DEFINITIONS (ASPR 7-103.1 AFPI 7-403.1)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67B00074R000600010071-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 26
• Document Creation Date: December 21, 2016
• Document Release Date: May 28, 2008
• Sequence Number: 71
• Publication Date: August 1, 1960
• Content Type: REPORT

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5P CIAL HAN1) v
INDEX TO GENERAL PROVISIONS
Clause No
. Pa
e No
g
.
1.
DEFINITIONS .................................................
1
2.
CHANGES ......................................... ...........
1
3.
LIMITATION OF COST ...........................................
1
4.
ALLOWABLE COST., FIXED FEE,, AND PAYMENT .......................
2
5.
INSPECTION AND CORRECTION OF DEFECTS .........................
3
6.
ASSIGNMENT OF CLAIMS .........................................
4
7.
RECORDS ...................................................
4
8.
SUBCONTRACTS .................................................
6
9.
UTILIZATION OF SMALL BUSINESS CONCERNS .......................
6
10.
TERMINATION .............. ..................
6
11.
EXCUSABLE DELAYS.. ...........................................
9
12.
DISPUTES ....................................................
10
13.
NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT.........
10
14.
BUY AMERICAN ACT ............................................
10
15.
CONVICT LABOR ...................................
11
16.
EIGHT-HOUR LAW OF 1912 ......................................
11
17.
NONDISCRIMINATION IN EMPLOYMENT ........................
11
18.
OFFICIALS NOT TO BENEFIT ....................................
11
19.
COVENANT AGAINST CONTINGENT FEES ............................
11
20.
PATENT RIGHTS ...............................................
12
21.
GOVERNMENT PROPERTY .........................................
15
22.
INSURANCE--LIABILITY TO THIRD PERSONS .......................
17
23.
AUTHORIZATION AND CONSENT .........................
18
24.
FILING OF PATENT APPLICATIONS ...............................
18
25.
RIGHTS IN DATA-UNLIMITED ....................
18
26.
MILITARY SECURITY REQUIREMENTS ..............................
19
27.
WALSH-HEALEY PUBLIC CONTRACTS ACT .............
20
28.
GRATUITIES ..................................................
20
29.
NEGOTIATED OVERHEAD RATES ...................................
20
30.
DELAY IN DELIVERY OF DATA ...................................
21
31.
SUPERSEDING SPECIFICATIONS ..................................
21
32.
FLIGHT RISK .................................................
21
33.
ALTERATIONS .................................................
22
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10 IC1 _.L FAINDHINg
GENERAL PROVISIONS
1. DEFINITIONS (ASPR 7-103.1 AFPI 7-403.1)
As used throughout this contract, the following terms shall have the meanings set forth
below:
(a) The term "Secretary" means the Secretary, the Under Secretary, or any Assistant Secre-
tary, or any Assistant Secretary of the Department, and the head or any assistant head of the
Federal agency; and the term "his duly authorized representative" means any person or persons
or board (other than the Contracting Officer) authorized to act for the Secretary.
(b) The term "Contracting Officer" means the person executing this contract on behalf of
the Government, and any other officer or civilian employee who is a properly designated Contract-
ing Officer; and the term includes, except as otherwise provided in this contract, the author-
ized representative of a Contracting Officer acting within the limits of his authority.
(c) Except as otherwise provided in this contract, the term "subcontracts" includes pur-
chase orders under this contract.
(d) (AFPI 7-303.1) The term "contract work" means all work to be performed under this con-
tract including any studies covering fundameptal, theoretical, or experimental investigations;
any extension of the investigative findings and theories of a scientific or technical nature into
practical application; any tangible items, hereinafter referred to as "supplies," furnished to
the Government; and any reports, data, computations, plans, drawings, and specifications with
respect to any of the foregoing.
The Contracting Officer may, at any time by a written order, make changes in or additions to
the drawings and specifications, issue additional instructions, require additional work within
the general scope of the contract, or change the place of delivery, method of shipment, or the
amount of Government-Furnished property. If any such change causes an increase or decrease in
the estimated cost of, or the time required for performance of this contract, or otherwise af-
fects any other provision of this contract, an equitable adjustment shall be made (i) in the
estimated cost or delivery schedule, or both, (ii) in the amount of any fixed fee to be paid to
the Contractor, and (iii) in such other provisions of the contract as may be so affected, and
the contract shall be modified in writing accordingly. Any claim by the Contractor for adjust-
ment under this clause must be asserted within sixty (60) days from the date of receipt by the
Contractor of the notification of change; PROVIDED, HOWEVER, That the Contracting Officer, if he
decides that the facts justify such action, may receive and act upon any such claim asserted at
any time prior to final payment under this contract. Failure to agree to any adjustment shall
be a dispute concerning a question of fact within the meaning of the clause of this contract en-
titled "Disputes." However, nothing in this clause shall excuse the Contractor from proceeding
with the contract as changed.
3. LIMITATION OF COST (ASPR 7-203.3 AFPI 7-403.3)
(a) It is estimated that the total cost to the Government, exclusive of any fixed fee, for
the performance of this contract will not exceed the estimated cost set forth in the Schedule,
and the Contractor agrees to use its best efforts to perform the work specified in the Schedule
and all obligations under this contract within such estimated cost. If at any time the Contrac-
tor has reason to believe that the costs which it expects to incur in the performance of this
contract in the next succeeding thirty (30) days, when added to all cost previously incurred,
will exceed eighty-five percent (85%) of the estimated cost then set forth in the Schedule, or
if at any time, the Contractor has reason to believe that the total cost to the Government, ex-
clusive of any fixed fee, for the performance of this contract will be substantially greater or
less than the then estimated cost thereof, the Contractor shall notify the Contracting Officer
in writing to that effect, giving its revised estimate of such total cost for-the performance of
this contract.
(b) The Government shall not be obligated to reimburse the Contractor for costs incurred in
excess of the estimated cost set forth in the Schedule and the Contractor shall not be obligated
to continue performance under the contract or to incur costs in excess of the estimated cost set
forth in the Schedule, unless and until the Contracting Officer shall have notified the Contrac-
tor in writing that such estimated cost has been increased and shall have specified in such no-
tice a revised estimated cost which shall thereupon constitute the estimated cost of performance
of this contract. When and to the extent that the estimated cost set forth in the Schedule has
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been increased, any cost incurred by the Contractor in excess of such estimated cost prior to
the increase in estimated cost shall be allowable to the same extent as if such costs had been
incurred after such increase in estimated cost.
4. ALLOWABLE COST, FIXED FEE, AND PAYMENT (ASPR 7-402.3 AFPI 7-403.4)
(a) For the performance of this contract, the Government shall pay to the Contractor:
(i) the cost thereof (hereinafter referred to as "allowable cost") determined by the
Contracting Officer to be allowable in accordance with --
(A) Part 2 of Section XV of the Armed Services Procurement Regulation as in effect
on the date of this contract; and
(B) the terms of this contract; and
(ii) such fixed fee, if any, as may be provided for in the Schedule.
(b) Once each month (or at more frequent intervals, if approved by the Contracting Officer)
the Contractor may submit to an authorized representative of the C.O., in such form and reason-
able detail as such representative may require, an invoice or public voucher supported by a state-
ment of cost incurred by the Contractor in the performance of this contract and claimed to con-
stitute allowable cost.
(c) Promptly after receipt of each invoice or voucher the Government shall, subject to the
provisions of (d) below, make payment thereon as approved by the C.O. Payment of the fixed
fee, if any, shall be made to the Contractor as specified in the Schedule; provided, however,
that after payment of eighty-five percent (85%) of the fixed fee set forth in the Schedule,
further payment on account of the fixed fee shall be withheld until a reserve of either fifteen
percent (15%) of the total fixed fee, or one hundred thousand dollars ($100,000), whichever is
less, shall have been set aside.
(d) At any time or times prior to final payment under this contract the Contracting Officer
may have invoices or vouchers and statements of cost audited. Each payment theretofore made
shall be subject to reduction for amounts included in the related invoice or voucher which are
found by the Contracting Officer on the basis of such audit, not to constitute allowable cost.
Any payment may be reduced for overpayments, or increased for underpayments, on preceding in-
voices or vouchers.
(e) On receipt and approval of the invoice or voucher designated by the Contractor as the
"completion invoice" or "completion voucher" and upon compliance by the Contractor with all the
provisions of this contract (including, without limitation, the provisions relating to patents
and the provisions of (f) below, the Government shall promptly pay to the Contractor any balance
of allowable cost, and any part of the fixed fee which has been withheld pursuant to (c) above
or otherwise not paid to the Contractor. The completion invoice or voucher shall be submitted
by the Contractor promptly following completion of the work under this contract but in no event
later than one (1) year (or such longer period as the Contractor Officer may in his discretion
approve in writing) from the date of such completion. -
(f) The Contractor agrees that any refunds,-rebates, credits, or other amounts (including
any interest thereon) accruing to or received by the Contractor or any assignee under this con-
tract shall be paid by the Contractor to the Government, to the extent that they are properly
allocable to costs for which the Contractor has been reimbursed by the Government under this
contract. Reasonable expenses incurred by the Contractor for the purpose of securing such re-
funds, rebates, credits, or other amounts shall be allowable costs hereunder when approved by
the Contracting Officer. Prior to final payment under this contract, the Contractor and each
assignee under this contract whose assignment is in effect at the time of final payment under
this contract shall execute and deliver:
(i) an assignment to the Government, in form and substance satisfactory to the Contracting
Officer, of refunds, rebates, credits, or other amounts (including any interest thereon) properly
allocable to costs for which the Contractor has been reimbursed by the Government under this con-
tract; and
(ii)' a release discharging the Government, its officers, agents, and employees from all
liabilities, obligations, and claims arising out of or under this contract, subject only to the
following exceptions --
(A) specified claims in stated amounts or in estimated amounts where the amounts are
not susceptible of exact statement by the Contractor;
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(B) claims, together with reasonable expenses incidental thereto, based upon liabili-
ties of the Contractor to third parties arising out of the performance of this contract; pro-
vided that such claims are not known to the Contractor on the date of the execution of the re-
lease; and provided further that the Contractor gives notice of such claims in writing to the
Contracting Officer not more than six (6) years after the date of the release or the date of any
notice to the Contractor that the Government is prepared to make final payment, whichever is
earlier; and
(C) claims for reimbursement of costs (other than expenses of the Contractor by rea-
son of any idemnification of the Government against patent liability), including reasonable ex-
penses incidental thereto, incurred by the Contractor under the provisions of this contract re-
lating to patents.
(g) Any cost incurred by the Contractor under the terms of this contract which would consti-
tute allowable cost under the provisions of this clause shall be included in determining the
amount payable under this contract, notwithstanding any provisions contained in the specifications
or other documents incorporated in this contract by reference, designating services to be per-
formed or materials to be furnished by the Contractor at its expense or without cost to the
Government.
5. INSPECTION AND CORRECTION OF DEFECTS (AFPI 7-403.5)
(a) All work under this contract shall be subject to inspection and test by the Government,
to the extent practicable at all reasonable times and places including the period of performance,
and in any event prior to final acceptance. The Contractor shall provide and maintain an in-
spection system acceptable to the Government covering the work hereunder. The Government, through
any authorized representative, may inspect the plant or plants of the Contractor or of any of its
subcontractors engaged in the performance of this contract. If any inspection or test is made by
the Government on the premise of the Contractor or a subcontractor, the Contractor shall provide
and shall require subcontractors to provide all reasonable facilities and assistance for the
safety and convenience of the Government inspectors in the performance of their duties. All in-
spections and tests by the Government shall be performed in such a manner as will not unduly de-
lay the work. Final inspection and acceptance by the Government shall be made as promptly as
practicable after delivery. The time and place of delivery, final inspection, and acceptance
shall be as set forth in the Schedule.
(b) The Contractor warrants that the services rendered in the performance of this contract
will conform to the requirements of this contract and to high professional standards in the field,
and that any article delivered to the Government under this contract will conform to the require-
ments of this contract and will not be defective in material or workmanship.
(c) At any time during performance of this contract, but not later than six (6) months (or
such other period as may be provided in the schedule) after final acceptance, the Government may
require the Contractor to remedy by correction or replacement as directed by the Contracting Of-
ficer, any failure by the Contractor to comply with its obligations under paragraph (b) hereof.
Except as otherwise provided in paragraph (d) hereof, the cost of any such replacement or cor-
rection shall be included in "Allowable Cost" determined as provided in the clause of this con-
tract entitled "Allowable Cost, Fixed Fee and Payment," but no additional fee shall be payable
with respect thereto. Corrected articles shall not be tendered again for acceptance unless the
former tender and the requirement of correction is disclosed. If the Contractor fails to pro-
ceed with reasonable promptness to perform such replacement or correction, the Government (i)
may by contract or otherwise perform such replacement or correction and charge to the Contrac-
tor any increased cost occasioned the Government thereby, or may reduce any fixed fee payable
under this contract (or require repayment of any fixed fee theretofore paid) in such amount as
may be equitable under the circumstances; or (ii) in the case of articles not delivered, may
require the delivery of such articles and shall have the right to reduce any fixed fee payable
under this contract (or to require repayment of any fixed fee theretofore paid) in such amount
as may be equitable under the circumstances; or (iii) may terminate this contract for default as
provided in the clause of this contract entitled "Termination." Failure to agree on the amount
of any such increased cost to be charged to the Contractor or to such reduction in, or repayment
of, the fixed fee shall be a dispute concerning a question of fact within the meaning of the
clause of this contract entitled "Disputes".
(d) Notwithstanding the provisions of paragraph (c) hereof, the Government may at any time
require the contractor to remedy by correction or replacement, without cost to the Government,
any failure by the Contractor to comply with its obligations under paragraph (b) hereof, if such
failure is due to fraud, lack of good faith, or willful misconduct on the part of any of the con-
tractor's directors or officers, or on the part of any of its managers, superintendents, or other
equivalent representatives, who has supervision or direction of (i) all or substantially all of
the Contractor's business; or (ii) all or substantially all of the Contractor's operations at any
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one plant or separate location in which this contract is being performed; or (iii) a separate
and complete major industrial operation in connection with the performance on this contract.
Fraud, lack of good faith, or willful misconduct on the part of any such supervisory personnel
shall be deemed to include the selection of individual employees or the retention of, employees
after any of such supervisory personnel has reason to believe that such employees are habitually
careless or otherwise unqualified.
(e) Corrected articles tendered as replacements shall be subject to the provisions of this
clause in the same manner and to the same extent as supplies originally delivered under this con-
tact.
(f) The Contractor shall make its records of all inspection work available to the Government
during the performance of this contract and for such longer periods as may be specified in this
contract.
(g) Except as provided in this clause and as may be provided in the Schedule, the Contractor
shall have no obligation or liability to correct or replace supplies or lots of supplies which at
the time of delivery are defective in materials or workmanship or otherwise not in conformity
with the requirements of this contract.
(h) Except as otherwise provided in the schedule, the contractor's obligation to correct or
replace Government-furnished property (which is property in the possession of or acquired directly
by the Government and delivered or otherwise made available to the contractor) shall be governed
by the provisions of the clause of this contract entitled "Government Property." LRev. No. 6,
3/21/58
6. ASSIGNMENT OF CLAIMS (ASPR 7-103.8 AFPI 7-403.6)
(a) Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.
Code 203, 41 U.S. Code 15), if this contract provides for payments aggregating $1,000 or more,
claims for monies due or to become due the Contractor from the Government under this contract
may be assigned to a bank, trust company, or other financing institution, including any Federal
Lending agency, and may thereafter be further assigned and reassigned to any such institution.
Any such assignment or reassignment shall cover all amounts payable under this contract and not
already paid, and shall not be made to more than one party, except that any such assignment or
reassignment may be made to one party as agent or trustee for two or more parties participating
in such financing. Notwithstanding any provision of this contract, payments to an assignee of
any monies due or to become due under this contract shall not, to the extent provided in said
Act, as amended, be subject to reduction or set-off.
(b) In no event shall copies of this contract or of any plans, specifications, or other sim-
ilar documents relating to work under this contract, if marked "Top Secret", "Secret", or "Con-
fidential", be furnished to any-assignee of any claim arising under this contract or to any other
person not entitled to receive the same; PROVIDED, That a copy of any part or all of this contract
so marked may be furnished, or any information contained therein may be disclosed, to such as-
signee upon the prior written authorization of the Contracting Officer.
7. RECORDS (ASPR 7-203.7 AFPI 7-403.7)
(a)(1) The Contractor agrees to maintain books, records, documents and other evidence per-
taining to the costs and expenses of this contract (hereinafter collectively called the "records")
to the extent and in such detail as will properly reflect all net costs, direct and indirect, of
labor, materials, equipment, supplies and services, and other costs and expenses of whatever na-
ture for which reimbursement is claimed under the provisions of this contract. The Contractor's
accounting procedures and practices shall be subject to the approval of the Contracting Officer;
provided, however, that no material change will be required to be made in the Contractor's account-
ing procedures and practices if they conform to generally accepted accounting practices and if the
costs properly applicable to this contract are readily ascertainable therefrom.
(2) The Contractor agrees to make available at the office of the Contractor at all reason-
able times during the period set forth in subparagraph (4) below any of the records for inspection,
audit or reproduction by any authorized representative of the Department or of the Comptroller
General.
(3) In the event the Comptroller General or any of his duly authorized representatives
determines that his audit of the amounts reimbursed under this contract as transportation charges
will be made at a place other than the office of the Contractor, the Contractor agrees to deliver,
with the reimbursement voucher covering such charges or as may be otherwise specified within two
years after reimbursement of charges covered by any such voucher, to such representative as'may
be designated for that purpose through the Contracting Officer such documentary evidence in support
of transportation costs as may be required by the Comptroller General or any of his duly authorized
representatives.
(CPFF Aug. 1, 1960) - 4 -
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6~ s av..3 ob -~ Sa ~L b~ A di1
(4) Except for documentary evidence delivered to the Government pursuant to subparagraph
(3) above, the Contractor shall preserve and make available his records (i) for a period of three
years from the date of final payment under this contract, and (ii) for such longer period, if any,
as is required by applicable statute, by any other clause of this contract, or by (A) or (B) be-
low. ZR-ev. No. 51, 1/4/60.]
(A) If this contract is completely or partially terminated, the records relating to the
work terminated shall be preserved and made available for a period of three years from the date
of any final settlement. fRev. No. 51, 1/4/60] jev. No. 54, 5/2/60]
(B) Records which relate to (i) appeals under the Disputes clause of this contract, (ii)
litigation or the settlement of claims arising out of the performance of this contract, or (iii)
cost and expenses of this contract as to which exception has been taken by the Comptroller Gen-
eral or any of his duly authorized representatives, shall be retained by the Contractor until
such appeals, litigation, claims, or exceptions have been disposed of. LRev. No. 42, 1/9/59?)'
LRev. No. 49, 10/1/59]
(5) Except for documentary evidence delivered pursuant to subparagraph (3) above, and
the records described in subparagraph (4)(B) above, the Contractor may in fulfillment of its
obligation to retain its records as required by this clause substitute photographs, microphoto-
graphs or other authentic reproductions of such records, after the expiration of two years fol-
lowing the last day of the month of reimbursement to the Contractor of the invoice or voucher to
which such records relate, unless a shorter period is authorized by the Contracting Officer with
the concurrence of the Comptroller General or his duly authorized representative. Rev. No. 49,
10/1/59]
(6) The provisions of this paragraph (a), including this subparagraph (6), shall be ap-
plicable to and included in each subcontract hereunder which is on a cost, cost-plus-a-fixed-fee,
time-and-material or labor-hour basis.
(b) The Contractor further agrees to include in each of his subcontracts hereunder, other
than those set forth in subparagraph (a)(6) above, a provision to the effect that the subcon-
tractor agrees that the Comptroller General or the Department, or any of their duly authorized
representatives, shall, until the expiration of three years after final payment under the sub-
contract, have access to and the right to examine any directly pertinent books, documents, papers,
and records of such subcontractor involving transactions related to the subcontract. The term
"subcontract," as used in this paragraph (b) only, excludes (i) purchase orders not exceeding
$2,500 and (ii) subcontracts or purchase orders foryublic utility services at rates established
for uniform applicability to the general public. Rev. No. 39, 11/3/58.]
Alternate Paragraph)
In the event this Contract establishes separate periods of performance, the following alter-
nate subparagraph (a)(4) may be substituted for the corresponding subparagraph of the clause
prescribed by (a) above.
(4) Except for documentary evidence delivered to the Government pursuant to subparagraph
(3) above, the Contractor shall preserve and make available his records (i) for a period of three
years from the date of payment of the voucher or invoice submitted by the Contractor after the
completion of the work performed during any separate period of performance established by this
contract or by any amendment or supplemental agreement, without regard to former or subsequent
periods of performance, and (ii) for such longer period, if any, as is required by applicable
statute, by any other clause of this contract, or by (A), (B), or (C) below.
(A) If this contract is completely or partially terminated, the records relating to the
work terminated shall be preserved and made available for a period of three years from the date
of any resulting final settlement agreement or determination.
(B) Records which relate to (i) appeals under the Disputes clause of this contract, (ii)
litigation or the settlement of claims arising out of the performance of this contract, or (iii)
cost and expenses of this contract as to which exception has been taken by the Comptroller Gen-
eral or any of his duly authorized representatives, shall be retained by the Contractor until
such appeals, litigation, claims, or exceptions have been disposed of.
(C) If the Contractor plans to destroy any records sooner than three years after the
date of the voucher or invoice to be submitted after the completion of the work performed during
the total of the periods of performance established by this contract and all amendments and sup-
plemental agreements thereto, which voucher or invoice shall be designated "completion voucher"
or "completion invoice," it shall give written notice to the Contracting Officer and to the
(CPFF Aug. 1, 1960)
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Comptroller General of the United States, specifying any records which it plans to'destroy after
the expiration of 90 days from the receipt of such notice, and shall retain any records which
either the Contracting Officer or the Comptroller General, by written notice within 90 days after
receipt of the Contractor's notice, requires to be retained for a further specified period of
time.
8. SUBCONTRACTS (ASPR 7-402.8)
(a) The Contractor shall give advance notification to the Contracting Officer oT any pro-
posed subcontract. hereunder which (i) is on a cost or cost-plus-a-fixed-fee basis, or (ii) is
on~a fixed-price basis exceeding in dollar amount either $25,000 or five percent (5%) of the
total estimated cost of ,this contract.
(b) The Contractor shall not, without the prior written consent of the Contracting Officer,
place any subcontract which (i) is on a cost or cost-plus-a-fixed-fee basis, or (ii) is on a
fixed-price basis exceeding In dollar amount either $25,000 or five percent (5%) of the total
estimated cost of this contract, or (111) provides for the fabrication, purchase, rental, in-
stallation or other acquisition, of any item of industrial facilities, or of special tooling
having a value in excess of $1,000, or (iv) is on a time-and-material or labor-hour basis, or
(v) involves.research and development work. The Contracting Officer may, in his discretion,
ratify in writing any such subcontract; such action shall constitute the consent of the
Contracting officer as required by this paragraph (b).
(c) The Contractor agrees that no subcontract placed under this contract shall provide for
payment on.a cost-plus-a-percentage-of-cost basis.
(d) The Contracting Officer may, in his discretion, specifically approve in writing any of
the provisions of a subcontract. However, such approval or the consent of the Contracting Offi-
cer obtained as required by this clause shall not be construed to constitute a determination of
the allowability of any cost under this contract, unless such approval specifically provides that
it constitutes a determination of the allowability of such cost.
(e) The Contractor shall give the,. Contracting Officer immediate notice in writing of any
action or suit filed, and prompt notice of any claim made against the Contractor by any subcon-
tractor or vendor which, in the opinion of the Contractor, may result in litigation, related in
any way to this contract with respect to which the Contractor may be entitled to reimbursement
from the Government.
(f) Notwithstanding (b) above, the Contractor may enter into subcontracts within (ii), or,
if the subcontract is for special tooling, within (iii), of (b) above, without the prior written
consent of the Contracting Officer if the Contracting Officer has, in writing, approved the Con-
tractor's purchasing system and the subcontract is within the limitations of such approval. LRev.
No. 49, 10/1/59]
9. UTILIZATION OF SMALL BUSINESS CONCERNS (ASPR 7-104.14 AFPI 7-403.9)
(a) It is the policy of the Government as declared by the Congress that a fair proportion of
the purchases and contracts for supplies and services for the Government be placed with small
business concerns.
LRev. No. 28, 1/28/58.]
(b) The Contractor agrees to accomplish the maximum amount of subcontracting to small busi-
ness concerns that the Contractor finds to be consistent with the efficient performance of this
contract.
10. TERMINATION (ASPR 8-702 AFPI 7-403.10)
(a) The performance of work under the contract may be terminated by the Government in ac-
cordance with this clause in whole, or from time to time in part:
(i) whenever the Contractor shall default in performance of this contract in accordance
with its terms (including in the term "default" any such failure by the Contractor to make prog-
ress in the prosecution of the work hereunder as endangers such performance), and shall fail to
cure such default within a period of ten days (or such longer periods as the Contracting Officer
may allow) after receipt from the Contracting Officer of a notice specifying the default; or
.(ii) whenever for any reason the Contracting officer shall determine that such termina-
tion is in the best interests of the Government.
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Any such termination shall be effected by delivery to the Contractor of a Notice of Termination
specifying whether termination is for the default of the Contractor or for the convenience of
the Government, the extent to which performance of work under the contract is terminated, and
the date upon which such termination becomes effective. If, after notice of termination of this
contract for default under (i) above, it is determined that the Contractor's failure to perform
or to make progress in performance is due to causes beyond, the control and without the fault or
negligence of the Contractor pursuant to the provisions of the clause of this contract relating
to excusable delays, the Notice of Termination shall be deemed to have been issued under (ii)
above, and the rights and obligations of the parties hereto shall in such event be governed ac-
cordingly.
(b) After receipt of a Notice of Termination and except as otherwise directed by the Contract-
ing Officer, the Contractor shall:
(i) stop work under. the contract on the date and to the extent specified in the Notice
of Termination;
(ii) place no further orders or subcontracts for materials, services, or facilities,
except as may be necessary for completion of such portion of the work under the contract as is
not terminated;
(iii) terminate all orders and subcontracts to the extent that they relate to the per-
formance of work terminated by the Notice of Termination;
(iv) assign to the Government, in the manner and to the extent directed by the Contract-
ing Officer, all of the right, title, and interest of the Contractor under the orders or sub-
contracts so terminated, in which case the Government shall have the right, in its discretion,
to settle or pay any or all claims arising out of the termination of such orders and subcontracts;
(v) with the approval or ratification of the Contracting Officer, to the extent he may
require, which approval or ratification shall be final and conclusive for all purposes of this
clause, settle all outstanding liabilities and all claims arising out of such termination of
orders and subcontracts, the cost of which would be reimbursable in whole or in part, in accord-
ance with the provisions of this contract;
(vi) transfer title (to the extent that title has not already been transferred) and, in
the manner, to the extent, and at the times directed by the Contracting Officer, deliver to the
Government (A) the fabricated or unfabricated parts, work in process, completed work, supplies,
and other material produced as a part of, or acquired in respect of the performance of, the work
terminated by the Notice of Termination, (B) the completed or partially completed plans, draw-
ings, information, and other property which, if the contract had been completed, would be re-
quired to be furnished to the Government, and (C) the jigs, dies, and fixtures, and other spe-
cial tools and tooling acquired or manufactured for the performance of this contract for the cost
of which the Contractor has been or will be reimbursed under this contract:
(vii) use its best efforts to sell in the manner, at the times, to the extent, and at
the price or prices directed or authorized by the Contracting Officer, any property of the types
referred to in (vi) above; provided, however, that the Contractor (A) shall not be required to
extend credit to any purchaser, and (B) may acquire any such property under the conditions pre-
scribed by and at a price or prices approved by the Contracting Officer; and provided further
that the proceeds of any such transfer or disposition shall be applied in reduction of any pay-
ments to be made by the Government to the Contractor under this contract or shall otherwise be
credited to the price or cost of the work covered by this contract or paid in such other manner
as the Contracting Officer may direct;
(viii) complete performance of such part of the work as shall not have been terminated by
the Notice of Termination; and
(ix) take such action as may be necessary, or as the Contracting Officer may direct, for
the protection and preservation of the property related to this contract which is in the posses-
sion of Contractor in which the Government has or may acquire an interest. The Contractor shall
proceed immediately with the performance of the above obligations notwithstanding any delay in
determining or adjusting the amount of the fee, or any item of reimbursable cost, under this
clause. At any time after expiration of the plant clearance period, as defined in Section VIII,
Armed Services Procurement Regulation, as it may be amended from time to time, the Contractor
may submit to the Contracting Officer a list, certified as to quantity and quality, of any or all
items of termination inventory not previously disposed of, exclusive of items the disposition of
which has been directed or authorized by the Contracting Officer, and may request the Government
to remove such items or enter into a storage agreement covering them. Not later than fifteen
(15) days thereafter, the Government will accept such items and remove them or enter into a
(CPFF Aug. 1, 1960)
i r
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storage agreement covering the same; provided that the list submitted shall be subject to veri-
fication by the Contracting Officer upon removal of the items, or if, the items are stored, within
forty-five (45) days from the date of submission of the list, and any necessary adjustment to
correct the list as submitted shall be made prior to final settlement.
(c) After receipt of a Notice of Termination, the Contractor shall submit to the Contracting
Officer its termination claim in the form and with the certification prescribed by the Contract-
ing Officer. Such claim shall be submitted promptly but in no event later than one year from
the effective date of termination, unless one~ or more extensions in writing are granted by the
Contracting Officer, upon request of the Contractor made in writing within such one year period
or authorized extension thereof. However, if the Contracting officer determines that the facts
justify such action, he may receive and act upon any such termination claim at any time after
such one year period or any extension thereof. Upon failure of the Contractor to submit its
termination claim within the time allowed, the Contracting Officer may, subject to any Settle-
ment Review Board approvals required by Section VIII of the Armed Services Procurement Regula-
tion in effect as of the date of execution of this contract, determine, on the basis of informa-
tion available to him, the amount, if any, due to the Contractor by reason of the termination
and shall thereupon pay to the Contractor the amount so determined.
(d) Subject to the provisions of paragraph (c), and subject to any Settlement Review Board
approvals required by Section VIII of the Armed Service `Procurement Regulation in effect as of
the date of execution of this contract, the Contractor and.-the Contracting Officer may agree
upon the whole or any part of the amount or amounts to be paid (including an allowance for the
fee) to the Contractor by reason of the ?'eotal or partial termination of work pursuant to this
clause. The contract shall be amended accordingly, and the Contractor shall be paid the agreed
amount.
(e) In the event of the failure of the Contractor and the Contracting Officer to agree in
whole or in part, as provided in paragraph (d), as to the amounts with respect to costs and fee,
or as to the amount of the fee, to be paid to the Contractor in connection with the termination
of work pursuant to this clause, the Contracting Officer shall, subject to any Settlement Re-
view Board approvals required by Section VIII of the Armed Services Procurement Regulation in
effect as of the date of execution of this contract, determine, on the basis of information
available to him, the amount, if any, due to the Contractor by reason of the termination and
shall pay to the Contractor the amount determined as follows:
(A) there shall be included therein all costs and expenses reimbursable in accord-
ance with this contract, not previously paid to the Contractor for the performance of this con-
tract prior to the effective date of the Notice of Termination, and such of these costs as may
continue for a reasonable time thereafter with the approval of or as directed by the Contracting
Officer; provided, however, that the Contractor shall proceed as rapidly as practicable to dis-
continue such costs;
(B) there shall be included therein so far as not included under (A) above, the cost
of settling and paying claims arising out of the termination of work under subcontracts or orders,
as provided in paragraph (b)(v) above, which are properly chargeable to the terminated portion
of the contract;
(C) there shall be included therein the reasonable costs of settlement, including
accounting, legal, clerical, and other expenses, reasonably necessary for the preparation of
settlement claims and supporting data with respect to the terminated portion of the contract
and for the termination and settlement of subcontracts thereunder, together with reasonable
storage, transportation, and other costs incurred in connection with the protection or disposi-
tion of termination inventory; provided, however, that if the termination is for default of the
Contractor there shall not be included any amounts for the preparation of the Contractor's set-
tlement proposal; and
(D) there shall be included therein a portion of the fee payable under the contract
determined as follows --
(I) in the event of the termination of this contract for the convenience of the Gov-
ernment and not for the default of the Contractor, there shall be paid a percentage of the fee
equivalent to the percentage of the completion of work contemplated by the contract, less fee
payments previously made hereunder; or
(II) in the event of the termination of this contract for the default of the Contrac-
tor, the total fee payable shall be such proportionate part of the fee (or,. if this contract
calls for articles of different types, of such part of the fee as is reasonably allocable to the
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type of article under consideration) as the total number of articles delivered to and accepted
by the Government bears to the total number of articles of a like kind called for by this con-
tract; if the amount determined under this subparagraph (1) is less than the total payment there-
tofore made to the Contractor, the Contractor shall repay to the Government the excess amount; or
(ii) if the settlement includes only the fee, the amount thereof will be determined in
accordance with subparagraph (i)(D) above.
(f) The Contractor shall have the right of appeal under the clause of this contract entitled
"Disputes," from any determination made by the Contracting Officer under paragraphs (c) or (e)
above, except that if the Contractor has failed to submit its claim within the time provided in
paragraph (c) above and has failed to request extension of such time, it shall have no such right
of appeal. In any case where the Contracting Officer has made a determination of the amount due
under paragraph (c) or (e) above, the Government shall pay to the Contractor the following:. (1)
if there is no right of appeal hereunder or if no timely appeal has been taken, the amount so,'
determined by the Contracting Officer, or (ii) if an appeal has been taken, the amount finally
determined on such appeal.
(g) In arriving at the amount due the Contractor under this clause there shall be deducted
(i) all unliquidated advance or other payments theretofore made to the Contractor, applicable to
the terminated portion of this contract, (ii) any claim which the Government may have against
the Contractor in connection with this contract, and (iii) the agreed price for, or the proceeds
of sale of, any materials, supplies, or other things acquired by the Contractor or sold pur-
suant to the provisions of this clause and not otherwise recovered by or credited to the Govern-
ment.
(h) In the event of a partial termination, the portion of the fee which is payable with
respect to the work under the continued portion of the contract shall be equitably adjusted by
agreement between the Contractor and the Contracting Officer, and such adjustment shall be evi-
denced by an amendment to this contract.
(i) The Government may from time to time,',unde such terms and conditions as it may pre-
scribe, make partial payments and payments on accoupt against costs incurred by the Contractor
in connection with the terminated portion of the.cgnfact whenever in the opinion of the Con-
tracting Officer the aggregate of such payment"s shill be within the amount to which the Contrac-
tor will be entitled hereunder. If the total of such payments is in excess of the amount final-
ly determined to be due under this clause, such excess shall be payable by the Contractor to the
Government upon demand, together with interest computed at the rate of 6 percent per annitm, for
the period from the date such excess payment is received by the Contractor to the date on which
such excess is repaid to the Government; provided, however, that no interest shall be charged
with respect to any such excess payment attributable to a reduction in the Contractor's claim
by reason of retention or other disposition of termination inventory until ten days after the
date of such retention or disposition, or such later date as determined by the Contracting Of-
ficer by reason of the circumstances.
(j) The provisions of this clause relating to the fee shall be inapplicable if this contract
does not provide for payment of a fee.
Except with respect to defaults of subcontractors, the Contractor shall not be in default
by reason of any failure in performance of this contract in accordance with its terms (includ-
ing any failure by the Contractor to make progress in the prosecution of the work hereunder which
endangers such performance) if such failure arises out of causes beyond the control and without
the fault or negligence of the Contractor. Such causes may include, but are not restricted to:
acts of God or of the public enemy; acts of the Government in either its sovereign or contrac-
tual capacity; fires; floods; epidemics; quarantine restrictions; strikes; freight embargoes;
and unusually severe weather; but in every case the failure to perform must be beyond the con-
trol and without the fault or negligence of the Contractor. If the failure to perform is caused
by the failure of a subcontractor to perform or make progress, and if such failure arises out
of causes beyond the control of both the Contractor and subcontractor, and without the fault or
negligence of either of them, the Contractor shall not be deemed to be in default, unless (i) the
supplies or services to be furnished by the subcontractor were obtainable from other sources, (ii)
the Contracting Officer shall have ordered the Contractor in writing to procure such supplies or
services from such other sources, and (iii) the Contractor shall have failed to comply reasonably
with such order. Upon request of the Contractor, the Contracting Officer shall ascertain the facts
and extent of such failure and, if he shall determine that any failure to perform was occasioned by
any one or more of the said causes, the delivery schedule shall be revised accordingly, subject to
the rights of the Government under the clause hereof entitled "Termination."
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12. DISPUTES (ASPR 7-103.12 AFPI 7-403.12)
(a) Except as otherwise provided in this contract, any dispute concerning a question of
fact arising under this contract which is not disposed of by agreement shall be decided by the
Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a
copy thereof to the Contractor. The decision of the Contracting Officer shall be final and
conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails
or otherwise furnishes to the Contracting Officer a written appeal addressed to the Secretary.
The decision of the Secretary or his duly authorized representative for the determination of
such appeals shall be final and conclusive unless determined by a court of competent jurisdic-
tion to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily
to imply bad faith, or not supported by substantial evidence. In connection with any appeal
proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to
offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the
Contractor shall proceed diligently with the performance of the contract and in accordance with
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. NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT (ASPR 9-104 AFPI 7-403.13)
The provisions of this clause shall be applicable only if the amount of this contract is in
excess of $10,000.
(a) The Contractor shall report to the Contracting Officer, promptly and in. reasonable
written detail, each notice or claim of patent infringement based on the performance of this
contract of which the Contractor has knowledge.
(b) In the event of any suit against the Government, or any claim against the Government
made before suit has been instituted, on account of any alleged patent infringement arising out
of the performance of this contract or out of the use of any supplies furnished or work or
services performed hereunder, the Contractor shall furnish to the Government, upon request, all
evidence and information in possession of the Contractor pertaining to such suit or claim. Such
evidence and information shall be furnished at the expense of the Government except in those
cases in which the Contractor has agreed to indemnify the Government against the claim being
asserted.
Rev-. No. 35, 7/15/58]
14. BUY AMERICAN ACT (ASPR 6-lo4.5 AFPI 7-404.i)
(a) In acquiring end products, the Buy American Act (41 U. S. Code 10 a-d) provides that
the Government give preference to domestic source end products. For the purpose of this clause:
(i) "components" means those articles, materials, and supplies, which are directly in-
corporated in the end products;
(ii) "end products"'means those articles, materials, and supplies, which are to be ac-
quired under this contract for public use; and
(iii) a "domestic source end product" means (a) an unmanufactured end product which has
been mined or produced in the United States and (B) an end product manufactured in the United
States if the cost of the components thereof which are mined, produced, or manufactured in, the
United States exceeds 50 percent of the cost of all its components. For the purposes of this (a)
(iii)(B), component's of foreign origin of the same.type or kind as the products referred to in
(b)(ii) or (iii) of this clause shall be treated as components mined, produced, or manufactured
in the United States.
(b) The Contractor agrees that there will be delivered under this contract only domestic
source end products, except end products:
(i) which are for use outside the United States;
(ii) which the Government determines are not mined, produced, or manufactured in the
United States in sufficient and reasonably available commercial quantities and of a satisfac-
tory quality;
(iii) as to which the Secretary determines the domestic preference to be inconsistent
with the public interest; or
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(iv) as to which the Secretary determines the cost to the Government to be unreasonable.
(c) Any component mined, produced, or manufactured in Canada, but not set forth in the
list of Canadian supplies excepted by the Secretary and maintained pursuant to paragraph 6-103.5
(a) of the Armed Services Procurement Regulations shall be treated as a component mined, pro-
duced, or manufactured outside the United States, for the purpose of (a)(iii)(B) above, unless
such component is to be incorporated in an end product to be delivered under this contract which
is on such list, or is an item on the list set forth in paragraph 6-105 of the Armed Services
Procurement Regulations, or is otherwise determined to be nonavailable as set forth in (b)(ti)
above.
Rev. No. 45, 4/20/59]
15. CONVICT LABOR (ASPR 12-203 AFPI 7-403.15)
In connection with the performance of work under this contract, the Contractor agrees not
to employ any person undergoing sentence of imprisonment at hard labor.
16. EIGHT-HOUR LAW CF 1912 -- OVERTIME COMPENSATION (ASPR 12-303.1 AFPI 7-403.16)
This contract tt to the extent that it is of a character specified in the Eight-Hour Law of
1912 as amended (40 U. S. Code 324-326) and is not covered by the Walsh-Healey Public Contracts
Act (41 U.S. Code 35-45), is subject to the following provisions and exceptions of said Eight-
Hour Law of 1912, as amended, and to all other provisions and exceptions of said Law:
No laborer or mechanic doing any part of the work contemplated by this contract, in the
employ of the Contractor or any subcontractor contracting for any part of the said work contem-
plated, shall be required or permitted to work more than eight hours in any one calendar day
upon such work, except upon the condition that compensation is paid to such laborer or mechanic
in accordance with the provisions of this clause. The wages of every laborer and mechanic em-
ployed by the Contractor or any subcontractor engaged in the performance of this contract shall
be computed on a basic day rate of eight hours per day; and work in excess of eight hours per
day is permitted only upon the condition that every such laborer and mechanic shall be compen-
sated for all hours worked in excess of eight hours per day at not less than one and one-half
times the basic rate of pay. For each violation of the requirements of this clause a penalty of
five dollars shall be imposed for each laborer or mechanic for every calendar day in which such
employee is required or permitted to labor more than eight hours upon said work without receiving
compensation computed in accordance with this clause, and all penalties thus imposed shall be
withheld for the use and benefit of the Government. LRev. No. 28, 1/28/58)
17. NONDISCRIMINATION IN EMPLOYMENT (ASPR 12-802 AFPI 7-403.17)
(a) In connection with the performance of work under this contract, the Contractor agrees
not to discriminate against any employee or applicant for employment because of race, religion,
color, or national origin. The aforesaid provision shall include, but not be limited to, the
following: employment, upgrading, demotion/or transfer; recruitment or recruitment advertising;
layoff or termination; rates of pay or other forms of compensation; and selection for training,
including apprenticeship. The Contractor agrees to post hereafter in conspicuous places, avail-
able for employees and applicants for employment, notices to be provided by the Contracting Offi-
cer setting forth the provisions of the nondiscrimination clause. Rev. No. 28, 1/28/587
(b) The Contractor further agrees to insert the foregoing provision in all subcontracts here-
under, except subcontracts for standard commercial supplies or raw materials.
No member of or delegate to Congress, or resident commissioner, shall be admitted to any
share or part of this contract, or to any benefit that may arise therefrom; but this provision
shall not be construed to extend to this contract if made with a corporation for its general
benefit.
The Contractor warrants that no person or selling agency has been employed or retained
to solicit or secure this contract upon an agreement or understanding for a commission, per-
centage, brokerage, or contingent fee, excepting bona fide employees or bona fide established
commercial or selling agencies maintained by the Contractor for the purpose of securing busi-
ness. For breach or violation of this warranty the Government shall have the right to annul
this contract without liability or in its discretion to deduct from the contract price or con-
sideration, or otherwise recover, the full amount of such commission, percentage, brokerage or
contingent fee.
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20. PATENT RIGHTS (ASPR 9-107.2 AFPI 7-403.20)
(a) As used in this clause, the following terms shall have the meanings set forth below:
(i) The term "Subject Invention" means any invention, improvement, or discovery (whether
or not patentable) conceived or first actually reduced to practice either
(A) in the'performance of the experimental, developmental, or research work called
for or required under this contract: or
(B) in the performance of any experimental, developmental, or research work relating
to the subject matter of this contract which was done upon an understanding in writing that a
contract would be awarded; provided that the term "Subject Invention" shall not include any in-
vention which is specifically identified and listed in the Schedule for the purpose of excluding
it from the.license granted by this clause. LRev. No. 28, 1/28/58)
(ii) The term "Technical Personnel" means any person employed by or working under con-
tract with the Contractor (other than a subcontractor whose responsibilities with respect to rights
accruing to the Government in inventions arising under subcontracts are set forth in (g), (h),
and (1) below) who, by reason of the nature of his duties in connection with the performance of
this contract, would reasonably be expected to make inventions. LRev. No. 28, 1/28/582
(iii) The terms "subcontract" and "subcontractor" mean any subcontract or subcontractor
of the Contractor, and any lower-tier subcontract or subcontractor under this contract.
(b)(1) The Contractor agrees to and does hereby grant to the Government an irrevocable, non-
exclusive, nontransferable, and royalty-free license to practice, and cause to be practiced by or
for the United States Government throughout the world, each Subject Invention in the manufacture,
use and disposition according to law, of any article or material, and in the use of any method.
Such license includes the practice of Subject Invention in the manufacture, use, and disposition
of any article or material, in the use of any method, or in the performance of any service acquired
by or for the Government, or with funds derived through the Mutual Security Program of the Govern-
ment or otherwis.e..through the Government. No license granted herein shall convey any right to the
Government to manufacture, have manufactured, or use any Subject Invention for the purpose of pro-
viding services or supplies to the general public in competition with the Contractor or the Con-
tractor's commercial licensees in the licensed fields. /ev. No. 52, 3/15/60)
(2) With respect to:
(1) any Subject Invention made by other than Technical Personnel;
(ii) any Subject Invention conceived prior to, but first actually reduced to practice
in the course of, any of the experimental, developmental, or research work specified in (a)(1)
above; and
(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 convey foreign rights as provided in (e) below, shall be lim-
ited 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 con-
tained in this Patent Rights clause shall be deemed to grant any license under any invention
other than a Subject Invention.
(c) The contractor shall furnish to the 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 statement specifying whether or not a United
States patent application claiming the Invention has been or will be filed by or on behalf of
the Contractor;
(ii) interim reports, at least every twelve months, commencing with the date of this
contract, each listing all such Inventions conceived or first actually reduced to practice more
than three months prior to the date of the report, and not listed on a prior interim report, or
certifying that there are no such unreported Inventions; and
(iii) prior to final settlement of this contract, a final report listing all such In-
ventions including all those previously listed in interim reports.
(CPFF Aug. 1, 1960)
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?E~-ate ti~y'E"~5
(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 be filed, the Contractor shall file or cause to be filed such application in due
form and time; however, if the Contractor, after having specified that such an application would
be filed, decides not to file or cause to be filed said application, the Contractor shall so
notify the Contracting Officer at the earliest practicable date and in any event not later than
eight months after first publication, public use or sale.
(ii) if the Contractor specifies that a United States patent application claiming such
Invention has not been filed and will not be filed (or having specified that such an application
will be filed 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 contemplated publication by the Contractor, stating the date and identity of such publica-
tion or contemplated publication; and
(B) convey to the Government the Contractor's entire right, title, and interest
in such Invention by delivering tt the Contracting Officer upon written request such duly ex-
ecuted instruments (prepared by the Government) of assignment and application, and such other
papers as are deemed necessary to vest in the Government the Contractor's right, title, and in-
terest aforesaid, and the right to apply for and prosecute patent applications covering such
Invention throughout the world, subject, however, to the rights of the Contractor in foreign ap-
plications as provided in (e) below, and subject further to the reservation of a non-exclusive
and royalty-free license to the Contractor (and to its existing and future associated and af-
filiated companies, if any, within the corporate structure of which the Contractor is a part)
which license shall be assignable to the successor of that part of the Contractor's business to
which such Invention pertains;
(iii) the Contractor shall furnish promptly to the Contracting Officer on request an
irrevocable power of attorney to inspect and make copies of each United States patent applica-
tion filed by or on behalf of the Contractor covering any such Inventions;
(iv) In the event the Contractor, or those other than the Government deriving rights
from the Contractor, elects not to continue prosecution of any such United States patent ap-
plication filed by or on behalf of the Contractor, the Contractor shall so notify the Contract-
ing Officer not less than sixty days before the expiration of the response period and, upon
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 rights from the Contractor,
shall, as between the parties hereto, have the exclusive rights to file applications on Subject
Inventions in each foreign country within:
(i) nine months from the date a corresponding United States application is filed;
(ii) six months from the date permission is granted to file foreign applications where
such filing had been prohibited for security reasons; or
(iii) such longer period as may be approved by the Contracting Officer. The Contractor
shall, upon written request of the Contracting Officer, convey to the Government the Contractor's
entire right, title, and interest in each Subject Invention in each foreign country in which an
application has not been filed within the time above specified, subject to the reservation of
a non-exclusive and royalty-free license to the Contractor together with the right of the Con-
tractor 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 fails to deliver to the Contracting Officer the interim reports re-
quired by (c)(ii) above, or fails to furnish the written disclosures for all Subject Inventions
required by (c)(i) above shown to be due in accordance with any interim report delivered under
(c)(ii) or otherwise known to be unreported, there shall be withheld from payment until the Con-
tractor shall have corrected such failures either ten percent (10%) of the amount of this con-
tract, as from time to time amended, or five thousand dollars ($5,000), whichever is less.
(CPFF Aug. 1, 1960)
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After payment of eighty percent (80%) of the amount of this contract, as from time to time amend-
ed, 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 reserve or
balance thereof to be retained until the Contractor shall have furnished to the Contracting Of-
ficer:
(1) 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 accord-
ance with such final reports or are otherwise known to be unreported; and
(iii) the information as to any subcontractor required by (h) below. The maximum amount
which may be withheld under this paragraph (f) shall not exceed ten percent (10%) of the amount
of this contract or five thousand dollars ($5,000), whichever is less, and no amount shall be
withheld under this paragraph (f) when the amount specified by this paragraph (f) is being with-
held under other provisions of this contract. The withholding of any amount or subsequent pay-
ment thereof'to the Contractor shall not be construed as a waiver of any rights accruing to the
Government under this contract. This paragraph (f) shall not be construed as requiring the Con-
tractor to withhold any amounts from a subcontractor to enforce compliance with the patent pro-
visions of a subcontract.
(g) The Contractor shall exert all reasonable effort in negotiating for the inclusion of a
patent rights clause containing all the provisions of this Patent Rights clause except provisions
(f) and (i) in any subcontract hereunder of three thousand dollars ($3,000) or more, having ex-
perimental, developmental, or research work as one of its purposes. In the event of refusal by
a subcontractor to accept such a patent rights clause, the Contractor shall not proceed with
the subcontract without written authorization of the Contracting Officer or unless there has
been a waiver of the requirement as hereinafter provided. The Contractor, if unable to comply
with the requirement that such a patent rights clause be included in a subcontract after ex-
erting all reasonable effort to do so, may submit to the Contracting Officer a written request
for waiver or modification of such requirement. If, within thirty-five (35) days after the
receipt of such request, the Contracting Officer does not mail; or otherwise furnish the Contrac-
tor written denial of such request or notification that the Government requests the Contractor's
cooperation with the Government, which the Contractor agrees to provide, in negotiating with
the subcontractor for the acceptance of a suitable patent rights clause, the requirement shall
be deemed to have been waived by the Contracting Officer as. to all patent rights provisions
with respect to Subject Inventions, except such provisions, if any, relating to the production
or utilization of special nuclear material or atomic energy. Such request shall specifically
state that the Contractor has used all reasonable effort to comply with said requirement and
shall cite the waiver provision hereinabove set forth. The Contractor is not required when
negotiating with a subcontractor, to obtain in behalf of the Government any rights in Subject
Inventions other than as provided herein. However, the Contractor is not precluded from sep-
arately negotiating with a subcontractor for rights in Subject Inventions for the Contractor's
own behalf, but any costs so incurred shall not be considered as an allowable charge or cost
under this contract. Reports, instruments, and other information required, to be furnished by a
subcontractor to the Contracting Officer under the provisions of such a patent rights clause
in a subcontract hereunder may, upon mutual consent of the Contractor and the subcontractor (or
by direction of the Contracting Officer) be furnished to the Contractor for transmission to the
Contracting Officer.
(h) The Contractor shall, at the earliest practicable date, notify the Contracting Officer
in writing of any.subcontract containing one or more patent rights clauses, furnish the Con-
tracting Officer a copy of each of such clauses; and notify the Contracting Officer when such
subcontract is completed. It is understood that with respect to any subcontract clause granting
rights to the Government in Subject Inventions, the Government is a third party beneficiary;
and the Contractor hereby assigns to the Government all the rights that the Contractor would
have to enforce the subcontractor's obligations for the benefit of the Government with respect
to Subject Inventions. If there are no subcontracts containing patent rights clauses, a negative
report is required. The Contractor shall not be obligated to enforce the agreements of any
subcontractor hereunder relating to the obligations of the subcontractor to the Government in
regard to Subject Inventions.
(i) When the Contractor shows that it has been delayed in the performance of this con-
tract by reason of the Contractor's inability to obtain, in accordance with the requirements
of (g) above, the prescribed or other authorized suitable patent rights clause from a qualified
subcontractor for any item or service required under this contract for which the Contractor it-
self does not have available facilities or qualified personnel, the Contractor's delivery dates
shall be extended for a period of time equal to the duration of such delay. Upon request of the
Contractor, the Contracting Officer shall determine to what extent if any, an additional exten-
sion of the delivery dates and increase in contract prices based upon additional costs incurred
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b such delay are proper under the circumstances and the contract shall be modified accordingly.
Rev. No. 38, 10/15/58]
(j) The Contractor recognizes that the Government, or a foreign government with funds
derived through the Mutual Security Program or otherwise through the United States Government,
may contract for property or services with respect to which the vendor may be liable to the Con-
tractor for royalties for the use of a Subject Invention on account of such a contract. The Con-
tractor further recognizes that it is the policy of the Government not to pay in connection with
its contracts, or to allow to be paid in connection with contracts made with funds derived through
the Mutual Security Program or otherwise through the United States Government, charges for use of
patents in which the Government holds a royalty-free license. In recognition of this policy,
the Contractor agrees to participate in and make appropriate arrangements for the exclusion of
such charges from such contracts or for the refund of amounts received by the Contractor with
respect to any such charges not so excluded. LRev. No. 52, 3/15/60]
21. GOVERNMENT PROPERTY (ASPR 13-503 AFPI 7-403.21)
(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 supplies 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 meet such delivery or per-
formance dates. In the event that Government-furnished Property is not delivered to the Contrac-
tor by such time or times, the Contracting Officer shall, upon timely written request made by the
Contractor, make a determination of the delay occasioned the Contractor and shall equitably ad-
just the estimated cost, fixed fee, or delivery or performance dates, or all of them, and any
other contractual provisions affected by such delay, in accordance with the procedures provided
for in the clause of this contract entitled "Changes." In the event that Government-furnished
Property is received by the Contractor in a condition not suitable for the intended use, the Con-
tractor 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 other-
wise dispose of the property or (ii) effect repairs or modifications. Upon completion of (i)
or (ii) above, the Contracting Officer upon written request of the Contractor shall equitably ad-
just the estimated cost, fixed fee, or delivery or performance dates, or all of them, and any
other contractual provision affected by the return or disposition, or the repair or modifica-
tion, in accordance with the procedures provided for in the clause of this contract entitled
"Changes." The foregoing provisions for adjustment are exclusive and the Government shall not
be liable to suit for breach of contract by reason of any delay in delivery of Government-fur-
nished Property or delivery of such property in a condition not suitable for its intended use.
(b) Title to all property furnished by the Government shall remain in the Government.
Title to all property purchased by the Contractor, for the cost of which the Contractor is en-
titled to be reimbursed as a direct item of cost under this contract, shall pass to and vest in
the Government upon delivery of such property by the vendor. Title to other property, the cost
of which is reimbursable to the Contractor under this contract, shall pass to and vest in the
Government upon (i) issuance for use of such property in the performance of this contract, or
(ii) commencement of processing or use of such property in the performance of this contract,
or (iii) reimbursement of the cost thereof by the Government, in whole or in the percentage
prevailing by reason of the clause of the contract entitled "Allowable Cost, Fixed. Fee and Pay-
ment," whichever occurs first. All Government-furnished Property, together with all property
acquired by the Contractor title to which vests in the Government under this paragraph, are
subject to the provisions of this clause and are hereinafter collectively referred. to as "Gov-
ernment Property." LRev. No. 33, 5/14/58]
(c) Title to the Government Property shall not be affected by the incorporation or attach-
ment thereof to any property not owned by the Government, nor shall such Government Property,
or any part thereof, be or become a fixture or lose its identity as personalty by reason of af-
fixation to any realty. The Contractor shall comply with the provisions of the "Manual for
Control of Government Property in Possession of Contractors" (Appendix B, Armed Services Pro-
curement Regulation), as in effect on the date of the contract, which Manual is hereby incor-
porated by reference and made a part of this contract. LRev. No. 33, 5/14/58.7
(d) The Government Property provided or furnished pursuant to the terms of this contract
shall, unless otherwise provided herein, be used only for the performance of this contract.
(e) The Contractor shall maintain and administer in accordance with sound industrial prac-
tice a program for the maintenance, repair, protection and preservation of Government property
(CPFF Aug. 1, 1960)
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so as to assure its full availability and usefulness for the performance of this contract. The
Contractor shall take all reasonable steps to comply with all appropriate directions or in-
structions which the Contracting Officer may prescribe as reasonably necessary for the protection
of Government property.
(f)(i) The Contractor shall not be liable for any loss of or damage to the Government prop-
erty, or for expenses incidental to such loss or damage, except that the Contractor shall be
responsible for any such loss or damage (including expenses incidental thereto) (A) which re-
sults from willful misconduct or lack of good faith on the part of any of the Contractor's di-
rectors or officers, or on the part of any of its managers, superintendents, or other equivalent
representatives, who has supervision or direction of (I) all or substantially all of the Con-
tractor's business, or (II) all or substantially all of the Contractor's operations at any one
plant or separate location in which this contract is being performed, or (III) a separate and
complete major industrial operation in connection with the performance of this contract; or (B)
which results from a failure on the part of the Contractor, due to the willful misconduct or
lack of good faith on the part of any of its directors, officers, or other representatives
mentioned in subparagraph (A) above, (I) to maintain and administer, in accordance with sound
industrial practice, the program for maintenance, repair, protection and preservation of Gov-
ernment property as required by paragraph (e) hereof, or (II) to take all reasonable steps to
comply with any appropriate written directions of the Contracting Officer under paragraph (e)
hereof; or (C) for which the Contractor is otherwise responsible under the express terms of
the clause or clauses designated in the Schedule; or (D) which results from a risk expressly
required to be insured under this contract, but only to the extent of the insurance so required
to be procured and maintained, or to the extent of insurance actually procured and maintained,
whichever is greater; or (E) which results from a risk which is in fact covered by insurance
or for which the Contractor is otherwise reimbursed, but only to the extent of such insurance
or reimbursement; provided that, if more than one of the above exceptions shall be applicable,'
in any case, the Contractor's liability under any one exception shall not be limited by any
other exception. This clause shall not be construed as relieving a subcontractor from liability
for loss or destruction of or damage to Government property in its possession or control, ex-
cept to the extent that the subcontract, with the prior approval of the Contracting Officer, may
provide for the relief of the subcontractor from such liability In the absence of such approv-
al, the subcontract shall contain appropriate provisions requiring the return of all Government
property in as good condition as when received, except for reasonable wear and tear or for the
utilization of the property in accordance with the provisions of the prime contract.
(ii) The Contractor shall not be reimbursed for, and shall not include as an item of
overhead, the cost of insurance, or any provision for a reserve, covering the risk of loss of
or damage to the Government property, except to the extent that the Government may have required
the Contractor to carry such insurance under any other provision of this contract.
(iii) Upon the happening of loss or destruction of or damage to the Government Property,
the Contractor shall notify the Contracting Officer thereof, 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 Salvage Organization so designated (unless the Contract-
ing Officer has designated that no such organization be employed), shall take all reasonable
steps to protect the Government Property from further damage, separate the damaged and undam-
aged Government Property, put all the Government Property in the best possible order, and fur-
nish to the Contracting Officer a statement of (A) the lost, destroyed and damaged Government
Property, (B) the time and origin of the loss, destruction or damage, (C) all known interests
in commingled property of which the Government Property is a part, and (D) the insurance, if
any, covering any part of or interest in such commingled property. The Contractor shall make
repairs and renovations of the damaged Government Property or take such other action, as the
Contracting Officer directs.
(iv) In the event the Contractor is indemnified, reimbursed, or otherwise compensated
for any loss or destruction of or damage to the Government Property, it shall use the proceeds
to repair, renovate or replace the Government Property involved, or shall credit such procceds
against the cost of the work covered by the contract, or shall otherwise reimburse the Govern-
ment, as directed by the Contracting Officer. The Contractor shall do nothing to prejudice the
Government's right to recover against third parties for any such lose, destruction or damage
and, upon the request of the Contracting Officer, shall, at the Government's expense, furnish
to the Government all reasonable assistance and cooperation (including the prosecution of suit
and the execution of instruments of assignment in favor of the Government) in obtaining recov-
ery. In addition, where the subcontractor has not been relieved from liability for any loss or
destruction of or damage to Government property, the Contractor shall enforce the liability of
the subcontractor for such loss or destruction of or damage to the Government property for the
benefit of the Government.
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(v) If this contract is for the development, production, modification, maintenance, or
overhaul of aircraft, or otherwise involves the furnishing of aircraft by the Government, the
clause of this contract entitled "Flight Risks" shall control, to the extent it is applicable,
in the case of loss or destructign of, or damage to, aircraft. CRev. No. 54, 5/2/60]
(g) The Government shall at all reasonable times have access to the premises where any of
the Government property is located.
(h) The Government Property shall remain in the possession of the Contractor for such peri-
od of time as is required for the performance of this contract unless the Contracting Officer
determines that the interests of the Government require removal of such property. In such case
the Contractor shall promptly take such action as the Contracting Officer may direct with respect
to the removal and shipping of Government Property. In any such instance, the contract may
be amended to accomplish an equitable adjustment in the terms and provisions thereof.
(i) Upon the completion of this contract, or at such earlier dates as may be fixed by the
Contracting Officer, the Contractor shall submit to the Contracting Officer in a form acceptable
to him, inventory schedules covering all items of the Government Property not consumed in the
performance of this contract or not theretofore delivered to the Government, and shall deliver
or make such other disposal of such Government property as may be directed or authorized by the
Contracting Officer. The net proceeds of any such disposal shall be credited to the cost of the
work covered by the contract or shall be paid in such manner as the Contracting Officer may di-
rect. The foregoing provisions shall apply to scrap from Government Property provided, however,
that the Contracting Officer may authorize or direct the Contractor to omit from such inventory
schedules any scrap consisting of cutting and processing waste, such as chips, cuttings, borings,
turnings, short ends, circles, trimmings, clippings, and remnants, and to dispose of such scrap
in accordance with the Contractor's normal practice and account therefor as a part of general
overhead or other reimbursable cost in accordance with the Contractor's established accounting
procedures.
(j) Unless otherwise provided herein, the Government shall not be under any duty or obliga-
tion to restore or rehabilitate, or to pay the cost of the restoration or rehabilitation of the
Contractor's plant or any portion thereof which is affected by the removal of any Government
Property.
(k) Directions of the Contracting Officer and communications of the Contractor issued
pursuant to this clause shall be in writing.
As provided in paragraph (i) of the above clause, the Contracting Officer may, subject
to Departmental procedures, authorize or approve use of the Contractor's established scrap dis-
posal and accounting procedures whenever the amount and recoverable value of scrap from the
Government property are relatively minor and the Contractor's established procedures for accu-
mulating and disposing of scrap and crediting the proceeds thereof to general overhead or other
general cost will permit the Government to share equitably in such scrap recovery through a
reduction of overhead or other cost factor affecting reimbursement under the contract.
22. INSURANCE--LIABILITY TO THIRD PERSONS (ASPR 7-203.22 AFPI 7-403.22)
(a) The Contractor shall procure and thereafter maintain workmen's compensation, employer's
liability, comprehensive general liability (bodily injury) and comprehensive automobile liability
(bodily injury and property damage) insurance, with respect to performance under this contract,
and such other insurance as the Contracting Officer may from time to time require with respect to
performance under this contract; provided, that the Contractor may with the approval of the Con-
tracting Officer maintain a self-insurance program, and provided further, that with respect to
workmen's compensation the Contractor is qualified pursuant to statutory authority. All insurance
required pursuant to the provisions of this paragraph shall be in such form, in such amounts, and
for such periods of time, as the Contracting Officer may from time to time require or approve,
and with insurers approved by the Contracting Officer. LRev. No. 51, 1/4/60]
(b) The Contractor agrees, to the extent and in the manner required by the Contracting Of-
ficer, to submit for the approval of the Contracting Officer any other insurance maintained by
the Contractor in connection with the performance of this contract and for which the Contractor
seeks reimbursement hereunder.
(c) The Contractor shall be reimbursed: (i) for the portion allocable to this contract of
the reasonable cost of insurance as required or approved pursuant to the provisions of this
clause, and (ii) for liabilities to third persons for loss or for damage to property (other
than property (A) owned, occupied or used by the Contractor or rented to the Contractor or (B)
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in the care, custody or control of the Contractor), or for death or bodily injury, not compen-
sated by insurance or otherwise, arising out of the performance of this contract, whether or
not caused by the negligence of the Contractor, its agents,-servants or employees, provided
such liabilities are represented by final judgments or by settlements approved in writing by
the Government, and expenses incidental to such liabilities, except liabilities (I) for which the
Contractor is otherwise responsible under the express terms of the clause or clauses, if any,
specified in the Schedule, or (II) with respect to which the Contractor has failed to insure
as required or maintain insurance as approved by the Contracting Officer or (III) which results
from willful misconduct or lack of good faith on the part of any of the Contractor's directors or
officers, or on the part of any of its managers, superintendents, or other equivalent representa-
tives, who has supervision or direction of (1) all or substantially all of the Contractor's busi-
ness, or (2) all or substantially all of the Contractor's operations at any one plant or separ-
ate location in which this contract is being performed, or (3) a separate and complete major
industrial operation in connection with the performance of this contract. The foregoing shall
not restrict the right of the Contractor to be reimbursed for the cost of insurance maintained
by the Contractor in connection with the performance of this contract, other than insurance re-
quired to be submitted for approval or required to be procured and maintained pursuant to the
provisions of this clause, provided such cost would constitute Allowable Costs under the clause
of this contract entitled "Allowable Cost, Fixed Fee and Payment."
(d) The Contractor shall give the Government or its representatives immediate notice of any
suit or action filed, or prompt notice of any claim made, against the Contractor arising out of
the performance of this contract, the cost and expense of which may be reimbursable to the Con-
tractor under the provisions of this contract, and the risk of which is then uninsured or in
which the amount claimed exceeds the amount of coverage. The Contractor shall furnish immediate-
ly to the Government copies of all pertinent papers received by the Contractor. If the amount
of the liability claimed exceeds the amount of coverage, the Contractor shall authorize repre-
sentatives of the Government to collaborate with counsel for the insurance carrier, if any, in
settling or defending such claim. If the liability is not insured or covered by bond, the Con-
tractor shall, if required by the Government, authorize representatives of the Government to
settle or defend any such claim and to represent the Contractor in or take charge of any litiga-
tion in connection therewith; provided, however, that the Contractor may, at its own expense, be
associated with the represents ives of the Government in the settlement or defense of any such
claim or litigation.
The Government hereby gives.its authorization and consent for all use and manufacture of any
patented invention in the performance of this contract or any part hereof or any amendment hereto
or any subcontract hereunder (including any lower-tier subcontract).
24. FILING OF PATENT APPLICATIONS (ASPR 9-106 AFPI 7-404.3)
(a) Before filing or causing to be filed a patent application disclosing any subject matter
of this contract, which subject matter is classified "Secret" or higher, the Contractor shall,
citing the thirty (30) day provision below, transmit the proposed application to the Contracting
Officer for determination whether, for reasons of national security, such application should be
placed under an order of secrecy or sealed in accordance with the provisions of 35 U. S. Code
181-188 or the issuance of a patent should be otherwise delayed under pertinent statutes or reg-
ulations; and the Contractor shall observe any instructions of the Contracting Officer with re-
spect to the manner of delivery of the patent application to the U. S. Patent Office for filing,
but the Contractor shall not be denied the right to file such patent application. If the Con-
tracting 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 applica-
tion.
(b) The Contractor shall furnish to the Contracting Officer, at the time of or prior to the
time when the Contractor files or causes to be filed a patent application disclosing any subject
matter of this contract, which subject matter is classified "Confidential", a copy of such appli-
cation 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 regulation.
(c) In filing any patent application coming within the scope of this clause, the Contractor
shall observe all applicable security regulations covering the transmission of classified subject
matter.
25. DATA (ASPR 9-106 AFPI 7-404.3)
(a) The term "Subject Data" as used herein includes writings, sound recordings, pictorial
reproductions, drawings or other graphical representations, and works of any similar nature
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(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) 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, nonexclu-
sive and irrevocable license throughout the world for Government purposes 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 the Subject Data now or here-
after covered by copyright and not originated in the performance of this contract, such license
shall be only to the extent that the Contractor, its employees, or any individual or concern
specifically employed or assigned by the Contractor to originate and prepare such Data under this
contract, now has, or prior to completion or final settlement of this contract may acquire, the
right to grant such license without becoming liable to pay compensation to others solely because
of such grant.
(c) The Contractor shall exert all reasonable effort to advise the Contracting Officer, at
the time of delivery of the Subject Data furnished under this contract, (1) of all invasions of the
right of privacy contained therein and (ii) of all portions of such Data copied from work not com-
posed or produced in the performance of this contract and not licensed under this clause.
(d) The Contractor shall report to the Contracting Officer, promptly and in reasonable writ-
ten detail, each notice or claim of copyright infringement received by the Contractor with respect
to all Subject Data delivered under this contract.
(e) Nothing contained in this clause shall imply a license to the Government under any patent
or be construed as affecting the scope of any license or other right, otherwise granted to the
Government under any patent.
(f) Subject to the proviso of (b) above and unless otherwise limited below, the Government
may duplicate, use, and disclose in any manner and for any purpose whatsoever, and have others
so do, all Subject Data delivered under this contract.
(g) The Contractor recognizes that the Government, or a foreign government with funds derived
through the Mutual Security Program or otherwise through the United States Government, may con-
tract for property or services with respect to which the vendor may be liable to the Contractor
for charges for the use of Subject Data on account of such a contract. The Contractor further
recognizes that it is the policy of the Government not to pay in connection with its contracts,
or to allow to be paid in connection with contracts made with funds derived through the Mutual
Security Program or otherwise through the United States Government, charges for data which the
Government has a right to use and disclose to others, or which is in the public domain, or with
respect to which the Government has been placed in possession without restrictions upon its use
and disclosure to others. This policy does not apply to reasonable reproduction, handling, mail-
ing, and similar administrative costs incident to the furnishing of such data. In recognition of
this policy, the Contractor agrees to participate in and make appropriate arrangements for the
exclusion of such charges from such contracts or for the refund of amounts received by the Con-
tractor with respect to any such charges not so excluded. LRev. No. 52, 3/15/60]
(h) Notwithstanding any provisions of this contract concerning inspection and acceptance,
the Government shall have the right at any time to modify, remove, obliterate or ignore any
marking not authorized by the terms of this contract on any piece of Subject Data furnished under
this contract. [ev. No. 52, 3/15/60]
LRev. No. 38, 10/15/58]
26. MILITARY SECURITY REQUIREMENTS (ASPR 7-104.12, 7-204.12 AFPI 7-404.7)
(a) The provisions of this clause shall apply to the extent that this contract involves ac-
cess to security information classified "Confidential" including "Confidential - - Modified Han-
dling Authorized" or higher.
(b) The Government shall notify the Contractor of the security classification of this con-
tract and the elements thereof, and of any subsequent revisions in such security classification,
by the use of a Security Requirements Check List (DD Form 254) or other written information.
(c) To the extent the Government has indicated as of the date of this contract., or thereafter
indicates, security classification under this contract as provided in paragraph (b) above, the
Contractor.shall safeguard all classified elements of this contract and shall provide and maintain
a system of security controls within its own organization in accordance with the requirements of:
(i) the Security Agreement (DD Form 441), including the Department of Defense Industrial
Security Manual for Safeguarding Classified Information as in effect on the date of this contract,
(CPFF Aug. 1, 1960)
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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 cognizance over the facility
and representatives of the contracting Military Department shall have the right to inspect at
reasonable intervals the procedures, methods, and facilities utilized by the Contractor in comply-
ing with the security requirements under this contract. Should the Government, through its author-
ized representative, determine that the Contractor has not complied with such requirements, the
Government shall inform the Contractor in writing of the proper actions to be taken in order to
effect compliance with such requirements.
(e) If, subsequent to the date of this contract, the security classifications or requirements
under this contract are changed by the Government as provided in this clause and the security costs
under this contract are thereby increased or decreased, the contract price shall be subject to an
equitable adjustment by reason of such increased or decreased costs. Any equitable adjustment
shall be accomplished in the same manner as if such changes were directed under the "Changes"
clause in this contract.
(f) The Contractor agrees to insert, in all subcontracts hereunder which involve access to
classified security information, provisions which shall conform substantially to the language of
this clause, including this paragraph (f) but excluding the last sentence of paragraph (e) of this
clause.
(g) The Contractor also agrees that it shall determine that any subcontractor proposed by it
for the furnishing of supplies and services which will involve access to classified information
in the Contractor's custody has been granted an appropriate facility security clearance, which is
still in effect, prior to being accorded access to such classified information.
27. WALSH-HEALEY PUBLIC CONTRACTS ACT (ASPR 12-604 AFPI 7-404.8)
If this contract is for the manufacture or furnishing of materials, supplies, articles or
equipment in an amount which exceeds or may exceed $10,000 and is otherwise subject to the Walsh-
Healey Public Contracts Act, as amended (41 U.S. Code 35-45), there are hereby incorporated by
reference all representations and stipulations required by said Act and regulations issued there-
under by the Secretary of Labor, such representations and stipulations being subject to all ap-
plicable rulings and interpretations of the Secretary of Labor which are now or may hereafter be
in effect.
28. GRATUITIES,(ASPR 7-104.16 AFPI 7-404.9)
(a) The Government may, by written notice to the Contractor, terminate the right of the Con-
tractor to proceed under this contract if it is found, after notice and hearing, by the Secretary
or his duly authorized representative, that gratuities (in 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 duly 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 Govern-
ment shall be entitled (i) to pursue the same remedies against the Contractor as it could pursue
in the event of a breach of the contract by the Contractor, and (ii) as a penalty in addition to
any other damages to which it may be entitled by law, to exemplary damages in an amount (as deter-
mined by the Secretary or his duly authorized representative) which shall be not less than three
nor more than ten times the costs incurred by the Contractor in providing any such gratuities to
any such officer, or employee,
(c) The rights and remedies of the Government provided in this clause shall not be exclusive
and are in addition to any other rights and remedies provided by law or under this contract.
29. NEGOTIATED OVERHEAD RATES (ASPR 3-704.1 AFPI 7-404.12)
(a) Notwithstanding the provisions of the clause of this contract entitled "Allowable Cost,
Fixed Fee, and Payment," the allowable indirect costs under this contract shall be obtained by
applying negotiated overhead rates to bases agreed upon by the parties, as specified below.
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(b) The Contractor, as soon as possible but not later than ninety (90) days after the expira-
tion of each period specified in the Schedule, shall submit to the Contracting Officer a proposed
final overhead rate or rates for that period based on the Contractor's actual cost experience dur-
ing that period, together with supporting cost data. Negotiation of final overhead rates by the
Contractor and the Contracting Officer shall be undertaken as promptly as practicable after re-
ceipt of the Contractor's proposal.
(c) Allowability of costs and acceptability of cost allocation methods shall be determined in
accordance with ASPR, Section XV, Part 2, as in effect on the date of this contract.
(d) The results of each negotiation shall be set forth in an amendment to this contract, which
shall specify (i) the agreed final rates, (ii) the bases to which the rates apply, (iii) the periods
for which the rates apply, and (iv) the specific items treated as direct costs or any changes in
the items previously agreed to be direct costs.
(e) Pending establishment of final overhead rates for any period, the Contractor shall be re-
imbursed either at negotiated provisional rates as provided in the Schedule or at billing rates
acceptable to the Schedule or at billing rates acceptable to the Contracting Officer subject to
appropriate adjustment when the final rates for that period are established. To prevent substan-
tial over or under payment, the provisional or billing rates may, at the request of either party,
be revised by mutual agreement, either retroactively or prospectively. Any such revision of nego-
tiated provisional rates provided in the Schedule shall be set forth in an amendment to this contract.
(f) Any failure by the parties to agree on any final rate or rates under this clause shall be
considered a dispute concerning a question of fact for decision by the Contracting Officer within
the meaning of the clause of this contract entitled "Disputes."
30. DELAY IN DELIVERY OF DATA (AFPI 7-4036)
(a) It is understood that the efficient use by the Government of the supplies called for here-
under requires that the data called for hereunder be delivered not later than the time or respective
times herein specified. If such data is not delivered at said time or times, the Government may at
its election so long as such data remains undelivered, unless the delay in delivery thereof arises
out of causes beyond the control and without the fault or negligence of the Contractor within the
meaning of this clause hereof entitled "Default," withhold payment to the Contractor for any of the
amounts then due, refuse approval of the Contractor's vouchers and refuse to accept further de-
liveries hereunder from the Contractor or take any other action authorized by law or regulation now
or hereafter in effect including termination of the contract for default to the extent and in the
manner authorized by said clause, and may take any or all of the foregoing actions separately or in
combination.
(b) The provisions of this clause shall only be applicable to technical data, such as hand-
books, service manuals, or other information necessary for the proper maintenance of servicing of
the end items called for herein.
All references in any Government Specification incorporated herein to other Government specifi-
cations shall be deemed to include all specifications supplementary to or superseding the specifi-
cations so referred to, to the extent that such supplementary or superseding specifications are in
effect at the date of Contractor's latest quotation if the Contractor was furnished or otherwise
notified of the existence of such supplementary or superseding specification at the time of said
quotation.
32. FLIGHT RISK (AFPI 7-4022(b))
(a) As used in this clause the term "Operation" includes tests of aircraft, tests of equip-
ment and accessories installed therein, and the operation of any power plant installed therein,
whether or not the aircraft is in motion during the making of any such test or operation of any
such power plant.
(b) Notwithstanding the provisions of paragraph (f) of the clause of this contract captioned
"Government Property," the Contractor shall be liable for loss and destruction of and damage to
aircraft (including equipment and accessories installed therein), to which the Government has
title pursuant to the provisions of this contract or otherwise, occurring in the course of opera-
tions of such aircraft conducted by the Contractor in the performance of this contract unless
personnel conducting such operations are furnished by the Government or are approved in writing
by the Air Materiel Area Commander having administrative responsibility for this contract, or his
representative to whom such authority has been delegated. The provisions of this clause shall
supersede any provisions of applicable Air Force specifications insofar as such specifications
relate to Contractor's liability in connection with such operations.
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(c) If prior to final acceptance by the Government, any aircraft, as referred to in para-
graph (b), are lost, destroyed, or damaged during such operation, and if the risk of such loss,
damage, or destruction is borne by the Government under paragraph (f) of the clause hereof entitled
"Government Property," the Government may terminate this contract with respect to such aircraft,
or in case such aircraft is damaged, the Government may require the Contractor to restore such
aircraft to the condition in which it was immediately prior to such damage. If the Government
terminates this contract with respect to such aircraft, the Contractor shall deliver to the Gov-
ernment at the place at or from which such operation is conducted all or such parts of such air-
craft as the Contracting Officer may designate. If the Government requires the aircraft to be
restored as aforesaid, an equitable adjustment shall be made in the estimated cost and fixed-fee,
if any, and in the time required for its performance, and this contract shall be modified in
writing accordingly.
(d). Any dispute that may arise under the provisions of this clause shall be determined as
provided in the clause hereof entitled "Disputes."
(a) Clause 4 hereof entitled wAllowable Cost, Fixed Fee, and Payment'
is deleted in its entirety and in lieu thereof substitute the following
new Clause 4+.
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4+. ALLOWABLE COST, INCENTIVE FEE, AND PAIL' (May 1961)
(a)(1) For the performance of this contract, the Government shall pay
to the Contractor.
(i) the cost thereof (hereinafter referred to as "allowable cost")
determined by the Contracting Officer to be allowable in accordance with --
(A) Part 2 of Section XV of the Armed Services Procurement
Regulation as in effect on the date of this contract; and,
(B) the terms of this contract; and
(ii) a fee determined as provided in this contract.
(2) The target cost and target fee of this contract are set forth in
the Schedule and shall be subject to adjustment in accordance with (h) and
(i) below. As used throughout this contract the term:
(i) "target cost" means the estimated s of t this contract initially
negotiated, adjusted in accordance with (h) below;
(ii) "target fee" means the fee which was initially negotiated on
the assumpton that this cinitially negotiated., adjusted in accordance
estimmated. d c
with (h) below.
(b) Once each month (or at more frequent intervals, if approved by
the Contracting Officer) the Contractor may submit to an authorized
representative of the Contracting Officer, in such form and reasonable
detail as such representative may require an invoice or voucher supported
by a statement of cost incurred by the Contractor in the performance of this
contract and claimed to caxstitute allowable cost.
(c) Promptly after receipt of each invoice or voucher and statement of
cost, the Government shall, except as otherwise provided in this contract,
subject to the provisions of (d) below rake payment thereon as approved
by the Contracting Officer. Payment of fee shall be made to the Contractor
as specified in the Schedule; PROVIDED, however, that after payment
ninety-five percent (95*) of the minimum fee provided for in (i) below,
further payment on account of the fee shall be withheld until a reserve of
either fifteen percent (15%) of the target fee, or one hundred thousand
dollars ($100,000), whichever-is less, shall have been set aside.
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(d) At any time or times prior to final payment under this contract,
Contracting officer may have the invoices or vouchers and statements of cost
audited. Each payment theretofore made shall be subject to reduction for
amounts included in the related invoice or voucher which are found by
the Contracting Officer, on the basis of such auditor of toaconconstitute allowable
cost. Any paymentmay be reduced for overpayments,
payments, on preceding invoices or vouchers.
(e) On receipt and approval of the invoice or voucher designated by
the Contractor as the "completion invoice" or "completion voucher" and
upon compliance by the Contractor with all the provisions of this
contract (including, without limitation, the provisions relating to patents
and the provisions of (f) below), the Government shapromptly pay
the fee which
Contractor any balance of allowable cost, and any part has been withheld pursuant to (c) above or otherwise not paid to the
Contractor. The completion invoice or voucher shall be submitted by the
Contractor promptly following completion of the work under this contract
but in no event later than one (1) year (or such longer period as the
Contracting Officer may in his discretion approve in writing) from the date
of such completion.
(f) The Contractor agrees that any refunds, rebates, credits,, or other
amounts (including any interest thereon) accruing to or received by the
Contractor or any assignee under this contract shall be paid by the
Contractor to the Government, to the extent that they are properly allocable
to costs for which the Contractor has been reimbursed by the Government
under this contract. Reasonable expenses incurred by the Contractor for
the purpose of securing such refunds, rebates, credits, or other amounts
shall be allowable costs hereunder when approved by the Contracting Officer.
Prior to final payment under this contract, the Contractor and each
assignee under thitcontract whose assignment is in effect at the time of
final payment under this contract shall execute and deliver:
(i) an assignment to the Government, in form and substance
satisfactory to the Contracting Officer, of refunds, rebates, credits, or
other (including interest hlGovebrnment
costs s amounts
which the ontmor has been reimbursed by the
under this contract; and
(ii) a release discharging the Government, its officers, agents,
thirs obligations., exceptions out
and employees
of
of or under
,(A) specified claims in stated amounts or in estimated amounts
where the amounts are not susceptible of exact statement by the Contractor;
(B) claims, together with reasonable expenses incidental
liabilities
c nof the tract;Contractor
thereto, based
PROVIDED that such claparties
ims aresnot
ouut offthe performance
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 9
known to the Contractor on the date of the execution, of the release; and
PROVIDED FURTHER that the Contractor gives notice of such claims in writing
to the Contracting Officer not more than six (6) years after the date of
the release or the date of any notice to the Contractor that the
Government is prepared to make final payment, whichever is earlier; and
(C) claims for reimbursement of costs (other than expenses of the
Contractor by reason of its indemnification of the Government against
patent liability), including reasonable expenses incidental thereto,
incurred by the Contractor under the provisions of this contract relating
to patents.
Payments under the assignment and the claims excepted from the release
shall be subject to adjustment by reason of the adjustment of fee in
accordance with (i) below.
(g) Any cost incurred by the Contractor under the terms of this
contract which would constitute allowable cost under the provisions of
this clause shall be included in determining the amount payable under this
contract, notwithstanding any provisions contained in the specifications or
other documents incorporated in this contract by reference, designating
services to be performed or materials to be furnished by the Contractor
at its expense or without cost to the Government.
(h) When the work under this contract (including any supplies or
services which are ordered separately under, or otherwise added to, this con-
tract) is increased or decreased by contract modification, appropriate
adjustments in the target cost and target fee shall be set forth in an
amendment or supplemental agreement to tht contract.
(i) The fee payable hereunder shall be the target fee increased by
twenty cents ($.20) for every dollar by which the total allowable cost
is less than the target cost or decreased by twenty cents ($.20) for every
dollar by which the total allowable cost exceeds the target cost. In no
event shall the fee be greater than 9%, nor less than 5.5%, of the
target cost; and within these limits such fee shall be subject to
adjustment by reason of increase or decrease of total allowable cost,
on account of payments under the assignment required by (f) (i) above,
and claims excepted from the release required by (f) (ii) above.
(j) Compensation for supplies (including spare parts) and services
which are to be furnished under this contract pursuant to a provisioning
document or Government option shall be determined in accordance with the
provisions of this clause notwithstanding any inconsistent provibion in
such provisioning document or Government option.
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