, either (i) return
such property at the Government's expense or otherwise dispose
of the property, or (ii) effect repairs or modifications. Upon
the completion of (i) or (ii) above, the Contracting Officer upon
written request of the Contractor shall equitably adjust the de-
livery or performance dates or the contract price, or both, and
any other contractual provision affected by the rejection or dis-
position, or the repair or modification, in accordance with the
procedures provided for in the clause of this contract entitled
"Changes." The foregoing provisions for adjustment are exclusive
and the Government shall not be liable to suit for breach of con-
tract by reason of any delay in delivery of Government-furnished
property or delivery of such property in a condition not suitable
for its intended use.
(b) Changes in Government-furnished Property.
(1) By notice in writing, the Contracting Officer may (i)
decrease the property provided or to be provided by the Govern-
ment under this contract, or (ii) substitute other Government-
owned property for property to be provided by the Government,
or to be acquired by the Contractor for the Government, under
this contract. The Contractor shall promptly take such action as
the Contracting Officer may direct with respect to the removal and
shipping of property covered by such notice.
(2) In the event of any decrease in or substitution of prop-
erty pursuant to subparagraph (1) above, or any withdrawal of
authority to use property provided under any other contract or
lease, which property the Government had agreed in the Schedule
to make available for the performance of this contract, the Con-
tracting Officer, upon the written request of the Contractor (or,
if the substitution of property causes a decrease in the cost
of performance, on his own initiative), shall equitably adjust such
contractual provisions as may be affected by the decrease, sub-
stitution, or withdrawal, in accordance with the procedures pro-
vided for in the "Changes" clause of this contract.
(c) Title. Title to all property furnished by the Government shall
remain in the Government. In order to define the obligations of the
parties under this clause, title to each item of facilities, special
test equipment, and special tooling (other than that subject to a
"Special Tooling" clause) acquired by the Contractor for the
Government pursuant to this contract shall pass to and vest in the
Government when its use in the performance of this contract com-
mences, or upon payment therefor by the Government, whichever
is earlier, whether or not title previously vested. All Government-
furnished property, together with all property acquired by the
Contractor title to which vests in the Government under this para-
graph, is subject to the provisions of this clause and is hereinafter
collectively referred to as "Government property." Title to Govern-
ment property shall not be affected by the incorporation or at-
tachment thereof to any property not owned by the Government,
nor shall such Government property, or any part thereof, be or
become a fixture or lose its identity as personalty by reason of af-
fixation to any realty.
(d) Property Administration. The Contractor shall comply with
the provisions of Appendix B, Armed Services Procurement Reg-
ulation, as in effect on the date of the contract, which is hereby
incorporated by reference and made a part of this contract. Mate-
rial to be furnished by the Government shall be ordered or re-
turned by the Contractor, when required, in accordance with the
"Manual for Military Standard Requisitioning and Issue Procedure
(MILSTRIP) for Defense Contractors" (Appendix H, Armed
Services Procurement Regulation) as in effect on the date of this
contract, which Manual is hereby incorporated by reference and
made a part of the contract.
(e) Use of Government Property. The Government property
shall, unless otherwise provided herein or approved by the Con-
tracting Officer, be used only for the performance of this contract.
(f) Utilization, Maintenance and Repair of Government Property.
The Contractor shall maintain and adminster, in accordance with
sound industrial practice, and in accordance with applicable pro-
visions of Appendix B, a program for the utilization, maintenance,
repair, protection, and preservation of Government property until
disposed of by the Contractor in accordance with this clause. In
the event that any damage occurs to Government property the risk
of which has been assumed by the Government under this con-
tract, the Government shall replace such items or the Contractor
shall make such repair of the property as the Government directs;
provided, however, that if the Contractor cannot effect such repair
within the time required, the Contractor shall dispose of such pro-
perty in the manner directed by the Contracting Officer. The con-
tract price includes no compensation to the Contractor for the per-
formance of any repair or replacement for which the Government is
responsible, and an equitable adjustment will be made in any con-
tractual provisions affected by such repair or replacement of Gov-
ernment property made at the direction of the Government, in ac-
cordance with the procedures provided for in the "Changes" clause
of this contract. Any repair or replacement for which the Contractor
is responsible under the provisions of this contract shall be accomp-
lished by the Contractor at his own expense.
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(g) Risk of Loss. Unless otherwise provided in this contract, the
Contractor assumes the risk of, and shall be responsible for, any
loss of or damage to Government property provided under this con-
tract upon its delivery to him or upon passage of title thereto to the
Government as provided in paragraph (c) hereof, except for rea-
sonable wear and tear and except to the extent that such property
is consumed in the performance of this contract.
(h) Access. The Government, and any persons designated by it,
shall at all reasonable times have access to the premises wherein
any Government property is located, for the purpose of inspecting
the Government property.
(i) Final Accounting and Disposition of Government Property.
Upon the completion of this contract, or at such earlier dates as
may be fixed by the Contracting Officer, the Contractor shall sub-
mit, in a form acceptable to the Contracting Officer, inventory
schedules covering all items of Government property not con-
sumed in the performance of this contract (including any resulting
scrap) or not theretofore delivered to the Government, and shall
prepare for shipment, deliver f.o.b. origin, or dispose of the Gov-
ernment property, as may be directed or authorized by the Con-
tracting Officer. The net proceeds of any such disposal shall be
credited to the contract price or shall be paid in such other manner
as the Contracting Officer may direct.
(j) Restoration of Contractor's Premises and Abandonment. Un-
less otherwise provided herein, the Government:
(i) may abandon any Government property in place, and
thereupon all obligations of the Government regarding such aban-
doned property shall cease; and
(ii) has no obligation to the Contractor with regard to restora-
tion or rehabilitation of the Contractor's premises, neither in case
of abandonment (paragraph (j) (i) above), disposition on comple-
tion of need or of the contract (paragraph (i) above), nor other-
wise, except for restoration or rehabilitation costs which are prop-
erly included in an equitable adjustment under paragraph (b)
above.
(k) Communications. All communications issued pursuant to this
clause shall be in writing or in accordance with the "Manual for
Military Standard Requisitioning and Issue Procedure (MILSTRIP )
for Defense Contractors" (Appendix H, Armed Services Procure-
ment Regulation),
(b) Overseas Contracts. If the contract is an overseas contract,
insert the words "United States" before the words "Government"
and Government-furnished" whenever they appear in the above
clause. Also, substitute the following paragraphs (d) and (k) for
paragraphs (d) and (k) of the above clause.
(d) Property Administration. The Contractor shall comply with
the provisions of Appendix B, Armed Services Procurement Reg-
ulation, as in effect on the date of the contract, which is hereby in-
corporated by reference and made a part of this contract.
(k) Communications. All communications issued pursuant to this
clause shall be in writing.
(c) Negotiated Contracts. In negotiated fixed price contracts for
which the price is not based on (i) adequate price competition,
(ii) established catalog or market prices of commercial items sold
in substantial quantities to the general public (see 3-807.1(b) ), or
(iii) prices set by law or regulation, substitute the following para-
graph (g) for paragraph (g) of the clause in (a) above.
(g) Risk of Loss.
(1) Except as provided in (2) below, the Contractor shall
not be liable for loss or destruction of or damage to the Government
property provided under this contract:
(i) caused by any peril while the property is in transit off
the Contractor's premises; or
(ii) caused by any of the following perils while the property
is on the Contractor's or subcontractor's premises, or on any other
premises where such property may properly be located, or by re-
moval therefrom because of any of the following perils-
(A) fire; lightning, windstorm, cyclone, tornado, hail;
explosion; riot, riot attending a strike, civil commotion; vandalism
and malicious mischief; sabotage; aircraft or objects falling there-
from; 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 volcanic erup-
tion; flood, meaning thereby rising of a body of water; nuclear
reaction, nuclear radiation or radioactive contamination; 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 an agent of
any such government, power, authority, or forces; or
(B) other peril, of a type not listed above, if such other
peril is customarily covered by insurance (or by a reserve for
self-insurance) in accordance with the normal practice of the
Contractor, or the prevailing practice in the industry in which
the Contractor is engaged with respect to similar property in the
same general locale.
The perils as set forth in (i) and (ii) above are hereinafter
called "excepted perils."
If the Contractor transfers Government property to the posses-
sion and control of a subcontractor, the transfer shall not affect
the liability of the Contractor for loss or destruction of or damage
to the property as set forth above. However, the Contractor shall
require the subcontractor to assume the risk of, and be responsible
for, any loss or destruction of or damage to the property while in
the latter's possession or control, except to the extent that the
subcontract, with the prior approval of the Contracting Officer,
provides for the relief of the subcontractor from such liability.
In the absence of such approval, the subcontract shall contain
appropriate provisions requiring the return of all Government prop-
erty in as good condition as when received, except for reasonable
wear and tear or for the utilization of the property in accordance
with the provisions of the prime contract.
(2) Notwithstanding (1) above, the Contractor shall be re-
sponsible for any loss or damage (i) to the extent specifically
provided in the clause or clauses of this contract designated in
the schedule, or (ii) which results from:
(A) willful misconduct or lack of good faith of any of
the Contractor's managerial personnel; or
(B) a failure on the part of the Contractor, due to
willful misconduct or lack of good faith of the Contractor's mana-
gerial personnel, (i) to maintain and administer the program for
maintenance, repair, protection, and preservation of the Govern-
ment property as required by paragraph (f) hereof, or (ii) to
establish, maintain and administer a system for control of Gov-
ernment property as required by paragraph (d) of this clause.
Any failure of the Contractor to act, as provided in this
(B), shall be conclusively presumed to be a failure resulting from
willful misconduct, or lack of good faith on the part of one of
the Contractor's managerial personnel if the Contractor is notified
by the Contracting Officer by registered or certified mail ad-
dressed to one of the Contractor's managerial personnel, of the
Government's disapproval, withdrawal of approval, or nonaccept-
ance of the Contractor's program or system. In such event, it
shall be presumed that any loss of or damage to Government
property resulted from such failure. The Contractor shall be liable
for such loss or damage unless he can establish by clear and
convincing evidence that such loss or damage did not result from
his failure to maintain an approved program or system, or oc-
curred during such time as an approved program or system for
control of Government property was maintained.
The term "Contractor's managerial personnel" as used herein
means the Contractor's directors, officers and any of his managers,
superintendents, 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; or
(iii) a separate and complete major industrial operation in
connection with the performance of this contract.
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(3) The Contractor represents that he is not including in
the price hereunder, and agrees that he will not hereafter include
in any price to the Government, any charge or reserve for in-
surance (including any self-insurance funds or reserve) covering
loss or destruction of or damage to the Government property
caused by an excepted peril.
(4) Upon the happening of loss or destruction of or damage
to any Government property caused by an excepted peril, the
Contractor shall notify the Contracting Officer thereof, and shall
communicate with the Loss and Salvage Organization, if any, now
or hereafter designated by the Contracting Officer, and with the
assistance of the Loss and Salvage Organization so designated
(unless the Contracting Officer has directed that no such organi-
zation be employed), shall take all reasonable steps to protect
the Government property from further damage, separate the dam-
aged and undamaged Government property, put all the Govern-
ment property in the best possible order, and furnish to the Con-
tracting Officer a statement of:
(i) the lost, destroyed, and damaged Government property;
(ii) the time and origin of the loss, destruction, or damage;
(iii) all known interests in commingled property of which
the Government property is a part; and
(iv) the insurance, if any, covering any part of or interest
in such commingled property.
The Contractor shall be entitled to an equitable adjustment in
the contract price for the expenditures made by him in performing
his obligations under this subparagraph (4) (including charges
made to the Contractor by the Loss and Salvage Organization,
except any of such charges the payment of which the Govern-
ment has, at its option, assumed directly), in accordance with
the procedures provided for in the "Changes" clause of this
contract.
(5) With the approval of the Contracting Officer after loss
or destruction of or damage to Government property, and subject
to such conditions and limitations as may be imposed by the
Contracting Officer, the Contractor may, in order to minimize
the loss to the Government or in order to permit resumption of
business or the like, sell for the account of the Government any
item of Government property which has been damaged beyond
practicable repair, or which is so commingled or combined with
property of others, including the Contractor, that separation is
impracticable.
(6) Except to the extent of any loss or destruction of or
damage to Government property for which the Contractor is
relieved of liability under the foregoing provisions of this clause,
and except for reasonable wear and tear or depreciation, or the
utilization of the Government property in accordance with the
provisions of this contract, the Contractor assumes the risk of,
and shall be responsible for, any loss or destruction of or damage
to the Government property, and such property (other than that
which is permitted to be sold) shall be returned to the Govern-
ment in as good condition as when received by the Contractor in
connection with this contract, or as repaired under paragraph
(f) above.
(7) In the event the Contractor is reimbursed or compensated
for any loss or destruction of or damage to the Government prop-
erty, caused by an excepted peril, he 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 (in-
cluding the prosecution of suit and the execution of instruments
of assignment in favor of the Government) in obtaining recovery.
In addition, where a subcontractor has not been relieved from
liability for any loss or destruction of or damage to the Govern-
ment property, the Contractor shall enforce the liability of the
subcontractor for such loss or destruction of or damage to the
Government property for the benefit of the Government.
*(8) If this contract is for the development, production, modi-
fication, maintenance or overhaul of aircraft, or otherwise involves
the furnishing of aircraft by the Government, the "Ground and
Flight Risk" clause of this contract shall control, to the extent
it is applicable, in the case of loss or destruction of, or damage
to, aircraft. (1970 SEP)
7-302.27 GOVERNMENT DELAY OF WORK (1968 SEP)
(a) If the performance of all or any part of the work is delayed
or interrupted by an act of the Contracting Officer in the admin-
istration of this contract, which act is not expressly or impliedly
authorized by this contract, or by his falure to act within the
time specified in this contract (or within a reasonable time if no
time is specified), an adjustment (excluding profit) shall be made
for any increase in the cost of performance of this contract caused
by such delay or interruption and the contract modified in
writing accordingly. Adjustment shall be made also in the delivery
or performance dates and any other contractual provision affected
by such delay or interruption. However, no adjustment shall be
made under this clause for any delay or interruption (i) to the
extent that performance would have been delayed or interrupted
by any other cause, including the fault or negligence of the Con-
tractor; or (ii) for which an adjustment is provided or excluded
under any other provision of this contract.
(b) No claim under this clause shall be allowed (i) for any
costs incurred more than twenty (20) days before the Contractor
shall have notified the Contracting Officer in writing of the act
or failure to act involved; and (ii) unless the claim, in an amount
stated, is asserted in writing as soon as practicable after the
termination of such delay or interruption, but not later than the
date of final payment under the contract.
7-302.29 PRICING OF ADJUSTMENTS (1970 JUL)
When costs are a factor in any determination of a contract price
adjustment pursuant to the "Changes" clause or any other pro-
vision of this contract, such costs shall be in accordance with
Section XV of the Armed Services Procurement Regulation as in
effect on the date of this contract.
7-304.11 STOP WORK ORDER (1971 APR)
(a) The Contracting Officer may, at any time, by written
order to the Contractor, require the Contractor to stop all, or
any part, of the work called for by this contract for a period of
ninety (90) days after the order is delivered to the Contractor,
and for any further period to which the parties may agree. Any
such order shall be specifically identified as a Stop Work Order
issued pursuant to this clause. Upon receipt of such an order, the
Contractor shall forthwith comply with its terms and take all rea-
sonable steps to minimize the incurrence of costs allocable to the
work covered by the order during the period of work stoppage.
Within a period of ninety (90) days after a stop work order is
delivered to the Contractor, or within any extension of that period
to which the parties shall have agreed, the Contracting Officer
shall either-
(i) cancel the stop work order, or
(ii) terminate the work covered by such order as provided
in the "Default" or the "Termination for Convenience" clause of
this contract.
*This subparagraph may be omitted where it is clearly inapplicable
and shall be deleted when the Ground and Flight Risk clause is
omitted pursuant to 10-404(b)(2).
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(b) If a stop work order issued under this clause is canceled
or the period of the order or any extension thereof expires, the
Contractor shall resume work. An equitable adjustment shall be
made in the delivery schedule or contract price, or both, and
the contract shall be modified in writing accordingly, if-
(i) the stop work order results in an increase in the time
required for, or in the Contractor's cost properly allocable to,
the performance of any part of this contract, and
(ii) the Contractor asserts a claim for such adjustment within
thirty (30) days after the end of the period of work stoppage;
provided that, if the Contracting Officer decides the facts justify
such action, he may receive and act upon any such claim asserted
at any time prior to final payment under this contract.
(c) If a stop work order is not canceled and the work covered
by such order is terminated for the convenience of the Govern-
ment, the reasonable costs resulting from the stop work order
shall be allowed in arriving at the termination settlement,
(d) If a stop work order is not canceled and the work covered
by such order is terminated for default, the reasonable costs result-
ing from the stop work order shall be allowed by equitable ad-
justment or otherwise.
7-302.28 TITLE AND RISK OF LOSS (1968 JUN)
(a) Unless this contract specifically provides for earlier pas-
sage of title, title to supplies covered by this contract shall pass
to the Government upon formal acceptance, regardless of when
or where the Government takes physical possession.
(b) (1) Unless this contract specifically provides otherwise, risk
of loss of or damage to supplies covered by this contract shall
remain with the Contractor until, and shall pass to the Govern-
ment upon:
(i) delivery of the supplies to a carrier, if transportation
is f.o.b. origin;
(ii) acceptance by the Government or delivery of possession
of the supplies to the Government at the destination specified in
this contract, whichever is later, if transportation is f.o.b. destina-
tion.
(2) Notwithstanding (1) above, the risk of loss or damage
to supplies which so fail to conform to the contract as to give a
right of rejection shall remain with the Contractor until cure or
acceptance, at which time (1) above shall apply.
(c) Notwithstanding (b) above, the Contractor shall not be
liable for loss of or damage to supplies caused by the negligence
of officers, agents, or employees of the Government acting within
the scope of their employment.
7-302.23(a) PATENT RIGHTS (TITLE) (1969 DEC)
(a) Definitions Used in This Clause.
(1) Subject Invention means any invention or discovery,
whether or not patentable, conceived or first actually reduced to
practice in the course of or under this contract. The term "Subject
Invention" includes, but is not limited to, any art, method, process,
machine, manufacture, design or composition of matter, or any
new and useful improvement thereof, or any variety of plant,
which is or may be patentable under the patent laws of the United
States of America or any foreign country.
(2) Government purpose means the right of the Govern-
ment of the United States (including any agency thereof, state or
domestic municipal government) to practice and have practiced
(make or have made, use or have used, sell or have sold) any
Subject Invention throughout the world by or on behalf of the
Government of the United States.
(3) Contract means any contract, agreement, grant, or other
arrangement, or subcontract entered into with or for the benefit
of the Government where a purpose of the contract is the con-
duct of experimental, developmental, or research work.
(4) Subcontract and subcontractor means any subcontract or
subcontractor of the Contractor, any lower-tier subcontract or
subcontractor under this contract.
(5) To bring to the point of practical application means to
manufacture in the case of composition or product, to practice in
the case of a process, or to operate in the case of a machine or
system and, in each case, under such conditions as to establish
that the invention is being worked and that its benefits are rea-
sonably accessible to the public.
(b) Rights Granted to the Government. Except as provided
in (e) and (h) of this clause, the Contractor agrees to grant the
Government all right, title and interest in and to each Subject
Invention (made by the Contractor), subject to the reservation of
a nonexclusive and royalty-free license to the Contractor. The
license shall extend to existing and future associated and affilated
companies, if any, within the corporate structure of which the
Contractor is a part and shall be assignable to the successor of
that part of the Contractor's business to which such Invention
pertains. Nothing contained in this Patent Rights clause shall be
deemed to grant any rights with respect to any invention other
than a Subject Invention.
(c) Invention Disclosures and Reports.
(1) With respect to Subject Inventions (made by the Con-
tractor) except those which are obviously unpatentable under the
patent laws of the United States, the Contractor shall furnish
to the Contracting Officer:
(i) a written disclosure of each invention within six (6)
months after conception or first actual reduction to practice, which-
ever occurs first under this contract, sufficiently complete in tech-
nical detail to convey to one skilled in the art to which the
Invention pertains a clear understanding of the nature, purpose,
operation, and to the extent known the physical, chemical, or elec-
trical characteristics of the Invention; when unable to submit a
complete disclosure, the Contractor shall within said six (6)
month period submit a disclosure which includes all such tech-
nical detail then known to him and shall, unless the Contracting
Officer authorizes a different period, submit all other technical
detail necessary to complete the disclosure within three (3)
months of the expiration of said six (6) month period;
(ii) interim reports at least every twelve (12) months,
the initial period of which shall commence with the date of this
contract, each report listing all such Inventions conceived or first
actually reduced to practice more than six (6) months prior to
the date of the report and not listed on a prior interim report,
or certifying that there are no such unreported Inventions;
(iii) prior to final settlement of this contract, a final report
listing all such Inventions including all those previously listed in
interim reports, or certifying that there are no such unreported
Inventions (This Final Report and any Interim Report under (ii)
above shall be submitted on DD Form 882 or other format ac-
ceptable to the Contracting Officer.) ;
(iv) information in writing, as soon as practicable, of the
date and identity of any public use, sale, or publication of such
Invention made by or known to the Contractor or of any con-
templated publication by the Contractor;
(v) upon request, such duly executed instruments and
other papers (prepared by the Government) as are deemed neces-
sary to vest in the Government the rights granted it under this
clause and to enable the Government to apply for and prosecute
any patent application, in any country, covering such Invention
where the Government has the right under this clause to file
such application; and
(vi) upon request, an irrevocable power of attorney to
inspect and make copies of each United States patent application
filed by, or on behalf of, the Contractor covering any such In-
vention.
(2) With respect to each Subject Invention in which the
Contractor has been granted greater rights under paragraph (h)
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of this clause, the Contractor agrees to provide written reports at
reasonable intervals, when requested by the Government as to:
(i) the commercial use that is being made or is intended
to be made of such Invention;
(ii) the steps taken by the Contractor to bring the Inven-
tion to the point of practical application, or to make the Invention
available for licensing.
(d) Subcontracts.
(1) The Contractor shall, unless otherwise authorized or
directed by the Contracting Officer, include a patent rights clause
containing all the provisions of this Patent Rights clause except
provision (g) in any subcontract hereunder where a purpose of
the subcontract is the conduct of experimental, developmental, or
research work. In the event of refusal by a subcontractor to accept
this Patent Rights clause, or if in the opinion of the Contractor this
Patent Rights clause is inconsistent with the policy set forth in
ASPR 9-107.2 and 9-107.3, the Contractor:
(i) shall promptly submit a written report to the Contract-
ing Officer setting forth the subcontractor's reasons for such
refusal or the reasons Contractor is of the opinion that the in-
clusion of this clause would be so inconsistent, and other pertinent
information which may expedite disposition of the matter; and
(ii) shall not proceed with the subcontract without the
written authorization of the Contracting Officer.
The Contractor shall not, in any subcontract or by using such a
subcontract as consideration therefor, acquire any rights to Sub-
ject Inventions for his own use (as distinguished from such rights
as may be required solely to fulfill his contract obligations to the
Government in the performance of this contract). Reports, instru-
ments, and other information required to be furnished by a sub-
contractor to the Contracting Officer under the provisions of such
a patent rights clause in a subcontract hereunder may, upon
mutual consent of the Contractor and the subcontractor (or by
direction of the Contracting Officer) be furnished to the Con-
tractor for transmission to the Contracting Officer.
(2) The Contractor, at the earliest practicable date, shall also
notify the Contracting Officer in writing of any subcontract con-
taining a patent rights clause, furnish to the Contracting Officer
a copy of such subcontract, and notify him when such subcontract
is completed. It is understood that the Government is a third
party beneficiary of any subcontract clause granting rights to the
Government in Subject Inventions, 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 respect to Subject Inventions. If there
are no subcontracts containing patent rights clauses, a negative
report is required. The Contractor shall not be obligated to enforce
the agreements of any subcontractor hereunder relating to the
obligations of the subcontractor to the Government in regard to
Subject Inventions.
(e) Domestic Filing of Patent Applications by Contractor.
(1) If greater rights are granted in and to a Subject Inven-
tion pursuant to paragraph (h) of this clause, the Contractor shall
file in due form and within six (6) months of the granting of such
greater rights a United States Patent application claiming the in-
vention referred to in said paragraph, and shall furnish, as soon
as practicable, the serial number and filing date of each such
application and the patent number of any resulting patent. As
to each Invention in which the Contractor has been given greater
rights, the Contractor shall notify the Contracting Officer at the
end of the six (6) month period if he has failed to file or caused
to be filed a patent application covering such invention. If the
Contractor has filed or caused to be filed such an application
within the six (6) month period, but elects not to continue prose-
cution of such application, he shall notify the Contracting Officer
not less than sixty (60) days before the expiration of the response
period. In either of the situations covered by the two immediately-
preceding sentences, the Government shall be entitled to all rights,
title and interest in such Invention subject to the reservation to the
Contractor of a license as specified in paragraph (b).
(2) The following statement shall be included within the first
paragraph of any patent application filed and any patent issued
on an Invention which was made under Government contract or
subcontract thereunder. "The Invention herein described was
made in the course of or under a contract or subcontract there-
under (or grant) with (here state the Department or Agency)."
(f) Foreign Filing of Patent Applications.
(1) If the Contractor acquires greater rights in a Subject
Invention pursuant to paragraph (h) of this clause and has filed
a United States patent application claiming the Invention, the
Contractor, or those other than the Government deriving rights
from the Contractor, shall as between the parties hereto, have
the exclusive right, subject to the rights of the Government
under paragraph (i) of this clause, to file applications on the
Inventions in each foreign country within:
(i) nine (9) months from the date a corresponding United
States patent application is filed;
(ii) six (6) months from the date permission is granted
to file foreign applications where such filing has been prohibited
for security reasons; or r
(iii) such longer period as may be approved by the Con-
tracting Officer.
The Contractor shall notify the Contracting Officer of each foreign
application filed and, upon written request of the Contracting
Officer, furnish an English translation of such application, and
convey to the Government the entire right, title and interest in
the Invention in each foreign country in which an application has
not been filed within the time specified above, subject to the
reservation of a royalty-free license as specified in paragraph (b).
(2) If the Contractor does not acquire greater rights pursuant
to paragraph (h) of this clause and the Government determines
not to file a patent application on any Subject Invention (made
by the Contractor) in any particular foreign country, the Con-
tracting Officer, upon request of the Contractor, may authorize
the Contractor to file a patent application on such Invention in
such foreign country and retain ownership thereof, subject to an
irrevocable, nonexclusive and royalty-free license to practice and
have practiced such Subject Invention throughout the world for
Governmental purposes, including the practice of each such Subject
Invention (i) in the manufacture, use, and disposition of any
article or material, (ii) in the use of any method, or (iii) in the
performance of any service, acquired by or for the Government
or with funds derived through the Military Assistance Program of
the Government or funds otherwise derived through the Govern-
ment.
(g) Withholding of Payment.
(1) Final payment under this contract shall not be made
before the Contractor delivers to the Contracting Officer the final
report required by (c) (1) (iii ), all written invention disclosures
required by (c) (1) (i ), and all information as to subcontracts
required by (d) (2).
(2) If at any time before final payment under this contract
the Contractor fails to deliver an interim report required by
(c) (1) (ii ), or a written invention disclosure required by (c) (1)
(i), the Contracting Officer shall withhold from payment $50,000
or five percent (5% ), of the amount of this contract whichever
is less (or whatever lesser sum is available if payments have
exceeded ninety-five percent (95%) of the amount of this con-
tract) until the Contractor corrects all such failures.
(3) After payments total eighty percent (80%) of the
amount of this contract, and if no amount is required to be with-
held under (2) above, the Contracting Officer may, if he deems
such action warranted because of the Contractor's performance
under the Patent Rights clause of this contract or other known
Government contracts, withhold from payment such sum as he
considers appropriate, not exceeding $50,000 or five percent (5% ),
of the amount of this contract whichever is less, to be held as a
reserve until the Contractor delivers all the reports, disclosures,
and information specified in (1) above. Subject to the five per-
cent (5%) or $50,000 limitation, the sum withheld under this
subparagraph (3) may be increased or decreased from time to time
at the discretion of the Contracting Officer.
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(4) No amount shall be withheld under this paragraph (g)
while the amount specified by this paragraph is being withheld
under other provisions of this contract. The total amount withheld
under (1), (2) and (3) above shall not exceed $50,000 or five
percent (5% ), of the amount of this contract whichever is less.
The withholding of any amount or subsequent payment thereof
to the Contractor shall not be construed as a waiver of any rights
accruing to the Government under this contract. This paragraph
shall not be construed as requiring the Contractor to withhold any
amounts from a subcontractor to enforce compliance with the
patent provision of a subcontract. As used in this paragraph (g),
"this contract" means "this contract as from time to time amended."
In cost-type contracts, "amount of this contract" means "estimated
cost of this contract."
(h) Contractor's Request for Greater Rights. The Contractor at
the time of first disclosing a Subject Invention pursuant to para-
graph (c) (1) (i) of this clause, but not later than three (3)
months thereafter, may submit in writing to the Contracting Of-
ficer, in accordance with applicable regulations, a request for
greater rights than the license reserved to the Contractor in para-
graph (b) of this clause if :
(i) the Invention is not the primary object of this contract;
and
(ii) the acquisition of such greater rights is consistent
with the intent of ASPR 9-107.3(a) and is necessary to call forth
private risk capital and expense to bring the Invention to the point
of practical application.
The Contracting Officer will review the Contractor's request for
greater rights and will notify the Contractor whether such re-
quest is granted in whole or in part. Any rights granted to the
contractor shall be subject to, but not necessarily limited to,
the provisions of paragraph (i) of this clause.
(i) Reservation o f Rights to the Government.
(1) In the event greater rights in any Subject Invention
are vested in or granted to the Contractor pursuant to paragraph
(h) above, such greater rights shall, as a minimum, be subject
to an irrevocable, nonexclusive and royalty-free license to
practice and have practiced each such Subject Invention (made by
the Contractor) throughout the world for Governmental purposes,
and including the practice of each such Subject Invention (i) in
the manufacture, use, and disposition of any article or material,
(ii) in the use of any method, or (iii) in the performance of
any service, acquired by or for the Government or with funds
derived through the Military Assistance Program of the Govern-
ment or funds otherwise derived through the Government.
(2) In the event greater rights are vested in the Contrac-
tor, the Contractor further agrees to and does hereby grant to
the Government the right to require the granting of a license
to an applicant under any such Invention:
(i) on a nonexclusive, royalty-free basis, unless the
Contractor, his licensee, or his assignee demonstrates to the
Government, at its request, that effective steps have been
taken within three (3) years after a patent issues on such
Invention to bring the Invention to the point of practical appli-
cation or that the Invention has been made available for licens-
ing royalty-free or on terms that are reasonable in the circum-
stances, or can show cause why the title should be retained
for further priod of time; or
(ii) royalty-free or on terms that are reasonable in the
circumstances to the extent that the Invention is required for
public use by Governmental regulations or as may be necessary
to fulfill health needs, or for other public purposes stipulated
in the Schedule of this contract.
(j) Right to Disclose Subject Inventions. The Government
may duplicate and disclose reports and disclosures of Subject
Inventions required to be furnished by the Contractor pursuant
to this Patent Rights clause.
(k) Forfeiture of Rights in Unreported Subject Inventions.
The Contractor shall forfeit to the Government all rights in any
Subject Invention which he fails to report to the Contracting
Officer at or prior to the time he (i) files or causes to be filed
a United States or foreign application thereon, or (ii) submits
the final report required by (c) (iii) of this clause, whichever
is later, provided that the Contractor shall not forfeit rights in
a Subject Invention if (A) contending that the invention is
not a Subject Invention, he nevertheless reports the invention
and all the facts pertinent to his contention to the Contracting
Officer within the time specified in (i) of (ii) above, or (B) he
establishes that the failure to report was due entirely to causes
beyond his control and without his fault or negligence, The
Contractor shall be deemed to hold any such forfeited Subject
Invention, and the patent applications and patents pertaining
thereto, in trust for the Government pending written assign-
ment of the Invention. The rights accruing to the Government
under this paragraph shall be in addition to and shall not super-
sede any other rights which the Government may have in rela-
tion to unreported Subject Inventions. Nothing contained here-
in shall be construed to require the Contractor to report any
invention which is not in fact a Subject Invention.
(1) Examination of Records Relating to Inventions. The Con-
tracting Officer, or his authorized representative shall, until
the expiration of three (3) years after final payment under
this contract, have the right to examine any books, records,
documents, and other supporting data of the Contractor which
the Contracting Officer or his authorized representative shall
reasonably deem directly pertinent to the discovery or identi-
fication of Subject Invention or to compliance by the Con-
tractor with the requirements of this clause.
7-304.2 ALTERATIONS IN CONTRACT (1949 JUL)
The following alterations have been made in the provisions
of this contract:
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