1. THIS DOCUMENT CONSTITUTES AMENDMENT NO. 2 TO CONTRACT NO. CC-28441 BETWEEN INFORMATION FIDELITY INCORPORATED AND THE UNITED STATES GOVERNMENT.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00709R000200500026-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 23, 2016
• Document Release Date: August 16, 2012
• Sequence Number: 26
• Publication Date: September 5, 1961
• Content Type: LETTER

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THIS DOCUMENT REQUIRES SPECIAL HANDLING
THIS DOCUMENT CONTAINS INFORMATION REGARDING A HIGHLY CLASSIFIED
ACTIVITY. PERMISSION TO TRANSFER CUSTODY, OR PERMIT ACCESS TO
THIS DOCUMENT MUST BE OBTAINED FROM THE ORIGINATOR. HAND CARRY
PROCEDURES WILL BE APPLIED TO ANY INTER-OFFICE OR INTRA-AGENCY
MOVEMENT OF THIS DOCUMENT.
REFERRED TO
RECEIVED
RELEASED
SEEN BY
OFFICE
SIGNATURE
DATE
TIME
DATE
TIME
NAME AND OFFICE SYMBOL
DATE
fan ~R o
25X1
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SEE 1
Information pidelity Incorporated
Las Vegas, Nevada
MC -2203
Copy '2 of 6
Contract No. CC-28441
Amendment No* 2
5 SEP 1961
1. This document constitutes Amendment No. 2 to Contract No.
CC .28t~1 between Information Fidelity Incorporated and the United
Ptates Government.
2. Paragraph (3) of LR+L 5:CL,3 M S i AT J~ COS Y ~ 3{ Pt'~J-i"i4L/
of the Contract Schedule, as amended _
by Amendment No. 1, 1 deleted
in its entirety and the following is substituted therefor:
"(3) The combined total of paragraphs (1) and (2) above is
TIM03Y I R 1J TwENTY-SEAN THUDS u"VD SIX HW Tt MY-: . LOLL R
($:327.625.00). However, there has been allotted to this contract to
cover servieea rendered through 30 November 1961 the soon of ONE R'UN3 'D
3 NT- FI THOUSAND 7--O LAR,S ($175.000.oo). Additionaal funding will
be effected as required, subject to availability of appropriated funds;
for this purpose. The Contractor shall not obligate or commit funds
in excess of this amount without the written approval of the Contracting
Officer. Such, approval shall be evidenced by an amendment to this
contract."
3. The above results in a net increase of $100,000.00. All other
terms, conditions and requirements of the contract, as amended, remain
unchanged.
4. Please indicate your receipt and acceptance of this Amendment
No. 2 to Contract No. CC-28441 by executing the original and two copies
hereof. Return the fully executed original and one copy to the under.
signed and retain the remaining copy for your files,
Very truly yours,
ACK10L1W"D AND AOGE Is
INFOI'IITION 'Ii LITY lr"OM ;JTY,1)
Contracting Officer
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Clause
No. Page No.
1.
DEFINITIONS .................................................
1
2.
CHANGES .....................................................
1
3.
LIMITATION OF COST ..........................................
1
4.
ALLOWABLE COST., FIXED FEE, AND PAYMENT ......................
2
5.
INSPECTION AND CORRECTION OF DEFECTS ........................
3
6.
ASSIGNMENT OF CLAIMS ........................................
4
7.
RECORDS .....................................................
4
8.
SUBCONTRACTS ................................................
6
9.
UTILIZATION OF SMALL BUSINESS CONCERNS ......................
6
10.
TERMINATION ..............
6
11.
EXCUSABLE DELAYS ............................................
9
12.
DISPUTES ....................................................
10
13.
NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT.........
10
14.
BUY AMERICAN ACT ............................................
10
15.
CONVICT LABOR ...............................................
11
16.
EIGHT-HOUR LAW OF 1912 ......................................
11
17.
NONDISCRIMINATION IN EMPLOYMENT .............................
11
18.
OFFICIALS NOT TO BENEFIT ....................................
11
19.
COVENANT AGAINST CONTINGENT FEES ............................
11
20.
PATENT RIGHTS ...............................................
12
21.
GOVERNMENT PROPERTY .........................................
15
22.
INSURANCE--LIABILITY TO THIRD PERSONS .......................
17
23.
AUTHORIZATION AND CONSENT ...................................
18
24.
FILING OF PATENT APPLICATIONS ...............................
18
25.
RIGHTS IN DATA-UNLIMITED ....................................
18
26.
MILITARY SECURITY REQUIREMENTS ..............................
19
27.
WALSH-HEALEY PUBLIC CONTRACTS ACT ...........................
20
28.
GRATUITIES ..................................................
20
29.
NEGOTIATED OVERHEAD RATES ...................................
20
30.
DELAY IN DELIVERY OF DATA ...................................
21
31.
SUPERSEDING SPECIFICATIONS ..................................
21
32..
FLIGHT RISK .................................................
21
33.
ALTERATIONS ......................................... .....
22
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GENERAL PROVISIONS
1. DEFINITIONS (ASPR 7-103.1 AFPI 7-403.1)
As used throughout this contract, the following terms shall have the meanings set forth
below:
(a) The term "Secretary" means the Secretary, the Under Secretary, or any Assistant Secre-
tary, or any Assistant Secretary of the Department, and the head or any assistant head of the
Federal agency; and the term "his duly authorized representative" means any person or persons
or board (other than the Contracting Officer) authorized to act for the Secretary.
(b) The term "Contracting Officer" means the person executing this contract on behalf of
the Government, and any other officer or civilian employee who is a properly designated Contract-
ing Officer; and the term includes, except as otherwise provided in this contract, the author-
ized representative of a Contracting Officer acting within the limits of his authority.
(c) Except as otherwise provided in this contract, the term "subcontracts" includes pur-
chase orders under this contract.
(d) (AFPI 7-303.1) The term "contract work" means all work to be performed under this con-
tract including any studies covering fundamental, theoretical, or experimental investigations;
any extension of the investigative findings and theories of a scientific or technical nature into
practical application; any tangible items, hereinafter referred to as "supplies," furnished to
the Government; and any reports, data, computations, plans, drawings, and specifications with
respect to any of the foregoing.
The Contracting Officer may, at any time by a written order, make changes in or additions to
the drawings and specifications, issue additional instructions, require additional work within
the general scope of the contract, or change the place of delivery, method of shipment, or the
amount of Government-Furnished property. If any such change causes an increase or decrease in
the estimated cost of, or the time required for performance of this contract, or otherwise af-
fects any other provision of this contract, an equitable adjustment shall be made (i) in the
estimated cost or delivery schedule, or both, (ii) in the amount of any fixed fee to be paid to
the Contractor, and (iii) in such other provisions of the contract as may be so affected, and
the contract shall be modified in writing accordingly. Any claim by the Contractor for adjust-
ment under this clause must be asserted within sixty (60) days from the date of receipt by the
Contractor of the notification of change; PROVIDED, HOWEVER, That the Contracting Officer, if he
decides that the facts justify such action, may receive and act upon any such claim asserted at
any time prior to final payment under this contract. Failure to agree to any adjustment shall
be a dispute concerning a question of fact within the meaning of the clause of this contract en-
titled "Disputes." However, nothing in this clause shall excuse the Contractor from proceeding
with the contract as changed.
3. LIMITATION OF COST (ASPR 7-203.3 AFPI 7-403.3)
(a) It is estimated that the total cost to the Government, exclusive of any fixed fee, for
the performance of this contract will not exceed the estimated cost set forth in the Schedule,
and the Contractor agrees to use its best efforts to perform the work specified in the Schedule
and all obligations under this contract within such estimated cost. If at any time the Contrac-
tor has reason to believe that the costs which it expects to incur in the performance of this
contract in the next succeeding thirty (30) days, when added to all cost previously incurred,
will exceed eighty-five percent (85%) of the estimated cost then set forth in the Schedule, or
if at any time, the Contractor has reason to believe that the total cost to the Government, ex-
clusive of any fixed fee, for the performance of this contract will be substantially greater or
less than the then estimated cost thereof, the Contractor shall notify the Contracting Officer
in writing to that effect, giving its revised estimate of such total cost for-the performance of
this contract.
.(b) The Government shall not be obligated to reimburse the Contractor for costs incurred in
excess of the estimated cost set forth in the Schedule and the Contractor shall not be obligated
to continue performance under the contract or to incur costs in excess of the estimated cost set
forth in the Schedule, unless and until the Contracting Officer shall have notified the Contrac-
tor in writing that such estimated cost has been increased and shall have specified in such no-
tice a revised estimated cost which shall thereupon constitute the estimated cost of performance
of this contract. When and to the extent that the estimated cost set forth in the Schedule has
(CPFF Aug. 1, 1960)
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been increased, any cost incurred by the Contractor in excess of such estimated cost prior to
the increase in estimated cost shall be allowable to the same extent as if such costs had been
incurred after such increase in estimated cost.
4. ALLOWABLE COST, FIXED FEE, AND PAYMENT (ASPR 7-402.3 AFPI 7-403.4)
(a) For the performance of this contract, the Government shall pay to the Contractor:
(i) the cost thereof (hereinafter referred to as "allowable cost") determined by the
Contracting Officer to be allowable in accordance with --
(A) Part 2 of Section XV of the Armed Services Procurement Regulation as in effect
on the date of this contract; and
(B) the terms of this contract; and
(ii) such fixed fee, if any, as may be provided for in the Schedule.
(b) Once each month (or at more frequent intervals, if approved by the Contracting Officer)
the Contractor may submit to an authorized representative of the C.O., in such form and reason-
able detail as such representative may require, an invoice or public voucher supported by a state-
ment of cost incurred by the Contractor in the performance of this contract and claimed to con-
stitute allowable cost.
(c) Promptly after receipt of each invoice or voucher the Government shall, subject to the
provisions of (d) below, make payment thereon as approved by the C.O. Payment of the fixed
fee, if any, shall be made to the Contractor as specified in the Schedule; provided, however,
that after payment of eighty-five percent (85%) of the fixed fee set forth in the Schedule,
further payment on account of the fixed fee shall be withheld until a reserve of either fifteen
percent (15%) of the total fixed fee, or one hundred thousand dollars ($100,000), whichever is
less, shall have been set aside.
(d) At any time or times prior to final payment under this contract the Contracting Officer
may have invoices or vouchers and statements of cost audited. Each payment theretofore made
shall be subject to reduction for amounts included in the related invoice or voucher which are
found by the Contracting Officer on the basis of such audit, not to constitute allowable cost.
Any payment may be reduced for overpayments, or increased for underpayments, on preceding in-
voices or vouchers.
(e) On receipt and approval of the invoice or voucher designated by the Contractor as the
"completion invoice" or "completion voucher" and upon compliance by the Contractor with all the
provisions of this contract (including, without limitation, the provisions relating to patents
and the provisions of (f) below, the Government shall promptly pay to the Contractor any balance
of allowable cost, and any part of the fixed fee which has been withheld pursuant to (c) above
or otherwise not paid to the Contractor. The completion invoice or voucher shall be submitted
by the Contractor promptly following completion of the work under this contract but in no event
later than one (1) year (or such longer period as the Contractor Officer may in his discretion
approve in writing) from the date of such completion.
(f) The Contractor agrees that any refunds, rebates, credits, or other amounts (including
any interest thereon) accruing to or received by the Contractor or any assignee under this con-
tract shall be paid by the Contractor to the Government, to the extent that they are properly
allocable to costs for which the Contractor has been reimbursed by the Government under this
contract. Reasonable expenses incurred by the Contractor for the purpose of securing such re-
funds, rebates, credits, or other amounts shall be allowable costs hereunder when approved by
the Contracting Officer. Prior to final payment under this contract, the Contractor and each
assignee under this contract whose assignment is in effect at the time of final payment under
this contract shall execute and deliver:
(i) an assignment to the Government, in form and substance satisfactory to the Contracting
Officer, of refunds, rebates, credits, or other amounts (including any interest thereon) properly
allocable to costs for which the Contractor has been reimbursed by the Government under this con-
tract; and
(ii) a release discharging the Government, its officers, agents, and employees from all
liabilities, obligations, and claims arising out of or under this contract, subject only to the
following exceptions --
(A) specified claims in stated amounts or in estimated amounts where the amounts are
not susceptible of exact statement by the Contractor;
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(B) claims, together with reasonable expenses incidental thereto, based upon liabili-
ties of the Contractor to third parties arising out of the performance of this contract; pro-
vided that such claims are not known to the Contractor on the date of the execution of the re-
lease; and provided further that the Contractor gives notice of such claims in writing to the
Contracting Officer not more than six (6) years after the date of the release or the date of any
notice to the Contractor that the Government is prepared to make final payment, whichever is
earlier; and
(C) claims for reimbursement of costs (other than expenses of the Contractor by rea-
son of any idemnification of the Government against patent liability), including reasonable ex-
penses incidental thereto, incurred by the Contractor under the provisions of this contract re-
lating to patents.
(g) Any cost incurred by the Contractor under the terms of this contract which would consti-
tute allowable cost under the provisions of this clause shall be included in determining the
amount payable under this contract, notwithstanding any provisions contained in the specifications
or other documents incorporated in this contract by reference, designating services to be per-
formed or materials to be furnished by the Contractor at its expense or without cost to the
Government.
3. INSPECTION AND CORRECTION OF DEFECTS (AFPI 7-403.5)
(a) All work under this contract shall be subject to inspection and test by the Government,
to the extent practicable at all reasonable times and places including the period of performance,
and in any event prior to final acceptance. The Contractor shall provide and maintain an in-
spection system acceptable to the Government covering the work hereunder. The Government, through
any authorized representative, may inspect the plant or plants of the Contractor or of any of its
subcontractors engaged in the performance of this contract. If any inspection or test is made by
the Government on the premise of the Contractor or a subcontractor, the Contractor shall provide
and shall require subcontractors to provide all reasonable facilities and assistance for the
safety and convenience of the Government inspectors in the performance of their duties. All in-
spections and tests by the Government shall be performed in such a manner as will not unduly de-
lay the work. Final inspection and acceptance by the Government shall be made as promptly as
practicable after delivery. The time and place of delivery, final inspection, and acceptance
shall be as set forth in the Schedule.
(b) The Contractor warrants that the services rendered in the performance of this contract
will conform to the requirements of this contract and to high professional standards in the field,
and that any article delivered to the Government under this contract will conform to the require-
ments of this contract and will not be defective in material or workmanship.
(c) At any time during performance of this contract, but not later than six (6) months (or
such other period as may be provided in the schedule) after final acceptance, the Government may
require the Contractor to remedy by correction or replacement as directed by the Contracting Of-
ficer, any failure by the Contractor to comply with its obligations under paragraph (b) hereof.
Except as otherwise provided in paragraph (d) hereof, the cost of any such replacement or cor-
rection shall be included in "Allowable Cost" determined as provided in the clause of this con-
tract entitled "Allowable Cost, Fixed Fee and Payment," but no additional fee shall be payable
with respect thereto. Corrected articles shall not be tendered again for acceptance unless the
former tender and the requirement of correction is disclosed. If the Contractor fails to pro-
ceed with reasonable promptness to perform such replacement or correction, the Government (i)
may by contract or otherwise perform such replacement or correction and charge to the Contrac-
tor any increased cost occasioned the Government thereby, or may reduce any fixed fee payable
under this contract (or require repayment of any fixed fee theretofore paid) in such amount as
may be equitable under the circumstances; or (ii) in the case of articles not delivered, may
require the delivery of such articles and shall have the right to reduce any fixed fee payable
under this contract (or to require repayment of any fixed fee theretofore paid) in such amount
as may be equitable under the circumstances; or (iii) may terminate this contract for default as
provided in the clause of this contract entitled "Termination." Failure to agree on the amount
of any such increased cost to be charged to the Contractor or to such reduction in, or repayment
of, the fixed fee shall be a dispute concerning a question of fact within the meaning of the
clause of this contract entitled "Disputes".
(d) Notwithstanding the provisions of paragraph (c) hereof, the Government may at any time
require the contractor to remedy by correction or replacement, without cost to the Government,
any failure by the Contractor to comply with its obligations under paragraph (b) hereof, if such
failure is due to fraud, lack of good faith, or willful misconduct on the part of any of the con-
tractor's directors or officers, or on the part of any of its managers, superintendents, or other
equivalent representatives, who has supervision or direction of (i) all or substantially all of
the Contractor's business; or (ii) all or substantially all of the Contractor's operations at any
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one plant or separate location in which this contract is being performed; or (iii) a separate
and complete major industrial operation in connection with the performance on this contract.
Fraud, lack of good faith, or willful misconduct on the part of any such supervisory personnel
shall be deemed to include the selection of individual employees or the retention of employees
after any of such supervisory personnel has reason to believe that such employees are habitually
careless or otherwise unqualified.
(e) Corrected articles tendered as replacements shall be subject to the provisions of this
clause in the same manner and to the same extent as supplies originally delivered under this con-
tact.
(f) The Contractor shall make its records of all inspection work available to the Government
during the performance of this contract and for such longer periods as may be specified in this
contract.
(g) Except as provided in this clause and as may be provided in the schedule, the Contractor
shall have no obligation or liability to correct or replace supplies or lots of supplies which at
the time of delivery are defective in materials or workmanship or otherwise not in conformity
with the requirements of this contract.
(h) Except as otherwise provided in the schedule, the contractor's obligation to correct or
replace Government-furnished property (which is property in the possession of or acquired directly
by the Government and delivered or otherwise made available to the contractor) shall be governed
by the provisions of the clause of this contract entitled "Government Property." LRev. No. 6,
3/21/58)
6. ASSIGNMENT OF CLAIMS (ASPR 7-103.8 AFPI 7-403.6),
(a) Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.
Code 203, 41 U.S. Code 15), if this contract provides for payments aggregating $1,000 or more,
claims for monies due or to become due the Contractor from the Government under this contract
may be assigned to a bank, trust company, or other financing institution, including any Federal
Lending agency, and may thereafter be further assigned and reassigned to any such institution.
Any such assignment or reassignment shall cover all amounts payable under this contract and not
already paid, and shall not be made to more than one party, except that any such assignment or
reassignment may be made to one party as agent or trustee for two or more parties participating
in such financing. Notwithstanding any provision of this contract, payments to an assignee of
any monies due or to become due under this contract shall not, to the extent provided in said
Act, as amended, be subject to reduction or set-off.
(b) In no event shall copies of this contract or of any plans, specifications, or other sim-
ilar documents relating to work under this contract, if marked "Top Secret", "Secret", or "Con-
fidential", be furnished to any assignee of any claim arising under this contract or to any other
person not entitled to receive the same; PROVIDED, That a copy of any part or all of this contract
so marked may be furnished, or any information contained therein may be disclosed, to such as-
signee upon the prior written authorization of the Contracting Officer.
7. RECORDS (ASPR 7-203.7 AFPI 7-403.7)
(a)(1) The Contractor agrees to maintain books, records, documents and other evidence per-
taining to the costs and expenses of this contract (hereinafter collectively called the "records")
to the extent and in such detail as will properly reflect all net costs, direct and indirect, of
labor, materials, equipment, supplies and services, and other costs and expenses of whatever na-
ture for which reimbursement is claimed under the provisions of this contract. The Contractor's
accounting procedures and practices shall be subject to the approval of the Contracting Officer;
provided, however, that no material change will be required to be made in the Contractor's account-
ing procedures and practices if they conform to generally accepted accounting practices and if the
costs properly applicable to this contract are readily ascertainable therefrom.
(2) The Contractor agrees to make available at the office of the Contractor at all reason-
able times during the period set forth in subparagraph (4) below any of the records for inspection,
audit or reproduction by any authorized representative of the Department or of the Comptroller
General.
(3) In the event the Comptroller General or any of his duly authorized representatives .
determines that his audit of the amounts reimbursed under this contract as transportation charges
will be made at a place other than the office of the Contractor, the Contractor agrees to deliver,
with the reimbursement voucher covering such charges or as may be otherwise specified within two
years after reimbursement of charges covered by any such voucher, to such representative as may
be designated for that purpose through the Contracting Officer such documentary evidence in support
of transportation costs as may be required by the Comptroller General or any of his duly authorized
representatives.
(cPFF Aug. 1, 1960) - 4 -
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(4) Except for documentary evidence delivered to the Government pursuant to subparagraph
(3) above, the Contractor shall preserve and make available his records (i) for a period of three
years from the date of final payment under this contract, and (ii) for such longer period, if any,
as is required by applicable statute, by any other clause of this contract, or by (A) or (B) be-
low. fR-ev. No. 51, 1/4/60)
(A) If this contract is completely or partially terminated, the records relating to the
work terminated shall be preserved and made available for a period of three years from the date
of any final settlement. fRev. No. 51, 1/4/60] CRev. No. 54, 5/2/60]
(B) Records which relate to (1) 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)
cost and expenses of this contract as to which exception has been taken by the Comptroller Gen-
eral or any of his duly authorized representatives, shall be retained by the Contractor until
such appeals, litigation, claims, or exceptions have been disposed of. LRev. No. 42, 1/9/59]
LRev. No. 49, 10/1/59_]
(5) Except for documentary evidence delivered pursuant to subparagraph (3) above, and
the records described in subparagraph (4)(B) above, the Contractor may in fulfillment of its
obligation to retain its records as required by this clause substitute photographs, microphoto-
graphs or other authentic reproductions of such records, after the expiration of two years fol-
lowing the last day of the month of reimbursement to the Contractor of the invoice or voucher to
which such records relate, unless a shorter period is authorized by the Contracting officer with
the concurrence of the Comptroller General or his duly authorized representative. LRev. No. 49,
10/1/59]
(6) The provisions of this paragraph (a), including this subparagraph (6), shall be ap-?
plicable to and included in each subcontract hereunder which is on a cost, cost-plus-a-fixed-fee,
time-and-material or labor-hour basis.
(b) The Contractor further agrees to include in each of his subcontracts hereunder, other
than those set forth in subparagraph (a)(6) above, a provision to the effect that the subcon-
tractor agrees that the Comptroller General or the Department, or any of their duly authorized
representatives, shall, until the expiration of three years after final payment under the sub-
contract, 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 paragraph (b) only, excludes (i) purchase orders not exceeding
$2,500 and (ii) subcontracts or purchase orders forjublic utility services at rates established
for uniform applicability to the general public. LRev. No. 39, 11/3/58]
Alternate Paragraph)
In the event this Contract establishes separate periods of performance, the following alter-
nate subparagraph (a)(4) may be substituted for the corresponding subparagraph of the clause
prescribed by (a) above.
(4) Except for documentary evidence delivered to the Government pursuant to subparagraph
(3) above, the Contractor shall preserve and make available his records (i) for a period of three
years from the date of payment of the voucher or invoice submitted by the Contractor after the
completion of the work performed during any separate period of performance established by this
contract or by any amendment or supplemental agreement, without regard to former or subsequent
periods of performance, and (ii) for such longer period, if any, as is required by applicable
statute,-by any other clause of this contract, or by (A), (B), or (C) below.
(A) If this contract is completely or partially terminated, the records relating to the
work terminated shall be preserved and made available for a period of three years from the date
of any resulting final settlement agreement or determination.
(B) Records which relate to (i) appeals under the Disputes clause of this contract, (ii)
litigation or the settlement of claims arising out of the performance of this contract, or (iii)
cost and expenses of this contract as to which exception has been taken by the Comptroller Gen-
eral or any of his duly authorized representatives, shall be retained by the Contractor until
such appeals, litigation, claims, or exceptions have been disposed of.
(C) If the Contractor plans to destroy any records sooner than three years after the
date of the voucher or invoice to be submitted after the completion of the work performed during
the total of the periods of performance established by this contract and all amendments and sup-
plemental agreements thereto, which voucher or invoice shall be designated "completion voucher"
or "completion invoice," it shall give written notice to the Contracting officer and to the
(CPFF Aug. 1, 1960)
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Comptroller General of the United States, specifying any records which it plans to destroy after
the expiration of 90 days from the receipt of such notice, and shall retain any records which
either the Contracting Officer or the Comptroller General, by written notice, within 90 days after
receipt of the Contractor's notice, requires to be retained for a further specified period of
time.
8. SUBCONTRACTS (ASPR 7-402.8)
(a) The Contractor shall give advance notification to the Contracting Officer o! any pro-
posed subcontract. hereunder which (i) is on a cost or cost-plus-a-fixed-fee basis, or (ii) is
on a fixed-price basis exceeding in dollar amount either $25,000 or five percent (5%) of the
total estimated cost of this contract.
(b) The Contractor shall not, without the prior written consent of the Contracting Officer,
place any subcontract which (i) is on a cost or cost-plus-a-fixed-fee basis, or (ii) is on a
fixed-price basis exceeding in dollar amount either $25,000 or five percent (5%) of the total
estimated cost of this contract, or (111) provides for the fabrication, purchase, rental, in-
stallation or other acquisition, of any item of industrial facilities, or of special tooling
having a value in excess of $1,000, or (iv) is on a time-and-material or labor-hour basis, or
(v) involves. research and development work. The Contracting Officer may, in his discretion,
ratify in writing any such subcontract; such action shall constitute the consent of the
Contracting Officer as required by this paragraph (b).
(c) The Contractor agrees that no subcontract placed under this contract shall provide for
payment on a cost-plus-a-percentage-of-cost basis.
(d) The Contracting Officer may, in his discretion, specifically approve in writing any of
the provisions of a subcontract. However, such approval or the consent of the Contracting Offi-
cer obtained as required by this clause shall not be construed to constitute a determination of
the allowability of any cost under this-contract, unless such approval specifically provides that
it constitutes a determination of the allowability of such cost.
(e) The Contractor shall give the.,Contracting Officer immediate notice in writing of any
action or suit filed, and prompt notice of any claim made against the Contractor by any subcon-
tractor or vendor which, in the opinion of the Contractor, may result in litigation, related in
any way to this contract with respect to which the Contractor may be entitled to reimbursement
from the Government.
(f) Notwithstanding (b) above, the Contractor may enter into subcontracts within (ii), or,
if the subcontract is for special tooling, within (iii), of (b) above, without the prior written
consent of the Contracting Officer if the Contracting Officer has, in writing, approved the Con-
tractor's purchasing system and the subcontract is within the limitations of such approval. LRev.
No. 49, 10/1/59
9. UTILIZATION OF SMALL BUSINESS CONCERNS (ASPR 7-104.14 AFPI 7-403.9)
(a) It is the policy of the Government as declared by the Congress that a fair proportion of
the purchases and contracts for supplies and services for the Government be placed with small
business concerns.
Rev. No. 28, 1/28/587
(b) The Contractor agrees to accomplish the maximum amount of subcontracting to small busi-
ness concerns that the Contractor finds to be consistent with the efficient performance of this
contract.
10. TERMINATION (ASPR 8-702 AFPI 7-403.10)
(a) The performance of work under the contract may be terminated by the Government in ac-
cordance with this clause in whole, or from time to time in part:
(1) whenever the Contractor shall default in performance of this contractiin accordance
with its terms (including in the term "default" any such failure by the Contractor to make prog-
ress in the prosecution of the work hereunder as endangers such performance), and shall fail to
cure such default within a period of ten days (or such longer periods as the Contracting Officer
may allow) after receipt from the Contracting Officer of a notice specifying the default; or
(ii) whenever for any reason the Contracting Officer shall determine that such termina-
tion is in the best interests of the Government.
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Any such termination shall be effected by delivery to the Contractor of a Notice of Termination
specifying whether termination is for the default of the Contractor or for the convenience of
the Government, the extent to which performance of work under the contract is terminated, and
the date upon which such termination becomes effective. If, after notice of termination of this
contract for default under (i) above, it is determined that the Contractor's failure to perform
or to make progress in performance is due to causes beyond, the control and without the fault or
negligence of the Contractor pursuant to the provisions of the clause of this contract relating
to excusable delays, the Notice of Termination shall be deemed to have been issued under (ii)
above, and the rights and obligations of the parties hereto shall in such event be governed ac-
cordingly.
(b) After receipt of a Notice of Termination and except as otherwise directed by the Contract-
ing Officer, the Contractor shall:
(1) stop work under the contract on the date and to the extent specified in the Notice
of Termination;
(ii) place no further orders or subcontracts for materials, services, or facilities,
except as may be necessary for completion of such portion of the work under the contract as is
not terminated;
(iii) terminate all orders and subcontracts to the extent that they relate to the per-
formance of work terminated by the Notice of Termination;
(iv) assign to the Government, in the manner and to the extent directed by the Contract=
ing Officer, all of the right, title, and interest of the Contractor under the orders or sub-
contracts so terminated, in which case the Government shall have the right, in its discretion,
to settle or pay any or all claims arising out of the termination of such orders and subcontracts;
(v). with the approval or ratification of the Contracting Officer, to the extent he may
require, which approval or ratification shall be final and conclusive for all purposes of this
clause; settle all outstanding liabilities and all claims arising out of such termination of
orders and subcontracts, the cost of which would be reimbursable in whole or in part, in accord-
ance with the provisions of this contract;
(vi) transfer title (to the extent that title has not already been transferred) and, in
the manner, to the extent, and at the times directed by the Contracting Officer, deliver to the
Government (A) the fabricated or unfabricated parts, work in process, completed work, supplies,
and other material produced as a part of, or acquired in respect of the performance of, the work
terminated by the Notice of Termination, (B) the completed or partially completed plans, draw-
ings, information, and other property which, if the contract had been completed, would be re-
quired to be furnished to the Government, and (C) the jigs, dies, and fixtures, and other spe-
cial tools and tooling acquired or manufactured for the performance of this contract for the cost
of which the Contractor has been or will be reimbursed under this contract:
(vii) use its best efforts to sell in the manner, at the times, to the extent, and at
the price or prices directed or authorized by the Contracting Officer, any property of the types
referred to in (vi) above; provided, however, that the Contractor (A) shall not be required to
extend credit to any purchaser, and (B) may acquire any such property under the conditions pre-
scribed by and at a price or prices approved by the Contracting Officer; and provided further
that the proceeds of any such transfer or disposition shall be applied in reduction of any pay-
ments to be made by the Government to the Contractor under this contract or shall otherwise be
credited to the price or cost of the work covered by this contract or paid in such other manner
as the Contracting Officer may direct;
(viii) complete performance of such part of the work as shall not have been terminated by
the Notice of Termination; and
(ix) take such action as may be necessary, or as the Contracting Officer may direct, for
the protection.and preservation of the property related to this contract which is in the posses-
sion of Contractor in which the Government has or may acquire an interest. The Contractor shall
proceed immediately with the performance of the above obligations notwithstanding any delay in
determining or adjusting the amount of the fee, or any item of reimbursable cost, under this
clause. At any time after expiration of the plant clearance period, as defined in Section VIII,
Armed Services Procurement Regulation, as it may be amended from time to time, the Contractor
may submit to the Contracting Officer a list, certified as to quantity and quality, of any or all
items of termination inventory not previously disposed of, exclusive of items the disposition of
which has been directed or authorized by the Contracting Officer, and may request the Government
to remove such items or enter into a storage agreement covering them. Not later than fifteen
(15) days thereafter, the Government will accept such items and remove them or enter into a
(CPFF Aug. 1, 1960)
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storage agreement covering the same; provided that the list submitted shall be subject to veri-
fication by the Contracting Officer upon removal of the items, or if the items are stored, within
forty-five (45) days from the date of submission of the list, and any necessary adjustment to
correct the list as submitted shall be made prior to final settlement.
(c) After receipt of a Notice of Termination, the Contractor shall submit to the Contracting
Officer its termination claim in the form and with the certification prescribed by the Contract-
ing Officer. Such claim shall be submitted promptly but in no event later than one year from
the effective date of termination, unless one' or more extensions in writing are granted by the
Contracting Officer, upon request of the Contractor made in writing within such one year period
or authorized extension thereof. However, if the Contracting Officer determines that the facts
Justify such action, he may receive and act upon any such termination claim at any time after
such one year period or any extension thereof.,, Upon failure of the Contractor to submit its
termination claim within the time allowed, the-Contracting Officer may, subject to any Settle-
ment Review Board approvals required by Section VIII of the Armed Services Procurement Regula-
tion in effect as of the date of execution of this contract, determine, on the basis of informa-
tion available to him, the amount, if any, due to the Contractor by reason of the termination
and shall thereupon pay to the Contractor'the amount so determined.
(d) Subject to the provisions of paragraph (c), and subject to any Settlement Review Board
approvals required by Section VIII of the Armed Servio ocurement Regulation in effect as of
the date of execution of this contract, the Contractor and-the Contracting Officer may agree
upon the whole or any part of the amount or amounts to be paid (including an allowance for the
fee) to the Contractor by reason of the .total or partial termination of work pursuant to this
clause. The contract shall be amended accordingly, and the Contractor shall be paid the agreed
amount.
(e) In the event of the failure of the Contractor and the Contracting Officer to agree in
whole or in part, as provided in paragraph (d), as to the amounts with respect to costs and fee,
or as to the amount of the fee, to be paid to the Contractor in connection with the termination
of work pursuant to this clause, the Contracting Officer shall, subject to any Settlement Re-
view Board approvals required by Section VIII of the Armed Services Procurement Regulation in
effect as of the date of execution of this contract, determine, on the basis of information
available to him, the amount, if any, due to the Contractor by reason of the termination and
shall pay to the Contractor the amount determined as follows:
(1) if the settlement includes cost and fee --
(A) there shall be included therein all costs and expenses reimbursable in accord-
ance with this contract, not previously paid to the Contractor for the performance of this con-
tract prior to the effective date of the Notice of Termination, and such of these costs as may
continue for a reasonable time thereafter with the approval of or as directed by the Contracting
Officer; provided, however, that the Contractor shall proceed as rapidly as practicable to dis-
continue such costs;
(B) there shall be included therein so far as not included under (A) above, the cost
of settling and paying claims arising out of the termination of work under subcontracts or orders,
as provided in.paragraph (b)(v) above, which are properly chargeable to the terminated portion
of the contract;
(C) there shall be included therein the reasonable costs of settlement, including
accounting, legal, clerical, and other expenses reasonably necessary for the preparation of
settlement claims and supporting data with respect to the terminated portion of the contract
and for the termination and settlement of subcontracts thereunder, together with reasonable
storage, transportation, and other costs incurred in connection with the protection or disposi-
tion of termination inventory; provided, however, that if the termination is for default of the
Contractor there shall not be included any amounts for the preparation of the Contractor's set-
tlement proposal; and
(D) there shall be included therein a portion of the fee payable under the contract
determined as follows --
(I) in the event of the termination of this contract for the convenience of the Gov-
ernment and not for the default of the Contractor, there shall be paid a percentage of the fee
equivalent to the percentage of the completion of work contemplated by the contract, less fee
payments previously made hereunder; or
(II) in the event of the termination of this contract for the default of the Contrac-
tor, the total fee payable shall be such proportionate part of the fee (or, if this contract
calls for articles of different types, of such part of the fee as is reasonably allocable to the
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type of article under consideration) as the total number of articles delivered to and accepted
by the Government bears to the total number of articles of a like kind called for by this con-
tract; if the amount determined under this subparagraph (i) is less than the total payment there-
tofore made to the Contractor, the Contractor shall repay to the Government the excess amount; or
(ii) if the settlement includes only the fee, the amount thereof will be determined in
accordance with subparagraph (1)(D) above.
(f) The Contractor shall have the right of appeal under the clause of this contract entitled
"Disputes," from any determination made by the Contracting Officer under paragraphs (c) or (e)
above, except that if the Contractor has failed to submit its claim within the time provided in
paragraph (c) above and has failed to request extension of such time, it shall have no such right
of appeal. In any case where the Contracting Officer has made a determination of the amount due
under paragraph (c) or (e) above, the Government shall pay to the Contractor the following:. (i)
if there is no right of appeal hereunder or if no timely appeal has been taken, the amount so;
determined by the Contracting Officer, or (ii) if an appeal has been taken, the amount finally
determined on such appeal.
(g) In arriving at the amount due the Contractor under this clause there shall be deducted
(i) all unliquidated advance or other payments theretofore made to the Contractor, applicable to
the terminated portion of this contract, (ii) any claim which the Government may have against
the Contractor in connection with this contract, and (iii) the agreed price for, or the proceeds
of sale of, any materials, supplies, or other things acquired by the Contractor or sold pur-
suant to the provisions of this,clause and not otherwise recovered by or credited to the Govern-
ment.
(h) In the event of a partial termination, the portion of the fee which is payable with
respect to the work under the continued portion of the contract shall be equitably adjusted by
agreement between the Contractor and the Contracting Officer, and such adjustment shall be evi-
denced by an amendment to this contract.
(i) The Government may from time to time,: nde such terms and conditions as it may pre-
scribe, make partial payments and payments on accou t against costs incurred by the Contractor
in connection with the terminated portion of the d9nnfa:ct whenever in the opinion of the Con-
tracting Officer the aggregate of such payments shd be within the amount to which the Contrac-
tor will be entitled hereunder. If the total of such payments is in excess of the amount final-
ly determined to be due under this clause, such excess shall be payable by the Contractor to the
Government upon demand, together with interest computed at the rate of 6 percent per annum, for
the period from the date such excess payment is received by the Contractor to the date on which
such excess is repaid to the Government; provided, however, that no interest shall be charged
with respect to any such excess payment attributable to a reduction in the Contractor's claim
by reason of retention or other disposition of termination inventory until ten days after the
date of such retention or disposition, or such later date as determined by the Contracting Of-
ficer by reason of the circumstances.
(j) The provisions of this clause relating to the fee shall be inapplicable if this contract
does not provide for payment of a fee.
Except with respect to defaults of subcontractors, the Contractor shall not be in default
by reason of any failure in performance of this contract in accordance with its terms (includ-
ing any failure by the Contractor to make progress in the prosecution of the work hereunder which
endangers such performance) if such failure 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; quarantine restrictions; strikes; freight embargoes;
and unusually severe weather; but in every case the failure to perform must be beyond the con-
trol and without the fault or negligence of the Contractor. If the failure to perform is caused
by the failure of a subcontractor to perform or make progress, and if such failure arises out
of causes beyond the control of both the Contractor and subcontractor, and without the fault or
negligence of either of them, the Contractor shall not be deemed to be in default, unless (i) the
supplies or services to be furnished by the subcontractor were obtainable from other sources, (ii)
the Contracting Officer shall have ordered the Contractor in writing to procure such supplies or
services from such other sources, and (iii) the Contractor shall have failed to comply reasonably
with such.order. Upon request of the Contractor, the Contracting Officer shall ascertain the facts
and extent of such failure and, if he shall determine that any failure to perform was occasioned by
any one or more of the said causes, the delivery schedule shall be revised accordingly, subject to
the rights of the Government under the clause hereof entitled "Termination."
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12. DISPUTES (ASPR 7-103.12 AFPI 7-403.12)
(a) Except as otherwise provided in this contract, any dispute concerning a question of
fact arising under this contract which is not disposed of by agreement shall be decided by the
Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a
copy thereof to the Contractor. The decision of the Contracting Officer shall be final and
conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails
or otherwise furnishes to the Contracting Officer a written appeal addressed to the Secretary.
The decision of the Secretary or his duly authorized representative for the determination of
such appeals shall be final and conclusive unless determined by a court of competent jurisdic-
tion to have been fraudulent, or capricious, or arbitrary, br so grossly erroneous as necessarily
to imply bad faith, or not supported by substantial evidence. In connection with any appeal
proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to
offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the
Contractor shall proceed diligently with the performance of the contract and in accordance with
(b) This "Disputes" clause does not preclude consideration of law questions in connection
with decisions. provided for in paragraph (a) above: Provided, That nothing in this contract
shall be construed as making final the decision of any administrative official, representative,
or board on a question of law.
13. NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT (ASPR 9-104 AFPI 7-403.13)
The provisions of this clause shall be applicable only if the amount of this contract is in
excess of $10,000.
(a) The Contractor shall report to the Contracting Officer, promptly and in reasonable
written detail, each notice or claim of patent infringement based on the performance of this
contract of which the Contractor has knowledge.
(b) In the event of any suit against the Government, or any claim against the Government
made before suit has been instituted, on account of any alleged patent infringement arising out
of the performance of this contract or out of the use of any supplies furnished or work or
services performed hereunder, the Contractor shall furnish to the Government, upon request, all
evidence and information in possession of the Contractor pertaining to such suit or claim. Such
evidence and information shall be furnished at the expense of the Government except in those
cases in which the Contractor has agreed to indemnify the Government against the claim being
asserted.
LRev'. No. 35, 7/15/58]
14. BUY AMERICAN ACT (ASPR 6-104.5 AFPI 7-404.1)
(a) In acquiring end products, the Buy American Act (41 U. S. Code 10 a-d) provides that
the Government give preference to domestic source end products. For the purpose of this clause:
(i) "components" means those articles, materials, and supplies, which are directly in-
corporated in the end products;
(ii) "end products" means those articles, materials, and supplies, which are,to be ac-
quired under this contract for public use; and
(iii) a "domestic source end product" means (a) an unmanufactured end product which has
been mined'or produced in the United States and (B) an end product manufactured in the United
States if the cost of the components thereof which are mined, produced, or manufactured in the
United States exceeds 50 percent of the cost of all its components. For the purposes of this (a)
(iii)(B), components of foreign origin of the same-type or kind as the products referred to in
(b)(ii) or (iii) of this clause shall be treated as components mined, produced, or manufactured
in the United States.
(b) The Contractor agrees that there will be delivered under this contract only domestic
source end products, except end products:
(i) which are.for use outside the United States;
(ii) which the Government determines are not mined, produced, or manufactured in the
United States in sufficient and reasonably available commercial quantities and of a satisfac-
tory quality;
(iii) as to which the
with the public interest; or
(CPFF Aug. 1, 1960)
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(iv) as to which the Secretary determines the cost to the Government to be unreasonable.
(c) Any component mined, produced, or manufactured in Canada, but not set forth in the
list of Canadian supplies excepted by the Secretary and maintained pursuant to paragraph 6-103.5
(a) of the Armed Services Procurement Regulations shall be treated as a component mined, pro-
duced, or manufactured outside the United States, for the purpose of (a)(iii)(B) above, unless
such component is to be incorporated in an end product to be delivered under this contract which
is on such list, or is an item on the list set forth in paragraph 6-105 of the Armed Services
Procurement Regulations, or is otherwise determined to be nonavailable as set forth in (b)(ti)
above.
LRev. No. 45, 4/20/592
15. CONVICT LABOR (ASPR 12-203 AFPI 7-403.15)
In connection with the performance of work under this contract, the Contractor agrees not
to employ any person undergoing sentence of imprisonment at hard labor.
16. EIGHT-HOUR LAW OF 1912 -- OVERTIME COMPENSATION (ASPR 12-303.1 AFPI 7-403.16)
This contract st to the extent that it is of a character specified in the Eight-Hour Law of
1912 as amended (40 U. S. Code 324-326) and is not covered by the Walsh-Healey Public Contracts
Act (41 U.S. Code 35-45), is subject to the following provisions and exceptions of said Eight-
Hour Law of 1912, as amended, and to all other provisions and exceptions of said Law:
No laborer or mechanic doing any part of the work contemplated by this contract, in the
employ of the Contractor or any subcontractor contracting for any part of the said work contem-
plated, shall be required or permitted to work more than eight hours in any one calendar day
upon such work, except upon the condition that compensation is paid to such laborer or mechanic
in accordance with the provisions of this clause. The wages of every laborer and mechanic em-
ployed by the Contractor or any subcontractor engaged in the performance of this contract shall
be computed on a basic day rate of eight hours per day; and work in excess of eight hours per
day is permitted only upon the condition that every such laborer and mechanic shall be compen-
sated for all hours worked in excess of eight hours per day at not less than one and one-half
times the basic rate of pay. For each violation of the requirements of this clause a penalty of
five dollars shall be imposed for each laborer or mechanic for every calendar day in which such
employee is required or permitted to labor more than eight hours upon said work without receiving
compensation computed in accordance with this clause, and all penalties thus imposed shall be
withheld for the use and benefit of the Government. LRev. No. 28, 1/28/587
17. NONDISCRIMINATION IN EMPLOYMENT (ASPR 12-802 AFPI 7-403.17)
(a) In connection with the performance of work under this contract, the Contractor agrees
not to discriminate against any employee or applicant for employment because of race, religion,
color, or national origin. The aforesaid provision shall include, but not be limited to, the
following: employment, upgrading, demotion/or transfer; recruitment or recruitment advertising;
layoff or termination; rates of pay or other forms of compensation; and selection for training,
including apprenticeship. The Contractor agrees to post hereafter in conspicuous places, avail-
able for employees and applicants for employment, notices to be provided by the Contracting Offi-
cer setting forth the provisions of the nondiscrimination clause. LRev. No. 28, l/28/587
(b) The Contractor further agrees to insert the foregoing provision in all subcontracts here-
under, except subcontracts for standard commercial supplies or raw materials.
18. OFFICIALS NOT TO BENEFIT (ASPR 7-103.19 AFPI 7-403.18)
No member of or delegate to Congress, or resident commissioner, shall be admitted to any
share or part of this contract, or to any benefit that may arise therefrom; but this provision
shall not be construed to extend to this contract if made with a corporation for its general
benefit.
The Contractor warrants that no person or selling agency has been employed or retained
to solicit or secure this contract upon an agreement or understanding for a commission, per-
centage, brokerage, or contingent fee, excepting bona fide employees or bona fide established
commercial or selling agencies maintained by the Contractor for the purpose of securing busi-
ness. For breach or violation of this warranty the Government shall have the right to annul
this contract without liability or in its discretion to deduct from the contract price or con-
sideration, or otherwise recover, the full amount of such commission, percentage, brokerage or
contingent fee.
(CPFF Aug. 1, 1960)
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20. PATENT RIGHTS (ASPR 9-107.2 AFPI 7-403.20)
(a) As used in this clause, the following terms shall have the meanings set forth below:
(1) The term "Subject Invention" means any invention, improvement, or discovery (whether
or not patentable) conceived or first actually reduced to practice either
(A) in the'performance of the experimental, developmental, or research work called
for or required under this contract: or
(B) in the performance of any experimental, developmental, or research work relating
to the subject matter of this contract which was done upon an understanding in writing that a
contract would be awarded; provided that the term "Subject Invention" shall not include any in-
vention which is specifically identified and listed in the Schedule for the purpose of excluding
it from the license granted by this clause. LRev. No. 28, 1/28/58]
(ii) The term "Technical Personnel" means any person employed by or working under con-
tract with the Contractor (other than a subcontractor whose responsibilities with respect to rights
accruing to the Government in inventions arising under subcontracts are set forth in (g), (h),
and (i) below) who, by reason of the nature of his duties in connection with the performance of
this contract, would reasonably be expected to make inventions. LRev. No. 28, 1/28/58]
(iii) The terms "subcontract" and "subcontractor" mean any subcontract or subcontractor
of the Contractor, and any lower-tier subcontract or subcontractor under this contract.
(b)(1) The Contractor agrees to and does hereby grant to the Government an irrevocable, non-
exclusive, nontransferable, and royalty-free license to practice, and cause to be practiced by or
for the United States Government throughout the world, each Subject Invention in the manufacture,
use and disposition according to law, of any article or material, and in the use of any method.
Such license includes the practice of Subject Invention in the manufacture, use, and disposition
of any article or material, in the use of any method, or in the performance of any service acquired
by or for the Government or with funds derived through the Mutual Security Program of the Govern-
ment or otherwise..