ENCLOSED IS YOUR COPY OF CONTRACT NO. SE-509 WITH THE REQUESTED CHANGES MADE THEREIN.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89B00709R000200450005-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 43
• Document Creation Date: December 22, 2016
• Document Release Date: January 4, 2011
• Sequence Number: 5
• Publication Date: June 22, 1959
• Content Type: LETTER

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CLASS IF IC AT 10,14
SECRET
THIS DOCUMENT REQUIRES SPECIAL HQC1300N3
HANDLING PROCEDURES
THIS DOCUMENT CONTAINS INFORMATION REGARDING A HIGHLY
CLASSIFIED
ACTIVITY. PERMISSION TO TRANSFER CUSTODY, OR PERMIT ACCESS TO
THIS DOCUMENT MUST BE OBTAINED FROM THE ORIGINATOR. HAND CARRY
PROCEDURES WILL BE APPLIED TO ANY INTER-OFFICE OR INTRA-AGENCY
MOVEMENT OF THIS DOCUMENT.
REFERRED TO
RECEIVED
RELEASED
SEEN,BY
OFFICE
SIGNATURE
DATE
TIME
DATE
TIME
NAME AND OFFICE SYMBOL
DATE
Granger
Associates
F
i
1
CLA1QA TION
~
f FORM
~ 12. 57 X352
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I e- 0
Gentlemen:
Enclosed is your copy of Contract No. SE-509
with the requested changes made therein.
Very truly yours,
5
16 /
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CHLZ1-0640
Granger Associates
966 Commercial street
Palo Alto, California
Contract tor: See Schedule Amounts $71,352.00
Mail Invoices tog Performance Periods
See Schedule
This contract is entered into tr and between the United States of
America, hereinafter called the Government, represented by the
Contracting Officer executing this contract, and the above named
Contractor which is a corporation, incorporated in the State of
California hereinafter called the Contractor.
The parties hereto agree that the Contractor shall furnish the
facilities and deliver all supplies and perform all the services
set forth in the attached schedule issued hereunder, for the con-
sideration stated therein.
The rights and obligations of the parties to this contract shall be
subject to and governed.by the attached schedule and General Provi-
sions. In the event of any inconsistency between the Schedule and
the General Provisions, the Schedule shall control.
IN WITNESS WHEREOF, the parties hereto have executed this contract
as of ~M AIY 95 ; , l959.
GRANGER ASSOCIATES THE UNITED STATES OF AMMICA
TITLE
sting Officer
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Contract No. SE-509
CERTIFICATE
certify that
I am the Assistant Secretary of the Corporation named
as Contractor herein; that
signed this contract on behalf of the Contractor was then
President of said Corporation; that said con-
tract was duly signed for and in behalf of said Corporation by
authority of its governing body, and is within the scope of its Cor-
porate powers.
(Corporate seal)
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Contract No. SL-509
IRD=X TO SCH I
PART I SCOPE of wow............? ............................4
PART IT DELIVAT ..............................................4
PART III WAIVER OF RZ UTITS OF GENERAL P1?OVISION3.9........4
PART IV SPECIAL SECURITY RESTUIC'TIONS.........................5
PART V ANTICIPATORY COSTS ....................................5
PART VI PRICE RE)ETERMINATION .................................5
SAL PROVISIONS
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Contract NO. SE-509
UUM
PART I - SG=- op WOR
Contractor shall furnish the necessary supplies, services and
materials to accomplish the work set forth belowt
?. Fabricate two (2) each Production Models of the One
Watt Traveling Wave Tube Repeater Jamer, Mod 504, capable
of performance In an operational environment of 4.5 PSI, at
a unit price of $32,433.0O and a total price of $64,866.00.
Ltdo" . Within 30 days after receipt of this contract,
Contractor shal.1 furnish a recommez dod list of necessary
spare parts and related equipment required to maintain the
units called for under Item 1 for a period of one (1) year.
Upon approval of said list, with revisions, if any, the
parties shall negotiate an equitable adjustment, in the
contract price and such adjustment will be evidenced by an
amendment to this contract.
110 3 - Contractor shall furnish personnel as required to
assist Government personnel in the evaluation and flight
testing of the units called for under Item 1 at a Goverri-
ment Test Site. Such testin is anticipated to include
as a minimum a total of six (6) flights. The price for
such assistance shall be negotiated by the parties at a
future date and such negotiation shall be evidenced by an
amendment to this contract.
PART It - MJ=
(a) Contractor shall furnish the work called for under PART I
above in accordance with the following scheduler
Contractor shall deliver one (1) unit on or before
20 July 1959 and the second unit no later than 20 August 1959.
1$0 Z - Delivery of spare parts shall be negotiated at the
time of approval thereof.
,ZJgM I - To be negotiated.
(b) Inspection and acceptance shall be at Destination, however,
price is F.O.U. Contractor's Plant. Shipping instructions will be
furnished at a later date by the Contracting Officer.
P A R T I I I - W II UMOILS
Notwithstanding the requirements of any of the General Provisions
of this contract to the contrary, whensoever the Contractor, in perforo
manes of the work under this contract, shall find that the requirements
4
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Contract No. SE-509
of any of the clauses of the General Provisions are in conflict with
security instructions issued to the Contractor by the Contracting Officer
or by his duly authorized representative for security matters, the
Contractor shall can the attention of the Contracting Officer to such
conflict and the Contractin Officer or his duly authorized representative
for security matters shall. i) modify or rescind such security require.
ments or (ii) the Contracting Officer shall issue to the Contractor a
waiver of compliance with the requirements of the General Provisions
conflicting with such security requirements. Any waiver of compliance
with the General Provisions of this contract issued by the Contracting
Officer shall be in writing, except that the approval by the Contracting
Officer of any subcontract issued hereunder by the Contractor shall be
deemed to constitute approval of waiver of any clauses of the Genera,
Provisions in conflict with the stipulations of such subcontract.
P A R T XV - SR
The Contractor shall not reveal (i) the specific nature or any
details of the work being performed hereunder or (ii) any information
whatsoever with respect to the department of the Government sponsoring
this contract and the work thereunder except as the Contractor is
directed or permitted to reveal such information by the Contracting
Officer or by his duly authorized representative for security matters,
and notwithstanding any clause or section of this contract to the
contrary, the Contractor shall not interpret any clause or section of
this contract as requiring or permitting divulgence of such information
to any person, public or private, or to any officer or department of the
Government without the express consent of the Contracting Officer or his
duly authorized representative for security matters.
PART V . AEICIPATORT CfITS
All costs which have been incurred by the Contractor on or
after 2O April 1959 in anticipation of and prior to the signing of this
contract, and which if incurred after the signing of this contract
would have been considered as items of allowable costs hereunder, will
be accepted by the Contracting Officer as costs under this contract,
PART VI -
A. Because of the nature of the work called for by this contract
and the great uncertainty as to the cost of performance hereunder, the
parties agree that the contract price set forth in the Schedule hereof
may be increased or decreased in accordance with the provisions of this
clause.
B. Within 60 days after the completion or termination of this
contract, the Contractor will file with the Contracting Officer a
statement showing, in such form and detail as the Contracting Officer
may prescribe, the Contractor's cost of producing the supplies or
furnishing the services called for hereunder, together with such
other information as may be pertinent in the negotiations for a rede-
termined price pursuant to this clause. Such statement of cost shall
S
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fairly reflect the normal operation of the Contractor's cost system.
The Contracting Officer shall have the right at all reasonable times
to make or cause to be made such examinations and audits of the
Contractor's books, records and accounts as he may request. The
Contractor further agrees to include in each of his subcontracts which
is on a coat or cost-plus-a-fixed-.fee or a price redetermination basis
a provision to the effect that the subcontractor agrees (S.) to submit
to the Contracting Officer such cost data as may be required for price
redetermination, (ii) to permit the Contracting Officer to make or cause
to be made such examination and audits of books, records and accounts as
the Contracting Officer may deem necessary, and (iii) to include a like pro..
vision in each of his subcontracts which is on a cost or cost-plua.a-fixed-
fee or a price redetermination basis.
C. Upon the filing of the statement and other pertinent information
required by paragraph (B) of this clause, the Contractor and the
Contracting Officer will promptly negotiate in good faith to agree upon
a reasonable redetermined price for the entire contract which, upon the
basis of such statement and other pertinent information, will constitute
fair and just compensation to the Contractor for the performance of this
contract. In determining the extent of any estimated allowance for
profit to be taken Into account in fixing such redetermined price, oonsid-
oration will be given to the extent to which the Contractor has performed the
contract with efficiency, economy and inggeouity. The redetermined price shall
be evidenced by a supplemental agreement to this contract. In no event shell
the redetermined price exceed the sum of 6T1,352.00.
D. If within 60 days after the completion or termination of this
contract, the parties shall fail to agree upon a redetermined price
(which term, for the purpose of this olause, shall include direct costs,
indirect costs and profit) in accordance with the provisions of this
clause, the failure to agree shall be a dispute concerning a question
of fact within the meaning of the clause of this contract entitled
"Disputes."
E. In the event of a price increase the Government will pay or
credit to the Contractor the amount by which the redetermined price
shall exceed the contract price aforesaid. In the event of a decrease
in price the Contractor will repay or credit the amount of such dew
crease to the Government in such manner as the Contracting Officer may
direct.
F. For any of the purposes of the clause of this contract
entitled "Termination for Convenience of the Government" (including
without limitation, computation of "the total contract price" and "the
contract price of work not termmnated"), the contract price shall be the
redetermined contract price agreed upon under paragraph (C) of this clause
or determined under paragraph (D) of this clause, as the came may be.
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INDEX TO GENERAL PROVISIONS
Article Noe
Page No,
1.
DEFINITIONS------------------------------------
1
2.
CHANGES----------------------------------------
1
3.
EXTRAS-----------------------------------------
2
21.
VARIATION IN QUANTITY--------------------------
2
5.
INSPECTION1I-------------------------------------
2
6.
Ij,ES_?O'\JSIBILITY FOR SUPPLIES---------------------
3
7.
PAYMEJTS---------------------------------------
3
8.
A,`"'SIGNMENT` OF CLAIMS---------------------------
21
9.
ADDITIONAL BIND SECURITY-----------------------
4
10.
FEDERAL, STATE, AND LOCAL TAXES----------------
4
11.
DEFAULT---------------------------------------
6
12.
DISPUTES-------Li-------------------------------
8
13.
SOVIET CONTROLLED AREAS -------- ..---------------
8
14.
EIGHT-HOUR LA[ OF 1912-------------------------
9
15.
VJA_LSH-HEALEY PUBLIC CONTRACTS ACT--------------
9
16.
NONCISCRIMLTATION IN EMPLOYMENT----------------
9
17.
OFFICIALS NOT TO BENEFIT-----------------------
10
J.B.
COVENANT AGAINST CONTINGENT FEES---------------
10
19.
TERMINATION FOR CONVENIENCE BF THE GOVERNMENT--
10
20,
AUTHORIZATION AND CONSENT -----------------------
15
21.
NOTICE AND ASSISTANCE, REGARDING PATENT-
INF
-
22.
RINGEI.JENT------
--------------------------
BUY AMERICAN ACT-------------------------------
15
23.
FILING OF PATENT APPLICATIONS------------------
16
211.
PATENT RIGHTS----------------------------------
17
25.
REPORTING OF ROYALTIES-------------------------
21
26.
RIGHTS IN DATA - UNLIMITED---------------------
23
27.
MILITARY SECURITY R EQUIRENENTS-----------------
214
28.
UTILIZATION OF SMALL BUSINESS CONCERNS---------
25
29.
EXAMINATION OF RECORDS-------------------------
25
30.
GRATUITIES-------------------------------------
26
31.
CONVICT LABOR ----------------------------------
26
32.
NOTICE TO THE GOVERNMENT OF LABOR DISPUTES-----
26
33.
2
MATERIEL INSPECTION AND RECEIVING REPORT-------
26 ,
.
3
SUBCONTRACTS,--------_
---
-
-
-
-
-
-
-
-
--
-
--
-
-
-
27
35.
6
_
_
_
_
_
_
_
_
_
__
_
_
_
_
SUBCONTRACTS ------ ----------
2$
.
3
AIRCRAFT IN THE OPEN---------------------------
27
37.
8
INSPECTION AND AUDIT---------------------------
28
.
3
GOVERNTE'IENT"FURNISHED PROPERTY ------------------
28
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GENERAL PROVISIONS
1. DEFINITIONS (ASPR 7-103.1)
As used throughout this contract, the following terms shall have 1 1*
the meanings set forth below:
(a) The term "Secretary" means the Secretary, or any Assistant
Secretary of the Department, and the head or any assistant head of the
Federal agency; and the term "his duly authorized representative" means
any person or persons or board (other than the Contracting Officer)
authorized to act for the Secretary.
(b) The term "Contracting 9fficer" means the person executing
this contract on behalf of the Government, and any other officer or
civilian employee who is a properly designated Contracting Officer;
and the term includes, except at otherwise provided in this contract,
the authorized representative of a Contracting Officer acting within
the limits of his authority.
(c) Except as otherwise provided in this contract, the term
subcontracts" includes pur'chase orders under this contract.
2. CHANGES (ASPR 7-103,2)
The Contracting Officer may at any time, by a written order, and
without notice tb the sureties, make changes, within the general scope
of this contract, in any one or more of the following; (i) Drawings,
designs, or specifications, where the supplies to be furnished are to
be specially manufactured for the Government in accordance therewith;
(ii) method of shipment or packing; and (iii) place of delivery. If
any such change causes an increase or decrease in the cost of, or the
time required for the performance of any aprt of the work under this
contract whether changed or not changed by any auch order an equitable
adjustment shall be made in the contract orice or delivery schedule, or
both, and the contract shall be modified in writing accordingly. Any
claim by the Contractor for adjustment under this clause must be asserted
within 60 days from the date of receipt by the Contractor of the noti-
fication of chage; PROVIDED, however, That the Contracting Officer, if
he decides that the facts justify such action, may receive and act
upon any such claim asserted at any time prior to final payment under
this contract. Where the cost of property made obsolete or excess
as result of a change is included in the Contractor's claim for
adjustment, the Contracting Officer shall have the right to prescribe
the manner of disposition of such property, Failure to agree to any
adjustment shall be a dispute concerning a question of fact within the
meaning of the clause of this contract entitled "Disputes," However,
nothing in this clause shall excuse the Contractor from proceeding with
the contract as changed.
FP or PR
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3. EXTRAS (ASPR 7-1030)
Except as otherwise provided in this contract, no payment for extras
shall be made unless such extras and the price therefor have been
authorized in writing by the Contracting Officer.
4. VARTAT ION IN QUANTITY
No variation in the quantity of any item called for by this contract
will be accepted unless such variation has been caused by conditions of
loading, shi ping, or packing, or allowances in manufacturing processes,
and then only to the extent, if any, specified elsewhere in this
contract.
5. INSPECTION (ASPR 7-105.5)
(a) all supplies (which term throughout this clause includes without
limitation raw materials, components, intermediate assemblise, and end
products) shall be subject to the inspection and test by the Government,
to the extent practicable at all times and places including the period.
of manufacture, and in any event prior to acceptance.
(b) In case dny supplies or lots of supplies are defective in
material or woriian hip or otherw se not in conformity with. the requirements
of this contract, the Government shall have the right eith to reject
them (with or without instructions as to their (disposition) or to
require their correction. 8dpplies or lots of supplies which have been
rejecter. or required to be corrected shall be removed or, if permitted
or required by the Contracting Officer, corrected in place by and at
the expense of the Contractor promptly after notice, and shall not
thereafter be tendered for acceptance unless the former rejection or
requirement of correction is disclosed. If the Contractor fails promptly
to remove such supplies or lots of supplies which are required to be
removed, or promptly to replace or correct such supplies or lots of
supplies, the Government either .(i) may by contract or otherwise replace
or correct such supplies and charge to the Contractor the cost occasioned
the Government thereby, or (ii) may terminate this contract for default
as provided in the clause of this contract entitled "Default." Unless
the Contractor corrects or replaces such supplies within the delivery
schedule, the Contracting Officer may require the delivery of such supplies
at a reduction in price which is equitable under the circumstances. Fail-
ure to agree to such reduction of price shall be a dispute concerning a
question of fact within the meaning of the clause of this contract
entitled "Disputes."
(c) If any inspection or test is made by the Government on the premises
of the Contractor or a subcontractor, the Contractor without additional
charge shall provide all reasonable facilities and assistance for the
safety and convenience of the Government inspectors in the performance of
their duties. If Government inspection or test is made at a point other
than the promises of the Contractor or a subcontractor, it shall be at
the expense of the Government except as otherwise provided in this
FP or PR
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contract: PROVIDED, That in case'of rejection the Government shall not
be liable for any reduction in' valge of samples used in connection with
such inspection or test. All inspections and tests by-the Government
shall be performed in such a manner as not to unduly delay the work.
The Government reserves the right to charge to the Contractor any additional
cost of Government inspection and test when supplies are not ready at the
times,ych inspection and test is recuested by the Contractor or when rein-
spection or retest is necessitated by prior rejection. Acceptance or
rejection of the supplies shall be made as promptly as practicable after
delivery, except as otherwise provided in this contract; but failure to
inspect and accept or reject supplies shall neither relieve the Contractor
from responsibility for such supplies as are not in accordance with the
contract requirements nor impose liability on the Government therefor.
(cl) The inspection and test by the Government of any supplies or lots
thereof does not relieve the Contractor from any responsibility regarding
defects or other failures to:meet the contract requirements wh:i ch may be
discovered prior to acceptance. Lccept as otherwise provided in this
contract, acceptance shall be conclusive except as regards latent defects,
fraud, or such gross mistakes as ar''~ount to fraud.
(e) The Contractor shall provide and maintain an inspection system
acceptabel to the Government covering the supplies hereunder. Records of
all inspection work by the Contractor shall be kept complete and available
to the Government during the performance of this contract 1-.nd for such
longer period as may be specified e.sewhere in this contract.
6. RESPONSIBILITY FOR SUPPLIES (ASPR 7-1C.6)
Except as otherwise Provided in,this contract, (i) the Contractor shall
be responsible for the supplies covered by this contract until they are
delivered at the designated delivery point, regardless of the point of
inspection; (ii) after delivery to the Government at the designated point
and prior to acceptance by the Government or rejection and giving notice
thereof by the Government, the Government shall be responsible for the loss
or destruction of or damage to the supplies only if such loss, destruction,
or damage results from the negligence of officers, agents, or employees of
the Government acting within the scope of their employment; and (iii) the
Contractor shall bear all risks as to rejected supplies after notice of
rejection, except that the Government shall be responsible for the loss, or
destruction of, or damage to the supplies only if such loss, destruction or
damage results from the gross negligence of officers, agents, or employees
of the Government acting within the scope of their employment.
7. PAYI,NTS (ASPR 7-103.'0
The Contractor shall be paid, upon the submission of proper invoices or
vouchers, the prices stipulated herein for supplies delivered and accepted
or services rendered and accepted, less deductions, if any, as herein
provided. Unless otherwise specified)~i payment will be made on partial
FP or PR
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deliveries accepted by the Government when the amount clue on such :e-
ti liveries so warrants; or, when requested by the Contractor, payment for
accepted partial deliveries shall be made whenever such payment would
equal or exceed either X1,000 or 5q percent of the total amount of
this contract.
8. ASSIGI '_,ENT OF CLAIMS (ASPR 7--103.8)
(a) Pursuant to the provisions of the Assignment of Claims Act of
1940, as amended (31 U. S. Code 203, 41 U. S. Code 15) if this contract
provides for payments aggregating x1,000 or more., claims for monies due
or to becc.me due the Contractor from the Government under this contract
may be assigned to a bank, trust company, or other financing institution,
including any Federal lending agency, and may thereafter be further
assigned and re-assigned to any such institution. Any such assignment or
reassignment shall cover all amounts payable under this contract and not
already paid, and shall not be made to more than one party, except that
any such assignment or reassignment; may be made to one party as agent or
trustee for two or more parties participating in such financing. Notwith-
standing any provisions of this contract, payhients to an assignee of any
monies clue or to become clue under this contract shall not, to the extent
provided in said Act, as amended, b'' subject to reduction or set-off.
(b) In no event shall copies of this contract or of any plans,
specifications, or other similar documents relating to work under this
contract, if marked "Top Secret," "Secret," or "Confidential", be
furnished to any assignee of any claim arising under this contract or to
any other person not entitled to receive the same: PROVIDED, That a
copy of any part or all of this contract so marked may be furnished, or
any information contained therein may be disclosed, to such assignee upon
the prior written authorization of the Contracting Officer
(c) The Contractor shall obtain the kritten authorization of the
Contracting Officer prior to the assignment of -ony rights under this
contract.
9. ADDITIONAL BOND SECURITY (ASPR 7-103.9)
If any surety upon any bond furnished in connection with this contract
becomes unacceptable to the Government, or if any such surety fails to
furnish reports as to his financial condition from time to time as
requested by the Government, the Contractor shall promptly furnish such
additional security as may be required from time to time to protect the
interests of the Government and of persons supplying labor or materials
in the prosecution of the work contemplated by this contract.
10. FEDERAL, STATE, AND LOCAL TAXES (ASPR 11-401.1)
(a) As used throughout this clause, the term "tax inclusive date" means
the date of negotiated contracts and the date set for the opening of bids
for contracts entered into through formal advertising. As to additional
FP or PR
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supplies or servicca procured by modification to this contract, the term
"tax inclusive date" means the date of such modification.
(b) Except as may be otherwise-provided in this contract, the
contract price includes all Federal., State, and local taxes and duties
in effect and applicable to the co4tr^ct on the tax inclusive date, except
taxes,(other than Federal transportation taxes) from which the Government,
the Contractor, or the transactions or. property covered by this contract
arc then exempt. Unless specifically excluded, duties are included in
the contract price, and, if freight is included in the contract price,
Federal transportation taxes are likewise included.
(c) (1) If the Contractor is required to pay or bear the burden
(i) of any tax or duty, which either was not to be included in the
contract price pursuant to the requirements of paragraph (b) or was
specifically excluded from the contract price by a provision of this
contract; or
(ii) of an increase in rate of any tax or duty, whether or not such
tax or duty was excluded from the contract price; or of any interest or
penalty thereon, the contract price shall be correspondingly increased;
PROVIDED, that the Contractor warrants in writing that no amount for such
tax, duty, or rate increase was included in the contract price as a contin-
gency reserve or otherwise; and PROVIDED further that liability for such
tax, duty, rate increase, interest, or penalty tax,vae nQt incurred through
the fault or negligence of the Contractor or its failure to follow instruc-
tions of the Contracting Officer.
(2) If the Contractor is not required to pay or bear the burder, or
obtains a refund or drawback, in whole or in part, of any tax, duty,
interest, or penalty which (i) was to be included in the contract price
pursuant to the requirements of paragraph (b), (ii) was included in the
contract price, or (iii) was the basis of an increase in the contract
price, the contract price shall be correspondingly decreased or the amount
of such relief, refund, or drawback shall'be.paid to the Government, as
directed by the Contracting Officer. The contract price also shall be
correspondingly decreased if the Contractor, through its fault or negli-
gence or its failure to follow instructions of the Contracting Officer,is
required to pay or bear the burden, or does not obtain a refund or draw-
back.of any such tax, duty, interest, or penalty. Interest paid or credited
to the Contractor incident to a refund of taxes shall inure to the benefit
of the Government to the extent that such interest was earned aftor the
Contractor was paid or reimbursed by the Government for such taxes.
(3) Invoices or vouchers covering any adjustment of the contract price
pursuant to this paragraph (c) shall set forth the amount thereof as a
separate item and shall identify the particular tax involved,.
(4) Nothing in this paragraph,(c) shall be applicable to social
security taxes; net income taxes; excess profit taxes; capital stock taxes;
Federal transportation taxes, except changes in the rate thereof, in-
cluding repeal; pertaining to shipments from the Contractor to the
FP or PR
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" taxes, except those levied on or measured by the contract or sales price
of the services or completed supplies furnished under this contract,
including gross income taxes, gross receipts taxes, sales and use taxes,
excise taxes, or franchise or occupation taxes measured by sales or
receipts from sales.
Government; unemployment compensation taxes; or any State and local
(5) No adjustment of less than $lQO shall be made in the contract
price pursuant to this paragraph.
(d) Unless there does not exist any reasonable basis to sustain an
exemption, the Government agrees upon request of the Contractor, without
further liability except as otherwise provided in this contract to
furnish evidence appropriate to establish exemption from (i) any Federal
tax, which the Contractor warrants in writing was excluded from the
contract price, or (ii) any State or local tax; PROVIDED that evidence
appropriate to establish exemption from duties will be furnished, and
Government bills of lading will be issues' only at the discretion of the
Contracting Officer, In addition, the Contracting Officer may furnish
evidence appropriate to establish eemption;frcm any tax that may,
pursuant to this clause, give rise ~o either an increase or decrease in
the contract price.
(e)(1) The Contractor shall pro}nptly notify the Contracting Officer
of all matters pertaining to Federal, State, and 'Local taxes and duties
that reasonably may result in either an increase or decrease in the
contract price.
(2) Whenever an increase or decrease in the contract price may be
required under this clause, the Contractor shall take action as directed
by the Contracting Officer, and the contract urice shall be equitably
adjusted to cover the costs of such action, including any interest, pen-
alty, and reasonable attorney's fees.
11. DEFLULT (ASPR 7--103.11)
;(a) The Government may, subject to the provisions of paragraph (c)
below, by written notice of default to the Contractor, terminate the
whole or any part of this contract in any one of the following circum-
stances:
j i)If the Contractor fails to make delivery of the supplies or to
perform the services within the time specified herein or any extension
thereof; or
(ii) if the Contractor fails to perform any of the other provisions
of this contract, or so fails to make progress as to endanger performance
of this contract in accordance with its terms, and in either of these two
circumstances does not cure such failure within a period of 10 days (or
such longer period as the Contracting Officer may authorize in writing)
after receipt of notice from the Contracting Officer specifying such
failure.
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(b) In the event the Goverrunent terminates this contract in whole or
in part as provided in paragraph (a) of this clause, the Government may
procure, upon such terms and in such manner as the Contracting Officer
may deem appropriate, supplies or pervices similar to those so terminated,
and the Contractor shall be liable to the Government for any excess
costs for such similar supplies or'services: PROVIDED, That the Con-
tractor shall continue the performance of this contract to the extent
not terminated under the provisions of this clause.
(c) Except with respect to defaults of subcontractors, the Con-
tractor shall not be liable for any excess costs if the failure to
perform the contract arises out of causes beyond the control and without
theifault or negligence of the Contractor. Such causes may include, but
are not restricted to, acts of God or of the public enemy, acts of the
Government in either its sovereign or contractual capacity, fires, floods,
epidemics, quarantine restrictions, strikes, freight embargoes, and u
unusually severe weather; but in every case the'failure to perform must
be beyond the control and without the fault or negligence of.the
Contractor. If the failure to perform is caused by the default of a
subcontractor, and if such default irises out of pauses beyond the control
of both the Contractor and subcontractor, and -tithout the fault or
negligence of either of them, the Contractor shall not be liable for any
excess costs for failure to perform, unless the supplies or services to
be furnished by the subcontractor were obtainable from other sources in
sufficient time to permit the Contractor to meet the required delivery
schedule.
(d) If this paragraph (a) of this clause, the Government, in addition
to any other rights provided in this.clause, may require the Contractor to
transfer title and deliver to the G~;hrnment, in the manner and to the
extent directed by the Contracting Officer, (i) any completed supplies, and
(ii) such partially completed supplies and materials, parts, tools, dies,
jigs, fixtures, plans, drawings, information and contract rights (herein-
after called "manufacturing materials") as the Contractor has specifi-
cally produced or specifically acquired for the performance of such part
of this contract as has been terminated; and the Contractor shall, upon
direction of the Contracting Officer, protect and preserve property in
possession of the Contractor in which the Government has an interest,
fl Payment for completed supplies delivered to and accepted by the Government
shall be at the contract price. Payment for manufacturing: materials
delivered to and accepted by the Government and for the protection and
preservaticn of property shall be in an amount agreed upon by the Con-
tractor and Contracting Officer; failure to agree to such amount shall be
a dispute concerning a question of fact within the meaning of the clause
of this contract entitled "Disputes."
(e) If, after notice of termination of this contract under the
provisions of paragraph (a) of this clause, it is determined that the
failure to perform this contract is due to causes beyond the control and
without the fault or negligence of the Contractor or subcontractor pur-
suant to to-the provisions of paragraph (c) of this clause, such notice of
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default shall he deemed to have been issued pursuant to the clause of
this contract entitled "Termination for Convenience of the Government,"
and the rights and oblitations of the parties hereto shall in such event
be governed by such clause. Except as otherwise provided in this contract,
this paragraph (e) applies only'f this contract is with a military
department
(f) The rights and remedies of the Government provided in this
clause shall not be exclusive and Are in addition to any other rights
and remedies provided by law or under this c ontra.ct.
12. DISPUTES (ASPR 7-103912)
(a) Except as otherwise provided in this contract, any dispute
concerning a question of fact arising under this contract which is not
disposed of by agreement shall be decided by the Contracting Officer,
who shall reduce his decision to writing and mail or otherwise furnish
a copy thereof-to the Contractor. The decision of the Contracting Officer
shall',be final and conclusive unless] within 30 days from the date of
receipt of such copy; the Contractor mails or otherwise furnishes to
the Contracting Officer a written ap;)eal addressed to the Secretary. The
decision of the Secretary or his duly authorized representative for the
determination of such appeals shall be final and conclusive unless
determined by- a court of competent jurisdiction to have been fraudulent,
or capricious, or arbitrary, or so grossly erroneous as necessarily to
imply bad fiath, or not supported by substantial evidence. In connection
with any ai-)ieal proceeding under thip clause, the Contractor shall be
afforded an opportunity to be heard and to offer evidence in support of
its ap)eal. Pending final decision of a dispute hereunder, the Contractor
shall ;.proceed diligently, with the performance of the contract and in
accordance with the Contracting Officer's decision.
(b) This "Disputes" clause does not preclude consideration of law
questions in connection with decisions provided for in paragraph (a) above:
PROVIDED,'.That_nothing in this contract shall be construed as making final
the decision of any administrative official, representative, or board
on a question of law.
13. SOVIET CONTROLLED AREI''S (ASPR 6-403)
(a) The Contractor shall not acquire for use in the performance
of this contract any supplies or services originatin? from sources within
Soviet-controlled areas, as listed in the Schedule of this contract, ar
from Hong Kong or Macao, without the written api~~roval of the Contracting
Officer.
(b) The contractor agrees to insert the provisions of this clause,
including the Soviet-controlled areas listed in the Schedule and this
subparagraph (b), in all subcontracts hereunder.
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14. EIGHT-HOUR LAG,I OF 1912 (ASPR 12-303.1)
This contract, to the extent that it is of a character specified in
the Eight-Hour Law of 1912 as amended (40 U. S. Code 324-326) and is not
covered by the Walsh-Healy Public Contracts Act (41 U. S. Code 35-Li5),
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 comtemplated by
this contract, in the employ o -,.the..Contractor or any subcontractor con-
tracting for any part of the said work contemplated, shall be required
or permitted to work more thaneight hours in any one calendar day upon
such work, except upon the condition that compensation is paid to such
laborer or mechanic in accordance with the provisions of this clause.
The wages of every laborer and mechanic employed by the Contractor or
any subcontrr.ctor engaged in the performance of this contract shall be
computed on a basic day rate of eight hours per day; and work in excess
of eight hours per day is permitted-only upon the dbidition that every
such laborer and mechanic shall be compensated for all hours worked in
excess of eight hours per day at not less than one and one-half times
the basic rate of pay. For each violation of the requirements of this
clause a penalty of five dollars shall be imposed for each laborer or
mechanic for every calendar day in Which such employee is required or
permitted to labor more than eight sours upon said work without receiving
compensation computed in accordance. with this clause, and all penalties
thus imposed shall be withheld for the use and benefit of the Government.
15. WALSH-HEALY PUBLIC CONTRACTS ACT (APR 12-604 mod)
If this contract is for the manufacture of furnished of materials,
supplies, articles or equipment in an amount which exceeds or may exceed
$10,000 and is otherwise subject to theWalsh-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, "except that the Contractor shall not be required
to include this clause in subcontracts issued hereunder when the
inclusion of this clause in a subcontract would jeopardize or conflict
with the security considerations established in connection with this contract.
16. NONDISCRT ITNATION IN E IPLOYNENT (ASPR 12-802 mod)
(a) In connection with the performance of work under this contract the
Contractor agrees not to discriminate against any employee or applicant
for employment because of race, religion, color, or national origin. The
aforesaid provision shall include, but not be limited to, the following:
employment, upgrading, demotion/or transfer; recruitment or recruitment
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advertising, layoff or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship.
The Contractor agrees to post hereafter in conspicuour places, available
for employees and applicants for employment, notices to be provided
by the Contracting Officer sett.ng:forth the provisions of the
nondiscrimination clause.
(b) The Contractor further agrees to insert the foregoing provision
in all subcontracts hereunder,,cxcept subcontracts for standard com-
mercial supplies or raw materiais,"and except as insertion of the fore-
going provision in a subcontract would jeopardize or conflict with the
security considerations established in connection with this contract."
17. OFFICI='iLS NOT TO BENEFIT (ASPR 7-103.19)
No member of or delegate to Congress or resident commissioner, shall
be admitted to any share or part of this contract, or to any benefit that
may arise therefrom; but this provision shall not be construed to expend
to this contract if mead with a corporation for its general benefit.
18. COVENANT AGAINST CONTL'IGEN!T FEtlS (ASPR 7-103,20)
The Contractor warrants that no person or selling agency has been
employed or retained to solicit or secure this contract upon an agreement
or understanding for a commission, percentage, brokerage, or contingent
fee, excepting bona fide employees or bona fide established commercial
or selling agencies maintained by the Contractor for the purpose of
securing business. For breach or violation of this warranty the Government
shall have the right to annul this contract without liability or in its
discretion to deduct from the contract price or consideration, or otherwise
recover, the full amount of such cominiss ion, percentage, brokerage, or
contingent fee.
19. TERMINATION FOR CO_NENIENCE OF TIC GOVERNMENT (ASPR 8-701)
(a) The performance of work under this contract may be terminated by
the Government in accordance with this clause in whole, or from time to
time in part, whenever the Contracting Officer shall determine that such
termination is in the best interests of the Government. Any such
termination shall be effected by delivery to the Contractor of a Notice
of Termination specifying the extent to which performance of work under
the contract is terminated, and the date upon which such termination be-
comes effective.
(b) After receipt of a Notice of Termination, and except as other-
wise directed by the Contracting Officer., the Contractor shall (1) stop
work under the contract on the date and to the extent specified in the
Notice of Termination; (2) place no further orders or subcontracts for
materials, services, or facilities except as may be necessary for completion
of such portion of the work under the contract as is not terminated;
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(3) terminate all orders and subcontracts to the extent that they relate
to ther performance of work terminated.- ,by the Notice of Termination;
(4) assign to the Government,in the manner, at the times, and to the
extent directed by the Contracting Officer, all of the right, title and
interest of the Contractor under the oiders and subcontracts so terminated,
in which case the Government shall have the right, in its discretion, to
settle or pay any or all claims arising out of the termination of such
orders and subcontract; (5) settle all outstanding liabilities and all
claims arising out of such termination:of orders and subcontracts, with
the approval or ratification of the Contracting Officer, to the extent
he may require, which approval, or ratification shall be final for all
the purposes of this clause; (6) transfer titled and deliver to the Govern-
ment, in the manner, at the times, and to the extent, if any, directed by
the Contracting Officer, (i) the fabricated or unfabricatec: parts, work in
process, completed work, supplies, and other material produced as a part of,
or acquired in connection with-the performance of, the work terminated by
the Notice of Termination, and (ii) the completed or partially completed
plans, drawings, information, and other property which, if the contract had
been completed, would have been required to be furnished to the Government;
(7) use its best efforts to sell, in the manner, at the times, to the
extent, and at the price or prices directed or authorized by the Contracting
Officer, any property of the types referred to in provision (6) of this
paragraph, PROVIDED, however, that the Contract (i) shall not be required
to extend credit to any purchaser, and (ii) may acquire any such
property under the conditions prescribed by and at a price or prices
approved by the Contracting Officer; and provided further that the proceeds
of any such transfer or disposition`shall be applied in reduction of any
payments to be made by the Government to the Contractor under this Contract
or shall otherwise be credited to the price or cost of the work covered by
this contract or paid in such other manner as the Contracting Officer may
direct; (8) complete performance of such part of the work as shall not have
been terminated by the Notice of Termination; and (9) take such action as
may be necessary, or as the Contracting Officer may direct, for the pro-
tection and preservation of the property related to this contract which
is in the possession of the Contractor and in which the Government has or
may acquire an interest. At any time after expiration of the plant
clearance period, as defined in Section VIII, Armed Services Procurement
Regulation, as it may be amended from time to time, the Contractor may
submit to the Contracting Officer a list, certified as to quantity and
quality, of any or all items of termination inventory not previously dis-
posed of, exclusive of items the disposition of which has been directed or
authorized by the Contractin?. Officer, and may request the Government to
remove such items or enter into a storage agreement covering them. Not
later than fifteen (15) days thereafter, the Government will accept title
to such items and remove them or enter into a storage agreement covering
the same, PROVIDED that the list submitted shall be subject to verification
by the Contracting Officer upon removal of the items, or if the items are
stored, within forty-five (45) days from the date of submission of the list,
and any necessary adjustment to correct the list as submitted shall be made
prior to final settlement.
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(c) After receipt of a Notice of Termination, the Contractor shall
submit to the Contracting Officer its termination claim, in the form and
with the certification prescribed by, the Contracting Officer. Such claim
shall be submitted promptly but in`no event later than two years from the
effective date of termination, unless one or mare extensions in writing
are granted by the Contracting Officer; upon request of the Contractor
made'in writing within such?two-year period or authorized extension thereof.
However, if the Contracting Officer determines that the facts justify
such action, he may receive and act upon any such termination claim at any
time after such two-year peiod or any extension .thereof. Upon failure
of the Contractor to submit its termination claim within-the time allowed,
the Contractin?, Officer may determine, on the basis of information
available to him, the amourt3 if any, due to the Contractor by reason of
the termination and shall thereupon pay to the Contractor the amount so
determined.
(d) Subject to the provisions of par.agragh (c), the Contractor and
the Contracting Officer may agree upon the whole or any part of the amount
or amounts to be paid to the Contractor by reason of the total or partial
termination of work pursuant to this clause, which amount or amounts
may include a reasonable allowance for profit on work done. The contract
shall be amended accordingly, and the Contractor shall be paid the agreed
amount. Nothing in paragraph (e) of this clause, prescribing the amount
to be paid to the amount to be paid to the Contractor in the event of
failure of the Contractor and the Contracting Officer to agree upon the
whole amount to be paid to the Contractor by reason of the termination of
work pursuant to this clause, shall, be deemed to limit, restrict, or
otherwise determine or affect the amount or amounts which may be agreed
upon to be paid to the Contractor pursuant to this paragraph (d).
~e) In the event of the failure of the Contractor and the Contracting
Officer to agree as provided in paragraph (d) upon the whole amount to be
paid to the Contractor by reason of the termination of work pursuant to
this clause the Contracting Officer shall determine, on the basis of in-
formation available to him, the amount, if any, due to the Contractor by
reason of the termination and shall pay to the Contractor the amounts
determined as follows:
(1) For completed supplies accepted by the Government (or sold or
acquired as provided in paragraph (b) (7) above) and not theretofore paid
for, a sum equivalent to the aggregate price for such supplies computed in
accordance with the price or prices specified in the contract, appropri-
ately adjusted for any saving of freight or other charges;
k2) The total of--
(i) The costs incurred in the performance of the work terminated,
including, initial costs and preparatory expense allocable thereto, but
exclusive of any costs attributable to supplies paid or to be paid for
under paragraph (e) (1) hereof;
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(ii) The cost of settling and paying, claims arising out of the
termination of work under subcontracts or orders, as provided in
paragraph (b) (5) above, which are properly chargeable to the terminated
portion of the contract (exclusive`of amounts paid or payable on account
of supplies or materials delivered or services furnished by subcontractors
or vendors prior to the efective date of the Notice of Termination,
which amounts shall be included in the-costs payable under (i) above).
(iii) A sum equal to 2% of that part of the amount determined under
.(i) which represents the cost of articles and materials not processed by
the Contractor, plus a sum equal to 8% of the remainder of such amount
but the aggregate of such sums shall not exceed 6% of the amount determined
under subdivision (i) above which'amourit,for the purpose of this sub-
c'ivision (iii) shall exclude any charges for interest on borrowings;
provided, however, that if it appears that the Contractor would have
sustained a loss on the entire contract had it been completed, no profit
shall be included or allowed under this subdivision (iii) and an appropri-
ate adjustment shall be made reducing the amount of the settlement to
reflect the indicated rate of loss.``
(3) The reasonable costs of settlement including accounting, legal,
clerical, and other expenses reasonable necessary for the preparation
of settlement claims and supporting data with respect to the terminated
portion of the contract and for the termination and settlement of sub-
contracts thereunder, together with reasonable storage, transportation,,
and other costs incurred in connect~on with the protection or disposition
of property allocable to this contract.
The total sum to be paid to the Contractor-under (1) and (2) of this
paragraph (e) shall not exceed the total contract price as reduced by the
amount of payments otherwise made and as further reduced by the contract
price of work not terminated. Except for normal spoilage, and except to.
the extant that the Government shall have otherwise expressly assumed the
risk of loss, there shall be excluded from the amounts ay-able to.the Con-
tractor as provided in paragraph (e) (1) and paragraph e) (2) (i), the
fair value, as determined by the Contracting Officer, of property which
is destroyed, lost, stolen, or damaged so as to become undeliverable to the
Government,. or to a buyer pursuant to paragraph (b)(7).
(f) Any determination of costs under paragraph (c) or (e) hereof shall
be governed by the Statement of Principles for Consideration of Costs set
forth in Part 4 of Section VIII of the Armed Services Procurement Regulation,
as in effect on the date of this contract.
(g) The Contractor shall have the right of appeal, under the clause
of this contract entitled "Disputes," from any determination made by the
Contracting Officer under paragraphs (c) or (e) above, except that if the
Contractor has failed to submit its claim within the time provided in
paragraph (c) above and has failed to request extension of such time, he
shall have no such right of appeal. In any case where the Contracting
Officer has made a determination of the amount due under paragraph (co or (e)
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above, the Government shall pay to the Contractor the following: (i) if
there is no right of appeal hereunder or if no timely appeal has been
taken, the amount so determined by the Contracting Officer, or (ii)
if an appeal has been taken,.'the amount finally determined on such
appeal.
(h) In arriving at the-amount due the Contractor under this clause
there shall be deducted (1) Al unliquidhted advance or other unliquidated
payments on account theretofore }fade to the Contractor, (2) any claim
which the Government may have against the Contractor in connection with
this contract, and (3) the agreed price for, or the proceeds of sale of,
any materials, supplies, or other things acquired by the Contractor or
sold, pursuant to the provisions of this clause, and not otherwise re-
covered by or credited to the Government.
(i) If the termination hereunder be partial, prior to the settlement
of the terminated portion of this contract, the Contractor may file with
the Contracting Officer a request in writing for an equitable adjustment
of the price or prices specified in the contract relating to the continued
portion of the contract (the portion not terminated by the Notice of
Termination), and such equitable'acljustment as may be agreed upon shall be
made in such price or pi-ices.
(j) The Government may from time to time, under such terms and
conditions as it may prescribe, make partial payments and payments on
account against costs incurred by the Contractor in connection with the
terminated portion of this contract whenever inthe opinion of the Con-
tracting Officer the aggregate of such payments shall be within the amount
to which the Contractor will be entitled hereunder. If the total of
such payments is in excess of the amount finally agreed or determined to
be due under this clause, such excess shall be payable by the Contractor to
the Government upon demand, together with interest computed at the rate of
6% per annum, for the period from the date such excess payment is received
by the Contractor to the date on which such excess is repaid to the Govern-
ment; provided, however, that no interest shall be charged with respect to any
such excess payment attributable to a reduction in the Contractor's claim
by reason of retention or other disposition of termination inventory until
ten days after the date of such retention or disposition.
(k) Unless otherwise provided for in this contract, or by applicable
statute, the Contractor, from the effective date of termination and for
a period of six years after final settlement under this contract, shall
preserve and make available to the Government at all reasonable times at
the office of the Contractor but without direct charge to the Government,
all its books, records, documents, and other evidence bearing on the costs
and expenses of the Contractor under this contract and relating to the
work terminated hereunder, or, to the extent approved by the Contracting
Officer, photographs, micro-photographs, or other authentic reproductions
thereof.
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20. AUTHORIZATION AND CONSENT (ASPR 9-102.1)
The Government hereby gives its authorization and consent (without
prejudice to its rights of indemnification, if such rights are provided
for in this contract) for all use.. and manufacture, in the performance of
this contract or any part hereof or any amendment hereto or any subcontract
hereunder (including any lower-tier subcontract), of any patented invention
(i) embodies in the structure or composition of any article the delivery
of which is accepted by the Government under this contract, or (ii)
utilized in the machinery, tools, or methods the use of which necessarily
results from compliance by the Contractor or the using subcontractor with
(a) specificstions or written provisions now or hereafter forming a part
of this contract, or (b) specific. written instructions given by the
Contracting Officer directing the manner of performance. The Contractor's
entire liability to the Government for patent infringement shall be
determined solely by the provisions of the indemnity clause, if any,
included in the contract and the Government assumes liability for all other
infringement to the extent of the authorization and consent hereinabove
.granted.
21. NOTICE AND ASSISTANCE REGARDING PATENT I!`-FRINGEI ENT (ASPR 9-104)
The provisions of this clause shall be applicable only if the amount
of this contract is in excess of ?5,000,
(a) The Contractor shall report to the Contracting Officer, promptly
and in reasonable written ,?etail, each notice or claim of patent infringe-
ment based on the performance of this contract of which the Contractor
has knowledge.
(b) In the event of litigation against the Government on account of
any claim of patent infringement,-,arising out of the performance of this
contract or out of the use of any supplies furnished or work or services
performed hereunder, the Contractor shall furnish to the Government, upon
request, all evidence and information in possession of the Contractor
pertaining to such litigation. Such evidence and information shall be
furnished at the expense of the Government except in those cases in which
the Contractor has agreed to indemnify the Government against the claim
being asserted.
22. BUY AMERICAN ACT (ASPR 6-104.5)
(a) In acquiring end products, the Buy American Act (4l U. S. Code
10 a..d) provides that the Government give preference to domestic source
end products. For the purpose of this clause:
(i) noomponents" means those articles, materials; ?and' sujalies, tthich
are directly incorporated in the end products;
(ii) "end products" means those articles, materials, and supplies,
which are to bce acquired under this contract for public;and
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an urmanufactUred
(iii) a "domestic source end prcd~:.cttt means
ei ' n
end product which has been min&I or prduce... in the United Stagy s ?nd
of the
an end manufactured in the LTrited_ States if the cost o
product
co-rm:ponezits thereof which are mined, produced, or manufactured in the For
United States exceeds 50 percent of the cost of all its components.
e purposes of this (a) (iii) (B), components of foreign origin of the same
hp,,~ ? Ji~"of this
type or k nd as the products referred to: in (b) (7_i) or (i-
clause shall be treated as components mined, produced., or manufactured in
the United States.
(b) The Contractor agrees that there will be delivered under this
contract only domestic source end ,products, except end products:
(1) uhic~. are for use outside the United States;
which the Government determines are not mined, p=roduced, or
manufactured in the United States in sufficient and reasenab'-y available
commercial quantities and of a satisfactory quality;
as to which the Secretary determines the domestic preference
to be incon.sisten:t with the public interest; or
(iv) as to which the Secretary determines the cost to the
Government to be unreasonable.
236 FILING OF PATENT APPLICATIONS (t':SPR 9-106)
(a) Before filing or causing to be filed a patent application disclosing
any subject matter of this contract, which subject matter is classified
"Sedret" or higher) the Contractor shall, citing the th? ty (3) day
provision below, transmit the proposed application to the Contracting
Officer for determination whether, for reasons of national security, such
application should. be placed under an order of secrecy or sealed in
accordance with the provisions of 35 Ut S. Code 181-188 or the issuance
of a patent should be otherwise delayed under pertinent statutes or
regualtions; and the Contractor shall observe any instructions of the Con-
tractin?_: Officer with r espect to the manner of delivery of the patent
application to the U,; S, Patent Officer for filing, but the Contractor
shall not be denied the right to file such patent application. If the
Contracting Officer shall not have given any such instructions within
thirty (30) days from the date of mailing or other transmittal of the
proposed application, the Contractor may file the applications
(b) The Contractor shall furnish to the Contracting Officer, at the time
of or prior to the time when the Contractor files or causes to be filed a
patent application disclosing any subject matter of this c ontrac t, which
s~-ubject matter is classified "Confidential" a copy of such application for
determination whether, for reasons of national security, such application
should be placed under an order of secrecy or the issuance of a patent
should be otherwise delayed under pertinent statutes or regulations,,
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(c) In filing any patent plication coming .within the scope of
this clause, the Contractor shall cbserv all applicable security
:'egulations covering the transmission of classified subject matter...
2L.0 PATENT RIGHTS (1!.SPR 9-107.1)
(a) 1--s used in. this clause, the following terms shall have the ireaniin?.s
set forth below-.
(i) The term "Subject Invent on"-means by invention, improvement,
or discovery (whether or not patenable) conceived or first actually
reduced to practice either
(e) in the performance of the experimental, developmental, or research
work called for or required under this contract: or
(B) in the performance of any experimental, developmental, or
research work relating to the subject "natter of this contract which was
done upon an understanding in writing that a contr,_.ct would be awarded;
PR0VT0'J that the term "Subject Invention" shall not include any invention
which is specifically identified ,nd=~listed in the Schedule for the
purpose of excluding it from the license granted. by this clauses
(ii) The term "Technical Personnel" means any person employed by or
working under contr :ct with the Contractor (other than a subcontractor
whose responsibilities with respect to rights accruing. to the Government
in inventi:'ns arising under subcontracts set forth in (g), (h), and (i)
below)- who, by reason of the nature of his duties in connection with the
performance of this contract, would reasonably be expected to make inventions.
(iii) The terms "subcontract" and "subcontractor" mean any subcontract
or subcontractor of the Contractor, and any lower-tier subcontract or
subcontractor under this contract.
(b)(1) The Contractor agrees to and does hereby gr:nt to the
Government irrevocable, nonexclusive, nontransferable, and royalty-free
license to practice, and. cause to be practiced by or for the United States
Government throughout the world, each Subject Invention in the manufacture,
use and disposition according to law, of any article or material, and in
the use of any method. No license granted herein shall convey any right
to the Government to manufacture, have manufactured, or use any Subject
Invention for the purpose of providing services or supolles to the general
public in competition with the Contractor or the Contractor's ccmmercial
licenses in the license fields.
(2) With respect to:
(i) any Shhject 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
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(iii) the practice of-any Subject Invention in foreign countries;
the obligation of the 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 ccnvey foreign tights as provided in (e) below, shall be limited
to the extent of the Contractor's right to grant the same without incurring
any obligation to pay royalties or other compensation to others solely
on account of said grant. Nothing contained in this Patent Rights
clause shall be deemed to grant any license under any invention other
than a Subject Invention.
(c) The Contractor shall furnishc. to the Contracting Officer the
following information and reports concerning Subject Inventions which
reasonably appear to be patentable.
(i) a written disclosure promptly after conception or first actual
reduction to practice of each such Invention together with a written state-
ment specifying whether or not a United States patent application claiming
the Invention has been or will be filed by or on behalf of the Contractor;
(ii) interim reports, at least every twelve months, commencing with
the date of this contract, each listing all such Inventions conceived or
first actually reduced to practice more than three months prior to the
date of the report, and not listed on a prior interim report9 or certifying
that there are no such unreported Inventions; and
(iii) prior to final settlement of this contract, a final report
listing all such Inventions including all those previously listed in
interim reports.
(d) In connection with each Subject Invention referred to in
(c)(i) above, the Contractor shall do the following:
(i) if the Contractor specifies that a United States patent
application claiming such Invention will`Hbe filed, the Contractor shall
file or cause to be filed such application in due form and time; however,
if the Contractor, after having specified that such an application would
be filed, decides not to file or cause to be filed said application, the
Contractor shall so notify the Contracting Officer at the earliest practica-
ble date and in any event not later than eight months after first publica-
tion, public use or sale.
(ii) if the Contractor specifies that a United States patent appli-
cation claiming such Invention has not been filed and will not be filed
(or having specified that such an application will be filed thereafter
notifies the Contracting Officer to the contrary), the Contractor shall:
(A) inform the Contracting Officer in writing at the earliest
practicable date of any publication of such invention made by or known to
the Contractor or, where applicable, of any comtemplated publication by
the Contractor, stating the date and identity of such publication or
comtemplated publication; and
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(B) convey to the Government the Cont?c.ctcr's entire right, titles, and
interest in such invention by cde_ivering,- to the Contracting Officer upon
written request such duly executed instruments (prepared by the Government)
of assignment and a-!)1licat-J_on, and such other papers as are deemed
necessary to vest in the Government the Contractor's right, title, and
interest aforesaid, and the right to app? y for and prosecute patent
applications cove-ring such Invention throughout the world, subject, how-
ever, to the right the Contractor specified in (e) below to file
foreign applications, and subject further to the reservation of a non-
exclusive and rpyalty-.-free license to the Contractor (and to its
existing; and future associated and affiliated companies, if any, within
the corporate structure of which the Contractor i_s a part) which license
shall be assignable to the successor of that part of the Contractor's
business to which such Invention pertaips;
(iii) the Contractor shall furnish promptly to the Contracting Officer
on requres an irrevocable power of a l ttorney to inspect and make coPies of
each United States patent application filed by of on behalf of the
Contractor covering any such Invention;
(iv) In the event the Contractor,, or those other than the Government
derrivinz. rights from the Contractor, dlects not to continue prosecution of
any such United States patent application filed by or on behalf of the
Contractor, th-; Contractor shall so notify the Contracting Officer not less
than sixty days before the expiration cf the response period and, upx~n
written request, deliver to the Contracting Officer such duly executed
instruments (prepared by the Government) as are deemed necessary to vest
in the Government the Contractor's entire right, title, and interest in
such Invention and the application, subject to the reservation as
specified in (d) (ii) above; and
(v) the Contractor shall deliver to the Contracting Officer duly
executed instruments fully confirmatory of any license rights herein
agreed to be granted to the Government.
(e) The Contractor, or those other than the Government deriving
ri{_hts from the Contr~ector, shall have the exclusive rights to file
applications on Subject Inventions in each foreign country within:
(i.) nine months from the date a corresponding United States
application is filed;
(ii) six months from the date permission is granted to file foreign
applications where such fiLingg: had been prohibited for security reasons; or
(iii) such longer period as may be approved by the Contracting Officer.
The Contractor ',shall., upon written request of the Contracting Officer,
convey to the Government the Contractor's entire right, title, and interest
in each Subject Invention in each foreign country in which an application
has not been filed within the time above specified, subject to the
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reservation of a non-ex6lusive and royalty-free license to the Contractor
together with the right of the Contractor to grant sublicenses, which
license and right shall be assignable to the 'successor of that part of
the Contractor's business to which the Subject Invention pertains.
(f) If the Contractor failp to deliver to the Contracting Officer the
interim reports required by (c)(i.i) above, or fails to furnish the written
disclosures for all Subject Inventions required by (c)(i) above shown
to be due in accordance with any interim report delivered under (c)(ii)
or otherwise known to be unreported, there shall be withheld from payment
until the Contractor shall have corrected such failures either ten percent
(10%) of the amount of this contract, as from time to time amended, or
five thousand dollars (45,000).s whichever is less. After payment of eighty
percent (80%) of the amount of this contract, as from time to time amended
payment shall be withheld until a reserve of either ten percent (10%) of
such amount, or five thousand dollars ($5,000), whichever is less, shall
have been set aside, such reserv? cr.balance thereof to be retained until
the Contractor shall h-.ve furnished to the Contracting Officer:
(i) the final report required by (c) (iii) above;
(ii) written disclosures for all Subject Inventions required by (c)
(i) above which are shown to be due in accordance with interim reports
delivered under (c)(ii) above or in accordance with such final re-
ports or are otherwise known to be unreported; and
(iii) the information as to any subcontractor required by (h) below.
The maximum amount which may be withheld under t his paragraph (f) shall
net exceed ten percent (10%) of he amount of this contract or five
thousand dollars ($5,000), whichever is less, and no amount shall be
withheld under this paragraph (f) when the amount specified by this
paragraph (f) is being withheld under other previsions of this contract.
The withholding of any amount or subsequent payment thereof to the
Contractor shall not be construed as a waiver of any rights accruing to
the Government under this contract. This paragraph (f) shall net be
construed as requiring the Contractor to withhold any amounts from a
subcontractor to enforce compliance with the patent provisions of a sub-
contract.
(g) The Contractor shall exert all reasonable effort in negotiating
for the inclusion of this Patent Rights clause in any subcontract hereunder
of three thousand dollars ($3,000) or more having experimental, developmen-
tal, or research work as one of its purposes. In the event of refusal
by a subcontractor to accept the Patent Rights clause, the Contractor shall
not proceed with the subcontract without written authorization of the
Contracting Officer, and upon obtaining such authorization, shall cooperate
with the Government in the negotiation with such subcontractor of an
acceptable patent rights clause; PROVIDED, however, that the Contractor
shall in any event require the subcontractor to grant to the Government
patent rights under Subject Inventions of no less scope and on no less
favorable terms than those which the Contractor has under such subcontracts,
except that in no event shall the subcontractor be required to grant to the
Government patent rights in excess of those herein agreed to be granted to
the Government by the Contractor.
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(h) The Contractor shall, at the earliest practicable date$ notify
the Contracting Officer in writing of any subcontract containing a patent
rights clause., furnish the Contracting Officer a copy of such clause, and
notify the Contracting Officer when such subcontract is completed. It is
understood that with respect to such subcontract clause, the Government
is a third party beneficiary, amd the Contractor hereby assigns to the
Government all the rights that the Contractor would have to enforce the
cubcontractcr's obligations for the benefit of the Government with respect
to Subject Inventions. The Contractor shall not be obli ated to enforce
-,he agreements of any subcontractor hereunder relating to Subject Inventions.
(i) When the Contractor shows that it has been delated in the
performance of this contract by reason of its inability to obtain in
a;cordance with (g) above a suitable patent rights clause from a qualified
subcontractor for any item or service required under this contract for
w:-.ich the Contractor itself does not have available facilities or qualified
personnel., the Contractor's delivery dates shall be extended for a period
of t ime equal to the duration of such delay; and, upon request of the
Contractor, the Contracting Officer 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 circumstances; and the contract shall be modified accordingly. If
the Contractor, after exerting all reasonable effort, is unable to obtain
a -qualified subcontractor as set forth above, the Contractor may submit
to the Contracting Officer a written request for waiver or modification
of the requirement that a suitable patent rights clause be included in the
subcontract.
Such request shall specifically state that the Contractor has used
all reasonable effort to obtain such qualified subcontractor, and shall
cite the waiver or termination provision hereinafter set forth. If.,
within thirty-give (35) days after the date of receipt of such request
for a waiver or modification of said requirement, the Contracting efficer
"fall fail to deny in writing such request, the requirement shall be
deemed to have been waived by the Government. If within such period the
Cc:itractor shall receive a written denial of such request by the Contracting
Oificer, this contract shall thereupon automatically terminate and the
rights and obligations of the parties shall be governed by the provisions
of the clause of this contract providing for termination for the convenience
of the Government.
25. REPORTING OF ROYALTIES (ASPR 9-110 mod.)
The provisions of this clause shall be applicable only if the amount
of the contract is in excess of $50,000.
(a) The contractor shall report in writing (in quadruplicate) to
the Contracting Officer as soon as practicable after execution of this
contract whether or not any royalties in excess of $250 have been paid or
are to be paid by the Contractor directly to any person or firm in connection
with the performance of this contract. If royalties in excess of $250 have
been paid or are to be paid to any person or firm, the report shall include
the following items of information with respect to such royalties (including
the initial $250)
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(1) The name and address of each licensor to whom royalties in excess
of ;250 have been paid or are to be paid,
42') The patent numbers, patent application serial numbers (with
filing dates), or other identification of the basis for such royalties,
(3) The manner of computing the royalties consisting of (i) a
brief identification of each royalty-bearing unit or process, (ii) the
total amount of royalties, and (iii) the percentage rate or dollars and
cents amount of royalties on each such unit or process; PROVIDED, that
if the royalties cannot be computed in terms of units or dollars and
cents value, then other data showing the manner in which the Contractor
c'Dmot.tes the royalties.
(
% b) In lieu of furnishing a report under paragraph Ca), the Con=
tractor may fu_u-nish a single, consolidated report for each accounting
period of the Contractor during: which the Contractor has contracts with
the C:overnrnent, provided the Contractor has requested and obtained the
prior written approval of the .......... Such consolidated report
shall be furnished, when the furnishing thereof has been approved, in
the nunber of copies as approved, as soon as practicable after the closb
of the accounting period covered by the report, Such consolidated report
shallbe made in accordance with Contractor's established accounting practice
and shall include, for the accounting period, the total amount of royalties
accruing to each licensor at a rate in excess of tivl,000 per annum on the
Contractor's over-all business, together with (i) the name and address
of each such licensor, (ii) th? patent numbers, patent application serial
numbers (with filing dates), or other identification of the basis for such
royalties, (iii) a brief description of the subject matter of the license
under which royalties are charged, (iv) the percentage rate or unit amount,
or if the royalties do not accrue by rate or unit amount, such other data
_-:,.owing the manner by which the royalties accrue to licensor, and (v) an
estimate or approximation (without detailed accounting) of the portion
of such royalties that may be attributable to Government contracts. The
Contractor shall, if requested by the Government, furnish at Government
e.c ense a more detailed allocation of such royalty payments attributable
t Government contracts.
(c) In the event that the Contractor requests written approval to
furnish consolidated reports under paragraph (b) above, the Contracting
Officer shall promptly consider the request and furnish to the Contractor
a letter stating whether.or not the request is approved and, notwithstanding
any;, such approval, the Contracting Officer shall have the right to question
aiy such subsequently furnished report at to accuracy or completeness of
data and ask for additional information, The Contractor shall furnish a
copy of such letter of approval to the Contracting Officer administering
this contract,
(d) After payment of eighty percent (80%) of the amount of this
contract, as from time to time amended, further payment shall be withheld
until a reserve of either (i) ten percent (10%) of such amount or (ii)
453000, whichever is less, shall have been set aside, such reserve or the
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balance thereof to be retained. until the Contractor shall have furnished
to the Contracting Officer the report called for by paragraph (a)hereof
or the copy of the letter approving the Contractorts request to furnish
the report under paragraph (b); PROVIDED, that no amount shall continue
to be withheld from payment for the causes specified in the paragraph (d)
if the Contracting Officer shall find that the Contractor has not been
furnished a letter as requite4"hy. paragraph (c) within a reasonable time
after making written request to submit a single, consolidated report under
the provisions of paragraph (b) of this clause; and PROVIDED further that
the Contracting Officer may, in his discretion, order payment to be with-
held in the amount and manner.:abq~re provided if the report called for by
paragraph (a) is unsatisfactory qr if the report called for by paragraph
(b) is due but has not been received, or if received, is found to be
unsatisfactory. No amount shall be withheld under this paragraph when
the minimum amount specified by this paragraph is being withheld under
other provisions of this contract. The withholding of any amount or
subsequent payment thereof to the Contractor shall not be construed as a
waiver of any right accruing to the Government under this contract4
26. RIGHTS IN DATA ' UNLIMITED (.SPR 9-203.1)
(a) The term "Subject Data" as used herein includes writings, sound
recordings, pictorial reproductions, drawings or other graphical repre-
sentations, and works of any similar nature (whether or not copyrighted)
which are specified to be delivered under this contract. The term does
not include financial reports, cost analyses and other information
incidental to contract administration.
(b) Subjedt to the proviso pf (c) below, the Government may duplicate,
use, and dis lose in any manner and for any purpose whatsoever, and have
others so do, all Subject Date delivered under this contract.
(c) The Contractor agrees to and does hereby grant to the Government,
and to its officers, agents, and Employees acting within the scope of
their official duties, a royalty-free, non-exclusive and irrevocable license
t'""?ro11ghout t`ie 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 contract but which is incor-
porated in the work furnished under t his contract such license shall be
only to the extent that the Cont--actor, its employees, or any individual or
concern specifically employed or assigned by the Contractor to originate and
prepare such Data under thiseontract, now has, or prior to completion or
final settlement of this contract may acquire, the right tog rant such
license without becoming liable to pay compensation to Mothers solely
because of such grant.
(d) The Contractor shall exert all reasonable effort to advise the
Contracting Officer, at the time of delivery of the Subject Date furnished
under this contract, 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 contract and not licensed under this
clause.
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(e) The Contractor shall report to the Contracting Officer, promptly
and in reasonable written detal, each notice or claim of copyright
infringement received by the Contractor with respect to all Subject
Data delivered under this contact.
(f) Nothing contained in: this clause shall imply a license to the
Government under any patent or'be construed as affecting the scope of
any license or other right otherwise granted to the Government under any
patent.
(g) The Contractor shall not affix any restrictive markings upon
any Subject Dats, and if such markings are affixed, the Government shall
.have the right at any time to modify, remove, obliterate or ignore any
such marking.
27. MILITARY SECURITY REQUIRKIENTS (ASPR 7-104.,12 )
(a) The provisions of this clause shall apply to the extent that this
contract involves access to security information classified "Confidential"
including "Condidential--Modified handling Authorized" or higher.
(b) The Government shall notify the Contractor of the security
classification of this contract and the elements thereof, and of any
subsequent revisions in such becurity classification, by the use of a
Security Requirements Check List (DD Form 254).
(c) To the extent the Government has indicated as of the date of
this contract, or thereafter indicates, security classification under this
contract as provided in paragrnpI (b) above, the Contractor shall safe-
guard all classified elements of this contract and shall provide and
maintain a system of security controls within its own organization in
accordance with the requirements of:
(i) the Security Agreement (DD Form 441), including the Department of
Defense :1ndustrial Security Manual for Safeguarding Classified Tformation
as in effect on date of this contract, and any modification to the
Security Agreement for the purpose of adapting the Manual to the Con-
tractor's business; and
(ii) any amendments to said Manual made after the date of this contract,
notice of which has been furnished to the Contractor by the Security Office
of the Military Department having security cognizance over the facility.
(d) Representatives of the Military Department having security cog-
nizance over the facility and representatives of the contracting Military
Department shall have the right to inspect at reasonable intervals the
procedures, methods, and facilites utilized by the Contractor in complying
with the security requirements under this contract. Should the Government,
through its authorized representative, determine that the Contractor has not
complied with such requirements, the Government shall inform the Contractor
in writing of the proper actions to be taken in order to effect compliance
with such requirements.
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(e) If, subsequent to the date of this contract, the security
classification or requirements under this contract are changed by the
Government as provided in this clause and the security costs under this
contract are thereby increased or decreased, the contract price shall be
subject to an equitable adjustment by reason of such increased or decreased
costs. Any equitable adjustment shall be accomplished in the same manner
as if such changes were directed under the "Changes" clause in this contract.
(f) The Contractor agrees to insert, in all subcontracts hereunder
which involve access to classified security information, provisions which
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paragraph (f) but excluding the lost sentence of paragraph (e) of this
c ~...c sC.
(g) The Conttactor also agrees that it shall determine that any
subcontrator propsed. by it for the furnishing of supplies and services
which will involve access to classified information n the Contractorts
c:uscody has been granted an appropriate facility security clearance, which
is still in effect, prior to being accorded access to such classified
information.
28. UTILIZATION OF SMALL BUSINESS CONCERNS (ASPR 7?-lOL lL)
Xa) It is the policy of the Government as declared by the Congress
that a fair proportion of the purchases and contracts for supplies and
services for the Government be placed with small business concerns?
(b) The Contractor agrees to accomplish the maximum amount of subcon-
tracting to small business concerns that the Contractor finds to be
consiste!r;; with the efficient performance of this contract.
29. EXAMINATION OF RECORDS (ASPR 7-104-15 mod.)
(a.) The Contractor agrees that the Contracting Officer or any of
his duly authorized representatives shall, until the expiration of three
':ars after final payment under this contract, have access to and the right
to examine any directly pertinent books, documents, papers and records of
the Contractor involving transactions related to this contract.
(b) The Contractor further agrees to include in all his subcontracts
hereunder a provision to the effect that the subcontractor agrees that
the Contacting Officer or any of his duly authorized representatives shall,
until the expiration of three years after final payment under the sub-
contract; have access to and the right to examine any directly pertinent
books, documents, papers, and records of such subcontractor involving
transactions related to the subcontr;jct. The term "subcontract" as used
in this clause excludes (i) purchase orders not exceeding X1,000 and
(ii) su'icontrects or purchase orders for public utility services at
rates established for uniform applicability to the general public.
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30. GRATUITIES (ASPR 7-104.16)
(a) The Government may, by written notice to the Contractor,
terminate the right of the Contractor to proceed under this contract
if it is found, after notice and hearing, by the Secretary or his duly
authorized representative, that gratuities (in the form of entertainment,
gifts, or otherwise) were offered or given by the Contractor, or any
agent or representative of the Contractor, to any officer or employee of
the Government with a view toward securing a contract or securing favorable
treatment with respect to the awarding or amending, or the making of
any determinations with respect to the performing of such contract;
PROVIDED, that the existence of the facts upon which the Secretary or
his da.ly authorized representative makes such findings shall be in
issue and may be reviewed in any competent court.
(b) In the event this contract is terminated as provided in paragraph
(a) hereof, the Government shall be entitled (i) to pursue the same
remedies against the Contr:-.etor as it could pursue in the event of a
breach of the contract by the Contractor, and (ii) as a penalty in addition
to any other damages to which it may be entitled by law, to exemplary
damages in an amount (as determined by the Secretary or his duly authorized
representative) which shall be not less than three nor more than ten times
the costs incurred by the Contractor in providing any such gratuities
to any such officer or employee.
(o) The rights and remedies of the Government provided in this
clause shall not be exclusive and are in addition to any other rights
and remedies provided by law or under this contract.
3' . CONVICT LABOR (ASPR 7-104.17)
In connection with the performance of work under this contract,
the Contractor agrees not to employ any person undergoing sentence of
'iriprisonment at hard labor.
32? NOTICE TO THE GOVERTMIENT OF LABOR DISPUTES.(ASPR 7-105.3)
Whenever the Contractor has knowledge that any actual or potential
labor dispute is delaying or threatens to delay the timely performance of
this contract, the Contractor shall immediately give notice thereof,
including all relevant information with respect thereto, to the Contracting
Officer.
33, MATERIEL INSPECTION AND RECEIVING REPORT (ASPR 7-105.7)
At the time of each delivery under this contract the Contractor shall
prepare and furnish to the Government, in the manner and to the extent
required by the Contracting Officer, a Materiel Inspection and Receiving
Report (DD Form 250 or comparable form). The government shall furnish
the required forms to the Contractor upon request.
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3t. SUBCONTRACTS (AFPI 7-4030)
No contract shall be made by the contractor with any other party
for furnishing any of the completed or-substantially completed articles,
spare pmts, or works herein contracted for, without written approval
of the Contracting Officer as:- to sources.
35. SUBCONTRACTS (AFPI 7-404.2)
If this contract provides for price redermination, the following
additional provisions shall apply to subcontracts:
(a) The Contractor shall give specific advance notification to
the Contracting Officer of any proposed subcontract hereunder which (1)
is on a cost or cost-plus-a-fixed-fee basis, or (2) is on a fixed-price
basis exceeding in dollar amount either t;v25,000 or five percent (5%)
of the total amount of this contract.
(b) The Contractor shall not, without the prior written consent of
Contracting Officer, place any subcontract which (1) is on a cost or cost-
plus-a-f ixed-fee basis, or (2) is on a fixed-price basis exceeding in
dollai amount either ~p25,000 or five (5%) of the total amount of this
contract or (3) 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 01,000,or (4) is on a time-and-material
or labor hour basis. The Contracting Officer may, in his discretion, ratify
in writing any such subcontract; such action shall constitute the consent
of the Contracting Officer as required by this paragraph (b).
(c) The Contractor agrees that no subcontract placed under this
contract shall provide for payment on a cost-plus-a-percentage-of-cost
basis.
(d) The Contracting Officer may, in his discretion, specifically
approve in writing any of the provisions of a subcontract. However, such
approval or the consent of the Contracting Officer obtained as required
by this clause shall not be construed to constitute a determination of the
acceptability of the subcontract price, unless such approval specifically
provides that it constitutes a determination of the acceptability of the
subcontract price.
(e) The Contracting Officer may approve all or any part of the
Contractor's purchasing system and from time to time rescind or reinstate
such approval. Such approval shall be, deemed to fulfill the requirements
for obtaining the Contracting Officer's consent to subcontracts as
prescribed in paragraph (b) above.
36. AIRCRAFT IN THE OPEN (ASPR lO-404)
(a) Subject to the definitions and limitations prescribed in this
clause, the Government assumes the risk of damage to or loss orcdestruction
of aircraft-, in the o en; PROVIDED. that such damage, loss, or destruction
is caused bar any of the following perils
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(i) Fire, lightning, windstorm, cyclone, tornado, hail; Explosion;
riot, riot attending a strike, civil commotion, vandalism and malicious
mischief; sabotage; aircraft qr objects falling therefrom; Vehicles
running on land or tracks, ex4luding vehicles owned or operated by the
Contractor or any agent or employee of the Contractor; smoke; earthquake
or volcanic eruption; flood, meaning thereby rising of a body of water;
hostile or warlike actioi,,;i.ncluding action in hindering, combating, or
defending against an actti,1t impending or expected attack by any government
or sovereign power (de jure or, de facto), or by any authority using military,
naval, or air forces, or by any agent of any such government, power,
authority, or forces; or
(ii) Other peril of a type not listed above, if such other peril is
customarily covered by insurance (or by a reserve for'self-insurance) in
accordance with the normal practice of the Contractor, or a prevailing
practice in the industry in which the Contractor is engaged with respect
to similar property.
(b) For purposes of this clause:
(i) The term "Aircraft" m?gns the aircraft to be furnished to the
Government under this contract, including complete aircraft; and aircraft
in the course of manufacture or rgodification, including engines, instru-
ments, subassemblies, parts, and equipment installed therein, or in
process of installation, and all uninstalled property withdrawn from
stores for installation in aircraft in the open or temporarily removed
from such aircraft, provided such uninstalled property is in the open.
(ii) The term "in the open'! means located wholly outside of
buildings or roofed structures,
(c) The Government's obligation under this clause shall extend only
to aircraft in the open under conditions approved by the Contracting Officer,
and shall not extend to the following.
(.i) loss, destruction, or damage resulting from failure Of the
Contractor, due to willful misconduct or lack of good faith of any of
the Contractor's managerial personnel, to maintain and administer a program
for the maintenance? repair, protection, and preservation of aircraft in
the open, in accordance with sound industrial practice. The term
"Contractor's managerial personnel" means the Contractor's directors, officers,
and any of its managers, superintendents, or other equivalent representatives
who have supervision or direction of all or substantially all of the
Contractor's business, or all or substantially all of the Contractor's
operation at any one plant or separate location at which this contract is
performed, or a spparate and complete major industrial operation in
connection with the performance of this contract;
(ii) loss, destruction or damage to aircraft in the possession or con-
trol of any subcontractor, except to the extent that the subcontract, with
the approval of the Contracting Officer and consistent with this clause,
may otherwise provide.
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r warrants that the dontract price does not and will
T
t
t
o
rac
he Con
(d)
not include any charge or reserve for insurance (including self-insurance
funds or reserves) covering damage to or loss or destruction of aircraft
f
s
in the open caused by any of_ the eerns set forth in paragraph (a)
(e) In the event of damage to or loss or destruction of aircraft
in the open, the Contractor shall take all reasonable steps to protect
such aircraft from further damage,, spparage damaged and undamaged aircraft,
D:Dut all aircraft in the best possible order, and furnish to the Contracting
Officer a statement of:
(i) the lost, destroyed, or damaged aircraft;
(ii) the time and origin of the loss, destruction, or damage;
(iii) all known interests in commingled property of which aircraft
in the open are a part;
(iv) the insurance., if any., covering any part of the interest in
such commingled property.
The Contractor shall be reimbursed for expenditures made by it in
performing its obligations under this paragraph, to the extent approved
by the Contracting Officer and this contract shall be modified in
writing accordingly.
(f) If prior to acceptance by and delivery to the Government any
aircraft in the open is lost, destroyed, or damaged due to any of the
perils set forth in paragraph (a) hereof, the Government may, u less
otherwise provided in this contract., elect to require that such aircraft
be replaced by the Contractor or restored by the Contractor to the condition
in which it was immediately prior to such damage, If the Government
requires the aircraft to be replaced or restored., an dquitable adjustment
shall be made in the amount due under this contract and in the time
required for its performance,, and this contract shall be modified in
writing accordingly. Alternatively, the Government may elect to terminate
this contract as to any such lost,, destroyed., or damaged aircraft, and
in that event the rights of the parties shall be as provided in the clause
entitled Termination for Convenience of the Government.
(g) In the event the Contractor is at any time reimbursed or com-
pensated by any third person for any damage to or loss or destruction of
any aircraft in the open caused by any peril set forth in paragraph (a)
hereof for which the Contractor has been compensated by the Government., it
shall equitably reimburse the Government. The Contractor shall do nothing
to prej'adice the GovernmentTs rights to recover against third parties for
any such loss., destruction or damage .nd, upon the request of the Contracting
Officer, shall at the Government's expense, furnish to the Government all
reasonable assistance and cooperation (including the prosecution of suit and
the execution of instruments of assignement or subrogation in favor of the
Government) in obtaining recovery.
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(h) Any loss or destruction of, or damage to, property furnished
by the Government will be governed by the clause of this contract
entitled "Government-Furnished: Property," to the extent that such clause
is, by its terms, applicable.:
(i) Any loss, or destruction of, or damage to, aircraft occurring
in connection with operations, of said aircraft will be governed by the
clause of this contract entities iikight Risk," to the extent that such
clause is, by its terms, applicable,
37. INSPECTION AND AUDIT (AFPI 7-?4023)
(a) The Contractor agrees that its books and records and its plants,
or such part thereof as may be engaged in the performance of"this contract,
shall at all reasonable times be subject to inspection and audit by
any authorized representative of the Department.
(b) The Contractor shall cause a like provision to be included
in all subcontracts hereunder.
38. GOVER 111ENT-"FURiNISHED PROPERTY (ASPR 13-502)
(a) The Government shall deliver to the Contractor, for use in
connection with and under the terms of this contract, the property described
in the Schedule or specifications.,', together with such related data and
information as the Contractor may request and as may reasonably be required
for the intended use of such property (hereinafter referred to as
"Government-furnished Property"). The delivery or performance dates for
the sup}lies or services to be furnished by the Contractor under-'this
contract are based upon the expectation that Government-furnished Property
suitable for use will be delivered;, to the Contractor at the times
stated in the Schedule or, if not so stated, in sufficient. time to enable
the Contractor to mdet such delivery or performance dates. In the event
that Government-furnished Property is not delivered to the Contractor by
such time or times, the Contracting Officer shall, upon timely writ-
request made by the Contractor, make a determination of the delay occasioned
the Contractor thereby, and shall equitably adjust the delivery or
pe?formance dates or the contract price, or both, and any other contractual
provisions affected by such delay, in accordance with the procedures
provided for in the clause of this contract entitled "Changes." In the
event the Government-furnished Property is received by the Contractor in
a condition not suitable for the intended use the Contractor shall, upon
receipt thereof, notify the Contracting Officer of such fact and, as directed
by the Contracting Officer, either (i) return such property at the Government's
expense or otherwise dispose of the property, or (ii) effect repairs or
modifications. Upon the completion of. (i) or (ii) above, the Contracting
Officer upon written request of the Contractor shall equitably adjust the
delivery or performance dates or the contract price, or both, and any other
contractual provisions affected by the rejection or disposition, or the
repair or modification, in accordance with the procedures provided for
in the clause of this contr ct entitled "Changes." The foregoing provisions
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for adjustment are exclusive and the Government shall not be liable to suit
for breach of contract by reason of any delay in delivery of Government-
furnished Property or delivery of such property in a condition not
suitable for its intended use.
(b) By notice in writing the Contracting Officer may decrease the
property furnished or to be furnished by the Government under this
contract,, In any such case, the Contracting Officer upon the written
of the Contractor shall equitably adjust the delivery or performance
Cates or the contract price, or both, and any other contractual pro-
visions affected by the decrease, in accordance with the procedures
provided for in the clause of this contract entitled "Changes."
(c) Title to the Government-furnished property shall remain in the
Government. Title to Government-furnished property shall not be affected
by the incorporation or attachment thereof to any property not owned by
the Government, nor shall such Government-furnished property, or any part
thereof, be or become a fixture or lose its identity as personalty by
reason of affixation to any realty. The Contractor shall comply with
the provisions of the "Manual for the Control of Government Property in
the Possession of Contractors" (Appendix B, Armed Services Procurement
Regulation) as in effect on the date of the contract, which Manual is
hereby incorporated by reference and made a part of this contract
(Rev. No. 33, 5/14/58.)
(d) The Government-furnished property shall, nuless otherwise
provided herein, be used only for the performance of this contract.
(e) The Contractor shall maintain and administer, in accordance
with sound industrial practice, a program for the maintenance, repair,
protection and preservation of Government-furnished property, until
disposed of by the Contractor in accordance with this clause. In the
event that any damage occurs to Government-furnished Property the risk
of which has been assumed by the Government under this contract, the
Government shall replace such items or the Contractor shall make such
repair of the property as the Government directs; provided, however, that
if the Contractor cannot effect such repair within the time required,
the Contractor shall dispose of such property in the manner directed by
the Cuntracting Officer, The contract price includes no compensation
to the Contractor for the performance of any repair or replacement for
which the Government is responsible, and an equitable adjustment will be
made in the contract price for any such repair or replacement of Government-
furnished property made at the direction of the Government. Any repair
or replacement for which the Contractor is responsible under the provisions
of this contract shall be accomplished by the Contractor at its own expense.
(f) (i) Except for loss, destruction,or damage resulting from a
failure of the Contractor, due to willful miscc)nduct or lack of good faith
of any of the Contractor's managerial personnel as defined herein, to
maintain and administer the program for the maintenance, repair, protection
and preservation of the Government-furnished property as required by
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paragraph (e) hereof, and except as specifically provided in c31use (s)
.. . . . . . . of this contract or in the clause or clauses of this
contract designated in the Schedule, the Contractor shall not be liable
for loss or destruction of or damage to the Government-furnished property
(A) caused by any peril while the property is in transit off the Contractor's
premises, or (B) caused by any of the following perils while the property
is on the Contractor's or subcontractor's premises, or an any other
premises where such property may properly be located, or by removal there-
from because of any of the following perils:
(I) Fire; lightning; windstorm, cyclone, tornado, hail; explosion;
riot, riot attending a strike, civil commotion; vandalism and malicious
mischief.; sabotage; aircraft or objects falling therefrom; vehicles running
on, land or tracks exclusng vehicles oUmed or operated by the Contractor
or any agent or employee of the Contractor; smoke; sprinkler leakage;
earthquake or volcanic eruption; flood, meaning thereby rising of a body
of water; hostile or warlike action, including action in hindering, combating,
or defending against an actual, impending or expected...att,zck by any
government or sovereign power (de jure or de facto), or by any authority
using military, naval, or air forces, or by an agent of any such government,
power,: authority, or forces; or
(ii) Other peril, of a type not listed above, if such other peril is
customarily covered by insurance (or by a reserve for self-insurance) in
accordance with the normal practice of the Contractor, or the prevailing
pract-4,ce in the industry in which the Contractor is engaged_ with repsect
to similar property in the some general locale.
The perils as set forth in (A) and (B) above are hereinafter called
"excepted perils."
This clause shall not be construed as relieving a subcontractor from
liability for loss or destruction of or damage to the Government-Furnished
property while in its possession or control, except to the extent that
tl-.e subcontract, with the prior approval of the Contracting Officer, may
p:-ovid.e for the relief of the subcontractor from such liability. In the
absence of such approval, the subcontract shall contain appropriate pro-
visions requiring the return of all Government-Furnished property in as
good condition as when received, except for reasrnable wear and tear or
for the utilization of the property in accordance with the provisions
of the prime contract.
The term "Contractor's managerial personnel" as used herein means
the Contractor's directors, officers and. any of its managers, superintendents,
? or other equivalent representatives who have supervision or direction of
(I) all or substantially all of the Contractor's business; (II)all or
substantially all of the Contractor's operation at any one plant or
separate location at which the contract is being performed; (III) a
separate and complete major industrial operation in connection with the
performance of this contract.
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(ii) The Contractor represents that it is not including in the price
hereunder, and agrees that it will not hereafter include in any price to
v
the Government, any charge or reserve f'o'r insurance (including self-
insurance funds or reserves) covering loss or destruction of or damage to
the Government-furnished property caused by any excepted peril,
(iii) Upon the happening of loss or destruction of or damage to any
Government--furnished property caused by an excepted peril, the Contractor
shall notify the Contracting Officer thereeof, and shall communicate with
the Loss and Salvage Organization, if any, now or hereafter,-.-designated
by the Contracting Officer, and with the assistance of the Loss and Sal-
vage Organization so designated (unless the Contracting Officer has
directe' that no such organization be employed), shall take all reasonable
steps to protect the Government-furnished property from further damage,
separate the damaged and undamaged Government-furnished property, put all
the Government-furni?hed property in the best possible order, and furnish
to the Contracting Officer a statement of: (A) the lost, destroyed and
damaged Government-furnished property (B) the time and origin of the loss,
destruction or damage, (C) all known interests in commingled property of
which the Government-furnished property is a part, and ;(D) the insurance,
if any, covering any part of or interest in such commingled property, The
Contractor shall be reimbursed for the expenditures made by it in performing
its obligations under this subparagraph (iii) (including charges made to
the Contractor by the Loss and Salvage Organization, except any of such
the payment of which the Government has, at its option, assumed directly),
to the extent approved by the Contracting-Officer and set forth in a
Supplemental Agreement.
(iv) With the approval of the Contracting Officer after loss of
destruction of or damage to Government furnished property, and subject to
such conditions and limitations as may be imposed by the Contractin.
Officer, the Contractor may, in order to minimize the loss to the Gov-
ernment &n in order to permit resumption of business or the like, sell
for th;: account of the Government any item of Government-furnished
property which has been damaged beyond practicable repair, or which is
:,c commingled or combined with property of others, including the Contrac-
tor, that separation is impracticable,
(v) Except to the extent of any loss or destruction of or damage to
Government-furnished property for which the Contractor is relieved of
liability under the foregoing provisions of this clause, and except for
reasonable wear and ter or depreciation, or the utilization of the Gov-
ernment-furnished property in accordance with the provisions of this con-
tract, the Government-furnished property (other than property permitted
to be solo:) shall be returned to the Government in as good condition
as when received by the Contractor in connection with this co.?.ntract, or
as repaired under paragraph (e) above,;
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(vi) In the event the Contractor is reimbursed or compensated for
any loss or destruction of or dama e to the Government-furnished propctty,
caused by an excepted peril, it shall equitably reimburse the Government.
The Contractor shall do nothing' to prejudice the Governmentts rights to
recover against third parties for any such loss, destruction or damage and,
upon the request of the Contracting Officer; shall at the Government's
expense, furnish to the Government all reasonable assistance and coopera
tion (including the prosecution of suit and the execution of instruments
of assignment in favor of the Governments in obtaining recovery. In
addition, where a subcontractor has not been relieved from liability for
any loss or destruction of or damage to the Government-Furnished property)
the Contractor shall enforce the liability of the subcontractor for such
loss or destruction of or damage to the Government-Furnished property for
the benefit of the Government.
(vii) (Where applicable): In the event any aircraft are to be
furnished under this contract, any loss or destruction,of, or damage to,
such aircraft or other Government-furnished property occurring in connection
with operations of said aircraft will be governed by the clause of this
contract captioned "Flight Risks', to the extent such clause is, by its
terms, applicable.
(g) The Government shall at all reasonable times hate access to the
premises wherein any Government-furnished property is located.
(h) Upon the completion of this contract, or at such earlier date as
may be fixed by the. Contracting Officer, the Contractor shall submit, in
a form acceptable to the Contracting Officer, inventory schedules covering
all items of Government-furnished property not consumed in the performance
of this contract (including any rQsulting scrap), or not theretofore
delivered to the Government, and shall deliver or make such other disposal
of such Government-furnished property, as may be directed or authorized
by the Contracting Officer. The net proceeds of any such disposal shall be
credited to the contract price or shall be paid in such other manner as the
Contracting Officer may direct.
(i) Directions of the Contracting Officer and communications of the
Contractor shall be in writing.
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