NEGOTIATED CONTRACT CONTRACT NO. HF-CT-696

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00709R000400850043-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 71
• Document Creation Date: December 22, 2016
• Document Release Date: January 11, 2011
• Sequence Number: 43
• Publication Date: June 30, 1959
• Content Type: MISC

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SECT
NEGOTIATED 'NTRACT
DPS-1816
COPY--L-of 7
Contract No HF-CT-696
Hycon Mfg. Company
Pasadena, California
Amount: $135,000.00
Performance Period:
1 July 1958 thru 30 June 1959
This contract is entered into, by and between the United States of America,
hereinafter called the Government, represented by the Contracting Officer
executing this contract, and the above-named Contractor which is a Corpora-
tion, incorporated in the State of Delaware, hereinafter called the Con-
tractor.
The parties hereto agree that the Contractor shall furnish the necessary
personnel and shall perform all the services set forth in the attached
Schedule issued hereunder for the consideration stated therein.
The rights and obligations of the parties to this contract shall be subject
to and governed by the attached Schedule and General Provisions, which
together with this signature page and the accompanying certificate comprise
this Contract No. HF-CT-696. In the event of any inconsistency between the
Schedule and the General Provisions, the Schedule shall control.
IN WITNESS WHEREOF, the parties hereto have executed this contract as of
JUL 1 1958 , 1958.
Signatures:
ByJ
itlLL Vice President, Engineering
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nnr;
Contract No. HF-CT-696
CERTIFICATE
certify that
I am the Asst. Secretary-Treasurer of the Corporation named
as Contractor herein; that)
who
sigz:ed this contract on behalf: of the Contractor was then
Vice President, Engineering of said Corporation; that said corn
tract was duly signed for and. in behalf of said Corporation by
authority of its governing bo4y, and is within the scope of its Cor-
porate po tiers .
(Corporate Seal)
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SE
Contract No. HF-CT-696
INDEX TO SCHEDULE
Page
PART I - ARTICLES AND SUPPLIES TO BE FURNISHED ----------
k
PART II - PROCEDURE FOR PRICING -------------------------
5
PART III - DELIVERY -------------------------------------
5
PART IV - INSPECTION AND ACCEPTANCE ---------------------
5
PART V - PL IOD CF PERFORR:ANCE --------------------------
6
PART VI - ESTABLISHING OF A PRICING FORMULA -------------
6
PART VII - FUNDS ALLOTTED -------------------------------
6
PART VIII - WAIVER OF REQUIREMWPS OF GENERAL PROVISIONS-
7
PART IX - SPECIAL SECURITY RESTRICTIONS -----------------
7
PART X - ANTICIPATORY COSTS -----------------------------
8
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SECRET
Contract No. HF-CT-696
SCHEDULE
PART I - ARTICLES AND SUPPLIES TO BE FURNISHED
(a) The Contractor shall furnish to the Government such equipment,
spare parts, modification kits, components, and data for equipment of
types which have been, are being or may hereinafter be manufactured by
the Contractor as the Government may call for hereunder. Quantities of
the supplies to be furnished shall be determined as hereinafter provided.
(b) From time to time the Government will furnish lists to the
Contractor which set forth the items the Government desires to procure
together with the desired delivery schedule and the estimated dollar
amount thereof. These lists will be in the form of (a) a Depot Purchase
Request issued by the Depot Supply Officer or (b) a Hqs. request from
the Contracting Officer or his authorized representatives in the case of
Customer No. 2. The Contractor will promptly delete from said purchase
requests any items rendered obsolete by design changes and insert in lieu
thereof, superseding and interchangeable items, if any, in the same or
lesser quantities, as appropriate. Contractor will generate a Production
List for each Customer from such Depot Purchase Requests and/or Contract-
ing Officer requests and shall transmit three (3) copies if for Customer
1 and six (6) copies if for Customer 2, together with any pertinent informa-
tion concerning the superseded items to the Contracting Officer and his
duly authorized representatives. The Contractor will include an estimated
price and an estimated delivery date on each Production List submitted.
The Contractor will be obligated to furnish the items in the quantities
listed therein, and subject to its rights elsewhere specified in this
contract, the Government will be obligated to take delivery of the items
so furnished on a Production List. The Contractor is hereby authorized to
make delivery in advance of the schedule appearing on any Production List
under this contract.
(c) If it appears to the Contractor at any time that the total price
of the total quantity of items covered by-any or all Production Lists issued
for a specified-Customer is likely to exceed the funds allotted hereunder
in Part VII for said Customer, the Contractor shall notify the Contracting
Officer and the authorized representative of the amount of such excess.
Within thirty (30) days after receipt of such notice, the Government will
either notify the Contractor it has taken action to increase the funds
allotted for a customer, or will notify the Contractor of the items or
quantities to be deleted from such Production Lists in order to bring it
within the dollar amount thereof. If the Government fails to act within
said thirty-day period, the Contractor shall submit to the Contracting
Officer and the authorized representatives a recommendation of the parts
to be deleted to bring the Production Lists within said dollar amount ? .
the Contracting Officer shall approve or disapprove such recommendatiouo
within ten (10) days after receipt thereof. If the Contracting )fficer
fails to act within said ten (10) day period, the recommendation of the Con-
tractor shall be deemed to have been approved and the Production Lists shall
be modified accordingly. If the Government deletes items or quantities from
a Production List, such action shall be considered a partial termination
under the clause hereof entitled Termination for Convenience of the Government.
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SECRET
Contract No. HF-CT-696
PART II - PROCEDURE FOR PRICING
(a) As soon as practicable after receipt by the Contractor from
the Contracting Officer or his authorized representatives of a request
or Depot Purchase Request, as appropriate, but in no event more than
sixty (60) days after such receipt, the Contractor shall prepare and
submit to the Contracting Officer a Proposed Call List (Priced Exhibit)
for each customer which shall include thereon the numbers of the Pro-
duction Lists which are applicable thereto and the unit and total prices
and delivery schedule covering the items shown thereon. A reproducible
original and seven (7) copies of the Proposed Call List will be prepared
and shall be delivered promptly by the Contractor to the Contracting
Officer. The reproducible and three (3) copies shall carry at the end
thereof, a certificate manually signed by an officer or other person
authorized to bind the Contractor, stating that the prices therein repre-
sent a firm quotation. Each such Call shall require the written approval
of the Contracting Officer stating that the prices therein are fair and
reasonable. Each such call shall set forth therein the total dollar
amount thereof.
(b) If the Proposed Call List is approved by the Contracting Officer
it shall be a numbered Call to the contract. If the Contracting Officer
and the Contractor fail to agree on Prices in the Proposed Call List, the
failure to agree shall be deemed a disagreement as to a question of fact
which shall be disposed of in accordance with the clause thereof entitled
"Disputes". The Contracting Jfficer shall reduce to writing by a Proposed
Call List his decision, containing prices he believes fair and reasonable.
The prices decided by the Contracting Officer shall be paid upon all
deliveries, pending final decision of the dispute.
(c) Upon approval of any Call List, the Contracting Officer shall
deliver a copy thereof to the Contractor and forward one copy thereof
bearing his written approval to the Finance Officer responsible for making
payments under this contract. Upon Government's acceptance of delivery
of any of the items listed on an Approved Call List, the Contractor shall
be entitled to be paid therefor at the prices shown on the Approved Call
List.
(d) The Contractor shall be paid upon the submission monthly of
properly certified invoices or vouchers, for partial deliveries accepted
by the Government, or, when requested by the Contractor, payment for
accepted partial deliveries shall be made whenever such payment would
equal or exceed either $1,000.00 or 50% of the total amount of the Approved
Call List.
PART III - DELIVERY
Deliveries shall be made in accordance with the delivery schedules set
forth in the Approved Call Lists as may be generated under this contract
from time to time.
PART IV - INSPECTION AND ACCEPTANCE
All supplies and services to be furnished under this contract shall
be shipped FOB Contractor's or Subcontractor's plant in accordance with
shipping instructions to be issued at a later date.
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Contract No. HF-CT-696
All services, material and workmanship shall be subject to inspec-
tion and test by representatives of the Government. For this purpose,
the Contractor shall allow at all reasonable times, to the extent approved
in writing by the Contracting Officer or his duly authorized representa-
tive, inspectors and other Government personnel free access to the plant
and operations and shall provide all reasonable facilities and assistance
for the safety and convenience of the Government inspectors in the per-
formance of their duties.
Inspection and acceptance of the items contracted for under this
contract shall be made by the Government at the Contractor's plant, with
respect to any items fabricated and/or assembled and packed as indivi-
dual or integral units at the Contractor's plant. With respect to items
fabricated and/or assembled and packed as individual or integral units
at subcontractors' plants, the point of inspection and acceptance shall
be at the plant of such subcontractor.
PART V - PERIOD OF PERFORMANCE
(a) The Contractor shall furnish the articles and supplies requested
hereunder during the period 1 July 1958 through 30 June 1959.
(b) The Government is granted the right and option of renewing or
extending this contract for any additional periods of time but not to
exceed 30 June 1960. This option to extend will be exercised by issuance
of an Amendment to this contract.
PART VI - ESTABLISHING OF A PRICING FORMULA
The parties hereto shall negotiate and establish a fixed pricing
method for certain periods of time. The agreed upon formula(ae) shall
be set forth in an amendment hereto.
PART VII - FUNDS ALLOTTED
For the purposes of this contract there has been allotted the fol-
lowing amounts:
Period
Custom
Total
er
Amount
Amount
1 July 1958 - 30 June 1959
No. 1
$67,500*
No. 2
67.500
$135,000
(*contingent upon availability of funds for
this purpose for Customer No. 1 during the
Government's Fiscal Year 1959).
When preparing a Proposed Call List, Contractor shall indicate
thereon the customer to which such document relates. Further, the
Invoices shall indicate (1) the period involved, (2) the total funds
allotted for said period less the total of all previous Invoices
theretofore submitted, thereby (3) shoving the balance of funds avail-
able for expenditure in that period. Under this amount shall be set
forth the amount'currently being claimed, reflecting the Call List
Number, the line item number, quantity, unit price and total prices
therefor.
-6-
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SECRET
Contract No. HF-CT-696
All Depot Purchase Requests or Contracting Officer authorizations
received prior to the end of a period should be charged to the funds
allotted for that period notwithstanding the preparation of the Call
List, work performed and invoices submitted after close of the period.
Contractor will indicate on final invoices for each customer
that such invoice is its final claim for that period and inform the
Contracting Officer of the unexpended amount for each customer. Un-
expended funds at the end of a period for Customer No. 1 are not
authorized for use in a subsequent period. Unexpended funds at the
end of a period for Customer No. 2 are available for use in a
subsequent period and upon notification of the amount of such funds,
the contract shall be anended to either transfer such funds to the
subsequent period or remove them from the contract. If, at any time,
the Contractor is of the opinion that the cost of such work will exceed
the amount set forth above, it shall notify the Contracting Officer in
accordance with the provisions of paragraph (c) of Part I.
PART VIII - WAIVER OF REQUIRE WTS OF 3ENERAL PROVISIONS
Notwithstanding the requirements of any of the General Provisions
of this contract to the contrary, whensoever the Contractor, in per-
formance of the work under this contract, shall find that the require-
ments of any of the clauses of the General Provisions are in conflict
with security instructions issued to the Contractor by the Contracting
Officer or by his duly authorized representative for security matters,
the Contractor shall call the attention of the Contracting Officer to
such conflict and the Contracting Officer or his duly authorized repre-
sentative for security matters shall (i) modify or rescind such security
requirements or (ii) the Contracting Officer shall issue to the Con-
tractor a waiver of compliance with the requirements of the General
Provisions conflicting with such security requirements. Any waiver of
compliance with the General Provisions of this contract issued by the
Contracting Officer shall be in writing, except that the approval by
the Contracting Officer of any subcontract issued hereunder by the Con-
tractor shall be deemed to constitute approval of waiver of any clauses
of the General Provisions in conflict with the stipulations of such
subcontract.
PART IX - SPECIAL SECURITY RESTRICTIONS
The Contractor shall not reveal (i) the specific nature or any
details of the work being performed hereunder or (ii) any information
whatsoever with respect to the department of the Government sponsoring
this contract and the work thereunder except as the Contractor is
directed or permitted to reveal such information by the Contracting
Officer or by his duly authorized representative for security matters,
and notwithstanding any clause or section of this contract to the con-
trary, the Contractor shall not interpret any clause or section of this
contract as requiring or permitting divulgence of such information to
any person, public or private, or to any officer or department of the
Government without the express consent of the Contracting Officer or
his duly authorized representative for security matters.
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S RE i
EC '__
Contract No. HF-CT-696
PART X - ANTICIPATORY COSTS
All costs, which have been incurred by the Contractor on and after
1 July 1958 in anticipation of this contract and prior to its signing,
and which if incurred after signing would have been considered allowable
items of coat for this contract, shall be considered as allowable items
of cost hereunder.
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Production List No. To Contract No. ! , r
(Authorized Representative
(Contractor)
(Coirtracting Officer
Item part
No. No. Nomenclature Qtr. Estimated Cost Remarks
Preservation, Packing, Packaging and Preservation:
Delivery: Shipment of above parts is desired in
Date
(Authorized Representative)
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Exhibit No. To Contract
FROM:
Contractor
(Contracting Officer)
Item part
No. No. Nomenclature Qtty. Unit Price Total Price
1 5-6724130 Pulse Stretcher 25 10.00 $250.00
Delivery: Shipment of above parts to be made in March 1958
Prices are fair and reasonable and this
Exhibit is hereby approved.
(Contracting Officer
Contractor warrants prices conform to the
price formula in effect on date of this
Exhibit.
(Contractor
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INDEX TO GENERAL PROVISIONS
Article Noo
Page No.
1.
DEFINITIONS----------------------------------
2.
CHANGES--------------------------------------
4.
VARIATION IN QUANTITY-- -----------------------
5.
INSPECTION------ ----------------------
6.
RESPONSIBILITY FOR $U?PLIES------------------
7?
ASSIGNMENT OF CLAP-.-----------------------
8.
ADDITIONAL BOND SECURITY---------------------
9.
FEDERAL STATE & LOCAL TAXES ------------------
10.
DISPUTES------------
11.
BUY AMERICAN ACT--"M,-------------------------
12.
EIGHT HOUR LAW OF 1912-----------------------
i
13i
WALS1-HEALEY PUBLIC``pONTRACTS ACT------------
14.
NONDISCRIMINATION INp: LOYMENT--------------
15.
OFFICIALS NOT 1'O BENEFIT---------------------
16.
COVENANT AGAINST CONTINGENT FEES----------..--
18.
MILITARY SECURITY REQUIRENENTS--_-~._""w ------
11
19.
UTILIZATION OF SMALL BUSINESS CONCERNS-----
13
20.
TXAMINATION OF RECORDS-----------------------
13
21.
GRATUITIES S-----------------------------------
13
22.
CONVICT LABOR----------="-h--------------------?
14
23.
NOTICE & ASSISTANCE REGARDING PATENT
INFRINGEMENT ----------'.:--------------------
14
2t4.
REPORTING OF ROYALTIES-- .-------------------
14
25.
FILING OF PATENT APPLICATIONS----------------
16
25.
AUTHORIZATION & CONSENT----------------------
17
27.
PATENT RIGHTS--------------------------------
17
28.
COPYRIGHT------------------------------------
22
P
9
REPR
B
l
Pmvr
-
.
e
b
fffffl &ND USE OF
cqi DATA ------22
30.
GOVERNMENT FURNISHED PROPERTY----------------
23
31-
TERMINATION FOR CONVENIENCE OF THE
27
33.
DEFAULT--------------------------------------
32
34.
SUBCONTRACTS FOR WORK OR SERVICES------------
33
35.
ALTERATIONS IN CONTRACT----------------------
34
36.
INSPECTION AND AUDIT -------------------------
349
37-
SUPERSEDING SPECIFICATIONS------------------
.
34
38.
DELAY IN DELIVERY DATA ----------------------
34
39-
QUALITY CONTROL SPECIFICATION---------------
35
40.
ADDITIONAL TAX PROVISION --------------------
.135
41.
SHIPMENTS-----------------------------------
35
42.
TIME FOR ISSUANCE OF PROIXJCTION LISTS-------
36
43.
FORMS---------------------------------------
36
44.
RIGHTS IN DATA - UNLIMITED------------------
37`
45.
CERTIFICATE OF ACCEPTANCE-------------------
37
L uu u~ ~.
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? d
GENERAL PROVISIONS
As used throughout this contract, the following terms shall
have the meanings set forth below:
(a) The terra "Secretary" means the Secretary, the Under Secre-
tary, or any Assistant Secretary of the Department and the head or
any assistant head of the executive agency; and the tern "his duly
authorized representative" means any person or persons or board (other
than the Contracting Officer) authorized to act for the Secretary;and
the terra "Department" means that component of the Government having
cognizance of this contrttet and represented by the Contracting Officer
executing this contract.
(b) The term "Contracting officer" means the person executing
this contract on behalf of the Government, and any other officer or
civilian employee who is a properly designated Contracting Officer;
and the terra includes, except as otherwise provided in this contract,
the authorized representative of a Contracting Officer acting within
the limits of his authority.
(c) Except as otherwise provided in this contract, the term
"subcontracts" includes purchase orders under this contract.
(d) The term "contract work" means all work to be performed
under this contract including any studies covering fundamental, theo-
retical, or experimental investigations; any extension of the inv,:s-
tigative findings and theories of a scientific and technical nature
into practical application; any tangible terms, hereinafter referred
to as supplies, if called for herein, furnished to the Government;
and any reports, data, computations, plans, drawings, and specifica-
tions with respect to the foregoing.
The Contracting Officer may at any time, by a written order, and
without notice to the sureties, make changes, within the general scope
of this contract, in any one or more of the following: (i) drawings,
designs, or specifications, where the supplies to be furnished are to
be specially manufactured for the Government in accordance therewith;
(ii) method of shipment or packing; and (iii) place of delivery. If
any such change causes an increase or decrease in the cost of, or the
time required for, performance of this contract, an equitable adjust-
ment shall be made in the contract price or delivery schedule, or
both, and the contract shall be modified in writing accordingly. Any
claim by the Contractor for adjustment under this clause must be as-
serted within 60 days from the date of receipt by the Contractor of
the notification of change; PROVIDED, however, that the Contracting
FP (Oct 8, 1956)
Price Rev.
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Officer, if he decides that the facts justify such action, may receive
and act upon any such claim asserted at any time prior to final pay-
ment under this contract. Failure to agree to any adjustment shall
be a dispute concerning a question of fact within the meaning of the
clause of this contract entitled "Disputes." However, nothing in
this clause shall excuse the Contractor from proceeding with the con-
tract as changed.
Except as otherwise provide-i-n-th sInntract, no payment for
extras shall be made unless such extras and the eric hmre?or_hav,^
h on niithcri nerd in writing by the Contracting C fice
4. VAP.IATION IN QUANTITY
No variation in the quantity of any item called for by this con-
tract will be accepted unless such variation has been caused by con-
ditions of loading, shipping, or packing, or allowances in manufac-
turing processes, and then only to the extent, if any, specified
elsewhere in this contract.
5. INSPECTION
(a) All supplies (which term throughout this clause includes
without limitation raw materials, components, intermediate assemblies,
and end products) shall be subject to inspection and test by the Gov-
ernment, to the extent practicable at all times and places including
the period of manufacture, and in any event prior to final acceptance.
.(b) In case any supplies or lots of supplies are defective in
material er workmanship or otherwise not in conformity with the re-
quirements of this contract, the Government shall have the right
either to reject them (with or without instructions as to their dis-
position) or to require their correction. Supplies or lots of sup-
plies which have been rejected or required to be corrected shall be
removed or corrected in place, as requested by the Contracting Officer,
by and at the expense of the Contractor promptly after notice, and
shall not again be tendered for acceptance unless the former tender and
either the rejection or requirement of correction is disclosed. If
the Contractor fails promptly to remove such supplies or lots of sup-
plies, when requested by the Contracting Officer, and to proceed
promptly with the replacement or correction thereof, the Goverment
either (i) may by contract or otherwise replace or correct such sup-
plies and charge to the Contractor the cost occasioned the Government
thereby, or (ii) may terminate this contract for default as provided
in the clause of this contract entitled "Default". Unless the Con-
tractor elects to correct or replace the supplies which the Government
has a right to reject and is able to make such correction or rep_lace-
ment within the required delivery schedule, the Contracting Officer
may require the delivery of such supplies at a reduction in price
FP (oct. 8, 1956) . - 2 -
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which is equitable under the circurstances. Failure to agree to such
reduction of price shall be a dispute concerning a question of fact
within the meaning of the clause of this contract entitled "Disputes".
(c) If any inspection or test is made by the Government on the
premises of the Contractor or a subcontractor, the Contractor without
additional charge shall provide all reasonable facilities and assist-
ance for the safety and convenience of the Government inspectors in
the performance of their duties. If Government inspection or test is
made at a point other than the premises of the Contractor or a sub-
contractor, it shall be at the expense of the Government, PROVIDED,
that in case of rejection the Government shall not be liable for any
reduction in value of samples used in connection with such inspection
or test. All inspecticns and tests by the Government shall be per-
formed in such a manner as not to unduly delay the work. 'The Govern-
ment reserves the right to charge to the Contractor any additional
cost of Government inspection and test when supplies are not ready at
the time such inspection and test is requested by the Contractor. Final
acceptance or rejection of the supplies shall be made as promptly as
practicable after delivery, except as otherwise provided in this con-
tract; but failure to inspect and accept or reject supplies Shall
neither relieve the Contractor from responsibility for such supplies
as are not in accordance with the contract requirements nor impose
liability on the Government therefor.
(d) The inspection and test by the Government of any supplies
or lots thereof does not relieve the Contractor fro;a.any responsibility
regarding defects or other failures to meet the contract requirements
which may be discovered prior to final acceptance. Except as other-
wise provided in this contract, final acceptance shall be conclusive
except as regards latent defects, fraud, or such gross mistakes as
amount to fraud.
(e) The Contractor shall provide and maintain an inspection
system acceptable to the Government covering the supplies hereunder.
Records of all inspection-work-by the Contractor shall be kept com-
plete and available to the Government during- :he`-perforrmance of this
contract and for such longer period as may be specified elsewhere in
this contract.
6. RESPONSIBILITY FOR SUPPLIES
Except as otherwise provided in this contract, (i) the Contractor
shall be responsible for the supplies covered by this contract until
they are delivered at the designated delivery point, regardless of
the point of inspection; and (ii) the Contractor shall bear all
risks as to rejected work after notice of rejection.
(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
FP (Oct. 8, 1956) - 3 -
Price Rev.
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contract provides for payrients aggregating $1,000 or more, claims
for moneys due or to become due to the Contractor from the Govern-
ment under this contract may be assigned to a bank, trust company,
or other financing institution, including any Federal lending agency,
and may thereafter be further assigned and reassigned to any such
institution. Any such assignment or 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. Notwitbbtandiflg any
provision of this contract, payment to an assignee of any moneys due
or to become due under this contract shall not, to the extent provided
in said Act as amended, be subject to reduction or set-off.
(b) In no event shall copies of this contract or of any plans,
specifications, or other similar documents relating to work under
this contract, if marked "TOP SECRET," "SECRET," "COIFIDENTtAL-,"
bo 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 fur-
nished, or any information contained therein ::lay be disclosed, to such
assignee upon the prior written authorization of the Contracting Officer
(c) The Contractor shall obtain the written authorization of
the Contracting Officer prior to the assignment of any rights under
this contract.
8. ADDITIONAL BOND SECURITY
If any surety upon any bond furnished in connection with this
contract becomes unacceptable to the Government, or if any such
surety fails to furnish reports as to his financial condition from
time to time as requested by the Government, the Contractor shall
promptly furnish such additional security as may be required from
time to time to protect the interests of the Government and of per-
sons supplying labor or materials in the prosecution of the work
contemplated by this contract.
9. FEDERAL, STATE AND LOCAL TAXES
6-ct7 5,
Price Rev.
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(a) DEFINITIONS. As used throughout this clause, the following
terms shall have the meanings set forth below:
(1) The term "direct tax" means any tax or duty
directly applicable to the completed supplies or
services (as distinguished from taxes directly ap-
plicable to materials and components used in the
manufacture or furnishing of the completed supplies
or services) covered by this contract or any other
tax or duty from which the Contractor or this trans-
is exempt. It includes any tax or duty directly
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applicable to the i=aportation, production, processing,
manufacture, construction, sale, or use of such sup-
plies or services; it also includes any tax levied on,
with respect to, or measured by sales, receipts from
sales, or use of the supplies or services covered by
this contract. The terra does not include transportation
taxes, unemployment compensation taxes, social security
taxes, income taxes, excess profits taxes, capital stock
taxes, property taxes, and such other taxes as are not
within the definition of the term "direct tax" as set
.forth above in this paragraph.
(ii) The terra "contract date" means the effective
date of this contract if it is a negotiated contract
or the date set for the opening of bids if it is a
contract entered into as a result of formal advertisin,.
For the purpose of any additional procurement of supplies
or services called for by any agreement supplemental
hereto, the term "contract date" shall refer to the date
of such supplemental agreement.
(b) FEDERAL TAXES. Except as may be otherwise provided in this
contract, the contract price includes all applicable Federal taxes in
effect on the contract date.
(c) STATE OR LOCAL TAXES. Except as may be otherwise provided
in this contract, the contract price does not include any State or
local direct tax in effect on the contract date.
(d) EVIDENCE CF EXEMPTION: The Government agrees, upon request
of the Contractor, unless there exists no legal basis to sustain an
exemption, to furnish a Tax Exemption Certificate or other similar
evidence raf exemption with respect to any direct tax not included in
the contract price pursuant to this clause; and the Contractor agrees,
in the event of the refusal of the applicable taxing authority to ac-
cept such evidence of exemption, (i) promptly to notify the Contracting
Officer of such refusal, (ii) to cause the tax in question to be paid
in such manner as to preserve all rights to refund thereof, and (iii)
if so directed by the Contracting Officer, to take all necessary action,
in cooperation with and for the benefit of the Government, to secure
a refund of such tax (in which event the Government agrees to reim-
burse the Contractor for any and all reasonable expenses incurred at
its direction).
(e) PRICE ADJUSTMENT. If, after the contract date, (i) the
Federal Government or any State or local government either imposes
or increases (or removes an exemption with respect to) any direct
tax, or any tax directly applicable to the materials or components
used in the manufacture or furnishing of the completed supplies or
services covered by this contract, or (ii) the Federal Government or
any State or local government refuses to accept the evidence of exemp-
tion, furnished under paragraph (d) hereof, with respect to any direct
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tax excluded from the contract price, or (iii) the Federal Government
does not furnish a tax exr-mption certificate or other similar evidence
of exemption with respect to any direct tax excluded from the contract
price, and if under either (i), (ii), or (iii) the Contractor is
obliged to and does pay or bear the burden of any such tax (and does
not secure a refund thereof), the contract price shall be correspondingly
increased, and if interest and penalties are incurred by reason of
delay in payment of such tax on the instruction of the Contracting
Officer, and such interest and penalties are legally imposed, the con-
tract price shall be correspondingly increased, If, after the contract
date, the Contractor is relieved in whole or in part from the payment
or the burden of any direct tax included in the contract price, or any
tax directly applicable to the materials or components used in the
manufacture or furnishing of the completed supplies or services covered
by this contract, the Contractor agrees promptly to notify the Contrac-
ting Officer of such relief, and the contract price shall be corres-
pondingly decreased or the amount of such relief paid over to the
Government. Invoices or vouchers covering any increase or decrease
in contract price pursuant to the provisions of this paragraph shall
state the amount thereof, as a separate added or deducted item, and
shall identify the particular tax imposed, increased, eliminated, or
decreased.
(f) REFUND OR DRAWBACK. If any tax or duty has been included
i.n the contract price cr the price as adjusted under paragraph (e) of
this clause, and if the Contractor is entitled to a refund or drawback
by reason of the export or re-export of supplies covered by this con-
tract, or of materials or components used in the manufacture or fur-
nishing of the completed supplies or services covered by this contract,
the Contractor agrees that he will promptly notify the Contracting
Officer thereof and that the amount of any such refund or drawback
obtained will be paid over to the Government or credited against amounts
due from the Government under this contract; PROVIDED, however, that
the Contractor shall not be required to apply for such refund or draw-
back unless so requested by the Contracting Officer.
Except as otherwise provided in this contract, any dispute con-
cerning a question of fact arising under this contract which is not
disposed of by agreement shall be decided by the Contracting Officer,
who shall reduce his decision to writing and mail or otherwise furnish
a copy thereof to the Contractor. Within thirty (30.) days from the
date of receipt of such copy, the Contractor may appeal by mailing or
otherwise furnishing to the Contracting Officer a written appeal ad-
dressed to the Secretary, and the decision of the Secretary or his
duly authorized representative for the hearing of such appeals shall,
unless determined by a court of competent jurisdiction to have been
fraudulent or capricious or arbitrary or so grossly erroneous as neces-
sarily to imply bad faith, or not supported by substantial e-idence, be
final and conclusive: PROVIDED, That, if no such appeal is taken, the
decision of the Contracting Officer shall be final and conclusive In
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connection with any appeal proceeding under this clause, the Contractor
shall be afforded an opportunity to be heard and to offer evidence in
support of its appeal. Pending final decision of a dispute hereunder,
the Contractor shall proceed diligently with the performance of the
contract and in accor-'.snce with the Contracting Officer's decision.
The Contractor agrees that there will be delivered under this con-
tract only such unmanufactured articles, materials and supplies (which
term "articles, materials and supplies" is hereinafter referred to in
this clause as "supplies") as have been mined or produced in the United
States, and only such manufactured supplies as have been manufactured
in the United States substantially all from supplies mined, produced
or manufactured, as the case may be, in the United States. Pursuant
to the Buy American Act (41 U. S. Code lOa-d), the foregoing provision
shall not apply (i) with respect to supplies excepted by the Secretary
from the application of that Act, (ii) with respect to supplies for :se
outside the United States, or (iii) with respect to the supplies to be
delivered under this contract which are of a class or kind determined by
the Secretary or his duly authorized representative not to be mined, pro-
duced, or manufactured, as the case may be, in the United States in suf-
ficient and reasonably available commercial quantities and of a satis-
factory quality, or (iv) with respect to such supplies from which the
supplies to be delivered under this contract are manufactured, as are
of a class or kind, determined by the Secretary or his duly authorized
representative not to be mined, produced, or manufactured, as the case
may be, in the United States in sufficient and reasonably available com-
mercial quantities and of a satisfactory quality: PROVIDED, That this
exception (iv) shall not permit delivery of supplies manufactured out-
side the United States if such supplies are manufactured in the United
States in sufficient and reasonably available commercial quantities and
of a satisfactory quality.
12. EIGHT-HC LAW OF 1912
This contract, to'the extent that it is of a character specified
in the Eight-Hour Law of 1912 as amended (40 U. S. Code 324-326) and
is not covered by the Walsh-Healey Public Contracts Act (41 U. S. Code
35-45) is subject to the following provisions and exceptions of said
Eight-Hour Law of 1912 as amended, and to all other provisions and ex-
ceptions of said Law.
No laborer or mechanic doing any part of the work contempla-
ted by this contract, in the employ of the Contractor or any sub-
contractor contracting for any part of the said work shall be re-
quired or permitted to work more than eight hours in any one cal-
endar day upon such work, except upon they-con.i.tion that ccsmpen-
sation is paid to such laborer or mechanic in accordance with the
provisions cf this clause. The wages of every such laborer and
mechanic employed by the Contractor or any subcontractor engaged
~_. in the performance of this contract shall be computed on a basic day rate of
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eight hours per day; and work in excess of eight hours per day is
permitted only upon the condition that every such laborer and mechanic
shall be compensated for all hours worked in excess of eight hours
per day at not less than one and one-half times the basic rate of
pay. For each violation of the requirements of this clause a penalty
of fi\e dollars shall be imposed upon the Contractor for each such
laborer or mechanic for every calendar day in which such employee
is required or permitted to labor more than eight hours upon said
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.
13. WALSH-HEALEY PUBLIC CONTRACTS ACT
If this contract is for the manufacture or furnishing of mater-
ials, supplies, articles or equipment in an amount which exceeds or
may exceed $10,000 and is otherwise subject.to the Walsh-Healey Public
Contracts Act as amended (41 U. S. Code 35-45), there are hereby incor-
porated by reference all representations and stipulations required by
said Act and regulations issued thereunder by the Secretary of Labor,
such representations and stipulations being subject to all applicable
rulings and interpretations of the Secretary of Labor which are now
t 4-1-
/ or n o'?.r hereafter be in ePf t = = t
ec
t
C
h
ll
h
be re:juired to include this clause in subcontracts issued hereunder
when the inclusion of this clause in subcontr act would ,jeopardize
or cenf.?lict with the security considerations established in connec-
tion with z s~~ _._ ------------------------ ._---_.__ ___
_th this contract.
14. NONDISCRIIJLNATION IN EMPLOYMENT
(a) In connection with tha frnrn e of work under this con-
,- tract, the Contract?r- agreas__not to discriminate a'gainst any employee
or applicant for employment because of race, religion, color, or
national origin. The aforesaid provision shall include, but not be
limited to, the following: employment, upgrading, demotion, or
transfer; recruitment or recruitment advertising; layoff or termina-
tion; rates of pay or other forms of compensation; and selection
for training, including apprenticeship. The Contractor agrees to
post hereafter in conspicuous places, available for employees and
applicants for employment, notices to be provided by the Contracting
Officer setting forth the provisions of the nondiscrimination clause.
___ .-(b) The Contractor further agrees to insert the foregoing pro-
vision in all. subcontracts issued hereunder, except subcontracts for
standard commercial supplies or raw materials, and except as insertion
of the foregoing
~__ _..._ g provision in a subcontract w.guld_~eo~dize or cor_-
Eliot with the__seculc~r ~cn,iderions established in connection with
----?... this contract ___---
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, exc..p
a
no.
e
on tractor s
t
a
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15. OFFICIALS NOT TO BENEFIT
No member of or delegate to Congress, or resident commissioner,
shall be admitted to any share or part of this contract, or to any
benefit that may arise therefrom; but this provision shall not be con-
strued to extend to this contract if made with a corporation for its
general benefit.
16. COVENANT AGAINST CONTINGENT FEES
The Contractor warrants that no person or selling agency has been
employed or retained to solicit or secure this contract upon an agreement
or understanding for a commission, percentage, 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 business. For breach or violation of this warranty the Govern-
ment shall have the right to annul this contract without liability or in
its discretion to deduct from the contract price or consideration the
full amount of such commission, percentage, brokerage, or contingent fee.
If this contract is a negotiated fixed-price type of contract for
production or modification of aircraft (or missiles having the general
characteristics of aircraft) the clause set forth below shall apply:
(a) Subject to the definitioas and limitations prescrib
tion is caused by any of the following perils;
of aircraft) in the open; PROVIDED, that such damage, 1s,
destruction of aircraft (or missiles having the general cha
this clause, the Government assumes the risk of damage to or 1
(i) Fire; lightning, windstorm, cyclo- , tornado, hail; explosion;
riot, riot attending a strike, civil commot' n, vandalism and malicious
mischief; sabotage; aircraft or objects lling therefrom, vehicles running
on land or tracks, excluding vehicle owned or operated by the Contractor
or any agent or employee of the C tractor; smoke; earthquake or volcanic
eruption; flood, meaning there rising-of a body of water; hostile or
warlike action, including ion in hindering, combating, or defending
against an actual, impe ng or expected attack by any government or
sovereign power (de ' e or de facto), or by any authority using military,
naval or air for s orb any agent of any such go
~ , Y Y Y vrnment, power, auth-
ority, or fort or
ii) Other peril of a type not`"atd~above, if such other peril
accordance with the normal practice of the Contractor, or a prevailing
practice in the industry in which the Contractor is engaged with respect
is c omarily covered by insurance (or z~a?reserve for self-insurance)
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buildings or roofed structures.
(ii) The term "in the open" means located wholly outside of
withdrawn from stores for installation in aircraft in the open or
temporarily removed from such aircraft, provided such uninstalled p
perty is in the open.
(i) The term "Aircraft" means aircraft to be furnished to
the Government under th_s contract, including complete aircraft; and
aircraft in the course of manufacture or modification, including en-
gines, instruments, subassemblies, parts, and equipment installed
therein, or in process of installation, and all uninstalled property
(c) The Government's obligation under this clauIe shall extend
only to aircraft in the open under conditions approved,/ the Contrac-
ting Officer, and shall not extend to the following:
(i) loss, destruction, or damage result' n9 from failure of
the Contractor, due to willful misconduct or lac of good faith of any
of the Contractor's managerial personnel, to twin and administer a
program for the maintenance, repair, protect' n, and preservation of
aircraft in the open, in accordance with so d industrial practice. The
term "Contractor's managerial personnel" means the Contractor's directors,
officers, and any of its managers, supe i~ntendents, or other equivalent
representatives who have supervision or direction of all or substantially
all of the Contractor's business, or-all or substantially all of the
Contractor's operation at any one plant or separate location at which
this contract is performed, or a separate and complete major industrial
operation in connection with the performance of this contract;
(ii) loss, destruction or damage to aircraft in the possession
or control of any subcontractor, except to the extent that the subcon-
tract, with the approval of the Contracting Officer and consistent with
this clause, may otherwis provide.
(d) The Contractor warrants that the contract price does not
and will not include- any charge or re erve for insurance (including
self-insurance funds or reserves) covering damage to or loss or destruc-
tion of aircraf+/in the open caused by of the any ~ perils set forth in
paragraph (s.) hereof.
In the event of damage to or loss or'struction of air-
craft in e open, the Contractor shall take all reasonable steps to
protect such aircraft from further pte damaged and undam-
aged < rcraft, put all aircraft in tix ble order, and furnish
~ai
to t e Contracting Officer a statement*`
(i) the lost, destroyed, or damaged!alvcraft;
(ii) the time and origin of the loss, destruction, Pr damage;
(iii) all known interests in commingled property of which
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(iy) ithe it 1ir~,A+`6'~ i ' any, cove 'in
in such commingled property.
The Contractor shall be reimbursed for expenditures made by it in
performing its obligations under this paragraph, to the extent approv
by the Contracting Officer and. this contract shall be modified in 7It-
ing accordingly.
(f) If prior to acceptance by and delivery to the
any aircraft in the open is lost, destroyed, or damaged due
the perils set forth in paragraph (a) hereof, the Governor,
otherwise provided in this contract, elect to require t
be replaced by the Contractor or restored by the Cont
tion in which it was immediately prior to such dams
requires the aircraft to be replaced or restored,
went shall be made in the amount due under this
required for its performance, and this c.ntra
writing accordingly. Alternatively, the Go
.pate this contract as to any such lost, d
and in that event the rights of the p
clause entitled Termination for Conve
ernment
o any of
t may, unless
such aircraft
actor to the condi-
e. If the Government
an equitable adjust-
contract and in the time
shall be modified in
ernment may elect to termi-
troyed, or damaged aircraft,
es shall be as provided in the
(g) In the event the Co ractor is at any time reimbursed or
compensated by any third person or any damage to or loss or destruction
of any aircraft in the open c sed by any peril set forth in paragraph
(a) hereof for which the Co ractor has been compensated by the Govern-
ment, it shall equitably imburse the Government. The Contractor shall
do nothing to prejudice e Government's rights to recover against
third parties for any uch loss, destruction or damage and, upon the
request of the Contr cting Officer, shall at the Government's expense,
furnish to the Gov rnment all reasonable assistance and cooperation
(including the oxecution of suit and the execution of instruments of
assignment or brogation in favor of the Government) in obtaining re-
covery.
h) Any loss or destruction of, or damage to, property fur-
nished the Government will be governed by the clause of this con-
tras entitled "Goverranent-Furnished Property," to the extent that
su u clause is, by its terms, applicable.
(i) Any loss, or destruction of, or damage to, aircraft oc-
curring in connection with operations of said aircraft will be governed
by the clause of this contract entitled "Flight Risk," to the extent
18. MILITARY SECURITY REQUIREMENTS
(a) The provisions of this clause shall apply to the extent that
this contract involves access to security information classified "Con-
fidential" including "Confidential - Modified Handling Authorized" or
higher.
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(b) The Government shall notify the Contractor of the security
classification of this contract and the elements thereof, and of any
subsequent revisions in such security classification, by the use of a
Security Requirements Check List '(DD Form 254 and 254-I).
(c) To the extent the Government has indicated as of the date
of this contract, or thereafter indicates, security classification under
this contract as provided in paragraph (b) above, the Contractor shall
safeguard all classified elements of this contract and shall provide and
maintain a system of security controls within its own organization in
accordance with the requirements of:
(i) the Security Agreement (DD Form 441), including the Department
of Defense Industrial Security Manual for Safeguarding Classified Infor-
mation as in effect on date of this contract, and any modification to
the Security Agreement for the purpose of adapting the Manual to the
Contractor's business; and
(ii) any amendments to said Manual made after the date of this
contract, notice of which has been furnished to the Contractor by the
Security Office of the Military Department having security cognizance
over the facility.
(d) Representatives of the Military Department having security
cognizance over the facility and representatives of the contracting
Military Department shall have the right to inspect at reasonable inter-
vals the procedures, methods, and facilities utilized by the Contractor
in complying with the security requirements under this contract. Should
the Government, through its authorized representative, determine that
the Contractor has not complied with such requirements, the Government
shall inform the Contractor in writing of the proper actions to be
taken in order to effect compliance with such requirements.
(e) If, subsequent to the date of this contract, the security
classifications or requirements under this contract are changed by
the Government as provided in this clause and the security costs under
this contract are thereby increased or decreased, the contract price
shall be subject to an equitable adjustment by reason of such increased
or decreased costs, Any equitable adjustment shall be accomplished in
the same manner as if such changes were directed under the "Changes"
clause in this contract.
(f) The Contractor agrees to insert, in all subcontracts hereunder
which involve access to classified security information, provisions which
shall conform substantially to the language of this clause, including
this paragraph (f) but excluding the last sentence of paragraph (e) of
this clause.
(g) The Contractor also agrees that it shall determine that any
subcontractor proposed by it for the furnishing of supplies and ser-
vices which will involve access to classified information in the Con-
tractor's custody has been granted an appropriate facility security
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clearance, which is still in effect, prior to being accorded access
to such classified security information.
19. UTILIZATION OF SMALL BUSINESS CONCERNS
(a) It is the policy sf the Government as declared by the Con-
gress to bring about the greatest utilization of small business con-
cerns which is consistent with efficient production.
(b) The Contractor agrees to accomplish the maximum amount of
subcontracting to small business concerns that the Contractor finds
to be consistent with the efficient performance of this contract.
20. EXAMINATION OF RECORDS
The following clause will be applicable in all negotiated fixed-
price supply contracts and purchase orders in excess of 11,000.
EXAMINATION OF RECORDS
(a) The Contractor agrees that the Contracting Officer or any
of his duly authorized representatives shall, until the expiration
of three years after final payment under this contract, have access
to and the right to examine any directly pertinent books, documents,
papers and records of the Contractor involving transactions related
to this contract.
(b) The Contractor further agrees to include in all his sub-
contracts hereunder a provision to the effect that the subcontractor
agrees that the Contracting Officer or any of his duly authorized
representatives shall, until the expiration of three years after
final payment under the subcontract, have access to and the right to
examine any directly pertinent books, documents, papers, and records
of such subcontractor involving transactions related to the subcon-
tract. The term "subcontract" as used in this clause excludes (i)
purchase orders not exceeding $1,000 and (ii.) subcontracts or pur-
chase orders for public utility services at rates established for
uniform applicability to the general public.
(a) The Government may, by written notice to the Contractor,
terminate the right of the Contractor to proceed under this contract
if it is found, after notice and hearing, by the Secretary or his
duly authorized representative, that gratuities (in the form of
entertainment, gifts, or otherwise) were offered or given by the
Contractor, or any agent or representative of the Contractor, to any
officer or employee of the Government with a view toward securing a
contract or securing favorable treatment with respect to the awarding
or amending, or the making of any determinations with respect to the
performance of such contract; PROVIDED, That the existence of the
facts upon which the Secretary or his duly authorized representative
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makes such findings shall be in issue and may be reviewed in any com-
petent court.
(b) In the event this contract is terminated as provided in
paragraph (a) hereof, the Government shall be entitled (i) to pursue
the same remedies against the Contractor as it could pursue in the event
of a breach r f the contract by the Contractor, and (ii) as a penalty in
addition to any other damages to which it may be entitled by law, to
exemplary damages in an amount (as determined by the Secretary or his
duly authorized representative) which shall be not less than three nor
more than ten times the costs incurred by the Contractor in providing
any such gratuities to any such officer or employee.
(c) The rights 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
In connection with the performance of work under this contract,
the Contractor agrees not to employ any person undergoing sentence of
imprisonment at hard labor.
23. NOTICE AND ASSISTANCE REGARDING PATENT INFRINlE1VMNT
The provisions of this clause shall be applicable only if the
amour.:t of this contract is in excess of $5,000.
(a) The Contractor shall report to the Contracting Officer,
promptly and in reasonable written detail, each notice or claim of
patent infringement based on the performance of this contract of which
the Contractor has knowledge.
(b) In the event of litigation against the Government on account
of any claim of patent infringement arising out of the performance of
this contract or cut of the use of any supplies furnished or work or
services performed hereunder, the Contractor shall furnish to the
Government, upon request, all evidence and information in possession
of the Contractor pertaining to such litigation. Such evidence and
information shall be furnished at the expense of the Government except
in those cases in which the Contractor has agreed to indemnify the
Government against the claim being asserted.
24. REPORTING OF ROYALTIES
The provisions of this clause shall be applicable only if the
amount of the contract is in excess of $10,000.
(a) The Contractor shall report in writing (in quadruplicate) to
the Contracting Officer as soon as practicable after execution of this
contract whether or not any royalties in excess of $250 have been paid
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or are to be paid by the Contractor directly to any person or firm in
connection with the performance of this contract If royalties in ex-
cess of $250 have been paid or are to be paid to any person or firm, the
report shall include the following items of information with respect to
such royalties (including the initial $250):
(1) The name and address of each licensccr to whom royalties in
excess of $250 have been paid or are to be paid,
(2) The patent numbers, patent application serial numbers (with
filing dates), or other identification of the basis for such royalties,
(3) The manner of computing the royalties consisting Of (i)
a brief identification of each royalty-bearing unit or process, (ii)
the total amount of royalties, and (iii) the percentage rate or dollars
and cents amount of royalties on each such unit or process; PRCTIM,
that if the royalties cannot be computed in terms of units or dollars
and cents value, then other data showing the manner in which the Con-
tractor computes the royalties.
(b) In lieu of furnishing a report under paragraph (a), the Con-
tractor may furnish a single, consolidated report for each accounting
period of the Contractor during which the Contractor has contracts with
the Government, provided the Contractor has requested and obtained the
prior written approval of the Contracting Officer. Such consolidated
report :shall be furnished, when the furnishing thereof has been approved,
in the :r~umoer of copies as approved, as soon as practicable after the
close of the accounting period covered by the report. Such consolidated
report shall be made in accordance with Contractor's established account-
ing practice, and shall include, for the accounting period, the total
a_bount of royalties accruing to each licensor at a rate in excess of
$1,000 per annum on the Contractor's overall business, together with
(i) the name and address of each such licensor, (ii) the patent numbers,
patent application serial numbers (with filing dates), or other identi-
fication of the basis for such royalties, (iii) a brief description of
the subject matter of the license under which royalties are charged,
(iv) the percentage rate or unit amount, or if the royalties do not
accrue by rate or unit amount, such other data showing the manner by
which the royalties accrue to licensor, and (v) an estimate or approxi-
mation (without detailed accounting) of the portion of such royalties
that may be attributable to Government contracts. The Contractor shall,
if requested by the Government, furnish at Government expense a more
detailed allocation of such royalty payments attributable to Government
contracts.
(c) In the event that the Contractor requests written approval to
furnish consolidated reports under paragraph (b) above, the Contracting
Officer shall promptly consider the request and furnish to the Contrac-
tor a letter stating whether or not the request is approved and, not-
withstanding any such approval, the Contracting officer shall have the
right to question any such subsequently furnished report as to accuracy
or completeness of data and to ask for additional information. The
Contractor shall, furnish a copy of such letter of approval to the Con-
tracting Officer ad iui_st.er_ing this curit:ract.
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(d) After payment of eighty percent (80%) of the amount of this
contract, as from time to time amended, further payment shall be with-
held until a reserve of either (i).ten percent (10%) of such amount or
(ii) $5,000, which ever is less, shall have been set aside, such reserve
or the balance thereof to be retained until the Contractor shall have
furnished to the Contracting Officer the report called for by paragraph
(a) hereof or the copy of the letter approving the Contractor's request
to furnish the report under paragraph (b); PRCVIDED that no amount shall
continue to be withheld from payment for the causes specified in this
paragraph (d) if the Contracting Officer shall find that the Contractor
has not, been furnished a letter as required by paragraph (c) within a
reasonable time after making written request to submit a single, con-
solidated report under the provisions of paragraph (b) of this clause;
and PROVIDED FURTHER that the Contracting Officer may, in his discre-
tion, order payment to be withheld in the amount and manner above pro-
vided if the report called for by paragraph (a) is unsatisfactory or (b)
is d(:ionbi% .has no-c been received, or if received, is found to be unsat-
isfactory. No amount shall be withheld under this paragraph when the
minimum amount specified by this paragraph is being withheld under other
provisions of this contract The withholding of any amount or subsequent
payment thereof to the Contractor shall not be construed as a waiver of
any right accruing to the Government under this contract.
25. FILING OF PATENT APPLICATIONS
(a) Before filing or causing to be filed a patent application dis-
closing any subject matter of this contract, which subject matter is
classified "Secret" or higher, the Contractor shall, citing the thirty
(30) day provision below, transmit the proposed application to the Con-
tracting Officer for determination whether, for reasons of national
security, such application should be placed under an order of secrecy
or sealed in accordance with the provisions of 35 U. S. Code 181-188
or the issuance of a patent should be otherwise delayed under pertinent
statutes or regulations; and the Contractor shall observe any instruc-
tions of the Contracting Officer with respect to the manner of delivery
of the patent application to the U. S. Patent Office for filing, but
the Contractor shall not be denied the right to file such patent appli-
cation. If the Contracting Officer shall not have given any such in-
structions within thirty (30) days from the date of mailing or other
transmittal of the proposed application, the Contractor may file the
application.
(b) The Contractor shall furnish to the Contracting Officer, at
the time of or prior to the time when the Contractor files or causes
to be filed a patent application disclosing any subject matter of this
contract, which subject matter is classified "Confidential," a copy of
such application for determination whether, for reasons of national
security, such application should be placed under an order of secrecy
or the issuance of a patent should be otherwise delayed under pertinent
statutes or regulations.
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(c) In filing any patent app,]i,ca tip cozain within the scope c f
this clause, the Contractor sha.1i observe all appUcable security regu-
lations covering the transmission of clsssi ..Led subject -matter
0
2:6. AUTHORIZATIONN AND CONSENT
The following clause shall be applicable in all ?contr.,icts to sup-
plies (including construction work), except purchase orders of $5,000
or less:
The Government hereby gives its authorization oncl consent (without
prejudice to its rights of inde;m.ification, if such rights are provided
for in this contract) for all use and pauufacture, 4.n the perforauanc:e ?of
this contract or any part hereof or any amerid.uent h_'reto or any siiCenn-
tract hereunder (including any lover-tier subcontract), of any patented
invention (i) embodied in the strtcturo or composition of any article
the delivery of which is accepted by the Governmera.t under this contract.,
or (ii) utilized in the machinery, tools, or methods the use of which
necessarily results from compliance by the Contractor or the using SIC)-
contractor with (a) specifications or written provisions now or heresalte:r
forming a part of this contract, or (b) specific written instruetinns
given by the Contracting Officer directing the manner of performance.
T'e Cc'?.''?ractcr?'s entire liability to t:e Government for patent ment s -.:J..1 be determined solely by the provisions of the indemnity
if any, included in the contract and the Government assumes liability for
all other infr.ngement to the extent of the authorization azd worsent
herei ._~bc,ve granted.
27 PAT T RIGHTS
(a) As used in this clause, the following terms shall ha v_- the
m eanings set forth below:'
(i) The term "Subject Inveintic'r." means Any inven-ticn, improve--
ment or discovery (whether or not patentable) conceived or first actually
reduced to practice either (A) in the performance of the exrerimxental.,
developmental, or research -work called for or required under this con-
tract, or (B) in the performance nf. any experimental, developmental., or
research work relating to the subject matter of this contract which was
d:inc upon. an ur:derstandin in writing that i c,-ntra.ct would. be r ,a,rded
Pl'!?VIDEM that the term "Subject In.venticr_" shall not include any inven-
tion which is spe=cifically id::ontified and lis`'ted in the Schedule for the
purpose of excluding it frorr. the 7 icenso granted by this claa:_s e.
(ii) The term "Technical., Personnel" means any per's nn employed
by or working under contract with the Contractor ( other than r subecn-
tractor whose responsibi.li.tles with respect to rights accruing to the
Government in inventions a-?ising under subcontracts are, sat forth in
paragraphs (g), (h), and (i) of this clause) who, by reason of .,he
n a,ture .of' his duties in eonnooction with tho peri o>rmare o of this con-
tract, would reasonably be expt, ctod to matte inver.tions .
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(iii) The terms "subcontract" and "subcontractor" mean any
subcontract or subcontractor of the? Contractor, and any lower-tier sub-
contract or subcontractor under this, contract.
(b) (1) The Contractor agrees to and does hereby grant to the Govern-
ment an irrevocable, nonexclusive, nontransferable, and royalty-free
license to practice, and cause to be practiced by or for the United
States Government throughout the world, each Subject Invention in the
manufacture, use and disposition according to law, of any article or
material, and in the use of any method No license granted herein shall
convey any right to the Government to manufacture, have manufactured, or
use any Subject Invention for the purpose of providing services or sup-
plies to the general public in competition with the Contractor or the
Contractor's commercial licensees in the licensed fields.
(2) With respect to:
(i) any Subject Invention made by other than Technical Per-
sonnel;
(ii) any Subject Invention conceived prior to, but first
actually reduced to practice in the course of, any of the experimental,
developmental, or research work specified in (a)(i) above: and
(iii) the practice of any Subject Invention in foreign
countries; the obligation of the Contractor to grant a license as pro-
vided in (b)(1) above, to convey title as provided in (d)(ii)(B) or (d)
(iv) below, and to convey foreign rights as provided in (e) below, shall
be limited to the extent of the Contractor's right to grant the same
without incurring any obligation to pay royalties or Qther compensation
to others solely on account of said grant. Nothing contained in this
Patent Rights clause shall be deemed to grant any license under any in-
vention other than a Subject Invention.
(c) The Contractor shall furnish to the Contracting Officer the
following information and reports concerning Subject Inventicns which
reasonably appear to be patentable:
M a written disclosure promptly after conception or first
actual reduction to practice of each such Invention together with a
written statement specifying whether or not a United States patent appli-
cation claiming the Invention has been or will be filed by or on behalf
of the Contractor;
(ii) interim reports, at least every twelve mcnths, commen-
cing with the date of this contract, each listing all such Inventions
conceived or first actually reduced to practice more than three mcnths
prior to the date of the report, and not listed on a prior interim re-
port, or certifying that there are no such unreported Inventions; and
(iii) prior to final settlement of this contract, a final
report listing all such Inventions including all those previously listed
in interim reports.
(d) In connection with each Subject Invention referred to in
(c)(i) above, the Contractor shall do the following:
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C
(i) if the Contractor specifies that a United States
patent application claiming such Invention will be filed, the Con-
tractor shall file or cause to be filed such application in due
form and time; however, if the Contractor, after having specified
that such an application would be filed, decides not to file or cause
to be filed said application, the Contractor shall so notify the Con-
tracting Officer at the earliest practicable date and in any event
not later than eight months after first publication, public use or
sale.
(ii) if the Contractor specifies that a United States
patent application claiming such Invention has not been filed and will
not be filed (or having specified that such an application will be
filed thereafter notifies the (ontracting Officer to the contrary), the
Contractor shall:
(A) inform the Contracting Officer in writing at the
earliest practicable date of any publication of such Invention made by
or known to the Contractor or, where applicable, of any contemplated
publication by the Contractor, stating the date and identi?y of such
publication or contemplated publication; and
(B) convey to the Government the Contractor's entire
right, title, and interest in such Invention by delivering to the Con-
tracting Officer upon written request such duly executed instruments
(prepared by the Government) of assignment and application, and such
other papers as are deemed necessary to vest in the Government the
Contractor's right, title, and interest aforesaid, and the right to
apply for and prosecute patent applications covering such Invention
throughout the world, subject, however, to the right of the Contrac-
tor specified in (e) belcw to file foreign applications, and subject
further to the reservation of a non-exclusive and royalty-free license
to the Contractor (and to its existing and future associated and affi-
liated companies, if any, within the corporate structure of which the
Contractor is a part) which license shall be assignable to the succes-
sor of that part of the Contractor's business to which such Invention
pertains:
(iii) the Contractor shall furnish promptly to the Con-
tracting Officer on request an irrevocable power of attorney to in-
spect and make copies of each United States patent application filed
by or on behalf of the Contractor covering any such Invention;
(iv) In the event the Contractor, or those other than the
Government deriving rights from the Contractor, elects not to continue
prosecution of any such United States patent application filed by or
on behalf of the Contractor, the Contractor shall so notify the Con-
tracting Officer not less than sixty days before the expiration of
the response period and, upon written request, deliver to the Contrac-
ting Officer such duly executed instruments (prepared by the Government)
as are deemed necessary to vest in the Government the Contractor's
entire right, title, and interest in such Invention and the applica-
tion, subject to the reservation as specified in (d)(ii) above; and
(v) the Contractor shall deliver to the Contracting Officer
duly executed instruments fully confirmatory of any license rights
herein agreed to be granted to the Government.
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(e) The Contractor, or those other than the Government deriving
rights from the Contractor, shall have the exclusive rights to file
applications on Subject Inventions in each foreign country within:
(i) nine months from the date a corresponding United States
application is filed;
(ii) six months from the date permission is granted to file
foreign applications where such filing had been prohibited for security
reasons; or
(iii) such longer period as may be approved by the Contrac-
ting Officer. The Contractor shall, upon written request of the Con-
tracting Officer, convey to the Government the Contractor's entire
right, title, and interest in each Subject Invention in each foreign
country in which an application has not been filed within the time
above specified, subject to the reservation of a non-exclusive and
royalty-free license to the Contractor together with the right of the
Contractor to grant sublicenses, which license and right shall be as-
signable to the successor of that part of the Contractor's business to
which the Subject Invention pertains.
(f) If the Contractor fails to deliver to the Contracting 3fficer
the interim reports required by (c)(ii) above, or fails to furnish the
written disclosures for all Subject Inventions required by (c)(i) above
shown to be due in accordance with any interim report delivered under
(c)(ii) or otherwise known to be unreported, there shall be withheld
from payment until the Contractor shall have corrected such failures
either ten percent (10%) of the amount of this contract, as from time
to time amended, or five thousand dollars ($5,000), whichever is less.
After payment of eighty percent (80%) of the amount of this contract,
as from time to time amended, payment shall be withheld until a reserve
of either ten percent (10%) of such amount, or five thousand dollars
t$5,,000), whichever is less, shall have been set aside,.such reserve
or balance thereof to be retained until the Contractor shall have fur-
nished to the Contracting Officer:
(i) the final report required by (c) (iii) above;
(ii) written disclosures for all Subject Inventions required
by (c)(i )above which are shown to be due in accordance with interim re-
ports delivered under (c)(ii) above or in accordance with such final
reports or are otherwise known to be unreported; and
(iii) the information as to any subcontractor required by (h)
below. The maximum amount which may be withheld under this paragraph
(f) shall not exceed ten percent (10%) of the amount of this contract
or five thousand dollars ($5,000), whichever is less, and no amount
shall be withheld under this paragraph (f) when the amount specified
by this paragraph (f) is being withheld under other provisions of this
contract. The withholding of any amount or subsequent payment thereof
to the Contractor shall not be construed as a waiver of any rights ac-
cruing to the Government under this contract. This paragraph (f) shall
not be construed as requiring the Contractor to withhold any amounts
from a subcontractor to enforce compliance with the patent provisions
of a subcontract.
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(g) The Contractor shall exert all reasonable effort in negotia-
ting for the inclusion of this Patent Rights clause in any subcontract
hereunder of three thousand dollars ($3,000) or more having experimen-
tal, developmental, or research wore: as one of its purposes. In the
event of refusal by a subcontractor to accept the Patent Rights clause,
the Contractor shall not proceed with .the subcontract without written
authorization of the Contracting Officer, and upon obtaining such auth-
orization, shall cooperate with the Government in the negotiation with
such subcontractor of an acceptable patent rights clause, PROVIDED,
however, that the Contractor shall in any event require the subcontrac-
tor to grant to the Government patent rights under Subject Inventions
of no less scope and on no less favorable terms than those which the
Contractor has under such subcontracts, except that in no event shall
the subcontractor be required to grant to the Government patent rights
in excess of those herein agreed to be granted to the Government by the
Contractor.
(h) The Contractor shall, at the earliest practicable date, notify
the Contracting Officer in writing of any subcontract containing a patent
rights clause, furnish the Contracting Officer a copy of such clause, and
notify the Contracting Officer when such subcontract is completed. It is
understood that with respect to such subcontract clause, the Government
is a third party beneficiary, and the Contractor hereby assigns to the
Government all the rights that the Contractor would have to enforce the
subcontractor's obligations for the benefit of the Government with res-
pect to Subject Inventions. The Contractor shall not be obligated to
enforce the agreements of any subcontractor hereunder relating to Subject
Inventions.
(i) When the Contractor shows that it has been delayed in the
performance of this contract by reason of its inability to obtain in ac-
cordance with (g) above a suitable patent rights clause from a qualified
subcontractor for any item or service required under this contract for
which the Contractor itself does not have available facilities or quali-
fied personnel, the Contractor's delivery dates shall be extended for a
period of time equal to the duration of such delay; and, upon request
of the Contractor, the Contracting Officer shall determine to what ex-
tent, if any, an additional extension of the delivery dates and an in-
crease in contract prices based upon additional costs incurred by such
delay are proper under the circLuustances; and the contract shall be
modified accordingly. If the Contractor, after exerting all reasonable
effort, is unable to obtain a qualified subcontractor as set forth above,
the Contractor may submit to the Contracting Officer a written request
for waiver or modification of the requirement that a suitable patent
rights clause be included in the subcontract.
Such request shall specifically state that the Contractor has used
all reasonable effort to obtain such qualified subcontractor, and shall
cite the waiver or termination provision hereinafter set forth. If,
within thirty-five (35) days after the date of receipt of such request
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for a waiver or modification of said requirement, the Contracting Offi-
cer shall fail to deny in writing such request, the requirement shall
be deemed to have been waived by'the Government. If within such period
the Contractor shall receive a written denial of such request by the
Contracting Officer, this contract shall thereupon automatically ter-
minate and the rights and obligations of the parties shall be governed
by the provisions of the clause of this contract providing for termina-
tion for the convenience of the Government.
28. COPYRIGHT
(a) The Contractor agrees to and does hereby grant to the Govern-
ment, and to its officers, agents and employees acting within the scope
of their official duties, (.) a royalty-free, nonexclusive and irrevo-
cable license to reproduce, translate, publish, use, and dispose of,
and to authorize others so to do, all copyrightable material first pro-
duced or composed and delivered to the Government under this contract
by the Contractor, its employees or any individual or concern specifi-
cally employed or assigned to originate and prepare such materia' and
(ii) a license as aforesaid under any and all copyrighted or copyright-
able work not first produced or composed by the Contractor in the per-
forrimance of this contract but which is incorporated in the material fur-
nished under the contract, provided that such license shall be only to
the extent the Contractor now has, or prior to completion or final set-
tlement of the contract may acquire, the right to grant such license
without becoming liable to pay compensation to others solely because
of such grant.
(b) The Contractor agrees that it will exert all reasonable effort
to advise the Contracting Officer, at the time of delivering any-copy-
rightable or copyrighted work furnished under this contract, of any
adversely held copyrighted or copyrightable material incorporated in
any such work and of any invasion of the right of privacy therein con-
tained.
(c) The Contractor agrees to report to the Contracting Officer,
promptly and in reasonable written detail, any notice or claim of copy-
right infringement received by the Contractor with respect to any mater-
ial delivered under this contract.
The Contractor agrees to and does hereby grant to vernment,
to the full extent of the Contractor's right t so without paynent
of compensation to others, the right produce, use, and disclose
for governmental purposes ing the right to give to foreign gov-
ernments for their as the national interest of the United States
may deman or any part of the reports, drawings, blueprints, data,
ethnical information specified to be delivered by the Contractor
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(a) The Government shall deliver to the Contractor, for use in
connection with and under the terns of this contract, the property des-
cribed in the Schedule or specifications, together with such related
data a:--.d information as the Contractor may request and as may reason-
ably be required for the intended use of such property (hereinafter
referred to as "Government-furnished Property"). The delivery or per-
forrmance dates for the supplies or services to be furnished by the Con-
tractor under this contract are based upon the expectation that Govern-
ment-furnished Property suitable for use will be delivered to the Con-
tractor at the times stated in the Schedule or, if not so stated, in
sufficient time to enable the Contractor to meet such delivery or per-
formance dates. In the event that Government-furnished Property is not
delivered to the Contractor by such time or times, the Contracting Offi-
cer shall, upon timely written request made by the Contractor, make a
determination of the delay occasioned the Contractor thereby, and shall
equitably adjust the delivery or performance dates or the contract price,
or both, and. any other contractual provision affected by such delay, in
accordance with the procedures provided for in the clause of this con-
tract entitled "Changes." In the event the Goverru:ient-furnished Property
is received by the Contractor in a condition not suitable for the in-
tended use the Contractor shall, upon receipt thereof, notify the Con-
tracting Officer of such fact and, as directed by the Contracting Offi-
cer, either (i) return such property at the Govern ent's expense or
otherwise dispose of the property, or (ii) effect repairs or modifica-
tions. Upon the completion of (i) or (ii) above, the Contracting Officer
upon written request of the Contractor shall equitably adjust the delivery
or performance dates or the contract price, or both, and any other con-
tractual provision affected by the rejection or disposition, or the re-
pair or modification, in accordance with the procedures provided for in
the clause of this contract entitled "Changes." The foregoing provisions
for adjustment are exclusive and the Government shall not be liable to
suit for breach of contract by reason of any delay in delivery of Gov-
ernment-furnished Property or delivery of such property in a condition
not suitable for its intended use.
(b) By notice in writing the Contracting officer may decrease the
property furnished or to be furnished by the Goverment under this con-
tract. In any such case, the Contracting Officer upon the written re-
quest of the Contractor shall equitably adjust the delivery or peer-
for::~ance dates or the contract price, or both, and any other contrac-
tual provisions affected by the decrease, in accordance with the pro-
cedures provided for in the clause of this contract entitled "Changes."
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(c) Title to the Government-furnished property shall remain in
the Government. Title to Goveri.Tent-furnished property shall not be
affected by the incorporation or attachment thereof to any property
not owned by the Government, nor shall such Govern crrt-furnished pro-
perty, or any part thereof, be or become a fixture or lose its identity
as personalty by reason of affixation to any realty. The Contractor
shall maintain adequate property control records of Government-furnished
property in accordance with the provisions of the "Manual for the Control
of Government Property in the Possession of Contractors" (Appendix B,
Armed Services Procurement Regulation) as in effect on the date of the
contract, which Manual is hereby incorporated by reference and made a
part of this contract.
(d) The Government-furnished property shall, unless otherwise
provided herein, be used only for the performance of this contract.
(e)' The Contractor shall maintain and administer, in accordance
with "sound industrial practice, a program for the maintenance, repair,
protection and preservation of Government-furnished property, until
disposed of by the Contractor in accordance with this clause. In the
event that any damage occurs to Government-furnished Property the risk
of which has been assumed by the Government under this contract, the
Government 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 re-
quired, the Contractor shall dispose of such property in the manner
directed by the Contracting Officer. The contract price includes no
compensation to the Contractor for the performance of any repair or
replacement for which the Government is responsible, and an equitable
adjustment will be made in the contract price for any such repair or
replacement of Government-furnished property made at the direction of
the Government. Any repair or replacement for which the Contractor
is responsible under the provisions of this contract shall be accom-
plished by the Contractor at its own expense.
(f) (i) Except for loss, destruction or damage resulting from a
failure of the Contractor, due to willful misconduct or lack of good
faith of any of the Contractor's managerial personnel as defined
herein, to maintain and administer the progra for the riiintenance,
repair, protection and preservation of the Governmeent-furnished pro-
perty as required by paragraph (e) hereof, and except as specifically
provided in clause (s) ........ of this contract or in the clause or
clauses of this contract designated in the Schedule, the Contractor
shall not be liable for loss or destruction of or damage to the Gov-
ernrient-furnished property (A) caused by any peril while the property
is in transit off the Contractor's premises, or (B) caused by any of
the following perils while the property is on the Contractor's or sub-
contractor's premises, or on any other premises where such property
may properly be located, or by r.,x~nvt~l_ fh., -rte o:2 h:3C LUGC:.of any of the
following perils:
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(I) Fire lightning; windstorm, cyclone, tornado, hail; explo-
sion; riot, riot attending a strike, civil cormnotion; vandalism and mali-
cious mischief; sabotage; aircraft or objects falling therefrom; vehicles
running on land or tracks, excluding vehicles owned or operated by the
Contractor or any agent or employee of the Contractor; smoke, sprinkler
leakage; earthquake or volcanic eruption; flood, meaning thereby rising
of a body of water; hostile or warlike action, including action in hin-
dering, combating, or defending against an actual, impending or expected
attack by any government or sovereign power (de jure or de facto), or by
any authority using military, naval, or air forces, or by an agent of any
such government, power, authority, or forces; or
(II) Other peril, of a type not listed above, if such other
peril is customarily covered by insurance (or by a reserve for self-
insurance) in accordance with the normal practice of the Contractor, or
the prevailing practice in the industry in which the Contractor is en-
gaged with respect to similar property in the same general locale.
The perils as set forth in (A) and (B) above are hereinafter called
"excepted perils."
This clause shall not be construed as relieving a subcontractor from
liabil.-.ty for loss or destruction of or damage to the Government-F1.irnished
property while in its possession or control, except to the extent that
the subcontract, with the prior approval of the Contracting Officer, may
provide for the relief of the subcontractor from such liability. In the
absence of such approval, the subcontract shall contain appropriate pro-
v_sions requiring the return of all Government-Furnished property in as
good condition as when received, except for reasonable wear and tear or
for the utilization of the property in accordance with the provisions of
the prime contract.
The term "Contractor's managerial personnel" as used herein means
the Contractor's directors, officers and any of its managers, superin-
tendents, or other equivalent representatives who have supervision or
direction of (I) all or substantially all of the Contractor's business;
(II) all or substantially all of the Contractor's operation at any one
plant or separate location at which the contract is being performed;
(III) a separate and complete major industrial operation in connection
wit4 the performance of this contract.
(ii) The Contractor represents that it is not including in the
price hereunder, and agrees that it will not hereafter include in any
price to the Government, any charge or reserve for insurance (including
self-insurance funds or reserves) covering loss or destruction of or
damage to the Government-furnished property caused by any excepted
peril.
(iii) Upon.the happening of loss or destruction of or damage
to any Government-furnished property caused by an excepted peril, the
Contractor shall notify the Contracting Officer thereof, and shall
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communicate with the Loss and Salvage Organization, if any, now or here-
after designated by the Contracting Officer, and with the assistance of
the Loss and Salvage Organization so designated (unless the contracting
Officer has directed that no such organization be employed), shall take
all reasonable steps to protect the Government-furnished property from
further damage, separate the damaged and undamaged Government-furnished
property, put all the Government-furnished property in the best possible
order, and furnish to the Contracting Officer a statement of: (A) the
lost, destroyed and damaged Government-furnished property (B) the time
and or`.gin of the loss, destruction or damage, (C) all known interests
in commingled property of which the Government-furnished property is a
part, and (D) the insurance, if any, covering any part of or interest
in such commingled property. The Contractor shall be reimbursed for
the expenditures made by it in performing its obligations under this sub-
paragraph (iii) (including charges made to the Contractor by the Loss and
Salvage Organization, except any of such charges the payment of which
the Government has, at its option, assumed directly), to the extent ap-
proved by the Contracting Officer and set forth in a Supplemental Agree-
ment.
(iv) With the approval of the Contracting Officer after loss
or destruction of or damage to Government-furnished property, and sub-
ject to such conditions and limitations as may be imposed by the Con-
tracting Officer, the Contractor may, in order to 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-furnished
property which has, been damaged beyond practicable repair, or which is
so commingled or combined with property of others, including the Con-
tractor, that separation is impracticable.
(v) Except to the extent of any loss or destruction of or
damage to Government-furnished property for which the Contractor is re-
lieved of liability under the foregoing provisions of this clause, and
except for reasonable wear and tear or depreciation, or the utilization
of the Government-furnished property in accordance with the provisions
of this contract, the Government-furnished property (other than property
permitted to be sold) shall be returned to the Government in as good
condition as when received by the Contractor in connection with this
contract, or as repaired under paragraph (e) above.
(vi) In the event the Contractor is reimbursed or compensated
for any loss or destruction of or damage to the Government-furnished
property, caused by an excepted peril, it shall equitably reimburse the
Government. The Contractor shall do nothing to prejudice the Government's
rights to recover against third parties for any such loss, destruction or
damage and, upon the request of the Contracting Officer, shall at the
Government's expense, furnish to the Government all reasonable assistance
and cooperation (including the prosecution of suit and the execution of
instruments of assignment in favor of the Government) in obtaining re-
covery. In addition, where a subcontractor has not been relieved from
liability for any loss or destruction of or damage to the Government-
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Furnished property, the Contractor shall enforce the liability of the
subcontractor for such loss or destruction of or darriage to the Govern-
ment-Furnished property for the benefit of the Government.
(vii)(Where applicable). In the event any aircraft are to be
furnished under this contract, any loss or destruction of, or damage to,
such aircraft or other Government-furnished property occurring in con-
nection with operations of said aircraft will be governed by the clause
of this contract captioned "Flight Risks", to the extent such clause is,
by its terms, applicable.
(g) The Government shall at all reasonable times have access to
the premises wherein any Government-furnished property is located.
(h) Upon the completion of this contract, or at such earlier date
as may be fixed by the Contracting Officer, the Contractor shall submit,
in a form acceptable to the Contracting Officer, inventory schedules
covering all items of Government-furnished property not consumed in the
performance of this contract (including any resulting scrap), or not
theretofore delivered to the Goverrmient, and shall deliver or make such
other disposal of such Government-furnished property, as may be directed
or authorized by the Contracting Officer. Recoverable scrap from
Gov- ernment-furnished property shall be reported in accordance with a pro-
cedure and in such form as the Contracting Officer may direct. 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.
(i) Directions of the Contracting Officer and communications of
the Contractor shall be in writing.
31. TERMINATION FOR CONVENIENCE OF THE GOVERNMENT
(a) The performance of work under this contract may be terminated
by the Government in accordance with this clause in whole, or from time
to time in part, whenever the Contracting Officer shall determine that
such termination is in the best interest of the Government. Any such
termination shall be effected by delivery to the Contractor of a Notice
of Termination specifying the extent to which performance of work under
the contract is terminated, and the date upon which such termination be-
comes effective
(b) After receipt of a Notic: of Terrmination, and except as other-
wise directed by the.Contracting Officer, the Contractor shall (1) stop
work under the contract on the date and to the extent specified in the
Notice of Termination; (2) place no further orders or subcontracts for
materials, services, or facilities except as may be necessary for conm-
pletion of such portion of the work under the contract as is not ter-
iminated; (3) terminate all orders and subcontracts to the extent that
they relate to the performance of work terminated by the Notice of Ter-
mination; (4) assign to the Government, in the _manner, at the times, and
to the extent directed by the Contracting Officer, all of the right,
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I
title, and interest of the Contractor under the orders and subcontracts
so terminated, in which case the Government shall have the right, in its
discretion, to settle or pay any or all claims arising out of the terriina-
tion of such orders and subcontracts; (5) settle all outstanding liabi-
lities and all claims arising out of such termination of orders and sub-
contracts, with the approval or ratification of the Contracting Officer,
to the extent he may require, which approval or ratification shall be
final for all the purposes of this clause; (6) transfer title and deliver
to the Government, in the manner, at the tiz_-i.s, and to the extent, if any,
directcl by the Contracting Officer, (i) the fabricated or unfabricated
parts, work in process, completed work, supplies, and other mterial pro-
duced as a part of, or acquired in connection with the performance of,
the work terminated by the Notice of Termination, and (ii) the completed
or partially completed plans, drawings, inforiation, and other property
which, if the contract had been completed, would have been required to
be furnished to the Government; (7) use its best efforts to sell, in the
manner, at the tines, to the extent, and at the price or prices directed
or authorized by the Contracting Officer, any property of the types re-
ferred to in provision (6) of this paragraph, PROVIDED, HOWEVER, that the
Contractor (i) shall not be required to extend credit to any purchaser,
and (ii) may acquire any such property under the conditions proscribed
by and at a price or prices approved by the Contracting Officer; and
PROVIDED further that the proceeds of any such transfer or disposition
shall be applied in reduction of any payments to be made by the Govern-
ment to the Contractor under this Contract or shall otherwise be credited
to the price or cost of the work covered by this contract or paid in such
other manner as the Contracting Officer may direct; (8) complete perfor-
mance of such part of the work as shall not have been terminated by the
Notice of Termination; and (9) take such action as r.-?ay be necessary, or
as the Contracting Officer may direct, for the protection and preserva-
tion of the property related to this contract which is in the possession
of the Contractor and in which the Goverment has or may acquire an
interest. At any time after expiration of the plant clearance period, as
defined in Section VIII, Armed Services Procurement Regulation, as it may
be amended from tie to tirne~-the Contractor may submit to the Contrac-
ting Officer a`1st, 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 thew. Not later than fifteen
(15) days thereafter, the Government will accept title to such items and
remove them or enter into a storage agreement covering the same, PROVIDED
that the list submitted shall be subject to verification by the Contrac-
ting Officer upon removal of the items, or if the items are stored, within
forty-five (45) days from the date of submission of the list, and any
necessary adjustment to correct the list as submitted shall be i:jade prior
to final settlement.
(c) After receipt of a Notice of TerAnation, the Contractor shall
submit to the Contracting Officer its termination claira, in the form and
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with the certification prescribed by the Contracting Officer. Such claim
shall be submitted promptly but in no event later than two years from
the effective date of termination, unless one or more extensions in writ-
ing are granted by the Contracting Officer, upon request of the Contrac-
tor made in writing within such two-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 two-year period or any extension thereof.
Upon failure of the Contractor to submit its termination claim within
the tine allowed, the Contracting Officer may determine, on the basis of
infoniation available to hi:i, 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), the Contractor and
the Contracting Officer may agree upon the whole or any part of the
mount or amounts to be paid to the Contractor by reason of the total
or partial termination of work pursuant to this clause, which amount
or amounts may include a reasonable allowance for profit on work done.
The contract shall be amended accordingly, and the Contractor shall be
paid the agreed amount. Nothing in paragraph (e) of this clause, pros-
cribing the amount to be paid to the Contractor in the event of failure
of the Contractor and the Contracting Officer to agree upon the whole
ai:ioun!, to be paid to the Contractor by reason of the termination of work
pursuant to this clause, shall be deemed to li:iit, restrict, or otherwise
determine or affect the amount or amounts which may be agreed upon to be
paid to the Contractor pursuant to this paragraph (d).
(e) In the event of the failure of the Contractor and the Contrac-
tin? -.Cfficer to agree as provided in paragraph (d) upon the whole amount
to be paid to the Contractor by reason of the termination of work pursuant
to this clause, the Contracting Officer shall determine, on the basis of
information available to hi:i, the mount, if any, due to the Contractor
by reason of the termination and shall pay to the Contractor the amounts
determined as follows :
(1) For completed supplies accepted by the Government (or sold
or acquired as provided in paragraph (b)(7) above) and not theretofore
paid for, a sum equivalent to the aggregate price for such supplies com-
puted in accordance with the price or prices specified in the contract,
appropriately adjusted for any saving of freight or other charges;
(2) The total of --
(i) The costs incurred in the performance of the work termina-
ted, including initial costs and preparatory expense allocable thereto,
but exclusive of any costs attributable to supplies paid or to be paid
for under paragraph (e)(1) hereof;
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(ii) The cost of settling and paying claims arising out of the termination
of work under subcontracts or orders, as provided in paragraph (b) 5) above, trhich
are properly chargeable to the terminated portion of the contract exclusive of
amounts paid or payable on account of supplies or materials delivered or services
furnished by subcontractors or vendors prior to the effective date of the Notice
of Termination, which amounts shall be included in the costs payable under (i)
above).
(iii) A sum equal to 2% of that part of the amount determined under (i)
which represents the cost of articles and materials not processed by the Contractor,
plus a sum equal to 8% of the remainder of such amount, but the aggregate of such
sums shall not exceed 6% of the whole of the amount determined under subdivision
(i) above, which amount for the purpose of this subdivision (iii) shall exclude
any charges for interest on borrowing; provided, however, that if it appears that
the Contractor would have sustained a loss on the entire contract had it been
completed, no profit shall be included or allowed under this subdivision (iii) and
an appropriate adjustment shall be made reducing the amount of the settlement to
reflect the indicated rate of loss.
(3) The reasonable cost 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 disposition of property allocable to this contract.
The total sum to be paid to the lontractor under (1) and (2) of this paragraph
(e) shall not exceed the total contract price as reduced by the amount of payments
otherwise made and as further reduced by the contract price of work not terminated.
except for normal spoilage, and except to the extent that the Government shall have
otherwise expressly assumed the risk of loss, there shall be excluded from the
amounts payable to the Contractor as provided in paragraph (e)(1) and paragraph (e)
(2)(i), the fair value, as determined by the Contracting Officer, of property which
is destroyed, lost, stolen, or damaged so as to become undeliverable to the Govern-
ment, or to a buyer pursuant to paragraph (b)(7).
(f) .'tit :late ~ ~tycr nf --i~xn 'c` or (e) hereof shall be
governed by the Statement of Principles for Consideration of Costs set forth in
Part 4 of Sectiofi VIII of the A ` b jLrvices Procurement :te julation, as in effect
on the date of this contract.
(g) The Contractor shall have the right of appeal, under the clause of this
contract entitled "Disputes'", from any determination made by the Contracting
Officer under paragraphs (c) or (e) above, except that if the Contractor has failed
to submit its claim within the time provided in paragraph (c) above and has failed
to request extension of such time, he shall have no such right of appeal. In
extension of such time, he shall have no such right of appeal. In any case
where the Contracting Officer has made a determination of the amount due under
paragraph (c) or (e) above, the Government shall pay to the Contractor the
following: (i) if there is no right of appeal hereunder or if no timely appeal
has been taken, the amount so dete..-mined by the Contracting Officer, or (ii)
if an appeal has been taken, the amount finally determined on such appeal.
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IIC1~E 1,
(h) In arriving at the amount due the Contractor under this clause
there shall be deamcted (1) all unliquidated advance or other unliquidated
payments on account theretofore made to the Contractor, (2) any claim
which the Government may have against the Contractor in connection with
this contract, and (3) the agreed price for, or the proceeds of sale of,
at materials, supplies, or other things acquired by the Contractor or
sold, pursuant to the provisions of this clause, and not otherwise re-
covered by or credited to the Government.
("41) If the tee i.nation hereunder be partial, prior to the settle-
ment o#: the terminated portion of this contract, the Contractor may file
with tike Contracting Officer a request in writing for an equitable ad-
justmen, of the price or prices specified in the contract relating to
the continued portion of the contract (the portion not terminated by
the Not`lce of Termination), and such equitable adjustment as may be
agreed on shall be made in such price or prices.
(j The Government may from time to time, under such terms and con-
ditions a it may p:rescr ibe, make partial payments and payments on account
against costs incurred by the Contractor in connection with the terminated
portion of this contract whenever in the opinion of the Contracting Offi-
cer the aggregate of such payments shall be within. the amount to which
the Contractor will be entitled hereunder. If the total of such payments
is in excel of the amount finally agreed or determined to be duo under
this clause such excess shall be payable by the Contractor to the Gov-
ernment upon demand, together with interest computed at the rate of 6%
per alzamll, for the period from the date such excess payment is received
by the Contractor to the date on which such excess is repaid to the Gov-
ern-non-t; provided, however, that. no interest shall be charged with res-
pect to a4w such excess payment attributable to a reduction in the Con-
tractor's claim by reason of retention or other disposition of termina-
tion inventory until ten days after the date of such retention or dis-
position.
(k) unless otherwise provided for in this contract, or by appli-
cable statute, the Contractor, from the effective date of termination
and for a period of six years after final settlement under this con-
tract, shall preserve and make available to the Government at all rea-
sonable times at the office of the Contractor but without direct charge
to the Government, all its books, records, documents, and other evidence
bearing on the costs and expenses of the Contractor under this contract
and relating to the work terminated hereunder, or, to the extent ap-
proved by the Contracting Officer, photographs, micro-photographs, or
other authentic reproductions thereof.
32. PAYMEN
shall be paid
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if any7 as hepei-
;-Vhen requestea oy the
be made on partial deliveries accepted by the Govermien
amount due on such deliveries so warrant
Contractor, payment for a
ever such
artlal deliveries shall be made when-
wou dl equal or exceed either $1,000 or 50% of the
33. DEFAULT
(a) The Government may, subject to the provisions of paragraph
(b) below, by written Notice of Default to the Contractor, terminate
the whole or any part of this contract in any one of the following cir-
cumstances:
(i) If the Contractor fails to make delivery of the supplies or
to perform the services within the time specified herein or any exten-
sion thereof; or
(ii) If- the Contractor fails to perform any of the other provi-
sions of this contract, or so fails to make progress as to endanger
performance of this contract in accordance with its terms, and in either
of these two circumstances does not cure such failure within a period
of 10 days (or such longer period as the Contracting Officer may auth-
orize in writing) after receipt of notice from the Contracting Officer
specifying such failure.
(b) The Contractor shall not be liable for any excess costs, if
any failure to perform the contract arises out of causes beyond the
control and without the fault or negligence of the Contractor. Such
causes include, but are not restricted to, acts of God or of the
public enemy, acts of the Government, fires, floods, epidemics, quar-
antine restrictions, strikes, freight embargoes, unusually severe
weather, and defaults of subcontractors due to any of such causes
unless the Contracting Officer shall determine that the supplies or
services to be furnished by the subcontractor were obtainable from
other sources in sufficient time to permit the Contractor to meet the
required delivery schedule
(c) In the event the Government terminates this contract in whole;
or in part as provided in paragraph (a) of this clause, the Government
may procure, upon such terms and in such manner as the Contracting
Officer may deem appropriate, supplies or services similar to those so
terminated, and the Contractor shall be liable to the Government for
any excess costs for such similar supplies or services, PROVIDED that
the Contractor shall continue the performance of this contract to the
extent not terminated under the provisions of this clause.
(d) If this contract is terminated as provided in paragraph (a)
of this clause, the Government, in addition to any other rights pro-
vided in this clause, may require the Contractor to transfer title
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and deliver to the Government, in the manner and to the extent
directed by the Contracting Officer, (i) any completed supplies,
and (ii) such partially ccanpleted supplies and materials., parts,
tools, dies, jigs, fixtures, plans, drawings, information and con-
tract rights (hereinafter called "manufacturing materials") as the
Contractor has specifically produced or specifically acquired for
the performance of such part of this contract as has been terminated;
and the Contractor shall, upon direction of the Contracting Officer,
protect and preserve property in possession of the Contractor in
which the Government has an interest. The Government shall pay to
the Contractor the contract price for completed supplies delivered
to and accepted by the Government, and the amount agreed upon by the
Contractor and the Contracting Officer for manufacturing materials
delivered to and accepted by the Government and for the protection
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."
(e) If, after notice of termination of this contract under
the provisions of paragraph (a) of this clause, it is determined
that the failure to perform this contract is due to c, _,.,uses beyond
the control and without the fault or negligence of the Contractor
pursuant to the provisions of paragraph (b) of this clause, such
Notice of Default shall be deemed to have been issued pursuant to
the clause of this contract entitled "Termination for Convenience
of the Government" and the rights and obligations of the parties
hereto shall in such event be governed by such clause. Except as
otherwise provided in this contract, this paragraph (e) applies only
if this contract is with a military department.
(f) The rights and remedies of the 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.
34. SUBCONTRACTS FOR WORK OR SERVICES
(a) No contract shall be made by the Contractor with any other
party for furnishing any of the completed or substantially completed
articles, spare parts or work, herein contracted for, without the
written approval of the Contracting Officer as to sources.
(b) The Contractor shall give specific advance notification
to the Contracting Officer of any proposed subcontract hereunder
which (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 amount of this contract.
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(c) The Contractor shall not, without the prior written consent of
the Contracting Officer, place any subcontract which (i) is on a cost or
cost-plus-a-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 amount
of this contract,cor (iii) provides for the fabrication, purchase, rental,
installation or other acquisition, of any item of industrial facilities,
or of special tooling having a value in excess of $1,000, or (iv) is on
a time-and-material or labor-hour basis. The Contracting Officer may,
in his discretion, ratify in writing any such subcontract; such action
shall constitute the consent of the Contracting Officer as required by
this paragraph (c).
(d) The Contractor agrees that no subcontract placed under this contract
shall provide for payment on a cost-plus-a-percentage-of-cost basis.
(e) The Contracting Officer may, in his discretion, specifically approve
in writing any of the provisions of a subcontract. However, such approval or
the consent of the Contracting Officer obtained as required by this clause
shall not be construed to constitute a determination of the acceptability
of the subcontract price, unless such approval specifically provides that
it constitutes a determination of the acceptability of the subcontract
price.
(f) The Contracting Officer may approve all or any part of the
Contractor's purchasing system and from time to time rescind or reinstate
such approval. Such approval shall be deemed to fulfill the requirements
of paragraphs a, b, and c of this Article 34. The Contracting Officer has
approved the Contractor's purchasing system, and such approval shall remain
li, effect unless rescinded by the Contracting Officer in writing.
35.. ALTERATIONS IN CONTRACT
The following alterations were made in this contract prior to signature
thereof by the parties to this contract:
(a) Tao i'u.llowing articles were added s
36 INSPECTION AND AUDIT
(a) The Contractor agrees that its books and records and its plants, or
such part thereof as may be engaged in the performance of this contract, shall
at all reasonable times be subject to inspection and audit by and authorized
representative of the Contracting Officer,
(b) The Contractor shall cause a like provision to be included in all
subcontracts hereunder.
37. SUPERSEDING SPECIFICATIONS
All references in any Government specification incorporated herein to
other Government specifications shall be deemed to include all specifications
supplementary to or superseding the specifications so referred to, to the
extent that such supplementary or superseding specifications are in effect
at the date of Contractor's latest quotation, if the Contractor was furnished
or otherwise notified of the existenCe?of such supplementary or superseding
specification at the time of said quotation.
38. DELAY IN DELIVERY DATA
(a) It is understood that the efficient use by the Government of
the supplies called for hereunder requires that the data dalled for
hereunder be delivered not later than the time or respective times herein
specified. If such data is not delivered at said time or times, the
Government may at its election, so long as such data remains undelivered,
unless the delay in delivery thereof arises out of causes beyond the
control and without the fault or negligence of the Contractor within the
meaning of the clause hereof entitled "Default," withhold payment to the
Contractor for any of the amounts then due, refuse approval of the
Contractor's vouchers and refuse to accept further deliveries hereunder
from the Contractor or take any other action authorized by law or
regulation now or hereafter in effect including termination of the
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contract for default t,; the extent and in the manner authorized by said
clause, and may tare any .-), all ut' the ?aregoing actions separately or
in cornbinati