TERMS AND CONDITIONS OF PURCHASE (FOR CPFF SUBCONTRACTS UNDER PRIME CONTRACTS WITH THE AIR FORCE)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00709R000200400005-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 48
• Document Creation Date: December 22, 2016
• Document Release Date: January 4, 2011
• Sequence Number: 5
• Content Type: MISC

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TERMS AND CONDITIONS OF PURCHASE
(For CPFF Subcontracts under Prime Contracts with the Air Force)
C
INDEX
ARTICLE Page
DEFINITIONS 1
1. PROVISIONS APPLICABLE TO SERVICES AND
SUPPLIES TO BE FURNISHED 2
2. PACKING AND CRATING
3. CHANGES
4. LIMITATION OF ALLOWABLE COSTS
5. ALLOWABLE COSTS AND FIXED FEE
6. PAYMENT
T. RELEASE PROVISIONS
8. INSPECTION AND CORRECTION OF DEFECTS
9. INDEMNIFICATION
10. ASSIGNMENT OF CLAIMS
11. RECORDS
12. SUBCONTRACTS
13. UTILIZATION OF SMALL BUSINESS CONCERNS
14. TERMINATION
15. EXCUSABLE DELAYS
16. BUY AMERICAN ACT
17. EIGHT-HOUR LAW OF 1912
18. WALSH-HEALEY PUBLIC-CONTRACTS ACT
19. NONDISCRIMINATION IN EMPLOYMENT
20. NOTICE TO LOCKHEED AND TO THE GOVERNMENT
OF LABOR DISPUTES
(i)
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ARTICLE
21.
22.
23.
24.
25.
26.
27.
28.
CONVICT LABOR
GOVERNMENT PROPERTY
PRIORITIES, ALLOCATIONS AND ALLOTMENTS
OFFICIALS NOT TO BENEFIT
INDEPENDENT CONTRACTOR
PATENT RIGHTS
FILING OF PATENT APPLICATIONS
NOTICE AND ASSISTANCE REGARDING
PATENT INFRINGEMENT
24
24
24
24
29.
REPORTING OF ROYALTIES
30'.
'PAYMENT OF ROYALTIES
31.
AUTHORIZATION AND CONSENT
32.
EXCESS PROFIT
33.
RENEGOTIATION
31
34.
MILITARY SECURITY REQUIREMENTS
31
35.
NEW FEATURES OF DESIGN
33
36.
REPORTS OF WORK
33
37.
RIGHTS IN DATA - UNLIMITED
33
38.
REPRODUCTION RIGHTS
34
39.
NON-DISCLOSURE OF INFORMATION
34
40.
FEDERAL,, STATE AND LOCAL TAXES
35
41.
AMENDMENTS REQUIRED BY PRIME CONTRACT
35
42.
COVENANT AGAINST CONTINGENT FEES
35
43.
QUALITY CONTROL SPECIFICATION .
36
0
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ARTICLE
Page
44.
GRATUITIES
36
45.
DELAY IN DELIVERY DATA
36
46.
LIMITS OF CONTRACT
37
47.
ADVANCE MANUFACTURE AND SHIPMEN'T'
37
48.
INTERPRETATION
37
49.
APPROVAL
37
50.
ALTERATIONS
38
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AGREEMENT AS TO TERMS AND CONDITIONS
APPLICABLE TO CPFF PURCHASE ORDERS
ISSUED UNDER AIR FORCE PRIME CONTRACTS
THIS AGREEMENT is entered into as of the day of , 195_,
between LOCKifEED AIRCRAFT CORPORATION, a corporation organized and existing
under the laws of the State of California (herein called "Lockheed") and
, a corporation organized and existing under the laws
of the State of (herein called "Contractor").
Lockheed and Contractor agree as follows:
Lockheed and Contractor have agreed upon the contract clauses contained in.
the attached "Terms and Conditions of Purchase" for use in negotiated cost type
subcontracts or Purchase Orders between Lockheed and Contractor in connection
with Lockheed's performance of cost-plus-fixed-fee Prime Contracts with the
Department of the Air Force. Unless otherwise agreed to in writing at the time
of execution, all such subcontracts or Purchase Orders entered into after the
O date of this Agreement and prior to its termination shall, if reference is made
to this Agreement, incorporate by reference all of said "Terms and Conditions
of Purchase". However, a copy of this Agreement or of said "Terms and Conditions
of Purchase" need not be, and will not be, attached to any such subcontracts
or Purchase Orders.
l~l
Any clause set forth in the attached "Terms and Conditions of Purchase" may
be deleted, or modified, or additional clauses may be added thereto. This
Agreement may be terminated in its entirety by either party upon thirty (30) days
notice in writing to the other party. No deletion, modification, addition or
termination shall affect any subcontract or Purchase Order theretofore entered into
between the parties in which this Agreement has been incorporated by reference.
No unilateral action by either party shall alter this Agreement or alter its
application to any contract wherein this Agreement has been incorporated.
Notwithstanding any other provisions of this Agreement, the attached "Terms
and Conditions of Purchase" shall be applicable only to subcontracts and Purchase
Orders executed or issued by the Missile Systems Division of Lockheed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above set forth.
By
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TERMS AND CONDITIONS OF PURCHASE
(For CPFF Subcontracts under Prime Contracts with the Air Force)
DEFINITIONS:
As used throughout these terms and conditions of purchase, the following terms shall
have the meanings set forth below:
a. The terms "the Department means the Department of the Air Force.
L
The term "Secretary" means the Secretary, the Under Secretary, or any
Assistant Secretary of the Department and the term "his duly authorized
representative" means any person or persons or-board (other than the Con-
tracting Officer), authorized to act for the Secretary.
c. The term "said purchase order" means the ,purchase order or purchase orders
by Lockheed and accepted by Contractor which incorporates these terms and
conditions of purchase by reference.
O
d. The term "this subcontract" means said purchase order and these terms and
conditions of purchase which are included therein by reference.
e. The term "Lockheed" means Lockheed Aircraft Corporation, acting on behalf
of its Missile Systems Division.
f. The term "Contractor" means the party who accepts said ,purchase order.
g. The term "prime contract"-means the contract between Lockheed and the United
States of America under which this, subcontract is issued, the number of
which is specified on the face of said purchase order.
h. The term "Contracting Officer" means the person executing the prime contract
on behalf of the Government, and any other officer or civilian employee who
is a properly designated Contracting Officer, and the term includes, except
as otherwise provided in this subcontract, the authorized representative of
a Contracting Officer acting within the limits of his authority.
i. The terms "work" or "services" mean all work to be performed under this sub-
contract including any studies covering fundamental, theoretical, or exper-
imental investigations; any extension of the investigative findings and
theories of a scientific or technical nature into practical application;
any tangible items (hereinafter referred to as "supplies") furnished to
Lockheed; and any reports,.data, computations, plans, drawings and speci-
fications with respect to any of the foregoing.
O
Lockheed and Contractor agree as follows:
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TERMS AND CONDITIONS:
ARTICLE 1 - PROVISIONS APPLICABLE~TO SERVICES-AND'SUPPLIES,.TO BE FURNISHED
a. Contractor agrees to perform the services and furnish and deliver the
supplies specified in said purchase order in accordance with, (i) the terms and
conditions contained herein, (ii) the specifications and requirements, delivery
schedules, printed "Instruction", and typed provisions all as specifically set
forth in said purchase order, 7' and (iii) in' ac'cordarice with each written 'changed
purchase order and purchase order change notice ielatirigto'said purchase'order
issued pursuant to the provisions of Article 3 (Changes) hereof or entered into
by mutual agreement between the : parties hereto.-' Acceptance of `such" 'changed purchase
orders and purchase order change notices shall be by signing and returning the?.ac-
knowledgment copy thereof- to Lockheed within fifteen (15) days after receipt of same.
b .- .=-Said purchase- order `and 'all -"changed` purchase' orders and purchase order
change notices relating thereto-which' are'Laccepted':by Contractor are'-by this refer-
ence made a part of this subcontract. The terms of this subcontract shall.,supersede
the term's set forth bn'the back-of, said purchase'order.' Ariy.typewritten-provisions
appearing 'on the face of said purchase order' or on the 'face of any such-''changed
purchase orders or purchase order change notices'shall supersede these terms and
conditions to the extent in conflict therewith.
c. Said purchase orde'r'iricludes ari'amount'covering'estimated cost-and fixed-
fee, if any monetary consideration is to be paid by Lockheed.
ARTICLE 2 - PACKING AND CRATING
method of:shipment or'pack'ing;
All supplies shall be packed' in suitable'containersor profection in ship-
ment and_ storage except as otherwise specified in this subcontract. Packing must
conform to requirements of carriers' tariffs. Contractor'-shall be - responsible for
damage in transit as a'result of'insufficient or improper packaging and for repair
or replacement required-as"a result of non-conformance by Contractor'with"the
ARTICLE" 3' - CHANGES
Lockheed may at any-time; by a written order,' and.without notice' tb_sureties,
if any, require additional work within'the general scope of 'said purchase order or
make changes, within the general scope of said purchase. order, in any one or more
of the following:
W. drawings,_ designs, .'or - specifications; ?ti
(ii)
(iii)
place of delivery; and
the amount of Government-furnished or 'Lockheed-furnished 'property.
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If any such change or addition causes an increase or decrease in the.estimated
cost of, or the time required for,performance .of said ,purchase order,- or--otherwise
affects any other provision of said ,purchase order, an equitable adjustment shall
be made (i) in the estimated cost or delivery schedule, or both, (ii) in the
amount of any fixed fee to be paid to Contractor, and (iii) in such other provisions
of said purchase order as may be so affected, and said purchase order shall be
modified in writing accordingly. 'Any.claim by Contractor for adjustment under
this article must be asserted within thirty (30) days from the date of receipt
by Contractor of the notification of change or addition; ,provided, however, that
Lockheed, if it decides that the facts justify such action, may receive and act
upon any such claim'asserted'at any time prior to final payment under, this sub-
contract. Nothing iri this article, however,, shall excuse Contractor from.pro-
ceeding with this subcontract aschanged.
ARTTCT F ly T IMT ATION OF ALLOWABLE COSTS
J-~ a. It i's" e"stimated -that the total cost to Lockheed, exclusive of any
fixed fee, for the performance of this subcontract will not exceed the estimated
cost set forth in said purchase order. Contractor agrees to use its best efforts
to perform the work specified in said purchase order and all obligations under
this subcontract within such estimated costa If at any , time. Contractor has reason
to believe that the costs which it expects to incur in the performance of said
purchase order in the next succeeding thirty'('30)'days, when added to all costs
previously incurred, will exceed eighty-five percent,(85%) of the estimated cost
then set forth in said purchase order or if at any time Contractor has reason
to believe that the total cost to Lockheed, exclusive of any. fixed fee, for the
performance'of said purchase order will be substantially greater or less than
the then estimated cost thereof, Contractor shall notify Lockheed in writing to
that effect, giving its revised estimate of such total cost for the performance
of said purchase, order, together with an appropriate breakdown of such estimate
and a statement setting forth a reason for such anticipated increase or decrease
in cost so that at the discretion of-Lockhe.ed.and with the-approval of the Con-
tracting Officer, an appropriate increase-or decrease may be made in the esti-
(~~, mated cost without.a corresponding change in fixed. fee except as to adjustment
~~// in the fixed fee'as-provided-for in Article 3 (Changes)
b. Lockheed shall not be obligated to reimburse Contractor for costs
incurred in excess of the estimated cost set forth in.said purchase order and
Contractor shall not be obligated to continue performance under this subcontract
or to incur costs-in-excess of the estimated cost set forth in said purchase
order, unless and until Lockheed shall. have notified Contractor. in writing that
such estimated cost has been increased and shall have specif ied.in such notice
a revised estimated cost.which shall thereupon constitute the estimated cost of
performance of this subcontract.' When and to the extent that.the estimated cost
set forth in said purchase order has been increased, any costs-incurred by Con-
tractor in'excess of such estimated cost prior to the increase in estimated cost
shall be'allowable.to the same extent. as if such costs had been incurred after
such increase in estimated cost, if so stated in writing at the time such increase
is authorized.
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ARTICLE 5-- ALLOWABLE COSTS AND FIXED FEE
a. Lockheed shall, pay to Contractor, at the.time and in the manner
hereinafter set'forth, for all services'and supplies to be furnished.here-
under.the allowable costs therefor determined as hereinafter set forth in
paragraph'(b) of this article, .plus a fee based on a percentage of the
total estimated cost as specified in said purchase order. If Lockheed,
because of the requirement of the Government, or for any other reasons,
accepts-services or supplies under this subcontract which do not conform
to the'guarantees set forth in Article 8 (Inspection and Correction of
Defects) hereof, Lockheed shall-pay the allowable costs as hereinafter
defined of furnishing and delivering such services and supplies., subject
to the provisions of said Article 8. The total estimated cost and fixed
fee shall be subject to increases and decreases resulting from changes or
additions as provided in Article 3 (Changes) hereof, or from changes in
the scope or nature of the work to be performed under this subcontract
which are-agreed to by Contractor and Lockheed.
b. The allowable costs.'of,performing this subcontract'shall be those
incurred by Contractor and properly chargeable to the subcontract which
are claimed by Contractor and accepted as such by the Contracting Officer.
The following'..criteria shall apply to the determination of allowable costs:
Allowable costs of performance shall be determined in
accordance with Part 2 of Section XV of the Armed
Services Procurement Regulations as in effect on the
date of the prime contract.
to the extent-that Contractor is reimbursed for such"
-costs under other contracts or to the extent that
provision is made apart from this subcontract or other
contracts_for'the payment of such costs by the Government
or otherwise than by Contractor, and except to the extent
that such costs are included in Contractor's overhead.
shall be allowable items'of cost hereunder only-if
and to the extent that the overtime work for which
such payments are'made shall be authorized by Lockheed
in writing prior to the performance of such overtime
work. Each request for such authorization shall be
submitted to Lockheed via the cognizant Government
Representative at Contractor's plant.
Costs incurred by Contractor-by reason of its use and
occupancy of facilities furnished pursuant to facilities
contracts authorized for use in connection with this
subcontract insofar" as they are allocable to the perform-
ance'of this subcontract shall be allowable costs except
.'Costs incurred for the performance of overtime work
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4. Appropriate credit shall be given to Lockheed for
disposal of scrap and salvage and.any surplus parts
or material. Lockheed shall not be charged for
excessive procurement of material and parts.
Costs incurred by Contractor in connection with third
party claims based on bodily injury or death or
property damage shall not be considered as allowable
costs under this subcontract.
6. There shall be included as allowable indirect costs
such overhead rates as may be established by Con-
tractor and the Contracting Officer'or his authorized
representative in accordance with the principles of
Armed Services Procurement Regulations. Pending
establishment of final overhead rates for any period,
'Contractor shall be reimbursed at billing rates
acceptable to the Contracting Officer or his author-
ized representative, which billing-rates may be
revised from time to time with the approval of the
Contracting Officer or his authorized representative,
subject to appropriate.adjustment when the final rates
for that period are established.
Q ARTICLE 6 - PAYMENT AND REIMBURSEMENT
a. Payment of the fixed fee provided for herein and reimbursement of
allowable costs shall be made upon the basis of invoices submitted to the
Contracting Officer which shall be in such form and detail as the Contracting
Officer may require and shall be supported by statements of costs incurred
by Contractor in the performance of this subcontract and claimed to constitute
allowable costs.
b. The originals and two copies of such invoices covering allowable
costs and fixed fee,. certified by an Officer or other responsible Official
of the Contractor Authorized by it to certify such statements shall be sub-
mitted to the Contracting Officer for approval and three additional copies
shall be submitted to the cognizant Government audit agency. Such invoices
may be provisionally approved by the Contracting Officer subject to final
audit by the cognizant United States. Government audit agency for Contractor's
plant. The original and two copies of such invoices bearing the certifi-
cation of such approval of the Contracting Officer shall be forwarded to
Lockheed but not more frequently than once every thirty (30) days (or at
more frequent intervals if approved by Lockheed). Within thirty (30) days
after receipt and acceptance of such invoices, Lockheed shall make payment
of such allowable costs approved by the Contracting Officer plus eighty-
five per cent (85%) of the accrued fixed fed, as such fixed fee may be
adjusted from time to time pursuant to Article :(Changes).. Accrual of such
fixed fee shall be based upon the percentage of the performance of the work
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actually done hereunder as determined from estimates made by-.Contractor
and approved by Lockheed. Upon completion of this-subcontract, including
execution of the-release called'for in Article 7 (Release Provisions)
hereof, and the furnishing of the documents, data and reports called for
in Article 29 (Patent Rights) hereof, the unpaid balance of the fixed fee,
as the same may. have been adjusted from time -to time shall be paid to
Contractor. All payments of allowable costs made pursuant hereto shall
be subject to adjustment from time to time as a result of audit by the
cognizant United States Government auditing agency, which adjustments
shall be recognized and accepted by:Contractor to the extent that such
adjustments are approved by Lockheed and the Contracting Officer.
c. At.any time or times prior to the final payment on account of
allowable costs, the Contracting Officer or Lockheed may cause to be
made such audit of invoices and statements of cost as shall be. deemed
proper. Payments made by Lockheed shall be subject to reduction to the
extent of amounts included in any invoices which are found by the Con-
tracting Officer not to constitute allowable'costs and'shall also be
subject'to reduction for overpayments or to increase for under-payments
made on preceding invoices.:
d. If any amount actually paid by Lockheed to Contractor-is dis-
allowed to Lockheed by Lockheed's lbcalGovernment Auditors, by the
Contracting Officer at Lockheed's plant or by the General Accounting
Office, as an item of cost under its Government prime contract, or if
Lockheed is required, because of any action of the Government to refund
or credit to the Government any amount with respect to an item of cost
for which it has reimbursed Contractor, Contractor shall, on demand.
made by Lockheed after such disallowance or after Lockheed shall have
made such..refund or given such credit, promptly repay to Lockheed the
:amount which Lockheed. has paid to Contractor with respect to any such .
item or items;, provided, however, that to the extent such disallowance.:.' .
or such refund or credit is the result of the performance by Contractor
of work authorized by Lockheed but not authorized by the prime contract,
Contractor shall not be required to repay to Lockheed the amount-which
Lockheed has paid to Contractor with respect to the performance of such
work. In the event Lockheed shall recover any-amount so disallowed`
or so refunded or credited by it to the Government with respect -to-.any
such item or items, Lockheed shall pay the amount of such recovery. to
Contractor.if the same shall not theretofore. have been repaid to
Contractor.
e. -In the event that any department, agency or representative of
the Government-disallows any cost granted under .this subcontract and in
Lockheed's opinion it appears that such disallowance is inequitable
and that such cost should be considered allowable, then. Lockheed agrees'
to negotiate with such department, agency or representative-of the Govern-
to obtain the reinstatement of such costs as allowable under the
terms of this subcontract. ..
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ARTICLE 7 -- RELEASE PROVISIONS
a. Contractor and each assignee under an assignment entered into
under this subcontract and in effect at the time of final payment under
this subcontract shall execute and deliver at the time of and as a
condition precedent to final ,payment under this subcontract, a release
discharging Lockheed and the Government, and their respective officers,
agents and employees, of and from all liabilities, obligations, and
claims arising out of or under this subcontract subject only to the
iollowing exceptions:
1. Specified claims in stated amounts or in estimated
amounts where the amounts are not susceptible of
exact statement by Contractor.
2. Claims, together with reasonable expenses incidental
,thereto, based upon the liabilities of Contractor to
third parties arising out of the performance of this
subcontract (but not including claims based on bodily
injury or death or property damage) which are not
known to Contractor on the date of the execution of
the release, and of which Contractor gives notice in
writing to Lockheed not more than five (5) years after
the date of the release or the date of any notice to
Contractor that Lockheed is prepared to make final
payment, whichever is earlier.
(71
Claims for reimbursement of costs (other than ex-
penses of Contractor by reason of its indemnification
of Lockheed and the Government against patent liabili-
ty), including reasonable expenses incidental thereto,
incurred by Contractor under the provisions of this
subcontract relating to patents.
b. Contractor agrees that any refunds, rebates or credits (including
any interest thereon) accruing to or received by Contractor or any assignee
which arise out of the performance of this subcontract and on account of
which Contractor has received reimbursement shall be paid by Contractor to
Lockheed. Contractor and each assignee under an assignment entered into
under this subcontract and in effect at the time of final payment under
this subcontract shall execute and deliver at the time of and as a condi-
tion precedent to final payment under this subcontract, an assignment to
Lockheed of refunds, rebates or credits (including any interest thereon)
arising out of the performance of this subcontract, in form and substance
satisfactory to Lockheed. Reasonable expenses incurred by Contractor for
the purpose of securing any such refunds, rebates or credits shall consti-
tute allowable costs when approved by the Contracting Officer.
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c. In addition to the release required by'-paragraph (a) above,
Contractor shall, prior to final payment, comply with the provisions
of paragraph (i) of Article 26 hereof and with paragraph (i) of Article
22 :hereof.
ARTICLE.8 -INSPECTION AND.CORRECTION OF DEFECTS
a.* All-work under this subcontract shall be subject to inspection.
and test by the Government and/or Lockheed,'to?the extent practicable at..%
all times and places, including the period of performance, and-in..any__,':
event prior to final acceptance. Contractor shall provide and maintain
and shalli'require its subcontractors._?to provide and maintain an. inspection
system acceptable.to the Government and Lockheed covering the work here-
under. The Government and/or Lockheed,,-,'through any authorized representa-
tive, may inspect the plant or plants of Contractor or any of its sub-
contractors engaged in the performance. of. this subcontract. If-any in-
spection.-or-test-'is made by the Government or Lockheed.ori the premises
of Contractor-or its .subcontractor, Contractor shall-provide and shall
require-'its subcontractors.to provide.all~.reasonable facilities and
assistance 'forthe. safety and convenience of .Lockheed or the Government
inspectors in-the-performance of their, duties.' All inspections and tests
by the Government-or-Lockheed shall be performed in such a manner as will
not unduly delay the work.
b. Contractor warrants that.the.services rendered in the performance
of this subcontract will conform to the requirements of this subcontract
and to high professional standards in the field, and that any supplies
delivered to Lockheed and/or the Government under this subcontract will
conform:,to:.the'requirements of this subcontract.and will'not be defective
in material or workmanship..,
c. At-any time.during the".performance-of: this. subcontract, but not
later than twelve (12) months after final.`acceptance by the Government
of the services or supplies furnished hereunder, the Government or
Lockheed'may-require Contractor to-"remedy by correctionoor-replacement,
as directed by- the Contracting Officer;. any .failure- by Contractor to
comply with its obligations under paragraph--(b) hereof. Except as _
otherwiserprovided-in..paragraph:(d) hereof, the cost of any.:such.replace-
ment or,.correction shall be included in.allowable costs determined as
provided in the article.of this, subcontract entitled "Allowable-Costs
and-"Fixed Fee", but-no additional . fee. shall be-payable with. respect
thereto. :Corrected: supplies shall not-be tendered again.for acceptance.
unless the-former tenderand_the'requirement ofcorrection is disclosed.
If, Contractor fails _ to.proceed with -reasonable- ,promptness to:perform .
such?replacement-or correction, Lockhee.d?(-i) may by contract or other-
.wise perform such replacement or correction, and charge to:Contractor
any increased cost-:occasioned Lockheed thereby-:or may reduce-any.fixed?
fee payable under this subcontract, (or require repayments of any fixed
fee theretofore paid) in such amount as may be equitable under the
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circumstances, or-(ii)-in the case of:supplies not delivered, may require
:,the:.delivery of such-supplies,,and shall have the.right to reduce any
fixed fee,payable,...under. this subcontract (or to .require' repayment of any
fixed fee, theretofore paid) in such amount as.'may be. equitable under. the
circumstances, 'or,.(iii) may.terminate'this sizbcontract:.for..default as
provided. in the article.. of .this subcontract. entitled, "Termination" .
d. Notwithstanding the provisions of paragraph (c)-hereof, Lockheed
may at any time. require correction or replacement of services or supplies
by Contractor without cost to Lockheed, which are. defective in material or
workmanship, or otherwise not in conformity with the requirements of this
subcontract if such failure is due to fraud,' lack of good faith or .willful
misconduct on the part of -any of boritractor's directors or. officers, or
'on. the-;part..of-any of its, managers, superintendents, or other equivalent:
representatives; who has supervision-or-direction of (i)all or sub-
stantially all of Contractor's business, or.(ii) all or substantially.
all of Contractor's operations at.any one.. plant or separate location'in
which-this subcontract-is being performed, or (iii) a.separate and com-
plete major industrial operation in connection,with performance?of.this
subcontract. Fraud, lack of-good faith or willful' misconduct on the part
of any such supervisory personnel shall be deemed' to. include the selection
of-individual employees.or,the'retention of employees after'any of such
supervisory personnel has reason to believe that such employees are -
habitually careless or otherwise unqualified.
e. Corrected services or:supplies'tendered as replacements, shall
be subject to-the provisions of this article in the same manner and to
the same extent as supplies originally delivered under this subcontract.
f'. Records of all inspection..work.shall.be'maintained by Contractor
and shall.be kept complete and available to_the'Government and Lockheed.
during the performance of this subcontract and for'such-longer period-as
may be?specified.in this subcontract.
g. Except as otherwise provided-in this.subcontract,.Contractor'-s
obligation to correct-or-replace Government-furnished property.(which is
property in the possession.of.or acquired'directly by the Government and
delivered or otherwise made available to Contractor) shall be governed
by the-provisions of-the article of. this subcontract. entitled "Government
Property".
h. Preliminary inspection and-acceptance, if any, shall be at
Contractor's plant'as set forth in said. purchase order;.but in any event
final inspection and acceptance by Lockheed shall be-at Lockheed's plant.
ARTICLE 9 - IDEMNIFICATION
In the event.., Contractor, its:employees, agents, subcontractors and/or
lower-tier subcontractors enter premises occupied.by or under the control of
Lockheed in the performance of this subcontract, Contractor agrees that it will
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indemnify and hold harmless Lockheed, its officers and employees from any loss,
cost, damage, expense or liability by reason of property damage or personal
injury of.whatsoever nature:or..kind arising out of, as a result of, or in
connection with such performance occasioned in!whole or in part-by the actions or
omissions:of Contractor, its employees,; agents., sizbcontracors and/or lower-tier
subcontractors; and Contractor agrees that it and its subcontractors and lower
tier subcontractors will: maintain public:-liability and property damage insurance
in reasonable limits covering the obligations,set forth above, and will maintain
proper workmen's compensation insurance covering all employees rendering per-
formance under.,this subcontract.
a. Neither this, subcontract nor-any interest hereunder nor any sums becoming
due to Contractor hereunder . shall be assigned b"y'Contractor without the prior written
consent of Lockheed, except that claims?.for.monies.due or to become due Contractor
from Lockheed under this subcontract'may be assigned to a bank, trust-company or
other financing institution; including ?any federal lending agency.. Any such
assignment- of.:monies due or to b.ecome.?due-shall :cover all amounts payable under'
this subcontract and not already-.paid, and shall not be made to more than one party,
except that any such assignment'may.1be ?made to-..one party as'. agent or trustee for
two (2) or more parties participating in!such.financing. Payment by Lockheed to
an assignee of any claim under'this-subcontract shall be subject to set-off or
recoupment.for any present:or,future claim?or:claims arising-in connection with
this subcontract which Lockheed :may-have-.against Contractor. - ??
b. In the event of any such assignment the assignee shall file four (4)
signed copies_,of.a written:-notice. of the assignment; together with one copy of the
instrument of assignment,- with Lockheed.:.''
c. Any claim under this subcontract which has been assigned pursuant to the
foregoing provisions of this article may-be further assigned-and reassigned only
with the prior wrtten consent: of Lockheed.to-.a bank, trust company or other fin-
ancing institution, including any federal.,-.lending agency. In the event of such
further assignemnt or reassignment the assignee shall.be required to file one
signed copy of a written notice of the further assignment or reassignment, to-
gether with-a true copy of the-instrument~of further assignment-or-reassignment
with Contractor; and shall-file four (4)-,'signed-copies of-such written notice,
tpgetjer with four (4) copies of such. instrument with Lockheed.
d. No assignee shall divulge any-information concerning-this subcontract
except to those persons concerned with the transaction. In no event shall copies
of this subcontract or of any plans, specifications, or other similar documents
relating to work under this subcontract, if marked "Top Secret", "Secret" or
"Confidential", be furnished to any assignee of any claim arising under this sub-
contract or to any other,person not-entitled to receive the same;-provided., that
a copy of any part or all of this subcontract so marked may be furnished, or any
information contained therein may be disclosed, to such assignee upon the prior
written authorization of Lockheed or the Contracting Officer.
e.. Indication of the assignment of claim--and of-any further assignment
thereof and the name of the assignee.shall be made on all-'vouchers or-invoices
certified by Contractor.
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ARTICLE 11 .- RECORDS
..a. Contractor. agrees to: maintain books and records, documents and
other.evidence pertaining to the-costs'and expenses. of this subcontract
(hereinafter collectively called the "records") to the extent and in -
such detail as will properly.-reflect, all net costs, direct and indirect,
of labor, materials,.equipment,..supplies and services, and-other costs
and expenses of whatever nature for which reimbursement is claimed
under the provisions of this subcontract. Contractor's accounting pro-
cedures and practices shall be subject to the approval of the Contract-
ing Officer; provided, however,. that no material change will be required
to be made. in Contractor's accounting procedures and practices if-they
conform to generally accepted accounting practices and. if: the costs
properly applicable to this subcontract are readily ascertainable there-
from.
b. Contractor, agrees to-make available at the office of Contractor,
at all, reasonable times during the period set forth in paragraph (d)
below any of the recordsfor,inspection, audit or reproduction by any
authorized representative of_the Department or.of the Comptroller General.
..c,. In the event -the Comptroller General or any of his duly author-
ized representatives determine, that his audit of the. amounts reimbursed.
under this subcontract as transportation charges will be made at a place
other than the-office of Contractor, Contractor agrees to deliver,_with
the reimburseme,nt.voucher covering such charges, or as may be.otherwise,
specified, within two (2) years after reimbursement of charges covered
by any such voucher, to such representatives as may be designated for
that purpose through the Contracting Officer, such documentary evidence
in support of transportation costs as may be required by the-Comptroller
General or,any of-his duly authorized representatives.
d.. 'Except for. documentary evidence-delivered to the Goverment
pursuantto,Paragraph' (c) above, Contractor shall preserve and make
available its records fora period of .six (6) years (unless a longer
period of time is provided by applicable statute) from the date of the
voucher or invoice submitted,by Contractor after the completion.of the
work under this subcontract and designated by Contractor-as the "com-
pletion voucher", or "completion invoice", or., in the event.thissub-
contract has been completely terminated, from the date of the termina-
tion settlement agreement; provided, however, . that records which relate
to (i.) appeals'under the clause of the prime contract entitled "Disputes",
(ii) litigation or the settlement of, claims arising out of the perform-
ance of this subcontract, or (iii) costs or expenses of the subcontract
as to which exception has been taken by the Comptroller General or any
of his,'duly authorized representatives, shall be retained by Contractor
until such appeals, litigation, claims or exceptions have been disposed
of, but in no event for less than the six-year period mentioned above.
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e. Except for documentary evidence delivered pursuant'to paragraph-_'
(c) above, and the records described in the proviso of paragraph (c)
above.,- Contractor may .:in fulfillment of 'its--obligation- retain its records
as required by this article substitute photographs, microphotographs'-or"
other authentic' reproduction's of such records, ' after ~ the. expiration 6f-_`
two:.-(2) years following the last day of Fthe month of reimbursement to' =
Contractor of'the`'invoice'or voucher to which-such records relate,-.unless
a shorter-period is authorized-by the Contracting?Officer with the'`con-
currence of the-'Comptroller General or his duly authorized representative'.
f-. The= provisions of this- article, including--this paragraph (f)
shall,, be-'applicable to and included'in-each'subcontract-hereunderwhich`
is on a cost; a-cost-plus-fixed-fee,-time-and-material or labor=hour ``c'
g. Contractor shall include in each subcontract hereunder, other
than - those' described in paragraph (f) above, ~a' provision to 'the-. effect
that the' subcontractor'agrees that-the-Comptroller General or the Depart
ment, or-any of their duly authorized representatives, shall, until-the
expiration of: three'='(3) 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`inv61ving transac'-
tions - related to the subcontract: The-term "subcontract", as 'used iii-F
this paragraph''- (g) only, excludes (i) purchase 'orders notiexceeding'-+
$1,000 and' (ii)`-subc'ontracts or -purchase orders for public utility `-
services at-rates't;established for uniform-a. pplicability-to the general '
public.
ARTICLE--12 - SUBCONTRACTS
a. Contractor shall give. advance notification to Lockheed and' the
Contracting Officer of any proposed subcontract or puchase order here-
under which (i) is.. on a -cost or cost-plus-a-f xed=fee,bas s'- or -'(ii') is
on a fixed-price -basis exceeding.--in' =dollar amount either $25;000 br
five ,percent-(5%) of the total estimated cost of this subcontract. 1
? is
b. Contractor. shall not, without the prior'written consent of
Contracting Officer, place any subcontract or purchase--order which-(')`
is on a -cost ' or acost-plus-a-fixed-fee basis-, or--(ii) is on a- fixed-
price basis exceeding`in dollar amount either $25,000'or five'.per'cent
(5?%) of the total -estimated cost of, this, subcontract; or (iii) provides `
for the fabrication, purchase, rental, installation or other' acquisition,
of any item of?'industrial facilities,- `or .of special tooling having -a'--. =
value in excess' of $1,000, or(iv)--is on a time-arid-material d?' labor
hour basis. Lockheed may, in its discretion, ratify in writing any--,
such subcontract; such action shall constitute-the?conseht of Lockheed
as required by'-this paragraph-M'. -
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c. Contractor agrees that no subcontract or purchase order placed
under this subcontract shall provide for payment on'a cost-plus-a-per-
centage-of-cost basis.
d. The Contracting Officer may, in its discretion, specifically
approve in writing any of the provisions of a subcontract. However,
such approval or the consent of the Contracting Officer obtained as
required by this clause shall not be construed to constitute a determi-
nation of the allowability of any cost under this subcontract, unless
such approval specifically provides that it constitutes a determination
of the allowability of such cost. -
e. Contractor shall give Lockheed and the Contracting Officer
immediate notice in writing of any action or suit filed, and prompt
notice of any claim made against Contractor by any subcontractor or
vendor which, in the opinion of Contractor, may result in litigation,
related in any way to this subcontract with respect to which Contractor
may be entitled to reimbursement from Lockheed.
ARTICLE 13 - UTILIZATION OF SMALL BUSINESS CONCERNS
a. It is the policy of the Government as declared by the Congress
to bring about the greatest utilization of small business concerns which
is consistent with efficient production.
b. Contractor agrees to accomplish the maximum amount of sub-
contracting to small business concerns that Contractor finds to be
consistent with the efficient performance of this subcontract.
ARTICLE 14 - TERMINATION
a. The performance of work under this subcontract may be terminated
by Lockheed in accordance with this article in whole, or from time to
time in part, (i) whenever Contractor shall default in performance
of this subcontract in accordance with its terms (including in the term
"default" any such failure by Contractor to make progress in the prose-
cution of the work hereunder as endangers such performance), and shall
fail to cure such default within a period of ten days (or such longer
periods-as Lockheed may allow) After receipt from Lockheed of a notice
specifying the default, or (ii) in the event of the institution of any
proceedings by or against Contractor in bankruptcy or insolvency or
under any provisions of the Bankruptcy Act or for the appointment of a
receiver or trustee or an assignment for the benefit of Contractor's
creditors, or (iii) whenever for any reason Lockheed shall determine
that such termination is necessary. Any such termination shall be
effected by delivery to Contractor of a Notice of Termination specify-
ing the reason for such termination, the extent to which performance
of work-under the subcontract is terminated, and the date upon which
such termination becomes effective. If, after notice of termination
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of this . subcontract, for default under (i,) above, it, is determinedthat
Contractor's failure to perform or to make progress in performance,_is{,...
due to causes beyond the control and without the fault or negligence
of Contractor pursuant to the_provisions,of the article of,this,sub-,r
contract entitled "Excusable Delays," the Notice of.Termination ;
shall bey deemedto.have been issued under (iii)abpve, and the rights.,:
and obligations,of the,-parties hereto shall in such event-,be governed.
accordingly.,
b. After receipt of a Notice of Termination. and except as other--?i
wise directed by Lockheed, Contractor shall (i) stop work under the
subcontract on the date and toithe_.extent specified in the Notice.of
termination; (ii'),-,place. no -further; orders or subcontracts . for;materials,, r .
services. , or._facilities except as may be,necessary fora completion of.
such portion?of the work under-the. subcontract as is , not.terminated;._
(iii), terminate all: ,order s and subcontracts to-the-extent-,that they
relate to the performance of work terminated by the_,Notice_,of.Termi-
nation; (iv) assign to Lockheed, in the manner and to the extent
directed by Lockheed, all.-of the right,,title and interest of-Con-..
tractor under the orders or subcontracts so terminated,-in-which
case Lockheed shall have the right in its discretion to-settle or
pay,,any,or _ all claims,arising, out of the termination of such orders
and ' subcontracts; (v) with the approval.or; ratification. of Lockheed, _.,~.-.
to the extent it may require, which approval or ratification shall
be final and conclus,ive.for all purposes of this article, settle,,all_r
outstanding liabilities,, and. all claims arising out of
- ,such termination,-,
of orders and subcontractsthe,cost of.which-would;be reimbursable,-;in
whole or in part, in accordance with the provisions of this subcontract;
(vi) transfer title (to the extent that title has not,,already?been,
transferred) and, in the manner, to the extent and at the times di-'
rected.by. Lockheed, deliver to Lockheed (A) the fabricated,-pants,or
unfabricated, parts, . work in process,,. completed work, supplies, ,and
other material produced' as a part- of, or acquired in respect of, ~., _
the performance. of, the. work terminated by the Notice;ofTermination,
(B) the, completed o_r.:partially completed.plans,-,-drawings,information_
and other property,which, if the subcontract had been completed,.. would L .
r
be required,to be furnished to- Lockheed, and (C.) the , , jigs, dies ,and
fixtures, and other , special tools-and tooling acquired , ,or,~manufactured,,
for the performance, of_this subcontract, for the cost of,.which;Con
tractor has been-or will be reimbursed under this subcontract, L(vii)
use its best; efforts to sell in the manner, at the. time, to-the extent,,
and at' the ,price-.or' prices directed or authorized by Lockheed,- any, r , ;-,?_
property of.. the types referred to in provision (vi)- of this paragraph;-,
provided, however, that Contractor (A) shall not, be required to extend,
credit to any purchaser, ,and (B) ? may' acquire .any ,such property under,-,
i
the conditions prescribed by and at a price-or prices approved;by
Lockheed, and provided, further, that the proceeds. of-,any such transfer- c
or disposition shall. be,applied in reduction,of any payments to be,made j
by Lockheed to Contractor under this subcontract or shall otherwise be
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credited to the price or cost of the work covered by this subcontract
or paid in such other manner as Lockheed may direct, (viii) complete
performance of such part of the work as shall not have been terminated
by the Notice of Termination; and (ix) take such action as may be
necessary; or as Lockheed may direct, for the protection and.preserva-
tion of the property related to this subcontract which is in the
possession of Contractor and in which Lockheed or the Government have.
or may acquire an interest. Contractor shall proceed immediately with
.the performance of the above obligations notwithstanding any delay in
determining or adjusting the amount of the fixed fee or any item or
reimbursable cost, under this article.
c. After receipt of a Notice of Termination, Contractor shall
submit to Lockheed its termination claim in the form and with the
certification prescribed by Lockheed. Such claim shall be submitted
promptly but in no event later than twelve (12) months from the
effective date of termination, unless. one or more extensions in writing
are granted by Lockheed upon request.of Contractor made in writing within
such twelve (12) month period or authorized extension thereof. However,
if Lockheed determines that the facts justify such action, it may receive
and act upon any such termination claim at any time after such twelve
(12) month period or any extension thereof. Upon failure of Contractor
to submit its termination claim within the time allowed, Lockheed shall
determine, with the approval of the Contracting Officer,.on the basis
O of information. available to it, the amount, if any, due to Contractor
by reason of the termination and shall thereupon pay to Contractor
the amount so determined.
d. Subject.tothe provisions of paragraph (c), Contractor and
Lockheed may agree upon the whole or any part of the amount or amounts
to be,paid,(including an. allowance for the fixed fee) to Contractor
by reason of the total or partial termination of work pursuant to this
article. Said purchase order shall be amended accordingly, and Con-
tractor shall be paid the agreed amount.
e. In the event of the failure of Contractor and Lockheed to agree
in whole or in part, as provided in paragraph (d) above, as to the amounts
with respect to costs and fixed fee or as to the amount-of the fixed fee,
to be paid to Contractor in connection with the termination of work pursu-
ant to . this. article, Lockheed shall determine, on the basis of information
available to.it, the amount, if any, due to Contractor by reason of the
termination and shall pay to Contractor the amount determined as follows:
(i) If the settlement includes cost and fixed fee
(A) There shall be included therein all costs and expenses
reimbursable in accordance with this subcontract, not
previously paid to Contractor for the performance of
this subcontract prior to the effective date of the
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Notice of Termination,'arid'such of these costs as may
continue for' a reasonable time thereafter with the
approval'of or as directed by Lockheed;'provided,' however,
that: Contractor shall proceed'as rapidly as`practicable
-to discontinue such costs.
(B) There'"-shall be included therein, so far as'not included
under (A) above, the cost of settling and paying claims'
arising out of the termination of work under subcontracts'
or orders; as provided in paragraph (b) (v) above, which
are properly chargeable to the terminated portion of this
subcontract.
(C) There shall be included therein the reasonable costs of
settlement, including accounting, legal, clerical and other
expenses. reasonably necessary for the preparation of settle-
ment claims- and-supporting data with respect to the termi-
nated portion.of the subcontract and for the termination and
settlement'of'purchase orders and subcontracts thereunder,
together?with-reasonable storage, transportation, and other-
costs incurred in connection with the protection or dispo-
sition of termination inventory; provided, however, that
if the termination is for a reason specified in paragraph'
(a) (i) or (a) (ii) of this Article 14 there'shall not be
included any amounts for the preparation of Contractor's
settlement proposal.
(D) There shall be included therein a portion of the fixed fee
'payable. under the subcontract determined as follows:
'(l)-''In the event of the termination of this subcontract
-pursuant.to paragraph-(a) (iii) of?this Article'14,
there shall be paid a percentage of the fee equivalent
to the percentage of the completion of work contemplated
by this subcontract, less fixed fee payments previously
made hereunder.
.
(2) In the event of the termination of'this subcontract for
.the-reasons specified in paragraph (a) (i) and'(ii,)
this Article 14, the'total fixed fee payable shall
-be _such-%proportionate -part of the fee (or, if-this
subcontract calls for supplies of different types, of
such part of the fee as is reasonably allocable to the
type of supplies under consideration)-as the total
number of supplies delivered to and accepted by Lockheed
;bears.:to the total number of supplies of a like kind
called for by this.subcontract. If the amount
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determined under this paragraph is less than the
total payment.of fixed fee theretofore made to,.
Contractor, Contractor shall repay to Lockheed.
.
the,excess amount.
(ii) If the settlement includes only the fixed fee, the amount
thereof will be determined in accordance with subparagraph
(e)(D)-above.
f,' In arriving at the amount-due Contractor under this article there
shall be deducted (i) all unliquidated'advance or other unliquidated payments,
theretofore made to Contractor,'`(ii) any claim which Lockheed may have. against
Contractor in'connection with this subcontract)and (iii.) the agreed price for,,
or the proceeds of sale of, any. materials, :supplies or other things' acquired.
by Contractor or sold'pursuant to the provisions of this article and'not other-
wise recovered by or credited to Lockheed.
..g.' In the event'of a partial termination, the portion of ; the fixed fee
which is'payable with respect to the work'uhder the continued portion of the
subcontract shall be equitably adjusted by agreement between Contractor and
Lockheed, and-such adjustment shall be evidenced by an amendment to said
purchase order.
h. Lockheed may from time toytime,' under such terms and conditions as_
it may prescribe, make partial pay'ments'and?payments,on,accoun't against costs
incurred by Contractor in connection with the terminated` portion of the sub-
contract whenever in the opinion of Lockheed the aggregate of-such payments
shall be within the amount to which Contractor will be entitled hereunder. If
the total of such payments is in excess of the amount finally determined to be
due under this, article, such excess shall be payable by Contractor to Lockheed
upon demand, together with interest computed .at the rate of six per cent (6%)
..per annum, for the period from the date such.excess payment is received by
Contractor '- to' the date on which such excess is repaid to.Lockheed, provided,
however; that no interest shall be charged' with respect to any such excess pay-
ment, attributable to a reduction in Contractor's claim by reason of retention
or other disposition Ior termination inventory until ten (10) days'a'fter the date
of 'such" r etention or disposition
:
i.'' The provisions of this article relating to the' fixed fee shall be
inapplicable if this contract does'not provide for payment of a fixed fee,
. -
ARTICLE 15 - EXCUSABLE DELAYS
a. Contractor shall not be in default by reason of any failure in.per-
formance of this subcontract in accordance , with, its terms (including any; failure,
by Contractor to make progress in 'the prosecutionof.the'workhereunder which
endangers such performance) if such failure arises out of causes beyond the
control and without the fault or negligence of Contractor. Such. causes
include, but are not restricted to:'-acts.of God or of the public..enemy;.,acts
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of the Government;-fires; floods; epidemics; quarantine restrictions; strikes;
freight embargoes; unusually severe weather; and failure of lower-tier sub-
contractors to perform or make progress due-to such causes, unless Lockheed
shall have determined that the supplies or services to be furnished under the
lower-tier subcontract were obtainable from other sources and.shall have ordered
Contractor in writing to procure such services or supplies from such other
sources, and Contractor shall have failed reasonably to comply with such order,
Contractor shall promptly notify Lockheed of any anticipated failure of perfor-
mance by reason of such causes. Upon request of.Contractor, Lockheed shall
ascertain the facts and extent of such failure and if it shall determine that
such failure was occasioned by any one or more of the said causes, the delivery
schedule shall be revised accordingly, subject to the rights of Lockheed and
the Government' under the Article hereof entitled"Termination".
b. If Contractor, by reason of a cuase, or,causes, other than those
specified in (a) above, will be unable to complete the contract work and make
delivery at'the time specified in said purchase orders, it may give Lockheed
written notice "of the anticipated default with the reasons therefor, provided,
such notice is given not less than forty-five (1.5) days before the delivery
dates specified in said purchase order or within such time as Lockheed.deems
sufficient. If such notice is duly given, then, to the extent the interest of
Lockheed makes, an extension desirable, Lockheed may, in its discretion, extend
the period of time specified in.said purchase order for such period as it deems
advisable, and the said purchase order shall then be modified in writing accordingly.
ARTICLE 16 - BUY AMERICAN ACT
Contractor agrees that there will be delivered under this subcontract only.
such unmanufactured.articles, materials, and supplies (which term "articles,
materials, and supplies" is hereinafter referred to in this article as "supplies")
as have been mined or produced in the United States, and only such manufactured
supplies as have-been manufactured in the United States substantially all from
supplies mined, produced, or manufactured, as the case may be, in the United States.
Pursuant,to the Buy American Act (41 U.-S. Code lOa-d), the foregoing provision
shall not apply (i) with respect to supplies excepted by the Secretary 'from the
application of that Act, (ii) with respect to supplies for use outside the United
States, or (iii) with respect to the supplies to be delivered under this subcontract
which are of a class or kind determined by the Secretary or his duly authorized,
representative not to be mined, 'produced, or manufactured, as the case may be,
in the United States in sufficient and reasonably available commercial quantities
and of a satisfactory quality, or (iv) with respect to. such supplies,.from'which
the supplies to be delivered under this subcontract are manufactured,. as are
of a class or kind'determined by the Secretary or his duly authorized representative
not'to be mined, produced, or manufactured, as the case may be, in the United
States in sufficient and reasonably available commercial quantities and of ,a
satisfactory quality, provided, that this exception (iv) shall'not permit delivery
of supplies manufactured outside the United States if such supplies are manufactured
in the United States in sufficient and reasonably available commercial quanties
and of a satisfactory quality
O
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ARTICLE 17 - EIGHT-HOUR LAW OF 1912
This subcontract, to the extent that'it is'of a character specified
in the Eight-Hour Law of 1912 as amended (40 U.S. Code 324-326) and is
not covered by the.Walsh-Healey Public Contracts Act (41 U.S. Code 35-45),
is subject to the following provisions and exceptions of said Eight-'Hour
Law of 1912 as amended, and to all other, provisions and exceptions of said Law:
No laborer or mechanic doing any part of the work contemplated by this
subcontract, in the employ'of.Contractor or any subcontractor contracting for
any part of the said work, shall be required or permitted to work more than
eight hours in any one calendar day upon such work, except upon the condition
that compensation is paid to such laborer or mechanic in accordance with the
provisions of this article. The wages of every such laborer and mechanic em-
ployed by Contractor or any subcontractor engaged in the performance shall be
computed on a basic day rate of eight hours per day; and work in excess of
eight hours per day is permitted only upon the condition that every such laborer
and mechanic shall be compensated for all hours worked in excess of eight hours
per day at not less than one and one-half times the basic rate-of pay. For
each violation of the requirements of this article a penalty of five dollars
shall be imposed upon Contractor for each such laborer or mechanic for every
calendar day in which such employee is required or permitted to labor more than
eight hours upon said work without receiving compensation computed in accordance
with this article; and all penalties thus imposed shall be withheld for-the.use
and benefit of the Government.
ARTICLE 18 - WALSH-HEALEY PUBLIC CONTRACTS ACT
If this subcontract is for the manufacture or furnishing of -materials,
supplies, articles or equipment in an'amount which exceeds or may exceed
$10,000 and is otherwise subject to the Walsh-Healey Public Contracts Act as
amended (41 U.S. Code 35-45), there are hereby incorporated by reference all
representations and stipulations required by said Act and' regulations issued
thereunder by the Secretary of Labor, such representations'and stipulations
being subject to all applicable rulings and interpretations of the Secretary
of Labor which are now or may hereafter be in effect.
ARTICLE 19 NONDISCRIMINATION IN EMPLOYMENT
a. In connection with'the performance of work under this subcontract,
the Contractor agrees not to discriminate against any employee or applicant
for employment because'of race, creed, color, or national origin The
aforesaid provision shall include, but not be limited to,'the_following:
employment, upgrading, demotion, or transfer; recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of,compensa-
tion; and selection for training,',.including apprenticeship. Contractor
agrees to post hereafter in conspicuous places, available"for employees
and applicants for employment, notices which Contractor shall obtain from
the Government setting forth the provisions of the nondiscrimination clause.
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b. Contractor further agrees to insert-thelforegoing provision in
all. subcontracts hereunder except subcontracts for standard commercial
supplies or'raw materials.
ARTICLE'20 - NOTICE TO LOCKEEEDAND TO THE GOVERNMENT'OF LABOR DISPUTES
Wheriever Contractor has knowledge that any actual or potential labor
dispute , is delaying, or threatens to delay the timely performance of ,this sub-
contract,. Contractor shall immediately, give 'notice thereof, including all
relevant information with respect thereto, to Lockheed and.to the Contracting
Officer.
ARTICLE 21 - CONVICT LABOR
In connection with the performance of work under this subcontract,.
Contractor'agrees:not'to employ any person undergoing sentence of imprisonment
at' hard labor ..
ARTICLE 22', GOVERNMENT PROPERTY
a. "Title to all property, purchased by Contractor, for the cost of which
Contractor is entitled to be reimbursed as a direct.item of cost under this
subcontract.,: shall pass to and vest in, the Government upon delivery of such
property by the vendor. Title to other property, the cost of which is,
reimbursable to Contractor under this subcontract, shall pass to and vest in
the Government upon (i) issuance for use of such property in the performance.
of this subcontract, or (ii) commencement of processing or use of such property
in the performance of this subcontract,_or (iii) reimbursement of the cost
thereof by Lockheed, whichever first occurs.
b:'"All property owned by the Government which is furnished by Lockheed
or the Governmerit_to Contractor'in connection with the performance of this
subcontract., together with all property acquired by Contractor title to which
vests '-in 'the Government' pursuant to. paragraph (a) of this article, are
collectively referred to in'-this, article as .".GovernmentProperty".y If. the
delivery or performance dates for the supplies or services to be furnished by
Contractor under this subcontract are based upon the expectation that .Government-
Furnished Property suitable for use will be delivered to Contractor at the'
times stated in said
purchase order.or,if not so stated, in. sufficient, timer'
to enable Contractor to meet, such delivery or. performance dates; then upon.
timely written request'made'by Contractor, Lockheed will make a determination
of the delay occasioned Contractor and shall equitably, adjust the estimated cost,
fixed fee,-or delivery or performance dates or all of them, and any other
contractual provisions, affected by such. delay in accordance with the procedures
provided for in the clause of this subcontract entitled "Changes" (Article 3).
In the event that Government-Furnished Property is received by Contractor in a
condition not suitable for the'intended use,..Contractor shall upon receipt
thereof notify Lockheed of such fact and as,directed by the Contracting Officer
either- (i) return such property at Government expense or otherwise dispose of the
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property, or. (ii),effect repairs or modification. Upon completion of (i) or (ii)
above and upon written request of Contractor, Lockheed shall equitably adjust
the estimated cost, fixed fee, or delivery or performance dates, or all of them,
and any other contractual provision affected by the return, disposition, repair
or modification,. in accordance with the procedures provided for in Article 3
of this subcontract. The foregoing provisions for adjustment are exclusive
and Lockheed shall not be liable to suit for breach of contract by.reason of
any delay in delivery of Government-Furnished Property or delivery of such
property in a condition not suitable for its intended use.
c. Title to Government Property shall not be affected by the incorporation
or attachment thereof to any property not owned by the Government, nor shall
such Government Property, or any part thereof, be or become a fixture or lose
its identity as personality by reason of affixation to any realty. Contractor
shall establish and operate a system acceptable to Lockheed for maintenance of
property control records and identification of the Government Property in
accordance with the requirements of the "Manual for the Control of Government
Property in Possession of Contractors" (Appendix B, Armed Services Procurement
Regulation), as in effect on the date of the prime contract, which manual is
hereby incorporated by reference and made a part of this subcontract.
d. The Government Property provided or furnished pursuant to the term of
this subcontract shall, unless otherwise provided herein, be used only for the
performance of this subcontract.
e. Contractor shall maintain and administer in accordance with sound
industrial practice, a program for the maintenance, repair, protection and
preservation of Government Property so as to assure its full availability and
usefulness for the performance of this subcontract. Contractor shall take all
reasonable steps to comply with all appropriate directions or instructions
which Lockheed or the Contracting Officer may prescribe as reasonably necessary
for the protection of Government Property.
f. (i) Contractor shall not be liable for any loss of or damage to the
Government Property, or for expenses incidental to such loss or damage, except
that Contractor shall be responsible for any such loss or damage (including
expenses incidental thereto) (A) which results from wilful misconduct or lack
of good faith on the part of any of Contractor's directors or officers, or on.
the part of any of its managers, superintendents, or other equivalent represen-
tatives, who has supervision or direction of (I) all or substantially all of
Contractor's business, or (II) all or substantially all of Contractor's operations
at any one plant or separate location in which this subcontract is being performed,
or (III) a separate and complete major industrial operation in connection with
the performance of this subcontract; or (B) which results from a failure on the
part of Contractor due to the wilful misconduct or lack of good faith on the
part of any of its directors, officers, or other representatives mentioned in
subparagraph (A) above, (I) toLmaintairi and administer, in accordance with
sound industrial practice, the program for maintenance, repair protection and
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and preservation of Government Property as required' by paragraph (d) hereof,
or'(II) to take-'a'll reasonable steps'to?coniply with any appropriate written
directions of the Contracting Officer under paragraph (d) hereof, or (C) for
which Contractor-is otherwise responsible under-the express terms of this
subcontract;-or ('D) which results from a risk expressly required to b'e insured
under this-'subcontract, butt only to the extent of the insurance so required
to be procured arid. maintained, whichever ' is' greater; or (E) which results from
a risk which is in fact covered by insurance or for which Contractor is other-
wise reimbursed, but only to the-extent-6f such insurance-or reimbursement;
provided that, if more than one of the above exceptions shall be applicable in
any case, Contractor's liability under any one exception'-shall-not-be limited
by any other exception. This Article shall not be construed as relieving a
lower-tier subcontractor from -liability for loss-or destruction of or damage
to Government-Property in its po'ssession'or-'coritrol, except to the extent that
the lower-tier subcontract, with the'prior approval of Lockheed or the Govern-
ment, may-provide for the relief of the lower-tier subcontractor from such
liability. In the-absence'of such approval,-the'lower-tier subcontract shall
contain appropriate provisions requiring the'returri of all Government Property
in as good condition as when received, except for reasonable wear. ana'tear or
for the utilization of the property in accordance with the provisions of the
prime contract. .? <
(ii) Contractor shall not be reimbursed for, and shall not include. as
an item of overhead, the cost of insurance, or any provision for a reserve,
covering the risk of loss of or damage to, the Government Property) except
to the extent that,Lockheed may.have required Contractor to carry such insurance
under any other provision. of-this.subcontract.
(iii) Upon the happening , of. loss or_-destruction.of.or damage to the.
Government Property.,,Contractor.shall notify Lockheedrand the Contracting Officer thereof, and shall communicate-with the Loss and Salyvage Organiza-
tion, if any, now or hereafter designated by the Contracting Officer, and
with the assistance of-the Loss-,and Salvage Organization so designated (un-
less the. Contracting Officer,has designated that,no such organization be em-
ployed), shall take all-reasonable steps to protect the Government Property
from further damage, separate-the damaged and undamaged Government Property,
put all the Government Property, in the best possible order, and furnish to
Lockheed and the. Contracting. Officer a statement,of?(A) the lost, destroyed
and damaged Government,Property,.(B)'the time and origin of the loss, destruc-
tion or damage, (C.) all know-n,interest.in the commingled property of-which the
Government Property is apart, and (D) the insurance, if any, covering any part
of or interest in such commingled property. Contractor shall make repairs and
renovations of the damaged Government-Property or take such.other action as Lockheed
directs. ,
(iv) In-the,event Contractor is indemnified, reimbursed, or otherwise com-
pensated for. any loss or?destruction.of or damage to the Government Property, it
shall use the proceeds to repair, renovate or replace the Government Property
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involved, or shall credit such proceeds against the cost of the work covered
by the subcontract, or shall otherwise reimburse Lockheed or the Government,
as directed by Lockheed. Contractor. shall do nothing to predudice the Govern-
ment's right to recover against third parties for any-such loss, destruction
or damage and, upon the request of Lockheed or the Contracting Officer, shall,
at Lockheed's or the Government's expense, furnish to the Government and Lock-
heed all reasonable assistance and cooperation (including the prosecution of
suit and the execution of instruments of assignment in favor of the Government)
in obtaining recovery. In addition, where a lower-tier subcontractor has not
been relieved from liability for any loss or destruction of or damage to Govern-
ment Property, Contractor shall enforce liability of the lower-tier subcontractor
for such loss or destruction of or damage to the Government Property for the
benefit of the Government.
g. Lockheed and the Government shall at all reasonable times have access
to the premises where any of the Government Property is located.
h. The Government Property shall remain in the possession of Contractor
for such period of time as is required for the performance of this subcontract
unless Lockheed or the Contracting Officer determines that the interests of the
Government require removal of such property. In such case Contractor shall
promptly take such action as Lockheed or the Contracting Officer may direct with
respect to the removal and shipping of Government-Property. In any such instance,
the subcontract may be amended to accomplish an equitable adjustment in the terms
and provisions thereof.
i. Upon the completion of this subcontract, or at such earlier date as
may be fixed by Lockheed or the Contracting Officer, Contractor shall submit
to Lockheed., in acceptable form, inventory schedules covering all items of
the Government Property not consumed in the performance of this subcontract'
(including any resulting scrap), or not theretofore delivered to Lockheed or
the Government, and shall deliver or make such other disposal of the Government
0 Property as may be directed by Lockheed or the Contracting Officer. Recoverable
scrap shall be reported in accordance with a procedure and in such form as Lock-
heed or the Contracting Officer may direct. The net proceeds of any such dis-
posal approved by Lockheed or the Contracting Officer shall be credited to the
cost of the work covered by the subcontract or shall be paid in such manner as
Lockheed or the Contracting Officer may direct.
j. Unless otherwise provided herein, Lockheed or the Government shall
not be under any duty or obligation to restore or rehabilitate or to Pay the
costs of the restoration or rehabilitation of Contractor's plant or any portion
thereof which is affected by the removal of any Government Property.
k. Directions of Lockheed and the Contracting Officer and communications
of Contractor issued pursuant to this article shall be in writing.
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ARTICLE 23 -, PRIORITIES, ALLOCATIONS AND ALLOTMENTS - r
Contractor agrees, in the procurement and-use of materials required.for
the.,performance of this subcontract, to comply with the provisions of all
applicable. rules and regulations of the Business and Defense Services Adminis-
tr`ation,,.including Defense Materials System regulation.
8RTIC-E_24 .OFFICIALS NOT TO BENEFIT
No.member of or delegate to Congress,-or Resident Commissioner, shall be
admitted to any,share or part of this subcontract or to. any benefit.that-may.
arise.therefrom;'_but this provision shall not be-construed to. extend to this
subcontract if made with a corporation for its general benefit. .
ARTICLE 25_- INDEPENDENT CONTRACTOR It is understood and agreed that Contractor shall be deemed to be an
independent contractor in all its operations and.activities hereunder; and
that,the_employees furnished by Contractor to perform work on this project shall
be;de.emed.to?_be.Contractor's employees exclusively without any relation whatever
f6 Lockheed.as employees or as independent contractors; that,. said employees shall
,be paid.by Contrac.tor.fo.r,all services in this connection;'that Contractor shall
car'ry,workmen'.s compensation insurance and that, Contractor shall be responsible
,,for? all obligations and reports covering social security, unemployment insurance,
workmen's compensation, income tax, and other reports and :deductions required
by State and/or Federal law.'
ARTICLE 26---"PATENT RIGHTS
.a. As.used in this article, the following terms. shall have the meanings.
set forth below:
(1~ The term "Subject Invention" means any invention, improvement ;or
.discovery, (whether or not patentable) conceived or first
actually reduced to practice either--.
in the performance of the experimental,-developmental,.
or research work,called for~or required under,this
subcontract, or
- ;_._(B) , in the performance of any experimental, developmental,
or.research work relating to.the-subject matter of,
this-subcontract which was done upon an-understanding
=1 :u -
writing that a subcontract would be awarded; pro=:
vided that the'term "Subject Invention" shall not
?include any invention.-which is specified in said pur-
chase order as--being excluded-from the license granted.
by this article.
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C
(ii) The term "Technical Personnel" means any person employed by
or working under contract with Contractor (other than a
subcontractor whose responsibilities with respect to rights
accruing to the Government in inventions arising under
subcontracts are set forth in paragraphs (g), (h), and (i)
of this article) who, by reason of the nature of his duties
in connection with the performance of this subcontract,
would reasonably be expected to make inventions.
(iii) The terms "subcontract" and "subcontractor" mean any
subcontract or subcontractor of Contractor, and any
lower-tier subcontract or subcontractor under this subcontract.
b. (1) Contractor agrees to and does hereby grant to Lockheed and the
Government an irrevocable, nonexclusive, nontransferable, and royalty-free
license to practice, and cause to be practiced by or for Lockheed and the
United States Government, throughout the world, each Subject Invention in
the manufacture, use and disposition according to law, of any article or
material, and in the use of any'method. No license granted herein shall
convey any right to the Government to manufacture, have manufactured, or
use any Subject Invention for the purpose of providing services or supplies
to the general public in competition with Contractor or Contractor's commer-
cial licensees in the licensed field.
(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 foreign countries;
the obligation of Contractor to grant a license as provided
in (b) (1) above, to convey title as provided in (d) (ii) (B) or
(d) (iv) below, and to convey foreign rights as provided in
(e) below, shall be limited to the extent of Contractor's
right to grant the same without incurring any obligation to
pay royalties or other compensation to others solely on
account of said grant. Nothing contained in this-Patent
Rights article shall be deemed to grant any license under
any invention other than a Subject Invention;
c. Contractor shall furnish to the Contracting Officer through Lockheed
the following information and reports concerning Subject Inventions which
reasonably appear to be patentable:
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(i) a written disclosure promptly after conception or first
actual reduction to practice of each such.Invention together ;
with a written statement specifying whether or not a United
States patent application claiming the Invention has been-or
will be-filed by or on behalf of Contractor:
(ii) Interim reports, at least every twelve months, commencing with
the date of this subcontract, each listing all such inventions
conceived or first actually reduced to practice more than three
months prior to the date of the report, and not listed on a prior
interim report,. or certifying that there are no such unreported,';
inventions; and. _
(iii)prior to final settlement of this subcontract, 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, Contractor shall do the.following:
(i) if Contractor specifies that a United States patent application
claiming such invention will be filed, Contractor shall file or
cause to.be filed such application in due form and time; however,
if Contractor, after having specified that such an application
would be filed, decides not to file or cause to be filed said
application, Contractor shall so notify the Contracting Officer
through Lockheed at the earliest practicable date and in any event
..not.later than eight months after first publication, public use or sale.
(ii) if Contractor specifies that 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 with copies to Lockheed
to the contrary), Contractor shall:
(A) inform the Contracting Officer through Lockheed in writing
at, the earliest practicable date of any. publication of such
invention made by or know to Contractor or, where applicable,
of any contemplated publication by Contractor, stating the
date and identity of such publication or contemplated publication;
and 11 : r
(B) convey to the_Government the Contractor's.entire right, title,
and interest in such invention by delivering to the Contracting
Officer through Lockheed upon written, request such duly executed
instruments (prepared by the Government) or assignment. and
application, and such other papers as are deemed necessary
to vest in the Government Contractor's right, title, and interest
aforesaid, and the right to apply for and prosecute, patent,.
applications covering such invention throughout the world.,,
subject, however, to the right of the Contractor specified
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in (e) below to file foreign applications, subject to
the reservation of the license granted by Contractor
to Lockheed pursuant to paragraph (b) of this article,
and subject further to the reservation of a nonexclusive
and royalty-free license to Contractor (and to its
existing and future associated and affiliated companies,
if any, within the corporate structure of which Contractor
is a part) which license shall be assignable to the
successor of that part of Contractor's business to which
such Invention pertains;
(iii) Contractor shall furnish promptly to Lockheed and the Contract-
ing Officer on request an irrevocable power of attorney to
inspect and make copies of each United States patent appli-
cation filed by or on behalf of Contractor covering any such
invention;
0
(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;
(iii) such-longer period as may be approved by the Contracting
Officer. Contractor shall, upon written request of the
Contracting Officer through Lockheed, convey to the Government
O
(iv) in the event Contractor, or those other than the Government
deriving rights from Contractor, elects not to continue pro-
secution of any such United States patent application filed
by or on behalf of Contractor, Contractor shall so notify
the Contracting Officer via Lockheed not less than sixty days
before the expiration of the response period and, upon written
request, deliver to the Contracting Officer through Lockheed
such duly executed instruments (prepared by the Government)
as are deemed necessary to vest in the Government Contractor's
entire right, title, and interest in such invention and the
applications, subject to the reservations as specified in
(d) (ii) above; and
(v) Contractor shall deliver to Lockheed and the Contracting
Officer duly executed instruments fully confirmatory of any
license rights herein agreed to be granted to Lockheed and
the Government.
e. Contractor, or those other than the Government deriving rights from
Contractor, shall have the exclusive rights to file applications on Subject
Inventions in each foreign country within:
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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 nonexclusive
and.royalty-free license to Contractor and Lockheed together
with,-the right of Contractor and:Lockheed to grant sublicenses,
which license and right shall be assignable to the successor
_.to that part of Contractor's or Lockheed's business to which
.:the Subject Invention pertains.
f. Contractor shall exert all reasonable effort in negotiating for the
inclusion'of this Patent.Rights clause in any subcontract hereunder of three
thousand dollars ($3,000),or more having experimental, developmental, or re-
search work as -one. of?. its purposes. In -the 'event of refusal by a subcontractor
to accept the Patent..Rights clause, Contractor shall not proceed with the sub-
contract without written authorization of Lockheed, and.upon-obtaining such
authorization, shall cooperate with Lockheed in the negotiation with such sub-
contractor of an.acceptable.patent rights clause; provided,' however, that Con-
tractor,-shall in any event require the subcontractor to grant the Government
and Lockheed patent.rights under Subject Inventions of no.--less scope and on no
less favorable-terms.than.,those which Contractor. has under such subconracts,
except that in no .event shall.the subcontractor be required?_to.grant to Lockheed
and the.-Government patent rights in excess-.of,those. herein agreed to be granted
to Lockheed and-the Government by Contractor.
g.,.-Contractor shall, at the earliest practicable date, notify the Contract-
ing Officer and Lockheed in writing of any subcontract, containing a patent rights
clause, furnish the Contracting Officer and Lockheed a copy of.such clause, and
notify the Contracting Officer and Lockheed when such subcontract is completed.
It is understood that with respect to such subcontract clause, Lockheed and the
Government .are.. third party..beneficiaries; and -Contractor .hereby 'assigns to the
Government and.-Lockheed all.--the rights that Contractor would. have to enforce
the subcontractor's,obligations for the benefit of -the Government and Lockheed
with respect to Subject Inventions. Contractor shall,not be obligated to enforce
the agreements of any subcontractor hereunder relating to Subject Inventions.
h. When Contractor shows that it has been delayed-in-the performance of -
this subcontract by reason of.its inability to obtain:in accordance-with-(f)
above a suitable patent rights clause from a qualified subcontractor for any
item or service required under-this subcontract for which Contractor itself
does not have available facilities or qualified personnel Contractor's delivery
dates shall be extended for a period of time equal to the duration of such delay;
and, upon request of Contractor, Lockheed shall determine to what extent, if any,
an additional extension of the delivery dates and an increase in contract prices
based upon additional costs incurred by such delay are proper under the circum-
stances; and the subcontract shall be modified accordingly. If Contractor,
after exerting. all reasonable. effort, is unable to obtain a:qualified subcontractor
as set forth above, Contractor may.submit to Lockheed a written request for waiver
or modification; of the requirement .that:a suitable patent rights 'clause be
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included in the subcontract. Such request shall specifically state that
Contractor has used all reasonable effort to obtain such qualified subcontractor,
and shall cite the waiver or termination provision hereinafter set forth. If,
within thirty-five (35) days after the date of receipt of such request for a
waiver or modification of said requirement, Lockheed shall fail to deny in writing
such request,, the requirement shall be deemed to have been waived by Lockheed.
If within such period "Contractor shall receive a written denial of such request
by Lockheed,''this subcont act shall thereupon automatically terminate and the
rights and obligations of the parties shall be governed by the provisions of
the article of this subcontract entitled "Termination".
i. - Contractor shall, prior to final payment, furnish Lockheed with the
following:
(i) A list of all patents, if any, issued on Subject Inventions under
this subcontract;
(ii) A list of all Subject Inventions, if any, not yet reduced to a
patent but which are or will be the subject of a patent application;
(iii)A statement that there are no patented or patentable Subject.Inven-
tions if, in fact, there are none.
ARTICLE 27 - FILING OF PATENT APPLICATIONS
a. Before filing or'causing to be filed a patent application disclosing
any subject matter of this subcontract, which subject matter is classified
"Secret" or higher, Contractor shall, citing:the thirty (30) day provision below,
transmit the proposed application through Lockheed to the Contracting Officer
for determination whether; for reasons of national security, such application
should be placed under an order of secrecy of sealed in accordance with the
provisions of 35 U. S. Code 181-188 or the issuance of a patent should be other-
wise delayed-under pertinent statutes or regulations; and Contractor shall ob-
serve any instructions of-the Contracting Officer with respect to the manner
of delivery of the patent application to the U. S. Patent Office for filing,
but 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
application, Contractor may file the application.
b. Contractor shall furnish to Lockheed and the Contracting Officer, at
the time of or prior to the time when Contractor files or causes to be filed
a patent application disclosing any subject matter of this subcontract, which
subject matter is classified "Confidential",'a copy of such application should
be placed under an order of secrecy or the issuance of a patent should be other-
wise delayed under pertinent statutes or regulations.
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c. In-filing any patent application-coming within the.-scope.of this
article, Contractor'shall observe all,applicable security regulations
covering the transmission of classified subject matter.
_ARTICLE,28.-,NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT
a. ;Contractor shall report to Lockheed, promptly.and_in reasonable
written detail, each notice or claim of patent infringement based on,the
performance of this subcontract, or..any subcontract hereunder of which,
Contractor has knowledge.
In the event of,litigation against the-Government and-or Lockheed-
on account of any claim of infringement arising out of the performance of.
this subcontract or out of the use of any supplies furnished or services
performed hereunder, Contractor agrees that it will furnish to.the Govern-
ment and/or Lockheed, upon request, all evidence and information,in its
possession pertaining to such litigation. Such evidence and information
shall be furnished at the expense of the Government and/or Lockheed;
except in those cases in which Contractor has agreed to indemn_i_fy the
Government and/or Lockheed against the claim being asserted.
ARTICLE 29'- REPORTING OF ROYALTIES
If this contract is in an amount which. exceeds $10,000, the-Contractor
agrees to report in writing to Lockheed, during the performance of this
contract;and.?prior.to its completion or final settlement, the amountof ?-,
any royalties_or royalty rates paid or to be paid by it directly-.to.-others
in connection with the performance of this contract, together with the ,?
names and addresses of licensors to whom such payments-are made and either.
the patent numbers. involved or such other information as will permit.
identification of the patents or other basis on which royalties are to,.-,,
be paid. If this contract is in an amount which exceeds $10,000, and no
royalties or royalty rates are paid or to be paid directly to others %
under the circumstances set forth above, the Contractor agrees so to
report in writing-to Lockheed prior to completion or final settlement
of this contract.
ARTICLE .30 PAYMENT OF-ROYALTIES
Payments by Contractor of any sum for royalties or patent rights
not included.in,the ordinary purchase price of standard commercial supplies.,
shall not constitute items of allowable cost. hereunder, unless an_d until
approved by Lockheed and the Contracting Officer. Reimbursement to,
Contractor on account of any such payments shall not be construed as?an
admission. by Lockheed:-and/or the Government of the enforceability,, validity
or scope of, or title to any of..the patents involved, nor shall any such
reimbursement constitute a waiver of any rights or defenses respecting
such patents.
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ARTICLE 31 - AUTHORIZATION AND CONSENT
The prime contract under which this is a subcontract contains a
section in which the Government gives authorization and consent with
respect to patented inventions, as follows:
"AUTHORIZATION AND CONSENT - The Government hereby gives
its authorization and consent for all use and manufacture
of any patented invention in the performance of this con-
tract or any part hereof or any amendment hereto or any
subcontract hereunder (including any lower-tier subcon-
tract)."
ARTICLE 32 -. EXCESS PROFIT
The Contractor agrees that, unless otherwise provided by law, this
contract shall be subject to all the provisions of 10 U.S.C. 2382 and
7300 and shall be deemed to contain all the agreements required by
those sections; provided, however, that this clause shall not be con-
strued to enlarge or extend by contract the obligations imposed by
those section. The Contractor agrees to insert in the subcontracts
specified in those sections either the provisions of this clause or
the provisions required by those sections.
ARTICLE 33 - RENEGOTIATION
a. To the extent required by law, this contract is subject to the
Renegotiation Act of 1951 (P.L. 9) 82d Cong., 65 Stat 7) as amended
(P.L. 764) 83d Cong., 68 Stat. 1116; P,L. 216, 84th Cong., 69 Stat 447),
and to any subsequent act of Congress providing for the renegotiation of
contracts. Nothing contained in this clause.shall impose any renegotiation
obligation with respect to this contract or any subcontract hereunder
which is not imposed by an act of Congress heretofore or hereafter
enacted. Subject to the foregoing this contract shall be deemed to con-
tain all the provisions required by Section 104 of the Renegotiation Act
of 1951, and by any such other act, without subsequent contract amendment
specifically incorporating such provisions.
b. The Contractor agrees to insert the provisions of this clause,
including this paragraph b, in all subcontracts, as that term.is defined
in section 1038 of the Renegotaition Act of 1951 or in any subsequent
act of Congress providing for the renegotiation of contracts.
ARTICLE 34 - MILITARY SECURITY REQUIREMENTS
a. The provisions of this article shall apply to the extent that
this subcontract involves access to information classified "Confidential"
including "Confidential--Modified Handling Authorized" or higher.
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b. Lockheed shall notify. Contractor of the security classification
of this subcontract and the elements thereof, and of any subsequent
revisions in such security classification, by the use.of a,, Security
Requirements Check List (DDForms'254and-254-1).
c. To the extent Lockheed has indicated as of the date of this
subcontract, or thereafter indicates, security classification under
this subcontract as_provided in.paragraph.(b) above, Contractor shall
safeguard'all classified elements of this subcontract and shall provide
and maintain-a system of security controls within its own organization
in accordance with the, requirements of:
(i) the Security Agreement (DD Form 441), including the
Department of Defense Industrial Security Manual
for Safeguarding Classified Information as in-effect
on the_date of this subcontract, and any modifica-
tion to the, Security Agreement for the purpose-of
adapting_the'Manual to Contractor's business; and
any amendments to said Manual made after the date
of this subcontract, notice'of which has been
'furnished'to Contractor by'the Security Office of
the Military'Department.having security cognizance
over the facility.
d. Representatives of the Military Department having-security
cognizance over,the facility and representatives of the contracting
Military:Departinent'shalT.have the right to inspect at reasonable in-'-'
tervals,the procedures, methods, and facilities utilized by Contractor
in complying with'the security. requirements under this subcontract.
Should the Government, through these representatives, determine that
Contractor is not complying with, the security requirements of this sub
rte.
contract Contractor shall be 'inforin6d "in,writing by the Security Office-
of the cognizant,-Mi_litary.Department of the proper action to be taken
in order to effect 'compliance with such requirements.
e. If subsequent to the date of-this subcontract, the security
classifications or security requirements'under this'"subcontract'are
changed by the Government ,as provided in.this article and if such,
changecauses-an increase or decrease'ift'the estimated cost of_ the
performanceof'this subcontract,'the estimated cost and fixed fee shall,-
to the extent appropriate,' be subject to'an equitable adjustment. Any
such equitable adjustment shall be'accomplished in the manner set forth
in the changes article of this subcontract. . ,
f. Contractor agrees to insert,.in all subcontracts hereunder
which involve access to classified information,, provisions which shall
conform substantially to the 'language.', of this article, including this
paragraph.
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g. Contractor also agrees that,it shall determine that any sub-
contractor proposed by it for the furnishing of supplies and services
which will involve access to classified information in Contractor's
custody has been granted an appropriate facility security clearance,
which is still in effect, prior to being accorded access to such
classified information.
ARTICLE 35 - NEWS FEATURES OF DESIGN
In the event Contractor, prior to completion of work hereunder,
develops (i) any improvement in the design of the supplies called for
by this subcontract, which is not incorporated in the supplies delivered
hereunder, or (ii) any alternative or improved method of accomplishing
the objectives of this subcontract, which is not employed in the per-
formance hereof, Contractor shall promptly give full information with
respect thereto to Lockheed.
ARTICLE 36 - REPORTS OF WORK
Contractor shall submit reports making full disclosure of all
services done and the results hereof, in the manner, at the times and
to the extent set forth in said purchase order; provided, however,
that except as may be otherwise specified in said purchase order, Con-
tractor shall submit such reports in triplicate from time to time as
requested and upon completion (or earlier termination) of the services.
Except as may be otherwise specified in said purchase order, or unless
Contractor is otherwise instructed, Contractor shall, upon completion
(or earlier termination) of the services; deliver'any working drawings
and specifications of such prototypes as may have been developed.
ARTICLE 37 - RIGHTS IN DATA - UNLIMITED
a, The term "Subject Data" as used herein includes writings, sound
recordings, pictorial reproductions, drawings or other graphical representa-
tions, and works of any similar' nature (whether or not copyrighted) which
are specified to be delivered under this subcontract. The term does not
include financial reports, cost analyses and other information incidental
to contract administration.
b. Subject to the proviso of c?., below, the Government and Lockheed
may duplicate, use, and disclose in any manner and for any purpose whatsoever,
and have others so do, all Subject Data delivered under this subcontract; pro-
vided, however, that with respect to such Subject Data not originated in the
performance of this subcontract but which is incorporated in the work furnished
under this subcontract, Lockheed's rights shall be limited to duplication, use
and disclosure of such Subject Data for governmental purposes,
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c. Contractor agrees to and does hereby grant to the Government and to
Lockheed and to their respective officers, agents, and employees acting with-
in the scope of their official duties, a royalty-free, non-exclusive and
irrevocable license throughout the world, to publish, translate, reproduce,
deliver, perform, dispose of, and to authorize others so to do, all Subject
Data now or hereafter covered by copyright; provided that with respect to such
Subject Data not originated in the performance of this subcontract but which
is incorporated in the work furnished under this subcontract such license shall
be only to the extent that Contractor, its employees, or any individual.or con-
cern specifically employed or assigned by Contractor to originate and prepare
such Data under this subcontract, now has, or prior to completion or final
settlement of this subcontract may acquire, the right to grant such license
without becoming, liable to pay compensation to others solely because of such
grant.
.d. Contractor shall exert all reasonable effort to advise Lockheed, at
the time of delivery of the Subject Data furnished under this subcontract, of
all invasions of the right of privacy contained therein and of all portions
of such Data copied from work not composed or produced in the performance of
this subcontract and not licensed under this clause.
e. Contractor shall report to Lockheed promptly and in'reasonable written
detail, each notice or claim of copyright infringement received by Contractor
with respect to all Subject Data delivered under this subcontract.
f. Nothing contained in this clause shall imply a license to the Govern-
ment-or Lockheed under any patent or be construed as.affecting the scope of any
license or other right otherwise granted to the Government or Lockheed under
any patent.
g. Contractor shall not affix any restrictive marking upon any Subject
Data, and if such markings are affixed, the Government and Lockheed shall have
the right at any time to modify, remove, obliterate or ignore any such markings.
ARTICLE 38 - REPRODUCTION RIGHTS
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Lockheed does not grant or convey to Contractor by virtue of this subcontract
(i) any reproduction rights in or to the articles called for hereunder, or (ii)
any right to use designs, drawings or other information belonging to Lockheed or
supplied by or on behalf of Lockheed for us in the performance of this subcontract,
in the production, manufacture or design of any articles or materials for anyone
other than Lockheed.
ARTICLE 39 - NON-DISCLOSURE OF INFORMATION
Contractor shall not, without the prior written consent of Lockheed, disclose
information relative to this subcontract, except as may be required to insure per-
formance.
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ARTICLE 1+0 - FEDERAL, STATE AND LOCAL.TAXES
Except as otherwise provided in this subcontract,. Federal, State, and
Local taxes (other than (i) Federal taxes on income and excell profits,
(ii) taxes in connection with financing, refinancing, or refunding opera-
tions, and (iii) Federal excise taxes from which exemption is obtainable
under Sections 4220 or 4222 of the Internal Revenue Code or for which a
credit is obtainable under Section 6+16 (b) (3) (B) thereof) paid by
Contractor, of any cost of cost-plus-a-fixed-fee subcontractor hereunder
(provided that there was no fixed-price subcontractor intervening between
such subcontractor and Contractor) and incident to the performance of
this subcontract shall constitute items of allowable cost under this sub-
contract or such cost or cost-plus-a-fixed-fee subcontract if (i) Contractor
has requested Lockheed to furnish tax exemption certificates or other
similar evidence of exemption for use by Contractor and such cost or cost-
plus-a-fixed-fee subcontractor in obtaining exemption from such Federal,
State or Local Taxes and (ii) Lockheed has notified Contractor that it
will not furnish such evidence of exemption. Payments of taxes for which
evidence of exemption has been furnished hereunder shall constitute items
of allowable cost under this subcontract (i) if the applicable Federal,
State or Local taxing authorities have refused to accept such evidence
of exemption and Contractor has notified Lockheed of such refusal, (ii)
if Contractor has caused the tax in question to be paid in such manner as
to preserve all rights to refund thereof, (iii) if Contractor causes to
be assigned to the Government any and all rights to any refund of such
taxes and,(iv) if being so directed by the Contracting Officer, Contractor
takes the'necessary action in cooperation with and for the benefit of the
Government, to secure a refund of such tax.
ARTICLE 4+1 - AMENDMENTS REQUIRED BY PRIME CONTRACT
Contractor agrees that upon the request of Lockheed it will from
time to time enter into amendments to this subcontract to incorporate
additional provisions herein or to change provisions hereof, as Lockheed
l~ may reasonably deem necessary, in order to comply with the provisions of
the prime contract or with the provisions of amendments to the prime
contract. If any such amendment to this subcontract causes an increase
or decrease in the cost of, or the time required for, performance of this
subcontract, an equitable adjustment shall be made in the estimated cost
and fixed fee or delivery schedule, or both, pursuant to Article 3 (Changes)
hereof
ARTICLE 4+2 - COVENANT AGAINST CONTINGENT FEES
Contractor warrants that no person or selling agency has been employed
or retained to solicit or secure this subcontract upon an agreement or
understanding for a commission, percentage, brokerage or contingent fee,
excepting bona fide employees or bona fide established commercial or selling
agencies maintained by Contractor for the purpose of securing business.
aD
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For breach or violation of this warra'nty'Lockheed shall have the right to
annul this.subcontract_without_liability or,.in its discretion, to deduct
from the subcontract price, of consideration the full amount of such
commission, percentage, brokerage or contingent fee.
ARTICLE. i3 - QUALITY CONTROL SPECIFICATION
Except as otherwise provided in this subcontract, Contractor's system
of quality control during the performance of this subcontract shall be in
accordance with the provisions of Military Specification MIL-Q-5923, as in
effect on the date of this subcontract.
ARTICLE 44 - GRATUITIES
a. Lockheed may, by written notice to. Contractor, terminate the right
of Contractor to proceed under this contract if Lockheed has a reasonable,
cause to-believe that gratuities (in the form of entertainment, gifts, or
otherwise) were offered or given by Contractor, or any agent or represent-
ative of Contractor, to any officer or employee of Lockheed with a view
toward securing a contract or securing favorable treatment with respect
to the awarding or amendment, or the making of any determination with
respect to the performing of such contract.
b. In the event this contract is terminated as provided in paragraph
a. hereof, Lockheed shall be entitled to pursue the same remedies against
Contractor as it could pursue in the.event of a breach of the contract by
Contractor.
c. The rights and remedies.of Lockheed 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. ,
ARTICLE 1i5 DELAY IN DELIVERY OF DATA
a. It is understood that the efficient use by Lockheed of the supplies
called for hereunder requires that the data called for hereunder be delivered
not later than the time or respective times herein specified. If such
data are not delivered at said time or times, Lockheed may, at its election,
so long as such data remain undelivered,; unless the delay in delivery there-
of arises out of causes beyond the control and without the fault or negli-
gence of Contractor within the meaning of the clause hereof entitled
"Excusable Delays", withhold payment to Contractor for any of the amounts
then due, refuse approval of Contractor's vouchers and refuse to accept
further deliveries hereunder from Contractor or take any other action
authorized by law or regulation. now or hereafter in effect, including termi-
nation of the contract for default to the extent and .in the manner author-
ized by "Termination," and may take any or all of the foregoing actions
separately or.in combination. .
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b. The provisions of this clause shall only be applicable to technical
data, such as handbooks, service manuals, or other information necessary for
the proper maintenance or servicing of the end items called. for herein.
ARTICLE 4+6 - LIMITS OF CONTRACT "
This contract supersedes all prior offers, negotiations or agreements
concerning the subject matter hereof and constitutes the entire contract
between the parties.
ARTICLE 4+7 - ADVANCE MANUFACTURE AND SHIPMENT
Contractor shall not, without Lockheed's prior written consent, manu-
facture in advance of Contractor's normal flow time or deliver in advance
of schedule. Lockheed may return, shipping charges collect, all articles
received in advance of schedule.
ARTICLE 48 - INTERPRETATION
This subcontract shall be construed and interpreted solely in accord-
ance with the laws of the State of California.
ARTICLE 49 - APPROVAL
This subcontract shall-not become effective until approved by the
Contracting Officer at Lockheed's Plant.
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1. Article 8 - Inspection And Correction Of Defects
Page 9, Paragraph d, line 8, 3rd word, delete "has"
and substitute "have".
2. Article 10 - Assignment Of Claims
Page 10, Paragraph c, line 9., lst word, delete
tpgetjer" and substitute "together".
3. Article 11 - Records
Page 12, Paragraph e, line 3, add the word "to"
after the word "obligation".
4. Article 26 - Patent Rights
Page 26, Paragraph d (ii) (A), line 3, 5th word,
delete "know" and substitute "known".
5. Article 27 - Filing of Patent Applications
Page 29, Paragraph a, line 6, 9th word, delete "of",
and substitute "or".
6. Article 36 - Reports of Work
Page 33, line 2, 6th word, delete "hereof" and substitute
"thereof".
7. Article 37 - Rights in Data - Unlimited
Page 34, Paragraph e, line 1, add the word "in" after
the word "and".
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. ARTICL. 50 - A TL? TIQ: S (O TiN )
"'fIAL FORS
Article 35 - Now Features of Deli
the first word of the article title
should be changed to "WW",
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ARTICLE 50 - ALTERATIONS ( ooNT]NW )
1. In tine of Paragraph a, of A
COSTS A414D FIXSD FL on page 6., Add the words 'rand
fee"' after the wor : "cost".
2. (a) Add the following sentence to Paragraph b. of
ARiICT 6 - PA! NT ! 1 u T IJT:
"Failure to agree to any such adjustments
shall be a dispute concerning a question
of fact within the meania g of the clause
of this subcontract entitled " ThPUT ".'r
(b) Insert after the word shall, appearin in the
7th line of Paragraph d. of said A tTI 6 the following
phrase:
"subject to the provisions of the article
hereof entitled { 215PRI U ."
(c) Delete Paragraph e. of said A-FtTICUE,
(a) Add the following subparagraph L to Pararaph a.
of AfTICL 4 7 - PT1,O)II-SI ?
"4. Claims by the Contractor for reimburse-
ment, of costs of the correction or replacement
of the suppl=ies furni; hed hereunder, as may
be required by Lockheed ? after the date of the
release, in aceoxdarieo nth the: provisiohs of
Paragrap.r c. of AM Uk3 - 11,39; CTI{ . A RD
CTION C DJl_ '66 this subeon?ract.
(b) Change the period at the anti of Paragraph c. of nad
ARTICLE 7 to a setrli -elon and add the followinj
"except that the Contractor shall not be
required to deliver or otherwise dispose
of Government Property prior to such final
payment",
(a) Add the followin sen encc at the end of Para rapt a. of
A eXIC.+' I1,4P c7' o A 1D c tc cTIUs U 'ai
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opt as otherwise provided in this contract,,
acceptanco of any supplies or lots of supplies
shalimbe made as promptly as pr cticable after
deliv&ry thereof and shall be deemed to have
been made no later than sr months after the
date of such delivery, if acceptance has not
been made earlier within such period.!!
(b) Delete the wordy the Government" appearing in line 2 of
Paragraph ca of said x .` 8 and ubs ;it 1te . t? e word "Lockheed"
in lieu thereof.
(c) Add the following new pax?raphs at the end of said , C
indentifiable as Pa.,rarapha i and 3.:
Ilia For purposes of compliance with the
provisions of Paragraph c. above of this
ARTICLE ?3, notitb.standi any provisions
to.." h contrar- r pear ,n herein,, the
contractor may retain Government Property
for a period no later than twelve (12)
months after final acceptance by Loc:eed,,
or for such per od as may be necessary for
correction or replacement of supplies. as
mmy, be required4byLockheed hearetander,
whichever is lat-or."
11j. Except as provided in this clause and
as may be provided in the schedule,, the
Contractor shall have no obligation, or lia-
bility to correct. or replace suppliee er iota
of supplied which at the time of delivery are
defective in material or orisasnship or other-
wise not in cenford .ty with the require nts
of this contract . 1'
. To the last sentence of Paragraph a:. of .I IC i 10 - A88IaN 9
OF CL IM an page 10 add the following before the periods
"but will not be su`b ect to set-off for cny
present and future claim or clai is arising
independently of this subcontract."
6. In lines Via, 7, and 10p respectively, of Paragraph c. of
A TICL.E 14 - TE ?,4,Z, N delete Utwelve (1?,) fl and In lieu
thereof insert 4,Fe 2 r h,teen (18)
tY. .
7. (h) In lines 1 and 3, respectively., of Paragraph b. (1) of
ARTICLE 26 FATENNY HjURTS, delete the phrase " e d aid",
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(b) In line 1 of Paragraph c. Of said ARTICLE 26 delete the
phrase "throw h 14 kheed""
(c) At the end of subparagraph (i) of Paragraph. d, of said
ARTICLE 26 add the followisrag:
"A copy of any patent application filed here-
zder shall be rled to Lockheed. , The contents
of such patent application shall not be discloses
by Lockheed to aa. yono outside of Lockheed other
than the Covern uernt.1,
(ci) ';Delete the following phrase appearing in each of limes
10, 11, 12 and 13 of ,pub-subpa a rapa (3) of subpara r3,ph (ii)
of Paragraph d, of said A `i`1ju 1 .2,6- "subject to the reservation
os the license granted by contrac .or to Lookneed pursuant to
arartapp (b) of this Article, and"
(e) Delete the word "further" appearing it line 13 of sub-
subparagraph (IS) of subparagraph (ii) of Paragraph d,of
said A.i om 26.
(f) Add the follo- ng to subparagraph (iii) of Paragraph do
of said ARTICL 26:
"provided, however., that the contents of such
patent application shad not be disclosed
by Lockheed to anyone outside of Look-head
other than the Govern nt; :l .
(x) Delete the phrase "to Lockheed mad"' appeariin in
subpara.? raph (v) of Paragraph d, of said A TI Mt .
(h) In lines 8 and 9, respectively, of subparagraph (iii)
of Paragraph e. of said C TICLE 2,6 del to the phrase "and
Lockheed".
U) In line 11 of subpax agraph (iii) of Paragraph e. of
said , i. 26 delete the phrase "or Lockheed'est,
(J) In lines 5 and 6 of Paragraph g. of said ARTICLE 26
revise the cla' e " t.k:hoed and the doverz: ent; t hir;.
party beneficiaries" to read as folle ss '"the Government
is a third party borne -ci 'yg" e
(k) Delete the phrase "Locishe an, ,,P1 appearing i lines
!2 and 13 of Paragraph f, of sai d. A i I0 260
(1) Delete the phrase "Lock-heed and ppearing in line
14 of Paragraph f. of said ARTICLE 2.?.
(m) Delete the phrase P"and Lockheed" : ppearis g in
lines 7 and 8j respecti vel ,, of Paragraph go of said
ARTICLE 26
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At the and o f ARTICLE 35 - NEW FEATC OF D IG change the
period to a sere -colon and add t h; fol ow igi
"provided, however, that the Contractor shall
not be required to :close; the proprietary
aspects thereof."
In line 2 of ART IC 1. s
TS R'
the words ,9.n good faith into reg,otiation
on page 35, delete the word "into" and
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ARTICLE 51 ? DISPUTES
Any decision, disapproval or omission made or omitted by Lockheed or the Con-
tracting Officer hereunder concerning.questions of fact., if disagreed faith by
Contractor,.. shall be treated by Lockheed,as. a dispute under the DISPUTES
clause it the prime contract, and Lockheed shall, at Contractor's expense,
take all' available steps thereunder to the extent required by Contractor to
resolve such dispute, except that Lockheed shall not be obligated to litigate
the matter in any court. Any decision under the DISPUTES clause of said.prime
contract"conc.erraing a dispute hereunder shall be final and conclusive to the
extent provided in said DISPUTES.clause. Lockheed agrees, that it will permit
Contractor to participate with Lockheed'in all'such proceedings. If Lockheed
fails to take action pursuant to this clause, or to.the?extent that a decision
with respect to any dispute hereunder is not final and conclusive under the
DISPUTES clause of the. prime contract, Contractor may appeal such dispute
by pursuing any right or remedy it may have at law or'in equity in any court
of competent jurisdiction. Pending final decision of any dispute hereunder,
Contractor shall proceed diligently with the performance of this subcontract
and in accordance with the decision appealed' from.
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