PRECONTRACT APPROVAL RECORD (PART ONE)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67B00820R000200340001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 48
• Document Creation Date: December 9, 2016
• Document Release Date: April 21, 2001
• Sequence Number: 1
• Publication Date: January 16, 1964
• Content Type: FORM

25X1A
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SECRET
PRECONTRACT APPROVAL
CONTRACTOR
Eastman Kodak C ompan.y
CONTROL NO.
XO-6
/1O
C opy f 3
RECORD
(PART ONE)
CONTRACT NO. AMENDMENT NO.
PEI-5 -
16 January 1964
THIS CONTRACT APPROVAL RECORD CONTAINS A RECOMMENDATION SUBMITTED FOR CONCURRENCE OF
THE UNDERSIGNED. CONCURRENCE IN THIS PRECONTRACT APPROVAL RECORD IS RECOMMENDED BY THE CON-
TRACTING OFFICER. BY CONCURRENCE, THE CHIEF, BUDGET AND FINANCE BRANCH, SIGNIFIES THAT SUFFICIENT
FUNDS ARE AVAILABLE (NOT INCLUDING CONTINGENT & EXPOSURE) AND/OR HAVE BEEN ADJUSTED AS PROVIDED
IN THIS DOCUMENT.
TYPE OF CONTRACT
? L.I. . F.P. REDETERM ? CP I F 0 TECH REP
gDEF INITI ZED . PPM, II T&M 0 FISCAL YEAR
? F.P. MI CPFF 0 CALL TYPE
'NO COST
FINANCIAL DATA
CONTRACT VALUE
PREVIOUS OBLIGATION - PRIOR FY
NONE
PREVIOUS OBLIGATION . CURRENT FY
NONE
OBLIGATION BY THIS DOCUMENT
DESCRIPTION, PROGRAM OR LINE ITEM
FISCAL YEAR
PROJECT
AMOUNT
NONE
TOTAL THIS OBLIGATION
NONE
CONTINGENT UPON AVAILABILITY
OF FUNDS
EXPOSURE LIABILITY
RATE
DATE RATE DATE
CPFF 0/H RATES FIXED THRU
T&M RATES FIXED THRU
....
NO
L
DATEDATE
/7A
PRECONTRACT CONCURREN S
,
UNIT
TYPED NAME SIGNATURE
DATE
CONTRACTING OFFICER
?1
BUDGET a FINANCE
GENERAL COUNSEL
Mitell
TECHNICAL REPRESENTATIVE
0-...- 4 14
TECHNICAL REPRESENTATIVE
CONTRACT SIGNATURE Contracting Officer) DATE DATE MAILED
DATE DISTRIBUTED
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_
(79 A
FORM 2167
11.63
SECRET
GROUP
Excluded horn utomcnic
downgrading and
declassifica ion
(12)
Approvod For R I 11.001/06/04.ali
PRECONTRACT APPROVAL RECORD
(PART TWO)
IT
020
17KNMA ?40001-0
Eastman Kodak Co.
The services and equipment being procured by this Contract No.
PNL-5 are in furtherance of the National Defense
Program(s), the nature of which cannot be publicly disclosed for security rea-
sons. The Contracting Officer therefore determines that this procurement must
be accomplished by negotiations pursuant to the authority of Section 3(a) of
PL 81-110 and Class Determination and Finding, OXC 2122, signed by the DDCI on
15 October 1961.
Certification of funds for this contract will be handled under the pro-
cedure approved by the Director of Central Intelligence on 15 December 1956
which, in effect, results in all covert expenses involving issuance of Treasury
Checks being accumulated in a separate account within the Finance Division. The
amounts in this account will be periodically scheduled for certification of the
vouchers by the Director. This procedure eliminates the necessity for a sepa-
rate certification of authority under Section 8(b) of Public Law 110, 81st Con-
gress (formerly 10(b) - see 85-507 dated 7/7/58) for each contract.
The following comments describe the procurement hereby effected, the
terms and provisions generally of this contract/amendment, and a resume of
major issues negotiated:
Contract No. PNL-5 has been drawn to provide for participation by
Eastman Kodak Company in a photo working panel comprised of representatives
of the Government, educational institutions and commercial organizations.
The term of the contract commences on,15 November l963 and expires on 15
March l961 subject to extension by mutual agreement. No monitary payment
will be made to Eastman Kodak Company by the Government for performance
of this contract since it is the intent of the contractor to render all
services, including travel, for the consideration of other contracts
currently in force between the contractor and the Government and in the
interest of the National Defense.
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SECRET
FOl M2
11-63167a
GROUP 1
Excluded from automatic
downgrading and
declassification
(12)
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(1, 077
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OXC-63l1
Copy,/ of 4
NEGOTIATED CONTRACT Contract No. PNL-5
Eastman Kodak Company
Rochester, New York
Contract for: See Schedule Amount: See Schedule
Mail Invoices to: Performance Period:
See Schedule
Administrative Data:
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 Corporation, incorporated in the State of New Jersey, hereinafter
called the Contractor.
The parties hereto agree that the Contractor shall perform the services
? set forth in the attached Schedule issued hereunder, for the consider-
ation statedtherein.
The rights and obligations of the parties to this contract shall be
subject to and governed by the attached Schedule, and General Provisions.
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 23 JAN 1964 1964.
Signatures:
THE UNITED STATES OF AMERICA
Contracting Officer
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CERTIFICATE
Contract No.PNL-5
, certify that I am
the of the Corpor-Ition named
Contractor herein; that who
signed this contract on behalf of the Contractor was then
25X1A of said Corporation; that saic Contract
w:As duly signed for and in behalf of said Corporation by wIthority
of its governing body, and is within scope of its Corporate Powers.
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INDEX TO SCHEDUTE
Page
PART I - SERVICES TO BE SUPPLIED AND CONSIDERATION 4
PART II - PERIOD OF PERFORMANCE 5
PART III - PAYMENT FOR WORK AND SERVICES 5
PART IV - WAIVER OF REQUIREMENTS OF GENERAL PROVISIONS. . 5
PART V - SPECIAL SECURITY RESTRICTIONS 6
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PART I - SERVICES TO BE SUPPLIED AND CONSIDERATION
a. In consideration of other contracts currently in force between
the Contractor and the Government and in the interest of the National
Defense the Contractor agrees that it will furnish the services of
certain personnel to participate in a scientific panel comprised of
representatives of the Government, educational institutions and
commercial organizations. The extent to which the contractor may
participate in the scientific and technical problems to be considered
by the panel shall be subject to mutual agreement between the Technical
Representative of the Contracting Officer and the Contractor. The
Contractor agrees that it will perform such travel which in its
discretion is in the interest of the panel.
b. It is understood and agreed that all transactions of the
panel and the Contractor's participation in such transactions shall
conform to the following conditions:
1) That the panel be organized and meetings conducted in
accordance with the requirements of Federal Laws relating to restraint
of trade and Executive Order 11007, dated 27 February 1962.
2) That care be exercised to insure that participation by
the Contractor's representatives shall not jeopardize the Contractor's
subsequent participation in Government contract work through organizational
conflict of interest.
3) That in the legal sense, no confidential relationship be
established involving the receipt of or disclosure to the Contractor's
representatives of information from other members of any committee.
25X1A 4) That the Contractor's representatives on any committee be
25X1A cautioned to consult with Contractor's management i.e.
var. concerning further participation in
the event that,
problems are submitted involving the disclosure of
substantial information about or requiring comment
or action with respect to equipment produced by
others engaged in fields of activity similar to that
of the Contractor's organization; and that the Contractor's
representatives refrain from making criticisms of
competitor's equipment and/or re-engineering competitor's
equipment;
b) problems are submitted to the committee which would
require the disclosure of proprietary information in
order to supply what in the Contractor's view might
be the most effective solution, and that only submitted
information such as engineering reports, test results,
etc., required by contract, be made available to the
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5) That Contractor's representatives do not accept receipt of
or disclosure of information of a classified nature which cannot be fully
disclosed to at least two members of the Contractor's management, i.e.
6) That since it is the Contractor's intent to supply the integrated
capabilities and skills from its organization, the Contractor may alternate
panel members to a reasonable degree and in accordance with its judgment.
7) That two rough draft copies of the minutes of the panel's
actions be submitted to the Contractor's panel participant, one for the
Contractor's f2e and the other to be corrected if necessary and returned
to the panel prior to the issuance of the final minutes.
PART II - PERIOD OF PERFORMANCE
This contract shall commence on or about 15 November 1963 and
shall expire on 15 March 1964; however, the term of this contract
may be extended by mutual agreement.
PART III - PAYMENT FOR WORK AND SERVICES
It is the intent of the Contractor to perform this contract for
the considerations stated in Paragraph 1, above, with no monetary
payments being made to the Contractor by the Government under this
Contract.
PART IV - WAIVER OF REQUIREMENTS OF GENERAL PROVISIONS
Notwithstanding the requirements of any of the General Provisions
of this contract to the contrary, whensoever the Contractor, in
performance of the work under this contract, shall find that the
requirements of any of the clauses of the General Provisions are in
conflict with security instructions issued to the Contractor by the
Contracting Officer or by his duly authorized representative for
security matters, the Contractor shall call the attention of the
Contracting Officer to such conflict and the Contracting Officer or
his duly authorized representative for security matters shall (i)
modify or rescind such security requirements or (ii) the Contracting
Officer shall issue to the Contractor a waiver of compliance with
the requirements of the General Provisions conflicting with such
security requirements. Any waiver of compliance with the General
Provisions of this contract issued by the Contracting Officer shall
be in writing, except that the approval by the Contracting Officer
of any subcontract issued hereunder by the Contractor shAll be deemed
to constitute approval of waiver of any clauses of the General
Provisions in conflict with the stipulations of such subcontract.
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INDEX TO GENERAL PROVISIONS
Clause No. Page No.
1 Definitions 1
.
43 --Extras- . . . . . . . . . .......
4- Variation in Quewitity
Inspection . . . . . . .
6..----Responsibilty for Supplies . . . 2,
7-- Payments ? 2.
Assignment of Claims . . .
% Additional Bond Security. . 3,
4---Federal, State, and Local Taxes .
It- Default . . . .
? ? .....
12 Disputes 5
13 Soviet Controlled Areas 5
14 Work Hours Act of 1962?Overtime Compensation 5
15 ? Walsh-Healey Public Contracts Act 5
16 Nondiscrimination in Employment 6
17 Officials Not To Benefit 6
18 Covenant Against Contingent Fees 6
1.9 Termination for Convenience of the Government 7.
20 Authorization and Consent 9
21 Notice and Assistance Regarding Patent and Copyright In-
fringement 9
22 Buy American Act 10
23 Filing of Patent Applications 10
24 Patent Rights (License) 10
25 Data 13
26 Data?Withholding of Payment 13
27 Military Security Requirements 14
28 Utilization of Small Business Concerns 14
29 Examination of Records 14
30 Gratuities 14
31 Convict Labor 15
-IvrateTial Inspection and- Recel vilig Report .
33 Subcontracts (Sources) 15
34 Subcontracts . . . . . . . . . 15
35 Subcontractor Cost and Pricing Data 16
3fr Subcontractor Cost and Pricing Data?Price Adjustments . . 16
- Competition in Subcontracting . . . . .
86? Utilization of Concerns in Labor Surplus Areas 17-
39 Standards of Work 17
46-- Ground and Flight Risk
? e ? '"-4.
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INDEX (Continued)
Clause No.
Page No.
41 Government-Furnished Property 20
42 Interest 22,
43 Audit and Records . ? ? ? ?
44 Price Reduction for Defective Cost or Pricing Data . . . . . . 24
46 Price Reduction for- Defective-ost- or Pricing' Data?Price-Ad-
justments ...... . . . . . .
46 Audit?Piiec Adjustments- _24
47 Inspection and Audit 25
48 Alterations in Contract 25
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GENERAL PROVISIONS
1. DEFINITIONS (ASPR 7-103.1) (Feb. 1962)
As used throughout this contract, the following
terms shall have the meanings set forth below:
(a) The term "head of the agency" or "Secre-
tary" means the Secretary, the Under Secretary,
any Assistant Secretary, or any other head or as-
sistant head of the executive or military department
or other Federal agency; and the term "his duly
authorized representative" means any person or
persons or board (other than the Contracting Offi-
cer) authorized to act for the head of the agency
or the Secretary.
(b) The term "Contracting Officer" means the
person executing this contract on behalf of the
Government, and any other officer or civilian em-
ployee who is a properly designated Contracting
Officer; and the term includes, except as otherwise
provided in this contract, the authorized repre-
sentative of a Contracting Officer acting within
the limits of his authority.
(c) Except as otherwise provided in this con-
tract, the term "subcontracts" includes purchase
orders under this contract.
241 CHANGES (ASPR 7-103.2) (Jan. 1958)
The Contracting Officer may at any time, by a
written order, and without notice to the sure es,
make\changes, within the general scope of this
contraet? in any one or more of the followi g:
Drawingk designs, or specifications, where e sup-
plies to bkfurnished are to be specially anufac-
tured for tlic Government in accordance herewith;
(ii) method oshIpment or packing; a d (iii) place
of delivery. It*.ny such change cau s an increase
or decrease in CI cost of, or the t e required for
the performance f any part of the work under
this contract, whet hr changed er not changed by
any such order, an quitable adjustmnt shall be
made in the contract i ice o delivery schedule, or
both, and the contract s be modified in writing
accordingly. Any claim the Contractor for ad-
justment under this cla ust be asserted within
30 days from the date f rec 'pt by the Contractor
of the notification o change. Provided, however,
That the Contracti Officer, if e decides that the
facts justify such ction, may rec ve and act upon
any such claim serted at any ti e prior to final
payment under this contract. Whe the cost of
property madl obsolete or excess as result of a
change is i luded in the Contractor' claim for
adjustmen the Contracting Officer shal have the
right to p escribe the manner of dispositio of such
proper Failure to agree to any adjustme shall
be a spute concerning a question of fact 'thin
the nleaning of the clause of this contract ent ed
"Pi6utes." However, nothing in this clause sh
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1 Feb. 63
1
Rxcuse the Contractor from proceeding with
cRntract as changed. [Rev. No. 28, 1/28/58; R
Nik 30, 3/17/58.]
3. kk,XTRAS (ASPR 7-103.3) (July 1949)
Ex6ept as otherwise provided in this contra t, no
paym t for extras shall be made un1esI such
extras nd the price therefor have been aut orized
in writilig by the Contracting Officer.
4. VARIAFION IN QUANTITY (ASPR 7103.4)
(July I49)
No varia on in the quantity of any item called
for by this contract will be accepted unless such
variation has been caused by conditio s of loading,
shipping, or p eking, or allowances i manufactur-
ing processes, knd then only to the/extent, if any,
specified elsewh re in this contrac
5. INSPECTION ASPR 7-103.5) May 1958)
(a) All supplies (which teriyf throughout this
clause includes wi out limit ion raw materials,
components, interm late asse blies, and end prod-
ucts) shall be subjec to insp ction and test by the
Government, to the e tent ? acticable at all times
and places including he eriod of manufacture,
and in any event prio t acceptance. [Rev. No.
33, 5/14/58.]
(b) In case any suppl
defective in material or
not in conformity wit
contract, the Gover
either to reject them
as to their dispositi
tion. Supplies or I
rejected or require
or, if permitted o
cer, corrected i
the Contractor
thereafter be
former reject'
disclosed. If
move such
required to
correct su
ernment
replace
Contrac
thereb
defau
entit
or r
ule
of
s or lots of supplies are
w i rkmanship or otherwise
t requirements of this
ent shall have the right
(with without instructions
n) or to require their correc-
s of supp 'es which have been
to be correc d shall be removed
required by th Contracting Offl-
place by and t the expense of
romptly after not e, and shall not
endered for accept nce unless the
n or requirement ? correction is
the Contractor fails p omptly to re-
pplies or lots of suppl s which are
e removed, or promptly o replace or
supplies or lots of suppli , the Gov-
ither (i) may by contract o otherwise
correct such supplies and cha ge to the
or the cost occasioned the G ernment
, or (ii) may terminate this con act for
as provided in the clause of this ontract
d "Default." Unless the Contractor birrects
laces such supplies within the delivery hed-
the Contracting Officer may require the de 'very
such supplies at a reduction in price whi is
e uitable under the circumstances. Failure to a ee
to such reduction of price shall be a dispute c
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..,rning a question of fact within the meaning of
th? ,,
clause of this contract entitled "Disputes.?
[Re, No. 28, 1/28/58.1
(c) If any inspection or test is made by the Gov-
ernment\ on the premises of the Contractor or a
subcontractor, the Contractor without additional
charge shall provide all reasonable facilities and
assistance for, the safety and convenience of the
Government inspectors in the performance of their
duties. If Govetriment inspection or test is made
at a point other than the premises of the Con-
tractor or a subcontractor, it shall be at the ex-
pense of the Govermnent except as otherwise pro-
vided in this contract:\Frovided, That in case of
rejection the Government shall not be liable for
any reduction in value of 'Namples used in connec-
tion with such inspection ots. test. All inspections
and tests by the Government\shall be performed
in such a manner as not to undIlly delay the work.
The Government reserves the riglitk to charge to the
Contractor any additional cost of Oovernment in-
spection and test when supplies are\not ready at
the time such inspection and test is lcquested by
the Contractor or when reinspection o\ retest is
necessitated by prior rejection. Acceptan or re-
jection of the supplies shall be made as p mptly
as practicable after delivery, except as oth?ise
provided in this contract; but failure to inspect nd
accept or reject supplies shall neither relieve t e
Contractor from responsibility for such supplie
as are not in accordance with the contract require-
ments nor impose liability on the Government
therefor. [Rev. No. 28, 1/28/58.1
(d) The inspection and test by the Government
of any supplies or lots thereof does not relieve the
Contractor from any responsibillity regarding de-.
fects or other failures to meet the contract require.ments which may be discovered prior to acceptanee.
Except as otherwise provided in this contractf; ac-
ceptance shall be conclusive except as regardsclatent
defects, fraud, or such gross mistakes as/amount
to fraud.
(e) The Contractor shall provide a,nd maintain
an inspection system acceptable to the Government
covering the supplies hereunder. R'ecords of all in-
spection work by the Contractor shall be kept com-
plete and available to the Government during the
performance of this contract' and for such longer
period as may be specified/elsewhere in this con-
tract. x
6. RESFONSIB1LTY FOR SUPPLIES (AR% 7-103.6)
(Jan. 1958)
Except as otherVise provided in this contract, (i)
the Contractor shall be responsible for the supplies
covered by thie contract until they are delivered at
the designated delivery point, regardless of the
point of inSpection; (ii) after delivery to the Gov-
ernment ltt the designed point and prior to accept-
ance by the Government or rejection and giving
not iie thereof by the Government, the Government
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1 Feb. 63
shall be responsible for the loss or destruction of or
damage to the supplies only if such loss, destruc-
tion, or damage results from the negligence of
officers, agents, or employees of the Government
acting within the scope of their employment; and
(iii) the Contractor shall bear all risks as to re-
jected supplies after notice of rejection, except that
the Government shall be responsible for the loss,
or destruction of, or damage to the supplies Only
if such loss, destruction or damage results from the
gross negligence of officers, agents, or employees of
the Government acting within the scope of their
employment. [Rev. No. 28, 1/28/58.1
7. PAYMENTS (AN% 7-103.7) (Jan-. 1958)
The Contractor shall be paidyupon the submis-
sion of proper invoices or vouc rs, the prices stipu-
lated herein for supplies d vered and accepted,
less deductions, if any, as erein provided. Unless
otherwise specified, paym t will be made on partial
deliveries accepted by 4ie Government when the
amount due on such geliveries so warrants; or, when
requested by the Contractor, payment for accepted
partial deliveries hall be made whenever such pay-
ment would equ or exceed either $1,000 or 50 per-
cent of the t al amount of this contract. [Rev.
No. 30, 3/17%8.]
8. ASSIG,NMENT OF CLAIMS (ASPR 7-103.8 mod.)
(Fey 1962)
\ (ay Pursuant to the provisions of the Assignment
/Claims Act of 1940, as amended (31 U. S. Code
41 U. S. Code 15) if this contract provides for
/-pay ents aggregating $1,000 or more, claims for
.
mom due or to become due the Contractor from
the Go ernment under this contract may be as-
signed to bank, trust company, or other financing
institution, including any Federal lending agency,
and may th reafter be further assigned and re-
assigned to an such institution. Any such assign-
ment or reassig ent shall cover all amounts pay-
able under this c tract and not already paid, and
shall not be made more than one party, except
that any such assign ent or reassignment may be
made to one party as gent or trustee for two or
more parties participati in such financing.
Unless otherwise provide in this contract, pay-
ments to an assignee of an monies due or to be-
come due under this contra shall not, to the
extent provided in said Act, as ended, be subject
to reduction or setoff.
(b) In no event shall copies of tiis contract or
of any plans, specifications, or other imilar docu-
ments relating to work under this'contract, if
marked "Top Secret," "Secret," or "Co dential,"
be furnished to any assignee of any claifi arising
under this contract or to any other persIsp not
entitled to receive the same: however a copy o any
part or all of this contract so marked may be r-
nished, or any information contained therein m
2
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bkdisclosed, to such assignee upon the prior written
ant orization of the Contracting Officer. [Rev.
No. , 1/28/58.]
(c) Ihe Contractor shall obtain the written au-
thorizatign of the Contracting Officer prior to the
assignment. of any rights under this contract.
9. ADDITION4L BOND SECURITY (ASPR 7-103.9)
(July 1949) \
If any surety on any bond furnished in con-
nection with this c ntract becomes unacceptable to
the Government, or any such surety fails to fur-
nish reports as to his 1iancial condition from time
to time as requested byNthe Government, the Con-
tractor shall promptly furVsh such additional secu-
rity as may be required fthn time to time to pro-
tect the interests of the Gove nment and of persons
supplying labor or materials the prosecution of
the work contemplated by this'contract.
10. FEDERAL, STATE, AND LOCA TAXES (ASPR
11-401-2) (July 1960)
(a) As used throughout this claus the term
"contract date" means the date of thi contract.
As to additional supplies or services pro red by
modification to this contract, the term "jitract
date" means the date of such modification.
(b) Except as may be otherwise provided in is
contract, the contract price includes, to the exte t
allocable to this contract, all Federal, State, an
local taxes which, on the contract date:
(i) by Constitution, statute, or ordinance, are a9,
plicable to this contract, or to the transacti ns
covered by this contract or to property or inte ests
In property, or
(ii) pursuant to written ruling or regula on, the
authority charged with administering an such tax
is assessing or applying to, and is not Jranting or
honoring an exemption for, a contrac r under this
kind of contract, or the transactions overed by this
contract, or property or interests i property.
(c) Except as may be otherwi6 provided in this
contract, duties in effect on t contract date are
Included in the contract pri to the extent allo-
cable to this contract. [Re . No. 1, '7/22/60.]
(d) (1) If the contrac r is required to pay or
bear the burden?
(i) of any tax or s ty which either was not to
be included in the ntract price pursuant to the
requirements of p agraphs (b) and (c), or of a tax
or duty specifical ? excluded from the contract price
by a provision this contract; or
(ii) of an crease in rate of any tax or duty,
whether or ot such tax or duty was excluded from
the contr t price; or
(iii) any interest or penalty on any tax or duty
ref err to in (i) or (ii) above; the contract price
sha9/be increased by the amount of such tax, duty,
interest, or penalty allocable to this contract; pro-
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1 Feb. 63
3
vided, that the Contractor warrants in writing thwt
no amount of such tax, duty, or rate increase Was
Included in the contract price as a conting?ncy
reserve or otherwise; and provided furthey; that
liability for such tax, duty, rate increase, ?Interest,
or penalty was not incurred through thp' fault or
negligence of the Contractor or his f atlfire to fol-
low instructions of the Contracting yfflcer. [Rev.
No. 1, 7/22/60.]
(2) If the Contractor is not ryinired to pay or
bear the burden, or obtains a rgirund or drawback,
in whole or in part, of any tat duty, interest, or
penalty which:
(i) was to be included ii/the contract price pur-
suant to the requiremen of paragraphs (b) and
(c) ;
(ii) was included X the contract price; or
(iii) was the basg of an increase in the contract
price; the contrafit price shall be decreased by the
amount of suchifelief, refund, or drawback allocable
to this contrOt, or the allocable amount of such
relief, refund, or drawback shall be paid to the
Governmep f, as directed by the Contracting Offi-
cer.r Th contract price also shall be similarly de-
creased/ f the Contractor, through his fault or neg-
ligenV or his failure to follow instructions of the
Con fading Officer, is required to pay or bear the
bqiden, does not obtain a refund or drawback of
a y such tax, duty, interest, or penalty. Interest
paid or credited to the Contractor incident to a
refund of taxes shall inure to the benefit of the
Government to the extent that such interest was
arned after the Contractor was paid or reimbursed
b the Government for such taxes.
( Invoices or vouchers covering any adjustment
of th contract price pursuant to this paragraph
(d) sh 1 set forth the amount thereof as a separate
item an shall identify the particular tax or duty
involved.
(4) This ragraph (d) shall not be applicable to
social securit taxes; income and franchise taxes,
other than tho levied on or measured by (i) sales
or receipts from les, or (ii) the Contractor's pos-
session of, interes in, or use of property, title to
which is in the Go rnment; excess profits taxes;
capital stock taxes; nemployment compensation
taxes; or property taxe other than such property
taxes, allocable to this ontract, as are assessed
either on completed supp s covered by this con-
tract, or on the Contractor' .ossession of, interest
in, or use of property, title to hich is in the Gov-
ernment.
(5) No adjustment of less tha $100 is required
to be made in the contract price rsuant to this
paragraph (d).
(e) Unless there does not exist an reasonable
basis to sustain an exemption, the t svernment
upon request of the Contractor, withou further
liability, agrees, except as otherwise pro ? ed in
this contract, to furnish evidence appropri te to
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establish exemption from any tax which the Con-
tractor warrants in writing was excluded from the
contract price. In addition, the Contracting Officer
may furnish evidence appropriate to establish ex-
emption from any tax that may, pursuant to this
clause, give rise to either an increase or decrease
in the contract price. Except as otherwise provided
in this contract, evidence appropriate to establish
exemption froni duties will be furnished only at
the discretion at the Contracting Officer.
(f) (1) The Contractor shall promptly notify the
Contracting Officer of all matters pertaining to
Federal, State, and local taxes, and duties, that
reasonably may be exp?ected to result in either an
increase or decrease in 'the contract price.
(2) Whenever an increase or decrease in the con-
tract price may be required 'under this clause, the
Contractor shall take action \as directed by the
Contracting Officer, and the contract price shall
be equitably adjusted to cover the costs of such
action, including any interest, penalty, and reason-
able attorneys' fees.
11. DEFAULT (ASPR 7-103.11 ?ASPR 81,707)
(July 1962)
(a) The Government may, subject to this pro-
visions of paragraph (c) below, by written ri'sztice
of default to the Contractor, terminate the wile
or any part of this contract in any one of die
following circumstances: \.
(i) if the Contractor fails to make delivery of
the supplies or to perform the services within the
time specified herein or any extension thereof; or'
(ii) if the Contractor fails to perform any /of
the other provisions of this contract, or so fails
to make progress as to endanger performanee of
this contract in accordance with its terms,?end 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 au-
thorize in writing) after receipt of notice from the
Contracting Officer specifying such ;failure.
(b) In the event the Government terminates this
contract in whole or in part as provided in para-
graph (a) of this clause, the Government may pro-
cure, 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 serv-
ices: Provided, That the Contractor shall continue
the performance of this contract to the extent not
terminated under the provisions of this clause.
(c) Except with respect to defaults of subcon-
tractors, the Contractor shall not be liable for any
excess costs if the failure to perform the contract
arises out of causes beyond the control and with-
out the fault or negligence of the Contractor. Such
' causes may include, but are not restricted to, acts
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1 Feb. 63
of God or of the public enemy, acts of the Govern-
ment in either its sovereign or contractual capacity,
fires, floods, epidemics, quarantine restrictions,
strikes, freight embargoes, and unusually severe
weather; but in every case the failure to perform
must be beyond the control and without the fault
or negligence of the Contractor. If Ahe failure to
perform is caused by the default of ,a subcontractor,
and if such default arises out of causes beyond the
control of both the Contractor and subcontractor,
and without the fault or nefgence of either of
them, the Contractor shall ot be liable for any
excess costs for failure to perform, unless the sup-
plies or services to be furnished by the subcon-
tractor were obtainable from other sources in suffi-
cient time to permit thy Contractor to meet the re-
quired delivery schedgle.
(d) If this contrajt is terminated as provided in
paragraph (a) of this clause, the Government, in
addition to any Ober rights provided in this clause,
may require thVoontractor to transfer title and de-
liver to the government, in the manner and to
the extent directed by the Contracting Officer, (i)
any completed supplies, and (ii) such partially
complete 'supplies and materials, parts, tools, dies,
jigs, fixtures, plans, drawings, information, and
contract rights (hereinafter called "manufacturing
materials") as the Contractor has specifically pro-
duc,ed or specifically acquired for the performance
of/such part of this contract as has been termi-
nated; and the Contractor shall, upon direction of
?N- the Contracting Officer, protect and preserve prop-
,' rty in possession of the Contractor in which the
vernment has an interest. Payment for com-
ple ed supplies delivered to and accepted by the
Government shall be at the contract price. Pay-
ment r manufacturing materials delivered to and
accepte by the Government and for the protection
and pres vation of property shall be in an amount
agreed upo by the Contractor and the Contracting
Officer; faili?to agree to such amount shall be
a dispute con rning a question of fact within the
meaning of the Nause of this contract entitled "Dis-
putes." The Go ernment may withhold from
amounts otherwise\due the Contractor for such
completed supplies \or manufacturing materials
such sum as the ContNcting Officer determines to
be necessary to protec the Government against
loss because of outstandin liens or claims of for-
mer lien holders.
(e) If, after notice of termin ion of this contract
under the provisions of this clau , it is determined
for any reason that the Contractk was not in de-
fault under the provisions of this cle,u,se, or that the
default was excusable under the proiNtsions of this
clause, the rights and obligations of "the parties
shall, if the contract contains a clause "providing
for termination for convenience of the Government,
be the same as if the notice of termination had
been issued pursuant to such clause.
4
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after notice of termination of this contract
unde the provisions of this clause, it is determi d
for an? 'reason that the Contractor was not de-
fault undb the provisions of this claus , and if
this contrac does not contain a clau providing
for terminatio'1 for convenience o the Govern-
ment, the contra shall be equ' ly adjusted to
compensate for suc'Kterminat1 and the contract
modified accordingly; fpur rto agree to any such
adjustment shall be a a ute concerning a ques-
tion of fact within tp m ning of the clause of
this contract en,flid "Dis tes." [Rev. No. 10,
7/30/62.]
(f) The 4-4s and remedies of se Government
providedz,th this clause shall not be elusive and
are in-lddition to any other rights a remedies
prgvlaed by law or under this contract. ev. No.
36?, 9/5/58].
12. DISPUTES (ASPR 7-103.12) (Jan. 1958)
(a) Except as otherwise provided in this contract,
any dispute concerning a question of fact arising
under this contract which is not disposed of by
agreement shall be decided by the Contracting Offi-
cer, who shall reduce his decision to writing and
mail or otherwise furnish a copy thereof to the
Contractor. The decision of the Contracting Offi-
cer shall be final and conclusive unless, within 30
days from the, date of receipt of such copy, the
Contractor mails or otherwise furnishes to the
Contracting Officer a written appeal addressed to
the Secretary. The decision of the Secretary or his
duly authorized representative for the determina-
tion of such appeals shall be final and conclusive
unless determined by a court of competent juris-
diction to have been fraudulent, or capricious, or
arbitrary, or so grossly erroneous as necessarily to
imply bad faith, or not supported by substantial
evidence. In connection with any appeal proceed-
ing under this clause, the Contractor shall be af-
forded an opportunity to be heard and to offer
evidence in support of its appeal. Pending final
decision of a dispute hereunder, the Contractor
shall proceed diligently with the performance of
the contract and in accordance with the Contract-
ing Officer's decision.
(b) This "Disputes" clause does not preclude con-
sideration of law questions in connection with de-
cisions provided for in paragraph (a) above: Pro-
vided, That nothing in this contract shall be con-
strued as making final the decision of any ad-
ministrative official, representative, or board on
a question of law. [Rev. No. 28, 1/28/58.]
13. SOVIET-CONTROLLED AREAS (ASPR 6-403)
(April 1962)
(a) The Contractor shall not acquire for use
in the performance of this contract any supplies
or services originating from sources within Soviet-
controlled areas, as listed in the schedule of this
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1 Feb. 63
5
contract, or transported from or through Hong
Kong or Macao, without the written approval of
the Contracting Officer.
(b) The contractor agrees to insert the provisions
of this clause including this subparagraph (b) and
the Soviet-controlled areas listed in the schedule,
in all subcontracts hereunder.
14. WORK HOURS ACT OF 1962?OVERTIME
COMPENSATION (ASPR 12-303.1) (Oct. 1962)
This contract, to the extent that it is of a char-
acter specified in the Work Hours Act of 1962 (Pub-
lic Law 87-581, 76 Stat. 357-360) and is not covered
by the Walsh-Healey Public Contracts Act (41
U.S.C. 35-45), is subject to the following provisions
and to all other provisions and exceptions of said
Work Hours Act of 1962.
(a) No contractor or subcontractor contracting
for any part of the contract work shall require or
permit any laborer or mechanic to be employed on
such work in excess of eight hours in any calendar
day or in excess of forty hours in any workweek un-
less such laborer or mechanic receives compensation
at a rate not less than one and one-half times his
basic rate of pay for all hours worked in excess of
eight hours in any calendar day or in excess of forty
hours in such workweek, whichever is the greater
number of overtime hours.
(b) In the event of any violation of the pro-
visions of paragraph (a), the contractor and any
subcontractor responsible for such violation shall
be liable to any affected employee for his unpaid
wages. In addition, such contractor or subcon-
tractor shall be liable to the United States for
liquidated damages. Such liquidated damages shall
be computed, with respect to each individual laborer
or mechanic employed in violation of the provisions
of paragraph (a), in the sum of $10 for each
calendar day on which such employee was required
or permitted to work in excess of eight hours or in
excess of forty hours in a workweek without pay-
ment of the required overtime wages.
(c) The Contracting Officer may withhold, or
cause to be withheld, from moneys payable on ac-
count of work performed by the contractor or sub-
contractor, the full amount of wages required by
this contract and such sums as may administratively
be determined to be necessary to satisfy any li-
abilities of such contractor or subcontractor for
liquidated damages as provided in paragraph (b).
[Rev. No. 13, 12/31/62.1
15. WALSH-HEALEY PUBLIC CONTRACTS ACT
(ASPR 12-605 mod.) (Jan. 1958)
If this contract is for the manufacture or fur-
nishing of materials, supplies, articles or equipment
in an amount which exceeds or may exceed $10,000
and is otherwise subject to the Walsh-Healey Pub-
lic Contracts Act, as amended (41 U. S. Code 35-45),
there are hereby incorporated by reference all rep-
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resentations 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 inter-
pretations of the Secretary of Labor which are now
or may hereafter be in effect, except that the Con-
tractor shall not be required to include this clause
in subcontracts issued hereunder when the inclusion
of this clause in a subcontract would jeopardize or
conflict with the security considerations established
in connection with this contract. [Rev. No. 11,
9/30/62.1
16. NONDISCRIMINATION IN EMPLOYMENT
(ASPR 12-802) (July 1962)
In connection with the performance of work un-
der this contract, the contractor agrees as follows:
(a) The contractor will not discriminate against
any employee or applicant for employment because
of race, creed, color, or national origin. The Con-
tractor will take affirmative action to ensure that
applicants are employed, and that employees are
treated during employment, without regard to their
race, creed, color or national origin. Such action
shall include, but not be limited to, the following:
Employment, upgrading, demotion or transfer; re-
cruitment or recruitment advertising; layoff or
termination; rates of pay or other forms of com-
pensation; and selection for training, including ap-
prenticeship. The contractor agrees to post in
conspicuous places, available to employees and ap-
plicants for employment, notices to be provided by
the contracting officer setting forth the provisions
of this nondiscrimination clause.
(b) The contractor will, in all solicitations or ad-
vertisements for employees placed by or on behalf
of the contractor, state that all qualified applicants
will receive consideration for employment without
regard to race, creed, color, or national origin.
(c) The contractor will send to each labor union
or representative of workers with which he has a
collective bargaining agreement or other contract
or understanding, a notice, to be provided by the
agency contracting officer, advising the said labor
union or workers' representative of the contractor's
commitments under this section, and shall post
copies of the notice in conspicuous places available
to employees and applicants for employment.
(d) The contractor will comply with all provi-
sions of Executive Order No. 10925 of March 6, 1961,
and of the rules, regulations, and relevant orders
of The President's Committee on Equal Employ-
ment Opportunity in effect as of the date of this
contract.
(e) The contractor will furnish all information
and reports required by Executive Order No. 10925
of March 6, 1961, and by the rules, regulations, and
orders of the said Committee or pursuant thereto,
and will permit access to his books, records, and
accounts by the contracting agency and the Corn-
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1 Feb. 63
6
mittee for purposes of investigation to ascertain
compliance with such rules, regulations, and orders.
(1) In the event of the contractor's non-com-
pliance with the nondiscrimination clauses of this
contract or with any of the said rules, regulations,
or orders, this contract may be cancelled in whole
or in part and the contractor may be declared
ineligible for further government contracts in ac-
cordance with procedures authorized in Executive
Order No. 10925 of March 6, 1961, and such other
sanctions may be imposed and remedies invoked
as provided in the said Executive Order or by rule,
regulation, or order of The President's Committee
on Equal Employment Opportunity, or as otherwise
provided by law.
(g) The. contractor will include the provisions of
the foregoing paragraphs (a) through (f) in every
subcontract or purchase order unless exempted by
rules, regulations, or orders of The President's Com-
mittee on Equal Employment Opportunity issued
pursuant to Section 303 of Executive Order No.
10925 of March 6, 1961, so that such provisions will
be binding upon each subcontractor or vendor. The
contractor will take such action with respect to any
subcontractor or purchase order as the contract-
ing agency may direct as a means of enforcing such
provisions, including sanctions for noncompliance:
Provided however that in the event the contractor
becomes involved in, or is threatened with, litiga-
tion with a subcontractor or vendor as a result of
such direction by the contracting agency, the con-
tractor may request the United States to enter into
such litigation to protect the interests of the United
States.
17. OFFICIALS NOT TO BENEFIT (ASPR 7-103.19)
(July 1949)
No member of or delegate to Congress or resident
commissioner, shall be admitted to any share or
part of this contract, or to any benefit that may
arise therefrom; but this provision shall not be
construed to extend to this contract if made with
a corporation for its general benefit.
18. COVENANT AGAINST CONTINGENT FEES
(ASPR 7-103.20) (Jan. 1958)
The Contractor warrants that no person or sell-
ing agency has been employed or retained to solicit
or secure this contract upon an agreement or under-
standing 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 Government shall have the right
to annul this contract without liability or in its
discretion to deduct from the contract price or con-
sideration, or otherwise recover, the full amount of
such commission, percentage, brokerage, or con-
tingent fee.
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19. TERMINATION FOR CONVENIENCE OF THE
GoNERNMENT (ASPR 8-701) (Jan. 1961)
\
(a) Ti performance of work under this con-
tract\ may e terminated by the Government in ac-
cordance wi , this clause in whole, or from time to
14,\
time in part, whenever the Contracting Officer
shall determine, that such termination is in the
best interests of "-khe Government. Any such ter-
mination shall be Kfected by delivery to the Con-
tractor of a Notice 14 Termination specifying the
extent to which perf Ormance of work under the
contract is terminated, nd the date upon which
such termination become effective.
(b) After receipt of a No ? e of Termination, and
except as otherwise directe by the Contracting
Officer, the Contractor shall:
(1) stop work under the con act on the date
and to the extent specified in the notice of Termi-
nation;
(ii) place no further orders or sub ontracts for
materials, services or facilities, except s may be
necessary for completion of such porti of the
work under the contract as is not termin ted;
(iii) terminate all orders and subcontra s to
the extent that they relate to the performanc of
work terminated by the Notice of Termination;
(iv) assign to the Government, in the manner,
at the times, and to the extent directed by the
Contracting Officer, all of the right, title, and in-
terest of the Contractor tuader the orders and sub-
/
contracts so terminated, in which case the Goy-
ernment shall have the right in its discretion/to
settle or pay any or all claims arising out offithe
termination of such orders and subcontracts':
(v) settle all outstanding liabilities and t?11 claims
arising out of such termination of ordei)s and sub-
contracts, with the approval or ratification of the
ContracTing Officer, to the extent 119,-/may require,
which approval or ratification shalOoe final for all
the purposes of this clause; /
(vi) transfer title and deliver to the Govern-
ment, in the manner, at the _pfMes, and to the ex-
tent, if any, directed by the Contracting Officer,
(A) the fabricated or unfabricated parts, work in
process, completed work, 'supplies, and other ma-
terial produced as a part of, or acquired in connec-
tion with the performince of, the work terminated
by the Notice of Tffrmination, and (B) the com-
pleted or partially' completed plans, drawings, in-
formation, and other property which, if the con-
tract had been,Completed, would have been required
to be furnishdd to the Government;
(vii) use/its best efforts to sell, in the manner,
at the tithes, to the extent, and at the price or
prices directed or authorized by the Contracting
Office,: any property of the types referred to in
(vi) 'above; provided, however, that the Contractor
(A) shall not be required to extend credit to any
ipiuchaser, and (B) may acquire any such property
/
FP or PR
1 Feb. 63
7
under the conditions prescribed by and at a price
or prices approved by the Contracting Officer', and
provided further that the proceeds of ap'Sr such
transfer or disposition shall be applied in /reduction
of any payments to be made by the GovAnment to
the Contractor under this contract orAhall other-
wise be credited to the price or cost( of the work
covered by this contract or paiyin such other
manner as the Contracting Office may direct;
(viii) complete performance if such part of the
work as shall not have bee terminated by the
Notice of Termination; and y
(ix) take such action a may be necessary, or as
the Contracting Officer ay direct, for the protec-
tionlc/ and preservation /Of the property related to
this contract which iyin the possession of the Con-
tractor and in whip the Government has or may
acquire an intere/t.
At any time afVr expiration of the plant clearance
period, as defied in Section VIII, Armed Services
Procurement' Regulation, as it may be amended
from time / 'to time, the Contractor may submit to
the Conyacting Officer a list, certified as to quan-
tity and quality, of any or all items of termination
inve5tory not previously disposed of, exclusive of
items the disposition of which has been directed or
autSorized by the Contracting Officer, and may re-
"quest the Government to remove such items or
'enter into a storage agreement covering them. Not
ter than fifteen (15) days thereafter, the Gov-
e ment will accept title to such items and remove
the or enter into a storage agreement covering the
sam provided that the list submitted shall be sub-
ject to verification by the Contracting Officer upon
removal if the items, or if the items are stored,
within fo y-five (45) days from the date of sub-
mission of e list, and any necessary adjustment
to correct th list as submitted shall be made prior
to final settle -nt.
(c) After recei t of a Notice of Termination, the
Contractor shall s mit to the Contracting Officer
its termination clai in the form and with certi-
fication prescribed by e Contracting Officer. Such
claim shall be submitte promptly but in no event
later than one year from the effective date of ter-
mination, unless one or mi e extensions in writing
are granted by the Contra ing Officer, upon re-
quest of the Contractor made i writing within such
one year period or authorize extension thereof.
However, if the Contracting Offic determines that
the facts justify such action, he ma receive and act
upon any such termination claim at nytime after
such one year period or any exten on thereof.
Upon failure of the Contractor to sub it its ter-
mination claim within the time allowed, he Con-
tracting Officer may, subject to any Se lement
Review Board approvals required by Sectio VIII
of the Armed Services Procurement Regulati in
effect as of the date of execution of this contr t,
determine, on the basis of information available
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him, the amount, if any, due to the Contractor by
reason of the termination and shall thereupon pay
to the Contractor the amount so determined.
(d) Subject to the provisions of paragraph (c),
and subject to any Settlement Review Board ap-
provals required by Section VIII of the Armed Serv-
ices Procurement Regulation in effect as of the date
of execution of this contract, the Contractor and
the Contracting Officer may agree upon the whole
or any part of the amount or amounts to be paid
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 al-
lowance for profit on work done; provided that such
agreed amount or amounts, exclusive of settlement
costs, 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. The contract shall be
amended accordingly, and the Contractor shall be
paid the agreed amount. Nothing in paragraph
(e) of this clause, prescribing the amount to be paid
to the Contractor in the event of failure of the Con-
tractor and the Contracting Officer to agree upon
the whole amount to be paid to the Contactor by
reason of the termination of work pursuant to this
clause, shall be deemed to limit, restrict, or other-
wise determine or affect the amount or amounts
which may be agreed upon to be paid to the Con-
tractor pursuant to this paragraph (d).
(e) In the event of the failure of the Contractor
and the Contracting Officer 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, subject to any Settlement Review Board ap-
provals required by Section VIII of the Armed Serv-
ices Procurement Regulation in effect as of the da
of execution of this contract, determine, on e
basis of information available to him, the amo nt,
if any, due to the Contractor by reason of th ter-
mination and shall pay to the Contract the
amounts determined as follows:
(i) for completed supplies accepted by e Gov-
ernment (or sold or acquired as provide in para-
graph (b) (vii) above) and not there ofore paid
for, a sum equivalent to the aggreg e price for
such supplies computed in accord ce with the
price or prices specified in the c tract, appro-
priately adjusted for any saving o freight or other
charges;
(ii) the total of ?
(A) the costs incurred in thf performance of the
work terminated, including tial costs and pre-
paratory expense allocable ereto, but exclusive of
any costs attributable to s plies paid or to be paid
for under paragraph (e) i) hereof;
(B) the cost of settling and paying claims arising
out of the terminati7 of work under subcontracts
or orders, as provide in paragraph (b) (v) above,
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8
which are properly chargeable to the terminated
portion of the contract (exclusive of amounts paid
or payable on account of supplies or materials
delivered or services furnished by subcontractors or
vendors prior to the effective date os/the Notice of
Termination, which amounts shall/be included in
the costs payable under (A) above and
(C) a sum, as a profit, equal t12 percent of that
part of the amount determine under (A) above
which represents the cost of a/tides and materials
not processed by the Contra or, plus a sum equal
to 8 percent of the remainc?of such amount, but
the aggregate of such sum/ shall not exceed 6 per-
cent of the whole of the amount determined under
(A) above; provided, hjwever, that if it appears
that the Contractor uld have sustained a loss
on the entire contra had it been completed, no
profit shall be inclu ed or allowed under this sub-
division (C) and th appropriate adjustment shall
be made reducing 'the amount of the settlement to
reflect the indic ed rate of loss; and
(iii) the rea ?nable costs of settlement, including
accounting, I al, clerical, and other expenses rea-
sonably nec sary for the preparation of settlement
claims and upporting data with respect to the ter-
minated srtion of the contract and for the ter-
minatio and settlement of subcontracts there-
under, ? gether with reasonable storage, transporta-
tion, d other costs incurred in connection with
the ? otection or disposition of property allocable to
thi contract. The total sum to be paid to the Con-
r- tor under (i) and (ii) of this paragraph (e)
s all not exceed the total contract price as reduced
y the amount of payments otherwise made and as
furthtzr reduced by the contract price of work not
terminhted. Except for normal spoilage, and ex-
cept to ite 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 (e) (i) and (ii) (A) above,
the fair value,\As determined by the Contracting
Officer, of propeity which is destroyed, lost, stolen,
or damaged so as to become undeliverable to the
Government, or to ?buyer pursuant to paragraph
(b) (vii) .
(f) Any determinatio'n\of costs under paragraph
(c) or (e) hereof shall be governed by the principles
for consideration of costs Nd forth in Section XV,
Part 2, of the Armed ServicaProcurement Regula-
tion, as in effect on the date &this contract.
(g) The Contractor shall have?the right of ap-
peal, under the clause of this ntract entitled
"Disputes," from any determinatiorimade by the
Contracting Officer under paragraph (c) or (e)
above, except that if the Contractor hhs failed to
submit his claim within the time provides in para-
graph (c) above and has failed to request eXtension
of such time, he shall have no such right of appeal.
In any case where the Contracting Officer has rade
a determination of the amount due under pa?a-
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graph (c) or (e) above, the Government shall psfy
to the Contractor the following: (i) if there is fao
rightkof appeal hereunder or if no timely appeal as
been aken, the amount so determined by the don-
tractiriF Officer, or (ii) if an appeal has been t ken,
the am,Runt finally determined on such appe I.
(h) th arriving at the amount due the Coiitrac-
tor undeil this clause there shall be deduc,,ted (i)
all unliqul ated advance or other payment on ,g\ac-
count ther tofore made to the Contractor, applicable
to the termI ated portion of this contract, (ii) any
claim which the Government may have vgainst the
Contractor i connection with this coptract, and
(iii) the agre d price for, or the procAeds of sale
of, any mate 'als, supplies, or othei things ac-
quired by the ontractor or sold, puisuant to the
provisions of t s clause, and not/otherwise re-
covered by or crn ited to the Govement.
(i) If the termi ation hereunder/be partial, prior
to the settlement ? the terminated portion of this
contract, the Cont ctor may ffle with the Con-
tracting Officer a req est in writVig for an equitable
adjustment of the p *ce or pries specified in the
contract relating to tie conti ' ued portion of the
Itcontract (the portion t ter inated by the Notice
of Termination), and s h equitable adjustment as
may be agreed upon sh U pe made in such price
or prices.
(j) The Government y from time to time,
under such terms and c s itions as it may pre-
scribe, make partial pay en and payments on ac-
count against costs inc rred by the Contractor in
connection with the ter,ininat portion of this con-
tract whenever in th opinio of the Contracting
Officer the aggregat of such payments shall be
within the amount t,? which the Contractor will be
entitled hereunder. If the total of such payments
is in excess of the/ mount finall agreed or deter-
mined to be due/ under this cla se, such excess
shall be payable Ay the Contractor to the Govern-
ment upon denlUnd, together with interest com-
puted at the rate of 6 percent per a num, for the
g"
period from t e date such excess p ment is re-
ceived by the ontractor to the date o which such
excess is repaid to the Government; pr vided, how-
ever, that riyi interest shall be charged th respect
to any sucyi excess payment attributable to a re-
duction in/the Contractor's claim by rea in of re-
tention op' other disposition of terminatio i inven-
tory untif ten days after the date of such r tention
or disposition, or such later date as determ ed by
the Contracting Officer by reason of the c T11111-
stances.
(k) Unless otherwise provided for in this on-
tract; or by applicable statute, the Contractor, om
the effective date of termination and for a pe od
of three years after final settlement under this co
tract, shall preserve and make available to the Go
ernment at all reasonable times at the Office of th
Contractor but without direct charge to the Gov-
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ernment, all his books, records, documents, and
Othei-? evidence bearing on the costs a_nd exfienses
of the Conli"actor..._under this egntratcand relating
to the work termingW-hge-under, or, to the ex-
tent approved lay-tre Concrleting Officer, photo-
grap crophotographs, or othe?-fttit tic re-
oductions thereof. [Rev. No. 49, 10/1/59.1
20. AUTHORIZATION AND CONSENT
(ASPR 9-102.1) (Jan. 1961)
The Government hereby gives its authorization
and consent (without prejudice to its rights of
indemnification, if such rights are provided for in
this contract) for all use and manufacture, in the
performance of this contract or any part hereof or
any amendment hereto or any subcontract here-
under (including any lower-tier subcontract), of
any invention described in and covered by a patent
of the United States (i) embodied in the structure
or composition of any article the delivery of which
is accepted by the Government under this contract,
or (ii) utilized in the machinery, tools, or methods
the use of which necessarily results from compliance
by the Contractor or the using subcontractor with
(a) specifications or written provisions now or here-
after forming a part of this contract, or (b) specific
written instructions given by the Contracting Officer
directing the manner of performance. The Con-
tractor's entire liability to the Government for in-
fringement of a patent of the United States shall
be determined solely by the provisions of the in-
demnity clause if any, included in the contract and
the Government assumes liability for all other in-
fringement to the extent of the authorization and
consent hereinabove granted. [Rev. No. 28, 1/28/58;
Rev. No. 3, 1/31/61.1
21. NOTICE AND ASSISTANCE REGARDING
PATENT AND COPYRIGHT INFRINGEMENT
(ASPR 9-104) (Feb. 1962)
The provisions of this clause shall be applicable
only if the amount of this contract exceeds $10,000.
(a) The Contractor shall report to the Contract-
ing Officer, promptly and in reasonable written de-
tail, each notice or claim of patent infringement
based on the performance of this contract of which
the Contractor has knowledge.
(b) In the event of any suit against the Govern-
ment, or any claim against the Government made
before suit has been instituted, on account of any
alleged patent or copyright infringement arising
out of the performance of this contract or out of
the use of any supplies furnished or work or serv-
ices performed hereunder, the Contractor shall fur-
nish to the Government, upon request, all evidence
and information in possession of the Contractor
pertaining to such suit or claim. Such evidence
and information shall be furnished at the expense
of the Government except in those cases in which
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the Contractor has agreed to indemnify the Gov-
ernment against the claim being asserted. [Rev.
No. 35, '7/15/58; Rev. No. 7, 2/15/62.]
22. BUY AMERICAN ACT (ASPR 6-104.5)
(July 1960)
(a) In acquiring end products, the Buy American
Act (41 U. S. Code 10 a-d) provides that the Gov-
ernment give preference to domestic source end
products. For the purpose of this clause:
(i) "components" means those articles, materials,
and supplies, which are directly incorporated in the
end products;
(ii) "end products" means those articles, ma-
terials, and supplies, which are to be acquired under
this contract for public use; and
(iii) a "domestic source end product" means (A)
an unmanufactured end product which has been
mined or produced in the United States and (B)
an end product manufactured in the United States
if the cost of the components thereof which are
mined, produced, or manufactured in the United
States or Canada exceeds 50 percent of the cost
of all its components. For the purposes of this
(a) (iii) (B), components of foreign origin of the
same type or kind as the products referred to in
(b) (ii) or (iii) of this clause shall be treated as
components mined, produced, or manufactured in
the United States.
(b) The Contractor agrees that there will be de-
livered under this contract only domestic source
end products, except end products:
(i) which are for use outside the United States;
(ii) which the Government determines are not
mined, produced, or manufactured in the United
States in sufficient and reasonably available com-
mercial quantities and of a satisfactory quality;
(iii) as to which the Secretary determines the
domestic preference to be inconsistent with the
public interest; or
(iv) as to which the Secretary determines the
cost to the Government to be unreasonable.
23. FILING OF PATENT APPLICATIONS
(ASPR 9-106) (Jan. 1955)
(a) Before filing or causing to be filed a patent
application disclosing any subject matter of this
contract, which subject matter is classified "Secret"
or higher, the Contractor shall, citing the thirty
(30) day provision below, transmit the proposed
application to the Contracting Officer for determi-
nation whether, for reasons of national security,
such application should be placed under an order
of secrecy or sealed in accordance with the pro-
visions of 35 U. S. Code 181-188 or the issuance of
a patent should be otherwise delayed under perti-
nent statutes or regulations; and the Contractor
shall observe any instructions of the Contracting
Officer with respect to the manner of delivery of
the patent application to the U. S. Patent Office
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1 Feb. 63
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for filing, but the Contractor shall not be denied
the right to file such patent application. If the
Contracting Officer shall not have given any such
instructions within thirty (30) days from the date
of mailing or other transmittal of the proposed ap-
plication, the Contractor may file the application.
(b) The Contractor shall furnish to the Contract-
ing Officer, at the time of or prior to the time when
the Contractor flies or causes to be filed a patent
application disclosing any subject matter of this
contract, which subject matter is classified "Confi-
dential," a copy of such application for determina-
tion whether, for reasons of national security, such
application should be placed under an order of se-
crecy or the issuance of a patent should be other-
wise delayed under pertinent statutes or regulations.
(c) In filing any patent application coming within
the scope of this clause, the Contractor shall ob-
serve all applicable security regulations covering
the transmission of classified subject matter.
24. PATENT RIGHTS (LICENSE) (ASPR 9-107.2 ?
7-204.7) (April 1962)
(a) As used in this clause, the following terms
shall have the meanings set forth below:
(i) The term "Subject Invention" means any in-
vention, improvement, or discovery (whether or not
patentable) conceived or first actually reduced to
practice either
(A) in the performance of the experimental, de-
velopmental, or research work called for or re-
quired under this contract: or
(B) in the performance of any experimental, de-
velopmental, or research work relating to the sub-
ject matter of this contract which was done upon
an understanding in writing that a contract would
be awarded; provided that the term "Subject In-
vention" shall not include any invention which is
specifically identified and listed in the Schedule
for the purpose of excluding it from the license
granted by this clause. [Rev. No. 28, 1/28/58.]
(ii) The term "Technical Personnel" means any
person employed by or working under contract with
the Contractor (other than a subcontractor whose
responsibilities with respect to rights accruing to
the Government in inventions arising under sub-
contracts are set forth in (g) and (h), below), who,
by reason of the nature of his duties in connection
with the performance of this contract, would rea-
sonably be expected to make inventions. (Rev. No.
28, 1/28/58.1
(iii) The terms "subcontract" and "subcontrac-
tor" mean any subcontract or subcontractor of the
Contractor, and any lower-tier subcontract or sub-
contractor under this contract. [Rev. No. 10,
7/30/62.]
(b) (1) The Contractor agrees to and does hereby
grant to the Government an irrevocable, nonexclu-
sive, nontransferable, and royalty-free license to
practice, and cause to be practiced by or for the
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United States Government throughout the world,
each Subject Invention in the manufacture, use and
disposition according to law, of any article or ma-
terial, and in the use of any method. Such license
(i) shall be non-transferable except that the Gov-
ernment shall have the right to grant sub-licenses
to any foreign government or international organ-
ization specifically for use in programs established
by international agreements for research develop-
ments or production of weapons or equipment for
mutual defense and (ii) shall include the practice
of Subject Invention in the manufacture, use, and
disposition of any articles or material, in the use
of any method, or in the performance of any
service acquired by or for the Government or
with funds derived through the Military Assistance
Program of the Government or otherwise through
the Government. [Rev. No. 9, 4/15/82.]
(2) With respect to:
(i) any Subject Invention made by other than
Technical Personnel;
(ii) any Subject Invention conceived prior to, but
first actually reduced to practice in the course of,
any of the experimental, developmental, or research
work specified in (a) (i) above; and
(iii) the practice of any Subject Invention in for-
eign countries; the obligation of the Contractor to
grant a license as provided in (b) (1) above, to con-
vey 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 Con-
tractor's right to grant the same without incurring
any obligation to pay royalties or other compen-
sation to others solely on account of said grant.
Nothing contained in this Patent Rights clause
shall be deemed to grant any license under any
invention other than a Subject Invention.
(c) The Contractor shall furnish to the Contract-
ing Officer the following information and reports
concerning Subject Inventions which reasonably ap-
pear to be patentable:
(i) a written disclosure promptly after concep-
tion or first actual reduction to practice of each
such Invention together with a written statement
specifying whether or not a United States patent
application claiming the Invention has been or
will be filed by or on behalf of the Contractor;
(ii) interim reports, at least every twelve months,
commencing with the date of this contract, each
listing all such Inventions conceived or first ac-
tually reduced to practice more than three months
prior to the date of the report, and not listed on
a prior interim report, or certifying that there are
no such unreported inventions; 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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1 Feb. 63
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(i) if the Contractor specifies that a United
States patent application claiming such Invention
will be filed, the Contractor 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 Con-
tractor shall so notify the Contracting 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 there-
after notifies the Contracting Officer to the con-
trary), 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 publica-
tion by the Contractor, stating the date and iden-
tity of such publication or contemplated publica-
tion; and
(B) convey to the Government the Contractor's
entire right, title, and interest in such Invention
by delivering to the Contracting Officer upon writ-
ten request such duly executed instruments (pre-
pared by the Government) of assignment and ap-
plication, and such other papers as are deemed
necessary to vest in the Government the Contrac-
tor's right, title, and interest aforesaid, and the
right to apply for and prosecute patent applications
covering such Invention throughout the world, sub-
ject, however, to the rights of the Contractor in
foreign applications as provided in (e) below, and
subject further to the reservation of a non-exclu-
sive and royalty-free license to the Contractor (and
to its existing and future associated and affiliated
companies, if any, within the corporate structure
of which the Contractor is a part) which license
shall be assignable to the successor of that part of
the Contractor's business to which such Invention
pertains;
(iii) the Contractor shall furnish promptly to the
Contracting Officer on request an irrevocable power
of attorney to inspect and make copies of each
United States patent application filed by or on be-
half of the Contractor covering any such Inven-
tion;
(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 Contracting Officer not less than sixty
days before the expiration of the response period
and, upon written request, deliver to the Contract-
ing Officer such duly executed instruments (pre-
pared by the Government) as are deemed necessary
to vest in the Government the Contractor's entire
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right, title, and interest in such Invention and the
application, subject to the reservation as specified
in (d) (ii) above; and
(v) the Contractor shall deliver to the Contract-
ing Officer duly executed instruments fully con-
firmatory of any license rights herein agreed to be
granted to the Government.
(e) The Contractor, or those other than the Gov-
ernment deriving rights from the Contractor, shall,
as between the parties hereto, 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 Contracting Officer.
The Contractor shall, upon written request of the
Contracting 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 Contrac-
tor together with the right of the Contractor to
grant sublicenses, which license and right shall be
assignable to the successor of that part of the Con-
tractor's business to which the Subject Invention
pertains.
(f) If the Contractor fails to deliver to the Con-
tracting Officer the interim reports required by
(c) (ii) above, or fails to furnish the written dis-
closures for all Subject Inventions required by
(c) (I) above shown to be due in accordance with
any interim report delivered under (c) (ii) or other-
wise known to be unreported, there shall be with-
held 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 per-
cent (80%) of the amount of this contract, as from
time to time amended, payment shall be withheld
until a reserve of either ten percent (10%) of such
amount, or five thousand dollars ($5,000), which-
ever is less, shall have been set aside, such reserve
or balance thereof to be retained until the Con-
tractor shall have furnished 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 reports delivered
under (c) (ii) above or in accordance with such
final reports or are otherwise known to be unre-
ported; and
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1 Feb. 63
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(iii) the information as to any subcontractor re-
quired 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 speci-
fied by this paragraph (f) is being withheld under
other provisions of this contract. The withhold-
ing of any amount or subsequent payment thereof
to the Contractor shall not be construed as a waiver
of any rights accruing to the Government under
this contract. This paragraph (f) shall not be con-
strued as requiring the Contractor to withhold any
amounts from a subcontractor to enforce compli-
ance with the patent provisions of a subcontract.
(g) The Contractor shall, unless otherwise au-
thorized by the Contracting Officer as hereafter pro-
vided, include a patent rights clause containing all
the provisions of this Patent Rights Clause except
provision (f) in any subcontract hereunder of three
thousand dollars ($3,000) or more having experi-
mental, developmental, or research work as one of
its purposes. In the event of refusal by a subcon-
tractor to accept such a patent rights clause, the
contractor (i) shall promptly submit a written re-
port to the Contracting Officer setting forth the
subcontractor's reasons for such refusal and other
pertinent information which may expedite disposi-
tion of the matter, and (ii) shall not proceed with
the subcontract without the written authorization
of the Contracting Officer. Reports, instruments,
and other information required to be furnished by
a subcontractor to the Contracting Officer under
the provisions of such a patent rights clause in a
subcontract hereunder may, upon mutual consent
of the Contractor and subcontractor, (or by direc-
tion of the Contracting Officer) be furnished to the
Contractor for transmission to the Contracting Offi-
cer. [Rev. No. 9, 4/15/62.1
(h) The Contractor shall, at the earliest prac-
ticable date, notify the Contracting Officer in writ-
ing of any subcontract containing one or more
patent rights clauses, furnish the Contracting Offi-
cer a copy of each of such clauses; and notify the
Contracting Officer when such subcontract is com-
pleted. It is understood that with respect to any
subcontract clause granting rights to the Govern-
ment in Subject Inventions, 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 subcontrac-
tor's obligations for the benefit of the Government
with respect to Subject Inventions. If there are
no subcontracts containing patent rights clauses,
a negative report is required. The Contractor shall
not be obligated to enforce the agreements of any
subcontractor hereunder relating to the obligations
of the subcontractor to the Government in regard
to Subject Inventions.
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(i) The contractor recognizes that the Govern-
ment, or a foreign Government with funds derived
through the Military Assistance Program or other-
wise through the United States Government, may
contract for property or services with respect to
which the vendor may be liable to the Contractor
for royalties for the use of a Subject Invention on
account of such a contract. The Contractor fur-
ther recognizes that it is the policy of the Govern-
ment not to pay in connection with its contracts,
or to allow to be paid in connection with contract
made with funds derived through the Military As-
sistance Program or otherwise through the United
States Government, charges for use of patents in
which the Government holds a royalty free license.
In recognition of this policy, the Contractor agrees
to participate in this policy and to make ap-
propriate arrangements for the exclusion of such
charges from such contracts or for the refund of
amounts received by the contractor with respect to
any such charges not so excluded. [Rev. No. 9,
4/15/62.]
25. DATA (ASPR 9-203.1) (Feb. 1962)
(a) The term "Subject Data" as used herein in-
cludes writings, sound recordings, pictorial repro-
ductions, drawings or other graphical representa-
tions, and works of any similar nature (whether or
not copyrighted) which are specified to be delivered
under this contract. The term does not include
financial reports, cost analyses, and other informa-
tion incidental to contract administration.
(b) The Contractor agrees to and does hereby
grant to the Government, and to its officers, agents,
and employees acting within the scope of their
official duties, a royalty-free, nonexclusive and ir-
revocable license throughout the world for Govern-
ment purposes to publish, translate, reproduce, de-
liver, perform, dispose of, and to authorize others
so to do, all Subject Data now or hereafter covered
by copyright. [Rev. No. 7, 2/15/62.1
(c) The Contractor shall not include in the Sub-
ject Data any copyrighted matter, without the
written approval of the Contracting Officer, unless
he provides the Government with the written per-
mission of the copyright owner for the Government
to use such copyrighted matter in the manner pro-
vided in paragraph (b) above. [Rev. No. 7, 2/15/62.1
(d) The Contractor shall report to the Contract-
ing Officer, promptly and in reasonable written de-
tail, each notice or claim of copyright infringement
received by the Contractor with respect to all Sub-
ject Data delivered under this contract.
(e) Nothing contained in this clause shall imply
a license to the Government under any patent or
be construed as affecting the scope of any license
or other right otherwise granted to the Govern-
ment under any patent.
(f) Unless otherwise limited below, the Govern-
ment may duplicate, use, and disclose in any man-
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1 Feb. 63
13
ner and for any purpose whatsoever, and have
others so do, all Subject Data delivered under this
contract. [Rev. No. 7, 2/15/62.1
(g) The Contractor recognizes that the Govern-
ment, or a foreign government with funds derived
through the Mutual Security Program or otherwise
through the United States Government, may con-
tract for property or services with respect to which
the vendor may be liable to the Contractor for
charges for the use of Subject Data on account of
such a contract. The Contractor further recognizes
that it is the policy of the Government not to pay in
connection with its contracts, or to allow to be paid
in connection with contracts made with funds de-
rived through the Mutual Security Program or
otherwise through the United States Government,
charges for data which the Government has a right
to use and disclose to others, or which is in the
public domain, or with respect to which the Gov-
ernment has been placed in possession without
restrictions upon its use and disclosure to others.
This policy does not apply to reasonable reproduc-
tion, handling, mailing, and similar administrative
costs incident to the furnishing of such data. In
recognition of this policy, the Contractor agrees to
participate in and make appropriate arrangements
for the exclusion of such charges from such con-
tracts or for the refund of amounts received by the
Contractor with respect to any such charges not
so excluded. [Rev. No. 52, 3/15/60.]
(h) Notwithstanding any provisions of this con-
tract concerning inspection and acceptance, the
Government shall have the right at any time to
modify, remove, obliterate or ignore any marking
not authorized by the terms of this contract on
any piece of Subject Data furnished under this
contract. [Rev. No. 38, 10/15/58; Rev. No. 52,
3/15/60.]
26. DATA ? WITHHOLDING OF PAYMENT
(ASPR 9-207.2) (Apr. 1962)
If "Subject Data" (as defined in the clause of
this contract entitled "Data") , or any part thereof,
is not delivered within the time specified by this
contract or is deficient upon delivery (including
having restrictive markings not specifically author-
ized by the contract) , the Contracting Officer may,
until such data is delivered or deficiencies are cor-
rected, withhold payment to the Contractor of ten
percent (10%) of the contract price unless a lesser
withholding is specified in the schedule. Payments
shall not be withheld nor any other action taken
pursuant to this clause where the Contractor's fail-
ure to make timely delivery or to deliver data with-
out deficiencies arises out of causes beyond the con-
trol and without the fault or negligence of the Con-
tractor within the meaning of the clause hereof
entitled "Default." The withholding of any amount
or subsequent payment thereof to the Contractor
shall not be construed as a waiver of any rights
accruing to the Government under this contract.
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27. MILITARY SECURITY REQUIREMENTS
(ASPR 7-104.12) (June 1958)
(a) The provisions of this clause shall apply to
the extent that this contract involves access to
security information classified "Confidential" in-
cluding "Confidential-Modified Handling Author-
ized" or higher.
(b) The Government shall notify the Contractor
of the security classification of this contract and
the elements thereof, and of any subsequent re-
visions in such security classification, by the use
of a Security Requirements Check List (DD Form
254) or other written information.
(c) To the extent the Government has indicated
as of the date of this contract, or thereafter indi-
cates, security classification under this contract as
provided in paragraph (b) above, the Contractor
shall safeguard all classified elements of this con-
tract 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), in-
cluding the Department of Defense Industrial Secu-
rity Manual for Safeguarding Classified Informa-
tion as in effect on the date of this contract, and
any modification to the Security Agreement for
the purpose of adapting the Manual to the Con-
tractor'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 cogni-
zance over the facility.
(d) Representatives of the Military Department
having security cognizance over the facility and
representatives of the contracting Military Depart-
ment shall have the right to inspect at reasonable
intervals the procedures, methods, and facilities
utilized by the Contractor in complying with the
security requirements under this contract. Should
the Government, through its authorized representa-
tives, determine that the Contractor is not comply-
ing with such requirements, the Government shall
inform the Contractor in writing of the proper ac-
tions 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 de-
creased 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 sub-
contracts hereunder which involve access to clas-
FP or PR
1 Feb. 63
14
sifled 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 de-
termine that any subcontractor proposed by it for
the furnishing of supplies and services which will
involve access to classified information in the Con-
tractor's custody has been granted an appropriate
facility security clearance, which is still in effect,
prior to being accorded access to such classified
information. [Rev. No. 34, 6/11/58; Rev. No. 48,
8/1/59.1
28. UTILIZATION OF SMALL BUSINESS
CONCERNS (ASPR 7-104.14) (Jan. 1958)
(a) It is the policy of the Government as de-
clared by the Congress that a fair proportion of
the purchases and contracts for supplies and serv-
ices for the Government be placed with small
business concerns. [Rev. No. 28, 1/28/58.]
(b) The Contractor agrees to accomplish the
maximum amount of subcontracting to small busi-
ness concerns that the Contractor finds to be con-
sistent with the efficient performance of this con-
tract.
29. EXAMINATION OF RECORDS
(ASPR 7-104.15) (Med.) (Feb. 1962)
(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 Con-
tractor involving transactions related to this con-
tract.
(b) The Contractor further agrees to include in
all his subcontracts hereunder a provision to the
effect that the subcontractor agrees that the Con-
tracting Officer or any of his duly authorized repre-
sentatives 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 subcontract. The term "subcontract" as
used in this clause excludes (i) purchase orders not
exceeding $2,500 and (ii) subcontracts or purchase
orders for public utility services at rates established
for uniform applicability to the general public.
[Rev. No. 39, 11/3/58; Rev. No. 42, 1/9/59.1
30. GRATUITIES (ASPR 7-104.16) (Mar. 1952)
(a) The Government may, by written notice to
the Contractor, terminate the right of the Con-
tractor to proceed under this contract if it is found,
after notice and hearing, by the Secretary or his
duly authorized representative, that gratuities (in
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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 treat-
ment with respect to the awarding or amending or
the making of any determinations with respect to
the performing of such contract; provided, that the
existence of the facts upon which the Secretary or
his duly authorized representative makes such find-
ings shall be in issue and may be reviewed in any
competent court.
(b) In the event this contract is terminated as
provided in paragraph (a) hereof, the Government
shall be entitled (i) to pursue the same remedies
against the Contractor as it could pursue in the
event of a breach of the contract by the Contractor,
and (ii) as a penalty in addition to any other
damages to which it may be entitled by law, to
exemplary damages in an amount (as determined
by the Secretary or his duly authorized representa-
tive) which shall be not less than three nor more
than ten times the costs incurred by the Contrac-
tor 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.
31. CONVICT LABOR (ASPR 7-104.17?
ASPR 12-203) (Mar. 1949)
In connection with the performance of work un-
der this contract, the Contractor agrees not to em-
ploy any person undergoing sentence of imprison-
ment at hard labor.
32..1IATERIEL INSPECTION AND RECEIVING
RITow_r (ASPR 7-105.7)
At the tim-eThf each delivery under this contract
the Contractor shalt-prepare and furnish to the
Government, in the mann& an,c1 to the *tent re-
quired by the Contracting Offic6,4, Materiel In-
spection and Receiving Report- (DD Perm_ 250 or
comparable form). T.be-dovernment shall fi111iis.4,
the required for o the Contractor upon request.
[Rev. No. 1J,-9730/62.]
33. SUBCONTRACTS (SOURCES) (AFPI 7-4030)
(Mar. 1960)
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.
IC SUBCONTRACTS (ASPR 3-903.1)_ (Noy... 1962)
If this contract prWaes -far 1)
tion or incentive,tliCir011owing additionOirOvisiGns,
_shall-101Y to subcontracts.
FP or PR
1 Feb. 63
15
( ) As used in this clause, the term "subcontra
incl des purchase orders.
(b Except as provided in paragraph (d) below,
the ntractor shall notify the Contracting Officer
reason bly in advance of entering into any; sub-
contra which?
(i) is n a cost-plus-a-fee, time and matqiial, or
labor-ho r basis and which would involve An esti-
mated a ount in excess of $10,000, inducting any
fee; or
(ii) is p posed to exceed $100,000; or'
(iii) is o e of a number of subcont acts under
this contrac with a single subcontra tor for the
same or rela d supplies or services vihich, in the
aggregate, are expected to exceed $1,90,000.
(c) The adv nce notification reqyired by para-
graph (b) abov shall include:
(i) a descripti n of the suppliq or services to
be called for by I e subcontract;
of the proased subcontractor
of why an how the proposed
lected, inc ding the degree of
(ii) identificatio
and an explanatio
subcontractor was s
competition obtaine
(iii) the proposed stitcontra t price, together with
the Contractor's cost r pric analysis thereof, in-
cluding current, compl te, a d correct cost or pric-
ing data accompanied it a certificate from the
subcontractor to the effc that all cost or pricing
data has been considere by the subcontractor in
preparing his proposal ad that such data is cur-
rent, and has been pro ed the Contractor; and
[Rev. No. 6, 11/15/61; o. 7, 2/15/62.1
(iv) identification of he t e of contract proposed
to be used.
(d) Advance noti ations o subcontracts, as re-
quired by paragra (b) abo e, are not required
for any subcontra (i) not o a cost-plus-a-fee,
time and materia or labor-hou basis, if the Con-
tracting Officer as in writing proved the Con-
tractor's purcha ng system and he subcontract is
within the limit tions of such app oval, or (ii) con-
sented to in w ting by the Contra sting Officer as a
proposed subc ntract prior to the e ecution of this
contract.
(e) The .ntractor shall not, wit out the prior
written co ent of the Contracting ?fficer, enter
into any bcontract for which adva ce notifica-
tion to t Contracting Officer is req ed by this
clause; ? ovided that, in his discretio the Con-
tracting Officer may ratify in writing a y subcon-
tract a d such ratification shall constitut the con-
sent o the Contracting Officer require by this
parag aph.
(f) No consent by the Contracting Office to any
sub ntract or any provisions thereof or a royal
of e Contractor's purchasing system shall be con-
st t ed to be a determination of the accepta lity
o any subcontract price or of any amount p id
nder any subcontract or to relieve the Contract a r
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Oc any responsibility for performing this contract,
unless such approval or consent specifically provides
otherwise.
(g) The Contractor agrees that no subcontract
placed under this contract shall provide for pay-
ment on a cost-plus-a-percentage-of-cost basis.
[Rev. No. 6, 11/15/61; AFPC No. 37, 8/14/62; Rev. No.
11, 9/30/62; Hey. No. 12, 11/26/62.1
35. SUBCONTRACTOR COST AND PRICING DATA
(ASPR '7-104.42) (Nov. 1962)
The following claus)5. shall apply to all incentive
and redeterminable type._ contracts, and to all other
negotiated contracts when the contractor has fur-
nished a Certificate of Curiknt Cost or Pricing Data
in connection with the initial pricing thereof.
(a) The Contractor shall retfuire subcontractors
hereunder to submit cost or pricing data under the
following circumstances: (i) prior lb award of any
cost-reimbursement type, incentive, ?or price rede-
terminable subcontract; (ii) prior to the award of
any subcontract the price of which is expected to
exceed $100,000, except where the price thereof is
based on adequate price competition, established
catalog or market prices of commercial item's sold
in substantial quantities to the general publik or
prices set by law or regulation; (iii) prior to flie
pricing of any subcontract change or other modifil.?
cation for which the price adjustment is expected
to exceed $100,000.
(b) The Contractor shall require subcontractors
to certify, in substantially the same form as that
used in the certificate by the Prime Contractor to
the Government, that to the best of their knowledge
and belief, the cost and pricing data submitted
under (a) above is accurate, complete, and current
as of the date of execution, which date shall be as
close as possible to the date of agreement on the
negotiated price of the subcontract.
(c) The Contractor shall insert the substance of
this clause, including this paragraph (c), in each
subcontract hereunder which exceeds $100,000, ex-
cept where the price thereof is bEised on adequate
price competition, established catalog or market
prices of commercial items soldtin substantial quan-
tities to the general public, or prices set by law or
regulation. In each such/ excepted subcontract
hereunder in excess of $100,000 the Contractor shall
insert the substance of the following clause:
Subcontractor Cost and Pricing Data?
Price Adjustments
(a) Paragraph S (b) and (c) of this clause shall
become operatite only with respect to any change
or other modification made pursuant to one or more
provisions a this contract which involves a price
adjustment in excess of $100,000. The requirements
of this use shall be limited to such price adjust-
FP or PR
1 Feb. 63
(b) The Contractor shall require subcontractors
hereunder to submit cost or pricing data under the
following circumstances: (i) prior to award of any
cost-reimbursement type, incentive, or price rede-
terminable subcontract; (ii) prior to award of any
subcontract, the price of which is expected to ex-
ceed $100,000 except where the price thereof is based
on adequate price competition, established catalog
or market prices of commercial items sold in sub-
stantial quantities to the general public or prices
set by law or regulation; (iii) prior to the pricing
of any subcontract change or other modification for
which the price adjustment i expected to exceed
$100,000.
(c) The Contractor shall require subcontractors
to certify, in substantially the same form as that
used in the certificate by the Prime Contractor
to the Government, that to the best of their knowl-
edge and belief the cost and pricing data submit-
ted under (b) above is accurate, complete, and cur-
rent as of the date of the execution, which date
shall be as close as possible to the date of agree-
ment on the negotiated price of the contract modi-
fication.
(d) The Contractor shall insert the substance of
this clause including this paragraph (d) in each
subcontract hereunder which exceeds $100,000.
36. SUBCONTRACTOR COST AND PRICING
'DATA?PRICE ADJUSTMENTS (ASPR 7-104.42)
(Nov. 1962)
," \The following clause shall apply to all advertised
anh* negotiated contracts in excess of $100,000,
?
wheN the contractor has not furnished a Certificate
of CuAent Cost or Pricing Data in connection with
the inittal pricing thereof.
16
Subco ractor Cost and Pricing Data?
Pri Adjustments (Nov. 1962)
(a) Paragraph
become operative
or other modificatio
provisions of this con
adjustment in excess of
of this clause shall be
j ustments.
(b) The Contractor shall quire subcontractors
hereunder to submit cost or pr ng data under the
following circumstances: (i) pri to award of any
cost-reimbursement type, incentive or price redeter-
minable subcontract; (ii) prior to a rd of any sub-
contract the price of which is expec d to exceed
$100,000, except where the price thereofN based on
adequate price competition, established ?alog or
market prices of commercial items sold "4i sub-
stantial quantities to the general public or rices
set by law or regulation; (iii) prior to the pricalg of
any subcontract change or other modification 'pr
which the price adjustment is expected to exceed
$100,000.
(b) and (c) of this clause shall
ly with respect to any change
made pursuant to one or more
act which involves a price
100,000. The requirements
led to such price ad-
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(c) The Contractor shall require subcontractors t
ce ify that to the best of their knowledge and bel f
the cost and pricing data submitted under b)
abov is accurate, complete, and current as o the
date o the execution, which date shall be as close
as poss le to the date of agreement on t e ne-
gotiated rice of the contract modification/
(d) Th Contractor shall insert the sugitance of
this clause ncluding this paragraph ( ) in each
subcontract ereunder which exceeds $ 00,000.
37. COMPETI ON IN SUBCONTRACTING
(ASPR 7-10 40) (Apr. 1962)
The Contractor shall select s contractors (in-
cluding suppliers) on a compesftive basis to the
maximum practical xtent con stent with the ob-
jectives and require ents of the contract. [Rev.
No. 9, 4/15/62.]
38. UTILIZATION OF ONCERNS IN LABOR
SURPLUS AREAS ( ? R 1-805.3) (Feb. 1962)
It is the policy of th Gi ernment to place con-
tracts with concerns ? ich ill perform such con-
tracts substantially areas f persistent or sub-
stantial labor surpl where th can be done, con-
sistent with the e dent perfor ance of the con-
tract, at prices n higher than a? obtainable else-
where. The Co ractor agrees to u e his best efforts
to place his s contracts in accor nce with this
policy. In co plying with the fore ging and with
paragraph ( ) of the clause of this \contract en-
titled "Util' ation of Small Business Co cerns," the
Contract? in placing his subcontracts s% pll observe
the Loll.ing order of preference: (i) \ ersistent
labor s rplus area concerns which are a o small
busin s concerns; (ii) other persistent lalQr sur-
plus 'rca concerns; (iii) substantial labor rplus
are concerns which are also small business con-
ce s; (iv) other substantial labor surplus acrea
c ncerns; and (v) small business concerns which
re not labor surplus area concerns.
39. STANDARDS OF WORK (ASPR 7-302.3)
(June 1959)
The Contractor agrees that the performance of
work and services pursuant to the requirements of
this contract shall conform to high professional
standards.
40*-,GROUND AND FLIGHT RISK (ASPR 10-404-)
1962)
(a) Notwithstanding any other provisions of this
contract, except'ls- ay be sped caffy provided in
the Schedule as an eoe i o this clause, the
Government, subject to hdeQnitions and limita-
tions of this clauseAstilmes the of damage to,
or loss or desirunion of, aircraft '9 e open,"
during "o rtion," and in "flight," as the erms
are d ed below, and agrees that the Contrac
not be liable to the Government for any such
FP or PR
1 Feb. 63
17
amage, loss, or destruction, the risk of which is sp
a sumed by the Government.
b) For the purposes of this clause:
( Unless otherwise specifically provided in the
Sch ule, the term "aircraft" means?
f
(A) aircraft (including (I) complete aircraft/ and
(II) a rcraft in the course of being manufaciUred,
disasse bled, or reassembled, provided that an en-
gine or portion of a wing or a wing is attached
to a fus age of such aircraft) to be furnished to
the Gove nment under this contract (whether be-
fore or af r acceptance by the GovernmOnt) ; and
i
(B) airc ft (regardless of whether in,' a state of
disassembly r reassembly) furnished by the Gov-
ernment to tie Contractor under this6ntract; iin-
cluding all p operty installed therei , or in the
process of inst llation, or temporarily emoved from
such aircraft; s ovided, however, that such aircraft
and property a not covered by al separate bail-
ment agreement. ,
(ii) The term "' the open" mea/is located wholly
outside of building on the Contrqttor's premises or
at such other plac as may bqf described in the
Schedule as being i the open for the purposes of
this clause, except t at aircraft furnished by the
Government shall be eemedo be in the open at
of
all times while in the ontra tor's possession, care
custody, or control. /
(iii) The term "flight' mg/ans any flight demon-
stration, flight test, taxi eit, or other flight, made
in the performance of this contract, or for the pur-
pose of safeguarding the i craft, or previously ap-
proved in writing by the o tracting Officer. With
respect to land based a'rera t, "flight" shall com-
mence with the taxi ro I fro a flight line on the
Contractor's premises, nd co tinue until the air-
craft has completed the taxi r 1 in returning to a
flight line on the Cintractor's remises; with re-
spect to seaplanes, 'flight" sha commence with
the launching froill a ramp on the Contractor's
premises and cont'llue until the a rcraft has com-
pleted its landing run upon return and is beached
at a ramp on t Contractor's pre ises; with re-
spect to helicop ers, "flight" shall cs mence upon
engagement of he rotors for the pu ?ose of take-
off from the ontractor's premises d continue
until the aircraft has returned to th ground on
the Contract r's premises and the rot s are dis-
engaged; a with respect to vertical ta e-off air-
craft, "fig " shall commence upon disen agement
from any 1 unching platform or device on he Con-
tractor's remises and continue until the aircraft
has bee re-engaged to any launching p tform
or devic on the Contractor's premises; pr vided,
howeve , that aircraft off the Contractor's pr ises
shall b deemed to be in flight when on the gr und
or wa er only during periods of reasonable d ra-
tion ollowing emergency landings, other landi gs
mad in the performance of this contract, or Ian -
ing approved by the Contracting Officer in writin
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(iv) The term "Contractor's premises" means
thos