SECTION D FIXED PRICE RESEARCH AND DEVELOPMENT PROVISIONS

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Document Number (FOIA) /ESDN (CREST): 
CIA-RDP89B00552R000700050013-3
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RIFPUB
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K
Document Page Count: 
15
Document Creation Date: 
December 20, 2016
Document Release Date: 
January 7, 2004
Sequence Number: 
13
Case Number: 
Publication Date: 
October 31, 1975
Content Type: 
REGULATION
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PDF icon CIA-RDP89B00552R000700050013-3.pdf2.04 MB
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Approved FRelease 2006/10/20: CIA-RDP89B0(,2R000700050013-3 SECTION D FIXED PRICE RESEARCH AND DEVELOPMENT PROVISIONS Article Page No. Alterations in Contracts ........................ 23 14 Audit .......................... .......... 5 3 Authorization and Consent ..................... 14 6 Changes ..................................... 10 4 Competition in Subcontracting ................. 4 3 Default ..................................... 13 5 Examination of Records ....................... 2 1 Federal, State, and Local Taxes ................. 16 8 Government Delay of Work .................... 18 11 Government Property ......................... 17 9 Ground and Flight Risk ....................... 15 6 Inspection ................................... 9 4 Page Article No. Payments ................................... 7 4 Patent Rights (Title) 22 12 Price Reduction for Defective Cost or Pricing Data . 3 2 Pricing of Adjustments ....................... 19 11 Reports of Work ............ ................. 11 5 Standards of Work 8 4 Stop Work Order ............................. 20 11 Subcontractor Cost or Pricing Data ............. 6 3 Subcontracts ................................. 1 1 Termination for Convenience of the Government .. 12 5 Title and Risk of Loss 21 12 7-303.12 SUBCONTRACTS (1972 APR) (The provisions of this clause do not apply to firm fixed-price and fixed price with escalation contracts. However, the clause does apply to unpriced modifications under such contracts.) (a) As used in this clause, the term "subcontract" includes pur- chase orders. (b) The Contractor shall notify the Contracting Officer reason- ably in advance of entering into any subcontract if the Contractor's procurement system has not been approved by the Contracting Officer and if the subcontract: (i) is to be a cost-reimbursement, time and materials, or labor- hour contract which it is estimated will involve an amount in ex- cess of ten thousand dollars ($10,000) including any fee; (ii) is proposed to exceed one hundred thousand dollars ($100,000) ; or (iii) is one of a number of subcontracts, under this contract, with a single subcontractor for the same or related supplies or services which, in the aggregate, are expected to exceed one hun- dred thousand dollars ($100,000). (c) The advance notification required by paragraph (b) above shall include: (i) a description of the supplies or services to be called for by the subcontract; (ii) identification of the proposed subcontractor and an ex- planation of why and how the proposed subcontractor was se- lected, including the competition obtained; (iii) the proposed subcontract price, together with the Con- tractor's cost or price analysis thereof; (iv) the subcontractor's current, complete, and accurate cost or pricing data and Certificate of Current Cost or Pricing Data, when such data and certificates are required by other provisions of this contract to be obtained from the subcontractor; (v) identification of the type of subcontract to be used; (vi) a memorandum of negotiation which sets forth the princi- pal elements of the subcontract price negotiations. A copy of this memorandum shall be retained in the contractor's file for the use of Government reviewing authorities. The memorandum shall be in sufficient detail to reflect the most significant considerations con- trolling the establishment of initial or revised prices. The memo- randum should include an explanation of why cost or pricing data was, or was not required, and, if it was not required in the case of any price negotiation in excess of $100,000, a statement of the basis for determining that the price resulted from or was based on ad- equate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, FORM ~ 424D OBSOLETE PREVIOUS 4-73 EDITIONS or prices set by law or regulation. If cost or pricing data was sub- mitted and a certificate of cost or pricing data was required, the memorandum shall reflect the extent to which reliance was not placed upon the factual cost or pricing data submitted and the ex- tent to which this data was not used by the contractor in determin- ing the total price objective and in negotiating the final price. The memorandum shall also reflect the extent to which it was recog- nized in the negotiation that any cost or pricing data submitted by the subcontractor was not accurate, complete, or current; the action taken by the contractor and the subcontractor as a result; and the effect, if any, of such defective data on the total price negotiated Where the total price negotiated differs significantly from the con- tractor's total price objective, the memorandum shall explain this difference; and (vii) when incentives are used, the memorandum of nego- tiation shall contain an explanation of the incentive fee/profit plan identifying each critical performance element, management deci- sions used to quantify each incentive element, reasons for incen- tives on particular performance characteristics, and a brief sum- mary of trade-off possibilities considered as to cost, performance, and time. (d) The Contractor shall not enter into any subcontract for which advance notification to the Contracting Officer is required by this clause, without the prior written consent of the Contracting Officer; provided that the Contracting Officer, in his discretion, may ratify in writing any subcontract. Such ratification shall con- stitute the consent of the Contracting Officer required by this paragraph. (e) Neither consent by the Contracting Officer to any subcon- tract or any provisions thereof nor approval of the Contractor's procurement system shall be construed to be a determination of the acceptability of any subcontract price or of any amount paid under any subcontract or to relieve the Contractor of any responsi- bility for performing this contract, unless such approval or con- sent specifically provides otherwise. (f) The Contractor agrees that no subcontract placed under this contract shall provide for payment on a cost-plus-a-percentage-of- cost basis. 7-302.6 EXAMINATION OF RECORDS (1971 MAR) (AMENDED) (a) This clause is applicable if the amount of this contract exceeds $2,500 and was entered into by means of negotiation, including small business restricted advertising, but is not applicable if this contract was entered into by means of formal advertising. Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 (b) The Contractor agrees that the Appropriate Audit Repre- sentative of the Government or any of his duly authorized repre- sentatives shall, until the expiration of three years after final payment under this contract or such lesser time specified in either Appendix M of the Armed Services Procurement Regulation or the Federal Procurement Regulations Part 1-20, as appropriate, have access to and the right to examine any directly pertinent books, documents, papers, and records of the Contractor involving transactions related to this contract. (c) The Contractor further agrees to include in all his sub- contracts hereunder a provision to the effect that the subcontractor agrees that the Appropriate Audit Representative of the Govern- ment or any of his duly authorized representatives shall, until the expiration of three years after final payment under the sub- contract or such lesser time specified in either Appendix M of the Armed Services Procurement Regulation or the Federal Procure- ment Regulations Part 1-20, as appropriate, have access to and the right to examine any directly pertinent books, documents, papers, and records of such subcontractor, involving transactions related to the subcontract. The term "subcontract" as used in this clause, excludes (i) purchase orders not exceeding $2,500 (ii) subcon- tracts or purchase orders for public utility services at rates estab- lished for uniform applicability to the general public. (d) The periods of access and examination described in (b) and (c) above for 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) costs and expenses of this contract as to which exception has been taken by the Appropriate Audit Representative of the Government or any of his duly authorized representatives, shall continue until such appeals, litigation, claims or exceptions have been disposed of. 7-303.16 PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA (1970 JAN) (a) The following clause shall be inserted in negotiated con- tracts which when entered into exceed $100,000, except where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. In addi- tion the Contracting Officer shall include this clause in other negotiated contracts for which he has obtained a Certificate of Current Cost or Pricing Data in accordance with 3-807.3(a) (iii) in connection with the initial pricing of the contract, or for which he has obtained partial cost or pricing data in accordance with 3-807.3(e). PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA (1970 JAN) If any price, including profit or fee, negotiated in connection with this contract or any cost reimbursable under this contract was increased by any significant sums because: (i) the Contractor furnished cost or pricing data which was not complete, accurate and current as certified in the Contractor's Certificate of Current Cost or Pricing Data; (ii) a subcontractor, pursuant to the clause of this contract entitled "Subcontractor Cost or Pricing Data" or "Subcontractor Cost or Pricing Data-Price Adjustments" or any subcontract clause therein required, furnished cost or pricing data which was not complete, accurate and current as certified in the subcon- tractor's Certificate of Current Cost or Pricing Data; (iii) a subcontractor or prospective subcontractor furnished cost or pricing data which was required to be complete, accurate and current and to be submitted to support a subcontract cost estimate furnished by the Contractor but which was not com- plete, accurate and current as of the date certified in the Con- tractor's Certificate of Current Cost or Pricing Data; or (iv) the Contractor or a subcontractor or prospective sub- contractor furnished any data, not within (i), (ii) or (iii) above, which was not accurate as submitted; the price or cost shall be reduced accordingly and the contract shall be modified in writing as may be necessary to reflect such reduction. However, any reduction in the contract price due to defective subcontract data of a prospective subcontractor when the subcontract was not subsequently awarded to such subcon- tractor, will be limited to the amount (plus applicable overhead and profit markup) by which the actual subcontract, or actual cost to the Contractor if there was no subcontract, was less than the prospective subcontract cost estimate submitted by the Con- tractor, provided the actual subcontract price was not affected by defective cost or pricing data. Note: Since the contract is subject to reduction under this clause by reason of defective cost or pricing data submitted in connection with certain subcontracts, it is expected that the contractor may wish to include a clause in each such subcontract requiring the subcontractor to appropriately indemnify the contractor. However, the inclusion of such a clause and the terms thereof are matters for negotiation and agreement between the contractor and the subcontractor, provided that they are consistent with ASPR 23-203 relating to Disputes provisions in subcontracts. It is also expected that any subcontractor subject to such indemnification will gen- erally require substantially similar indemnification for defective cost or pricing data required to be submitted by his lower tier subcontractors. (b) Insert the following clause in all contracts, both formally advertised and negotiated, which when entered into exceed $100,000 except those containing the clause set forth in (a) above. PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA-PRICE ADJUSTMENTS (1970 JAN) (a) This clause shall become operative only with respect to any modification of this contract which involves aggregate increases and/or decreases in costs plus applicable profits in excess of $100,000 unless the modification is priced on the basis of adequate competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. The right to price reduction under this clause is limited to defects in data relating to such modification. (b) If any price, including profit, or fee, negotiated in con- nection with any price adjustment under this contract was in- creased by any significant sums because: (i) the Contractor furnished cost or pricing data which was not complete, accurate and current as certified in the Contractor's Certificate of Current Cost or Pricing Data; (ii) a subcontractor, pursuant to the clause of this contract entitled "Subcontractor Cost or Pricing Data" or "Subcontractor Cost or Pricing Data-Price Adjustments" or any subcontract clause therein required, furnished cost or pricing data which was not complete, accurate and current as certified in the subcontractor's Certificate of Current Cost or Pricing Data; (iii) a subcontractor or prospective subcontractor furnished cost or pricing data which was required to be complete, accurate and current and to be submitted to support a subcontract cost estimate furnished by the Contractor but which was not complete, accurate and current as of the date certified in the Contractor's Certificate of Current Cost or Pricing Data; or (iv) the Contractor or a subcontractor or prospective subcon- tractor furnished any data, not within (i), (ii) or (iii) above, which was not accurate as submitted; the price shall be reduced accordingly and the contract shall be modified in writing as may be necessary to reflect such reduction. However, any reduction in the contract price due to defective subcontract data of a prospective subcontractor, when the sub- contract was not subsequently awarded to such subcontractor, will be limited to the amount (plus applicable overhead and profit markup) by which the actual subcontract, or actual cost to the Contractor if there was no subcontract, was less than the prospec- tive subcontract cost estimate submitted by the Contractor, pro- vided the actual subcontract price was not affected by defective cost or pricing data. Approved For Relea e 2006/10/20: CIA-RDP89BOO552RO700050013-3 Approved For Z~please 2006/10/20: CIA-R DP89B0055.000700050013-3 Note: Since the contract is subject to reduction under this clause by reason of defective cost or pricing data submitted in connection with certain subcontracts, it is expected that the con- tractor may wish to include a clause in each such subcontract requiring the subcontractor to appropriately indemnify the con- tractor. However, the inclusion of such a clause and the terms thereof are matters for negotiation and agreement between the contractor and the subcontractor, provided that they are consistent with ASPR 23-203 relating to Disputes provisions in subcontracts. It is also expected that any subcontractor subject to such indemni- fication will generally require substantially similar indemnification for defective cost or pricing data required to be submitted by his lower tier subcontractors. 7-303.27 COMPETITION IN SUBCONTRACTING (1962 APR) The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract. (e) Availability. The materials described in (b), (c) and (d) above shall be made available at the office of the Contractor, at all reasonable times, for inspection, audit, or reproduction, until the expiration of three years from the date of final payment under this contract or such lesser time specified in Appendix M of the Armed Services Procurement Regulation, and for such longer period, if any, as is required by applicable statute, or by other clauses of this contract, or by (1) and (2) below: (1) If this contract is completely or partially terminated, the records relating to the work terminated shall be made available for a period of three years from the date of any resulting final settlement. (2) Records which relate to appeals under the "Disputes" clause of this contract, or litigation or the settlement of claims arising out of the performance of this contract, shall be made available until such appeals, litigation, or claims have been dis- posed of. (f) The Contractor shall insert a clause containing all the pro- visions of this clause, including this paragraph (f), in all sub- contracts hereunder, except altered as necessary for proper iden- tification of the contracting parties and the Contracting Officer under the Government prime contract. 7-303.28 AUDIT (1971 APR) (AMENDED) (a) Insert the clause set forth below in all contracts other than contracts entered into by formal advertising which are not expected to exceed $100,000. AUDIT (1971 APR) (AMENDED) (a) General. The Contracting Officer or his representatives shall have the audit and inspection rights described in the ap- plicable paragraphs (b), (c) and (d) below. (b) Examination of Costs. If this is a cost reimbursement type, incentive, time and materials, labor hour, or price redeterminable contract, or any combination thereof, the Contractor shall maintain, and the Contracting Officer or his representatives shall have the right to examine books, records, documents, and other evidence and accounting procedures and practices, sufficient to reflect properly all direct and indirect costs of whatever nature claimed to have been incurred and anticipated to be incurred for the performance of this contract. Such right of examination shall in- clude inspection at all reasonable times of the Contractor's plants, or such parts thereof, as may be engaged in the performance of this contract. (c) Cost or Pricing Data. If the Contractor submitted cost or pricing data in connection with the pricing of this contract or any change or modification thereto, unless such pricing was based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation, the Contracting Officer or his representatives who are employees of the United States Government shall have the right to examine all books, records, documents and other data of the Contractor related to the negotiation, pricing or performance of such contract, change or modification, for the purpose of evaluating the accuracy, com- pleteness and currency of the cost or pricing data submitted. Additionally, in the case of pricing any change or modification exceeding $100,000 to formally advertised contracts, the Appro- priate Audit Representative of the Government or his representa- tives who are employees of the United States Government shall have such rights. The right of examination shall extend to all documents necessary to permit adequate evaluation of the cost or pricing data submitted, along with the computations and pro- jections used therein. (d) Reports. If the Contractor is required to furnish Cost In- formation Reports (CIR) or Contract Fund Status Reports (CFSR), the Contracting Officer or his representatives shall have the right to examine books, records, documents, and supporting materials, for the purpose of evaluating (i) the effectiveness of the Contractor's policies and procedures to produce data compatible with the objectives of these reports, and (ii) the data reported. ARTICLE 6 7-303.29 SUBCONTRACTOR COST OR PRICING DATA (1970 JAN) (a) The following clause shall be inserted in all negotiated con- tracts expected to exceed $100,000, except where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. The Contracting Officer may include this clause, with appropriate reduction in the dollar amounts included therein, in other negotiated contracts where a Certificate of Current Cost or Pricing Data is required (see 3-807.3 (a) (iii) ) in connection with initial pricing of the contract. SUBCONTRACTOR COST OR PRICING DATA (1970 JAN) (a) The Contractor shall require subcontractors hereunder to submit, actually or by specific identification in writing, cost or pricing data under the following circumstances: (i) prior to the award of any subcontract the amount of which is expected to exceed $100,000 when entered into; (ii) prior to the pricing of any subcontract modification which involves aggregate increases and/or decreases in costs plus applicable profits expected to exceed $100,000; except where the price is based on adequate price competition, established catalog or market prices of com- mercial items sold in substantial quantities to the general public, or prices set by law or regulation. (b) The Contractor shall require subcontractors to certify, in substantially the same form as that used in the certificate by the Prime Contractor to the Government, that to the best of their knowledge and belief, the cost and pricing data submitted under (a) above is accurate, complete, and current as of the date of agreement on the negotiated price of the subcontract or sub- contract change or modification. (c) The Contractor shall insert the substance of this clause including this paragraph (c) in each subcontract hereunder which exceeds $100,000 when entered into except where the price thereof is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. In each such excepted subcontract hereunder in excess $100,000, the Contractor shall insert the substance of the following clause: SUBCONTRACTOR COST OR PRICING DATA-PRICE AD- JUSTMENTS (a) Paragraph (b) and (c) of this clause shall become op- erative only with respect to any modification made pursuant to one or more provisions of this contract which involves aggregate increases and/or decreases in costs plus applicable profits ex- pected to exceed $100,000. The requirements of this clause shall be limited to such contract modifications. Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 Approved For Re4ase 2006/10/20: CIA-RDP89B00552I 0700050013-3 Note: Since the contract is subject to reduction under this clause by reason of defective cost or pricing data submitted in connection with certain subcontracts, it is expected that the con- tractor may wish to include a clause in each such subcontract requiring the subcontractor to appropriately indemnify the con- tractor. However, the inclusion of such a clause and the terms thereof are matters for negotiation and agreement between the contractor and the subcontractor, provided that they are consistent with ASPR 23-203 relating to Disputes provisions in subcontracts. It is also expected that any subcontractor subject to such indemni- fication will generally require substantially similar indemnification for defective cost or pricing data required to be submitted by his lower tier subcontractors. 7-303.27 COMPETITION IN SUBCONTRACTING (1962 APR) The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract. 7-303.28 AUDIT (1971 APR) (AMENDED) (a) Insert the clause set forth below in all contracts other than contracts entered into by formal advertising which are not expected to exceed $100,000. AUDIT (1971 APR) (AMENDED) (a) General. The Contracting Officer or his representatives shall have the audit and inspection rights described in the ap- plicable paragraphs (b), (c) and (d) below. (b) Examination of Costs. If this is a cost reimbursement type, incentive, time and materials, labor hour, or price redeterminable contract, or any combination thereof, the Contractor shall maintain, and the Contracting Officer or his representatives shall have the right to examine books, records, documents, and other evidence and accounting procedures and practices, sufficient to reflect properly all direct and indirect costs of whatever nature claimed to have been incurred and anticipated to be incurred for the performance of this contract. Such right of examination shall in- clude inspection at all reasonable times of the Contractor's plants, or such parts thereof, as may be engaged in the performance of this contract. (c) Cost or Pricing Data. If the Contractor submitted cost or pricing data in connection with the pricing of this contract or any change or modification thereto, unless such pricing was based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation, the Contracting Officer or his representatives who are employees of the United States Government shall have the right to examine all books, records, documents and other data of the Contractor related to the negotiation, pricing or performance of such contract, change or modification, for the purpose of evaluating the accuracy, com- pleteness and currency of the cost or pricing data submitted. Additionally, in the case of pricing any change or modification exceeding $100,000 to formally advertised contracts, the Appro- priate Audit Representative of the Government or his representa- tives who are employees of the United States Government shall have such rights. The right of examination shall extend to all documents necessary to permit adequate evaluation of the cost or pricing data submitted, along with the computations and pro- jections used therein. (d) Reports. If the Contractor is required to furnish Cost In- formation Reports (CIR) or Contract Fund Status Reports (CFSR), the Contracting Officer or his representatives shall have the right to examine books, records, documents, and supporting materials, for the purpose of evaluating (i) the effectiveness of the Contractor's policies and procedures to produce data compatible with the objectives of these reports, and (ii) the data reported. (e) Availability. The materials described in (b), (c) and (d) above shall be made available at the office of the Contractor, at all reasonable times, for inspection, audit, or reproduction, until the expiration of three years from the date of final payment under this contract or such lesser time specified in Appendix M of the Armed Services Procurement Regulation, and for such longer period, if any, as is required by applicable statute, or by other clauses of this contract, or by (1) and (2) below: (1) If this contract is completely or partially terminated, the records relating to the work terminated shall be made available for a period of three years from the date of any resulting final settlement. (2) Records which relate to appeals under the "Disputes" clause of this contract, or litigation or the settlement of claims arising out of the performance of this contract, shall be made available until such appeals, litigation, or claims have been dis- posed of. (f) The Contractor shall insert a clause containing all the pro- visions of this clause, including this paragraph (f), in all sub- contracts hereunder, except altered as necessary for proper iden- tification of the contracting parties and the Contracting Officer under the Government prime contract. 7-303.29 SUBCONTRACTOR COST OR PRICING DATA (1970 JAN) (a) The following clause shall be inserted in all negotiated con- tracts expected to exceed $100,000, except where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. The Contracting Officer may include this clause, with appropriate reduction in the dollar amounts included therein, in other negotiated contracts where a Certificate of Current Cost or Pricing Data is required (see 3-807.3(a) (iii) ) in connection with initial pricing of the contract. SUBCONTRACTOR COST OR PRICING DATA (1970 JAN) (a) The Contractor shall require subcontractors hereunder to submit, actually or by specific identification in writing, cost or pricing data under the following circumstances: (i) prior to the award of any subcontract the amount of which is expected to exceed $100,000 when entered into; (ii) prior to the pricing of any subcontract modification which involves aggregate increases and/or decreases in costs plus applicable profits expected to exceed $100,000; except where the price is based on adequate price competition, established catalog or market prices of com- mercial items sold in substantial quantities to the general public, or prices set by law or regulation. (b) The Contractor shall require subcontractors to certify, in substantially the same form as that used in the certificate by the Prime Contractor to the Government, that to the best of their knowledge and belief, the cost and pricing data submitted under (a) above is accurate, complete, and current as of the date of agreement on the negotiated price of the subcontract or sub- contract change or modification. (c) The Contractor shall insert the substance of this clause including this paragraph (c) in each subcontract hereunder which exceeds $100,000 when entered into except where the price thereof is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. In each such excepted subcontract hereunder in excess $100,000, the Contractor shall insert the substance of the following clause: SUBCONTRACTOR COST OR PRICING DATA-PRICE AD- JUSTMENTS (a) Paragraph (b) and (c) of this clause shall become op- erative only with respect to any modification made pursuant to one or more provisions of this contract which involves aggregate increases and/or decreases in costs plus applicable profits ex- pected to exceed $100,000. The requirements of this clause shall be limited to such contract modifications. Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 Approved For Re#aase 2006/10/20: CIA-RDP89B00552 OF, D700050013-3 be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." However, noth- ing in this clause shall excuse the Contractor from proceeding with the contract as changed. 7-304.6 REPORTS OF WORK (1960 JUL) (a) The Contractor shall submit reports making full disclosure of all work done and the results thereof, in the manner, at the times, and to the extent set forth in the Schedule; provided that, unless otherwise specified in the Schedule, the Contractor shall submit such reports in triplicate from time to time as requested and upon completion (or earlier termination) of the work. Except as may be otherwise specified in the Schedule, or unless the Contractor is otherwise instructed, the Contractor shall, upon completion (or earlier termination) of the work, deliver any work- ing drawings and specifications of any prototypes as may have been developed. (b) If the Contractor becomes unable to complete the contract work and to deliver at the time specified in the Schedule because of technical difficulties, notwithstanding the exercise of good faith and diligent efforts in performance of the work, he shall give the Contracting Officer written notice of the anticipated delays with reason therefor not less than forty-five (45) days before the completion date specified in the Schedule or within such time as the Contracting Officer deems sufficient. When notice is so re- quired, the Contracting Officer may, in his discretion, extend the time specified in the Schedule for such period as he deems advisable. 7-302.10 TERMINATION FOR THE CONVENIENCE OF THE GOVERNMENT (1973 APR) (a) The performance of work under this contract may be terminated, in whole or from time to time in part, by the Go- ernment whenever for any reason the Contracting Officer shall determine that such termination is in the best interest of the Government. Termination of work hereunder shall be effected by delivery to the Contractor of a Notice of Termination specifying the extent to which performance of work under the contract is terminated and the date upon which such termination becomes effective. (b) After receipt of the Notice of Termination the Contractor shall cancel his outstanding commitments hereunder covering the procurement of materials, supplies, equipment and miscellaneous items. In addition the Contractor shall exercise all reasonable diligence to accomplish the cancellation or diversion of his out- standing commitments covering personal services and extending beyond the date of such termination to the extent that they relate to the performance of any work terminated by the notice. With respect to such cancelled commitments the Contractor agrees to (i) settle all outstanding liabilities and all claims arising out of such cancellation of commitments, with the approval or ratifica- tion of the Contracting Officer, to the extent he may require, which approval or ratification shall be final for all purposes of this clause, and (ii) assign to the Government, in the manner at the time, and to the extent directed by the Contracting Officer, all of the right, title, and interest of the Contractor under the orders and subcontracts so terminated, in which case the Govern- ment 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. (c) The Contractor shall submit his termination claim to the Contracting Officer promptly after receipt of a Notice of Termi- nation, but in no event later than one year from the effective date thereof, unless one or more extensions in writing are granted by the Contracting Officer upon written request of the Contractor within such one year period or authorized extension thereof. Upon failure of the Contractor to submit his termination claim within the time allowed, the Contracting Officer may determine, on the basis of information available to him, the amount, if any, due to the Con- tractor by reason of the termination and shall thereupon pay to the Contractor the amount so determined. (d) Any determination of costs under paragraph (c) shall be governed by the cost principles set forth in Section XV, Part 3, of the Armed Services Procurement Regulation, as in effect on the date of this contract. (e) Subject to the provisions of paragraph (c) above, the Con- tractor and the Contracting Officer may agree upon the whole or any part of the amount or amounts to be paid to the Contractor by reason of the termination under this clause, which amount or amounts may include any reasonable cancellation charges thereby incurred by the Contractor and any reasonable loss upon outstand- ing commitments for personal services which he is unable to cancel; provided, however, that in connection with any outstanding com- mitments for personal services which the Contractor is unable to cancel, the Contractor shall have exercised reasonable diligence to divert such commitments to his other activities and operations. Any such agreement shall be embodied in an amendment to this contract and the Contractor shall be paid the agreed amount. (f) The Government may from time to time, under such terms and conditions as it may prescribe, make partial payments against costs incurred by the Contractor in connection with the terminated portion of this contract, whenever, in the opinion of the Contract- ing Officer, the aggregate of such payments is within the amount to which the Contractor will be entitled hereunder. (g) The Contractor agrees to transfer title and deliver to the Government, in the manner, at the time, and to the extent, if any, directed by the Contracting Officer, such information and items which, if the contract had been completed, would have been re- quired to be furnished to the Government, including: (i) completed or partially completed plans, drawings and in- formation; and (ii) materials or equipment produced or in process or acquired in connection with the performance of the work terminated by the notice. Other than the above, any termination inventory resulting from the termination of the contract may, with the written approval of the Contracting Officer, be sold or acquired by the Contractor under the conditions prescribed by and at a price or prices approved by the Contracting Officer. The proceeds of any such disposition shall be applied in reduction of any payments to be made by the Govern- ment to the Contractor under this contract or shall otherwise be credited to the price or cost of work covered by this contract or paid in such other manner as the Contracting Officer may direct. Pend- ing final disposition of property arising from the termination, the Contractor agrees to take such action as may be necessary, or as the Contracting Officer may direct, for the protection and pres- ervation of the property related to this contract which is in the possession of the Contractor and in which the Government has or may acquire an interest. (h) Any disputes as to questions of fact which may arise here- under shall be subject to the "Disputes" clause of this contract. 7-302.9 DEFAULT (1969 AUG) (a) The Government may, subject to the provisions of paragraph (c) of this clause, by written Notice of Default to the Contractor terminate the whole or any part of this contract in any one of the following circumstances: (i) if the Contractor fails to perform the work called for by this contract within the time(s) specified herein or any ex- tension thereof; or (ii) if the Contractor fails to perform any of the other pro- visions of this contract, or so fails to prosecute the work as to endanger performance of this contract in accordance with its terms, and in either of these two circumstances does not cure such failure within a period of 10 days (or such longer period as the Contracting Officer may authorize in writing) after receipt of notice from the Contracting Officer specifying such failure. Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 (b) In the event the Government terminates this contract in whole or in part as provided in paragraph (a) of this clause, the Government may procure, upon such terms and in such manner as the Contracting Officer may deem appropriate, work similar to the work so terminated and the Contractor shall be liable to the Gov- ernment for any excess costs for such similar work; provided, that the Contractor shall continue the performance of this contract to the extent not terminated under the provisions of this clause. (c) Except with respect to defaults of subcontractors, the Con- tractor shall not be liable for any excess costs if the failure to perform the contract arises out of causes beyond the control and without 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, quaratine restrictions, strikes, freight embargoes, and unusually severe weather; but in every case the failure to perform must be beyond the control and without the fault or negligence of the Contractor. If the failure to perform is caused by the default of a subcontractor, and if such default arises out of causes beyond the control of both the Contractor and subcontractor, and without the fault or negligence of either of them, the Contractor shall not be liable for any excess costs for failure to perform, unless the supplies or service to be furnished by the subcontractor were obtainable from other sources in suffi- cient time to permit the Contractor to meet the required delivery schedule or other performance requirements. (d) If this contract is terminatd as provided in paragraph (a) of this clause, the Government, in addition to any other rights provided in this clause, may require the Contractor to transfer title and deliver to the Government, in the manner and to the extent directed by the Contracting Officer any of the completed or partially completed work not theretofore delivered to, and accepted by, the Government and any other property, including contract rights, specifically produced or specifically acquired for the performance of such part of this contract as has been termi- nated; and the Contractor shall, upon the direction of the Con- tracting Officer, protect and preserve property in the possession of the Contractor in which the Government has an interest. The Government shall pay to the Contractor the contract price, if separately stated, for completed work accepted by the Government and the amount agreed upon by the Contractor and the Contract- ing Officer for (i) completed work for which no separate price is stated, (ii) partially completed work, (iii) other property described above which is accepted by the Government and, (iv) the pro- tection and preservation of property. Failure to agree shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." The Government may withhold from amounts otherwise due the Contractor for such completed supplies or manufacturing materials such sum as the Contracting Officer determines to be necessary to protect the Government against loss because of outstanding liens or claims of former lien holders. (e) If, after notice of termination of this contract under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the provisions of this clause, or that the default was excusable under the provisions of this clause, the rights and obligations of the parties shall, if the contract contains a clause providing for termination for con- venience of the Government, be the same as if the notice of termination had been issued pursuant to such clause. (f) The rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract. (g) As used in paragraph c of this clause, the terms "sub- contractor" and "subcontractors" mean subcontractor (s) at any tier. 7-302.21 AUTHORIZATION AND CONSENT (1981 JAN) The government hereby gives its authorization and consent for all use and manufacture of any invention described in and covered by a patent of the United States in the performance of this con- tract or any part hereof or any amendment hereto or any subcon- tract hereunder (including any lower-tier subcontract). (a) Notwithstanding any other provisions of this contract, ex- cept as may be specifically provided in the Schedule as an excep- tion to this clause, the Government, subject to the definitions and limitations of this clause, assumes the risk of damage to, or loss or destruction of, aircraft "in the open," during "operation," and "flight," as these terms are defined below, and agrees that the Contractor shall not be liable to the Government for any such damage, loss, or destruction, the risk of which is so assumed by the Government. (b) For the purposes of this clause: (i) Unless otherwise specifically provided in the Schedule, the term "aircraft" means- (A) aircraft (including (I) complete aircraft, and (II) air- craft in the course of being manufactured, disassembled, or re- assembled; provided, that an engine or a portion of a wing or a wing is attached to a fuselage of such aircraft) to be furnished to the Government under this contract (whether before or after acceptance by the Government); and (B) aircraft (regardless of whether in a state of dis- assembly or reassembly) furnished by the Government to the Contractor under this contract; including all property installed therein, or in the process of installation, or temporarily removed from such aircraft; provided, however, that such aircraft and property are not covered by a separate bailment agreement. (ii) The term "in the open" means located wholly outside of buildings on the Contractor's premises or at such other places as may be described in the Schedule as being in the open for the purposes of this clause, except that aircraft furnished by the Government shall be deemed to be in the open at all times while in Contractor's possession, care, custody, or control. (iii) The term "flight" means any flight demonstration, flight test, taxi test, or other flight, made in the performance of this contract, or for the purpose of safeguarding the aircraft, or pre- viously approved in writing by the Contracting Officer. With respect to land based aircraft, "flight" shall commence with the taxi roll from a flight line on the Contractor's premises, and continue until the aircraft has completed the taxi roll in returning to a flight line on the Contractor's premises; with respect to sea- planes, "flight" shall commence with the launching from a ramp on the Contractor's premises and continue until the aircraft has completed its landing run upon return and is beached at a ramp on the Contractor's premises; with respect to helicopters, "flight" shall commence upon engagement of the rotors for the purpose of take-off from the Contractor's premises and continue until the aircraft has returned to the ground on the Contractor's premises and the rotors are disengaged; and with respect to vertical take- off aircraft, "flight" shall commence upon disengagement from any launching platform or device on the Contractor's premises and continue until the aircraft has been re-engaged to any launching platform or device on the Contractor's premises; provided, however, that the aircraft off the Contractor's premises shall be deemed to be in flight when on the ground or water only during periods of reasonable duration following emergency landing, other landings made in the performance of this contract, or landings approved by the Contracting Officer in writing. (iv) The term "Contractor's premises" means those premises designated as such in the Schedule or in writing by the Contract- ing Officer, and any other place to which the aircraft are moved for the purpose of safeguarding the aircraft. (v) The term "operation" means operations and tests, other than on any production line, of aircraft, when not in flight, whether or not the aircraft is in the open or in motion during the making of any such operations or tests, and includes operations and tests of equipment, accessories, and power plants, only when installed in aircraft. Approved For Release 2006/10/20: CIA-RDP89B00552F 00700050013-3 Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 (b) In the event the Government terminates this contract in whole or in part as provided in paragraph (a) of this clause, the Government may procure, upon such terms and in such manner as the Contracting Officer may deem appropriate, work similar to the work so terminated and the Contractor shall be liable to the Gov- ernment for any excess costs for such similar work; provided, that the Contractor shall continue the performance of this contract to the extent not terminated under the provisions of this clause. (c) Except with respect to defaults of subcontractors, the Con- tractor shall not be liable for any excess costs if the failure to perform the contract arises out of causes beyond the control and without 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, quaratine restrictions, strikes, freight embargoes, and unusually severe weather; but in every case the failure to perform must be beyond the control and without the fault or negligence of the Contractor. If the failure to perform is caused by the default of a subcontractor, and if such default arises out of causes beyond the control of both the Contractor and subcontractor, and without the fault or negligence of either of them, the Contractor shall not be liable for any excess costs for failure to perform, unless the supplies or service to be furnished by the subcontractor were obtainable from other sources in suffi- cient time to permit the Contractor to meet the required delivery schedule or other performance requirements. (d) If this contract is terminatd as provided in paragraph (a) of this clause, the Government, in addition to any other rights provided in this clause, may require the Contractor to transfer title and deliver to the Government, in the manner and to the extent directed by the Contracting Officer any of the completed or partially completed work not theretofore delivered to, and accepted by, the Government and any other property, including contract rights, specifically produced or specifically acquired for the performance of such part of this contract as has been termi- nated; and the Contractor shall, upon the direction of the Con- tracting Officer, protect and preserve property in the possession of the Contractor in which the Government has an interest. The Government shall pay to the Contractor the contract price, if separately stated, for completed work accepted by the Government and the amount agreed upon by the Contractor and the Contract- ing Officer for (i) completed work for which no separate price is stated, (ii) partially completed work, (iii) other property described above which is accepted by the Government and, (iv) the pro- tection and preservation of property. Failure to agree shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." The Government may withhold from amounts otherwise due the Contractor for such completed supplies or manufacturing materials such sum as the Contracting Officer determines to be necessary to protect the Government against loss because of outstanding liens or claims of former lien holders. (e) If, after notice of termination of this contract under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the provisions of this clause, or that the default was excusable under the provisions of this clause, the rights and obligations of the parties shall, if the contract contains a clause providing for termination for con- venience of the Government, be the same as if the notice of termination had been issued pursuant to such clause. (f) The rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract. (g) As used in paragraph c of this clause, the terms "sub- contractor" and "subcontractors" mean subcontractor (s) at any tier. 7-302.21 AUTHORIZATION AND CONSENT (1961 JAN) The government hereby gives its authorization and consent for all use and manufacture of any invention described in and covered by a patent of the United States in the performance of this con- tract or any part hereof or any amendment hereto or any subcon- tract hereunder (including any lower-tier subcontract). (a) Notwithstanding any other provisions of this contract, ex- cept as may be specifically provided in the Schedule as an excep- tion to this clause, the Government, subject to the definitions and limitations of this clause, assumes the risk of damage to, or loss or destruction of, aircraft "in the open," during "operation," and "flight," as these terms are defined below, and agrees that the Contractor shall not be liable to the Government for any such damage, loss, or destruction, the risk of which is so assumed by the Government. (b) For the purposes of this clause: (i) Unless otherwise specifically provided in the Schedule, the term "aircraft" means- (A) aircraft (including (I) complete aircraft, and (II) air- craft in the course of being manufactured, disassembled, or re- assembled; provided, that an engine or a portion of a wing or a wing is attached to a fuselage of such aircraft) to be furnished to the Government under this contract (whether before or after acceptance by the Government); and (B) aircraft (regardless of whether in a state of dis- assembly or reassembly) furnished by the Government to the Contractor under this contract; including all property installed therein, or in the process of installation, or temporarily removed from such aircraft; provided, however, that such aircraft and property are not covered by a separate bailment agreement. (ii) The term "in the open" means located wholly outside of buildings on the Contractor's premises or at such other places as may be described in the Schedule as being in the open for the purposes of this clause, except that aircraft furnished by the Government shall be deemed to be in the open at all times while in Contractor's possession, care, custody, or control. (iii) The term "flight" means any flight demonstration, flight test, taxi test, or other flight, made in the performance of this contract, or for the purpose of safeguarding the aircraft, or pre- viously approved in writing by the Contracting Officer. With respect to land based aircraft, "flight" shall commence with the taxi roll from a flight line on the Contractor's premises, and continue until the aircraft has completed the taxi roll in returning to a flight line on the Contractor's premises; with respect to sea- planes, "flight" shall commence with the launching from a ramp on the Contractor's premises and continue until the aircraft has completed its landing run upon return and is beached at a ramp on the Contractor's premises; with respect to helicopters, "flight" shall commence upon engagement of the rotors for the purpose of take-off from the Contractor's premises and continue until the aircraft has returned to the ground on the Contractor's premises and the rotors are disengaged; and with respect to vertical take- off aircraft, "flight" shall commence upon disengagement from any launching platform or device on the Contractor's premises and continue until the aircraft has been re-engaged to any launching platform or device on the Contractor's premises; provided, however, that the aircraft off the Contractor's premises shall be deemed to be in flight when on the ground or water only during periods of reasonable duration following emergency landing, other landings made in the performance of this contract, or landings approved by the Contracting Officer in writing. (iv) The term "Contractor's premises" means those premises designated as such in the Schedule or in writing by the Contract- ing Officer, and any other place to which the aircraft are moved for the purpose of safeguarding the aircraft. (v) The term "operation" means operations and tests, other than on any production line, of aircraft, when not in flight, whether or not the aircraft is in the open or in motion during the making of any such operations or tests, and includes operations and tests of equipment, accessories, and power plants, only when installed in aircraft. Approved For Reuse 2006/10/20: CIA-RD P89B00552FM00700050013-3 Approved For ]ease 2006/10/20: CIA-R DP89B00500700050013-3 (vi) The term "flight crew members" means the pilot, the co- pilot and, unless otherwise specifically provided in the Schedule, the flight engineer, navigator, bombardier-navigator, and defensive systems operator, when required, or assigned to their respective crew positions, to conduct any flight on behalf of the Contractor. (c) (1) The Government's assumption of risk under this clause, as to aircraft in the open, shall continue in effect unless termi- nated pursuant to subparagraph (3) below. Where the Con- tracting Officer finds that any of such aircraft is in the open under unreasonable conditions, he shall notify the Contractor in writing of the conditions he finds to be unreasonable and require the Contractor to correct such conditions within a reasonable time. (2) Upon receipt of such notice, the Contractor shall act promptly to correct such conditions, regardless of whether he agrees that such conditions are in fact unreasonable. To the extent that the Contracting Officer may later determine that such con- ditions were not in fact unreasonable, an equitable adjustment shall be made in the contract price to compensate the Contractor for any additional costs he incurred in correcting such conditions and the contract shall be modified in writing accordingly. Any dispute as to the unreasonableness of such conditions or the equitable adjustment shall be deemed to be a dispute concerning a question of the fact within the meaning of the clause of this contract entitled "Disputes." (3) If the Contracting Officer finds that the Contractor has failed to act promptly to correct such conditions or has failed to correct such conditions within a reasonable time, he may termi- nate the Government's assumption of risk under this clause, as to any of the aircraft which is in the open under such conditions, such termination to be effective at 12:01 A.M. on the fifteenth day following the day of receipt by the Contractor of written notice thereof. If the Contracting Officer later determines that the Con- tractor acted promptly to correct such conditions or that the time taken by the Contractor was not in fact unreasonable, an equitable adjustment shall, notwithstanding paragraph (g) of this clause, be made in the contract price to compensate the Contractor for any additional costs he incurred as a result of termination of the Government's assumption of risk under this clause and the contract shall be modified in writing accordingly. Any dispute as to whether the Contractor failed to act promptly to correct such conditions, or as to the reasonableness of the time for correction of such conditions, or as to such equitable adjustment, shall be deemed to be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." (4) In the event the Government's assumption of risk under this clause is terminated in accordance with (3) above, the risk of loss with respect to Government-furnished property shall be determined in accordance with the clause of this contract, if any, entitled "Government-Furnished Property" until the Government's assumption of risk is reinstated in accordance with (5) below. (5) When unreasonable conditions have been corrected, the Contractor shall promptly notify the Government thereof. The Government may elect to again assume the risks and relieve the Contractor of liabilities as provided in this clause, or not, and the Contracting Officer shall notify the Contractor of the Govern- ment's election. If, after correction of the unreasonable condi- tions the Government elects to again assume such risks and relieve the Contractor of such liabilities, the Contractor shall he entitled to an equitable adjustment in the contract price for costs of in- surance, if any, extending from the end of the third working day after the Contractor notifies the Government of such correction until the Government notifies the Contractor of such election. If the Government elects not to again assume such risks, and such conditions have in fact been corrected, the Contractor shall be entitled to an equitable adjustment for costs of insurance, if any, extending after each third working day. (d) The Government's assumption of risk shall not extend to damage to, or loss or destruction of, such aircraft: (i) resulting from failure of the Contractor, due to willful misconduct or lack of good faith of any of the Contractor's man- agerial personnel, to maintain and administer a program for the protection and preservation of aircraft in the open, and during operation, in accordance with sound industrial practice (the term "Contractor's managerial personnel" means the Contractor's di- rectors, officers, and any of his managers, superintendents, or other equivalent representatives, who has supervision or direction of all or substantially all of the Contractor's business, or all or sub- stantially all of the Contractor's operations at any one plant or separate location at which this contract is performed, or a separate and complete major industrial operation in connection with the performance of this contract); (ii) sustained during flight if the flight crew members con- ducting such flight have not been approved in writing by the contracting officer; (iii) while in the course of transportation by rail, or by conveyance on public streets, highways, or waterways, except for Government-furnished property; (iv) to the extent that such damage, loss or destruction is in fact covered by insurance; (v) consisting of wear and tear, deterioration (including rust and corrosion), freezing, or mechanical, structural, or electrical breakdown or failure, unless such damage is the result of other loss, damage, or destruction covered by this clause; provided, however, in the case of Government-furnished property, if such damage consists of reasonable wear and tear or deterioration, or results from inherent vice in such property, this exclusion shall not apply; or (vi) sustained while the aircraft is being worked upon and directly resulting therefrom, including but not limited to any repairing, adjusting, servicing or maintenance operation, unless such damage, loss, or destruction is of a type which would be covered by insurance which would customarily have been main- tained by the Contractor at the time of such damage, loss, or destruction, but for the Government's assumption of risk under this clause. (e) With the exception of damage to, or loss or destruction of aircraft in "flight," the Government's assumption of risk under this clause shall not extend to the first $1,000 of loss or damage resulting from each event separately occurring. The Contractor assumes the risk of and shall be responsible for the first $1,000 of loss of or damage to aircraft "in the open" or during "operation" resulting from each event separately occurring, except for reason- able wear and tear and except to the extent the loss or damage is caused by negligence of Government personnel. If the Govern- ment elects to require that the aircraft be replaced or restored by the Contractor to the condition in which it was immediately prior to the damage, the equitable adjustment in the price au- thorized by paragraph (i) below shall not include the dollar amount of the risk assumed by the Contractor under this paragraph. In the event the Government does not elect repair or replacement, the Contractor agrees to credit the contract price or pay the Government $1,000 (or the amount of the loss if smaller) as directed by the Contracting Officer. (f) A subcontractor shall not be relieved from liability for damage to, or loss or destruction of aircraft while in his possession or control, except to the extent that the subcontract, with the prior written approval of the Contracting Officer, provides for relief of the subcontractor from such liability. In the absence of such approval, the subcontract shall contain appropriate provisions re- quiring the return of such aircraft in as good condition as when received, except for reasonable wear and tear or for the utiliza- tion of the property in accordance with the provisions of this contract. Where a subcontractor has not been relieved from lia- bility for any damage, loss, or destruction of aircraft and any damage, loss, or destruction occurs, the Contractor shall enforce the liability of the subcontractor for such damage to, or loss or destruction of, the aircraft for the benefit of the Government. (g) The Contractor warrants that the contract price does not and will not include, except as may be otherwise authorized in this clause, any charge or contingency reserve for insurance (in- cluding self-insurance funds or reserves) covering any damage to, or loss or destruction of, aircraft while in the open, during opera- tion, or in flight, the risk of which has been assumed by the Government under the provisions of this clause, whether or not such assumption may be terminated as to aircraft in the open. Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 (h) In the event of damage to, or loss or destruction of, aircraft in the open during operation, or in flight, the Contractor shall take all reasonable steps to protect such aircraft from further damage, separate damaged and undamaged aircraft, put all aircraft in the best possible order and, further, except in cases covered by (e ) above, the Contractor should furnish to the Contracting Officer a statement of: (i) the damaged, lost, or destroyed aircraft; (ii) the time and origin of the damage, loss or destruction; (iii) all known interests in commingled property of which aircraft are a part; and (iv) the insurance, if any, covering any part of the interest in such commingled property. Except in cases covered by (e) above, an equitable adjustment shall be made in the amount due under this contract for expendi- tures made by the Contractor in performing his obligations under this paragraph (h) and this contract shall be modified in writing accordingly. (i) If prior to delivery and acceptance by the Government any aircraft is damaged, lost, or destroyed and the Government has under this clause assumed the risk of such damage, loss or destruc- tion, the Government shall either (1) require that such aircraft be replaced or restored by the Contractor to the condition in which it was immediately prior to such damage, or (2) shall terminate this contract with respect to such aircraft. In the event that the Government requires that the aircraft be replaced or restored, an equitable adjustment shall be made in the amount due under this contract and in the time required for its performance, and this contract shall be modified in writing accordingly. If, in the al- ternative, this contract is terminated under this paragraph with respect to such aircraft and under this clause the Government has assumed the risk of such damage, loss, or destruction, the Con- tractor shall be paid the contract price for said aircraft (or, if applicable, any work to be performed on said aircraft) less such amounts as the Contracting Officer determines (1) that it would have cost the Contractor to complete the aircraft (or any work to be performed on said aircraft) together with anticipated profit, if any, on any such uncompleted work, and (2) to be the value, if any, of the damaged aircraft or any remaining portion thereof retained by the Contractor. The Contracting Officer shall have the right to prescribe the manner of disposition of the damaged, lost, or destroyed aircraft, or any remaining parts thereof; and if any additional costs of such disposition are incurred by the Con- tractor, a further equitable adjustment will be made in the amount due to the Contractor. Failure of the parties to agree upon an equitable adjustment or upon the amount to be paid in the event of termination of the contract with respect to any aircraft, shall be a dispute concerning a question of fact within the meaning of the Disputes clause of this contract. (j) In the event the Contractor is at any time reimbursed or compensated by any third person for any damage, loss, or destruc- tion of any aircraft, the risk of which has been assumed by the Government under the provisions of this clause and for which the Contractor has been compensated by the Government, he shall equitably reimburse the Government. The Contractor shall do nothing to prejudice the Government's rights to recover against third parties for any such damage, loss, or destruction 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 or subrogation in favor of the Gov- ernment) in obtaining recovery. 7-302.7 FEDERAL, STATE, AND LOCAL TAXES (1960 JUL) (a) As used throughout this clause, the term "contract date" means the date of this contract. As to additional supplies or serv- ices procured by modification of this contract, the term "contract date" means the date of such modification. (b) Except as may be otherwise provided in this contract, the contract price includes, to the extent allocable to this contract, all Federal, State, and local. taxes which, on the contract date: (i) by Constitution, statute, or ordinance, are applicable to this contract, or to the transactions covered by this contract, or to property or interests in property; or (ii) pursuant to written ruling or regulation, the authority charged with administering any such tax is assessing or applying to, and is not granting or honoring an exemption for, a Contractor under this kind of contract, or the transactions covered by this contract, or property or interests in property. (c) Except as may be otherwise provided in this contract, duties in effect on the contract date are included in the contract price, to the extent allocable to this contract. (d) (1) If the Contractor is required to pay or bear the burden- (i) of any tax or duty which either was not to be included in the contract price pursuant to the requirements of paragraphs (b) and (c), or of a tax or duty specifically excluded from the contract price by a provision of this contract; or (ii) of an increase in rate of any tax or duty, whether or not such tax or duty was excluded from the contract price; or (iii) of any interest or penalty on any tax or duty referred to in (i) or (ii) above; the contract price shall be increased by the amount of such tax, duty, interest, or penalty allocable to this contract; provided, that the Contractor warrants in writing that no amount of such tax, duty, or rate increase was included in the contract price as a con- tingency reserve or otherwise; and provided further, that liability for such tax, duty, rate increase, interest, or penalty was not incurred through the fault or negligence of the Contractor or his failure to follow instructions of the Contracting Officer. (2) If the Contractor is not required to pay or bear the burden, or obtains a refund or drawback, in whole or in part, of any tax, duty, interest, or penalty which: (i) was to be included in the contract price pursuant to the requirements of paragraphs (b) and (c) ; (ii) was included in the contract price; or (iii) was the basis of an increase in the contract price; shall be decreased by the amount of such relief, refund, or drawback allocable to this contract, or the allocable amount of such relief refund, or drawback shall be paid to the Government, as directed by the Contracting Officer. The contract price also shall be similarly decreased if the Contractor, through his fault or negli- gence or his failure to follow instructions of the Contracting Officer, is required to pay or bear the burden, or does not obtain a refund or drawback of any such tax, duty, interest, or penalty. Interest paid or credited to the Contractor incident to a refund of taxes shall inure to the benefit of the Government to the extent that such interest was earned after the Contractor was paid or reim- bursed by the Government for such taxes. (3) Invoices or vouchers covering any adjustment of the con- tract price pursuant to this paragraph (d) shall set forth the amount thereof as a separate item and shall identify the particular tax or duty involved. (4) This paragraph (d) shall not be applicable to social security taxes; income and franchise taxes, other than those levied on or measured by (i) sales or receipts from sales, or (ii) the Con- tractor's possession of, interest in, or use of property, title to which is in the Government; excess profits taxes; capital stock taxes; un- employment compensation taxes; or property taxes, other than such property taxes allocable to this contract, as are assessed either on completed supplies covered by this contract, or on the Contractor's possession of, interest in, or use of property, title to which is in the Government. (5) No adjustment of less than $100 is required to be made in the contract price pursuant to this paragraph (d). (e) Unless there does not exist any reasonable basis to sustain an exemption, the Government upon request of the Contractor, without further liability, agrees, except as otherwise provided in this contract, to furnish evidence appropriate to establish exemp- tion from any tax which the Contractor warrants in writing was excluded from the contract price. In addition, the Contracting Officer may furnish evidence appropriate to establish exemption Approved For R Tease 2006/10/20: CIA-RDP89B00552100700050013-3 - Approved For Rase 2006/10/20: CIA-RDP89B00552ZQ00700050013-3 from any tax that may, pursuant to this clause, give rise to either an increase or decrease in the contract price. Except as otherwise provided in this contract, evidence appropriate to establish exemp- tion from duties will be furnished only at the discretion of the Contracting Officer. (f) (1) The Contractor shall promptly notify the Contracting Officer of all matters pertaining to Federal, State, and local taxes, and duties, that reasonably may be expected to result in either an increase or decrease in the contract price. (2) Whenever an increase or decrease in the contract price may be required under this clause, the Contractor shall take action as directed by the Contracting Officer, and the contract price shall be equitably adjusted to cover the costs of such action, including any interest, penalty, and reasonable attorneys' fees. 7-303.7 GOVERNMENT PROPERTY (FIXED PRICE) (1968 SEP) (a) Government Property Clause. Except as provided in (b) through (d) below, insert the following clause when the Govern- ment is to furnish the Contractor, or the Contractor is to acquire Government property. GOVERNMENT PROPERTY (FIXED PRICE) (1968 SEP) (a) Government-Furnished Property. The Government shall deliver to the Contractor, for use in connection with and under the terms of this contract, the property described as Government- furnished property 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 prop- erty"). 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 (except for such property furnished "as is") 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 performance dates. In the event that Gov- ernment-furnished property is not delivered to the Contractor by such time or times, the Contracting Officer shall, upon timely written request made by the Contractor, make a determination of the delay, if any, occasioned the Contractor thereby, and shall equitably adjust the delivery or performance dates or the con- tract price, or both, and any other contractual provision affected by any such delay, in accordance with the procedures provided for in the clause of this contract entitled "Changes." Except for Government-furnished property furnished "as is," in the event the Government-furnished property is received by the Contractor in a condition not suitable for the intended use the Contractor shall, upon receipt thereof, notify the Contracting Officer of such fact and as directed by the Contracting Officer, either (i) return such property at the Government's expense or otherwise dispose of the property, or (ii) effect repairs or modifications. Upon the completion of (i) or (ii) above, the Contracting Officer upon written request of the Contractor shall equitably adjust the de- livery or performance dates or the contract price, or both, and any other contractual provision affected by the rejection or dis- position, or the repair or modification, in accordance with the procedures provided for in the clause of this contract entitled "Changes." The foregoing provisions for adjustment are exclusive and the Government shall not be liable to suit for breach of con- tract by reason of any delay in delivery of Government-furnished property or delivery of such property in a condition not suitable for its intended use. (b) Changes in Government-furnished Property. (1) By notice in writing, the Contracting Officer may (i) decrease the property provided or to be provided by the Govern- ment under this contract, or (ii) substitute other Government- owned property for property to be provided by the Government, or to be acquired by the Contractor for the Government, under this contract. The Contractor shall promptly take such action as the Contracting Officer may direct with respect to the removal and shipping of property covered by such notice. (2) In the event of any decrease in or substitution of prop- erty pursuant to subparagraph (1) above, or any withdrawal of authority to use property provided under any other contract or lease, which property the Government had agreed in the Schedule to make available for the performance of this contract, the Con- tracting Officer, upon the written request of the Contractor (or, if the substitution of property causes a decrease in the cost of performance, on his own initiative), shall equitably adjust such contractual provisions as may be affected by the decrease, sub- stitution, or withdrawal, in accordance with the procedures pro- vided for in the "Changes" clause of this contract. (c) Title. Title to all property furnished by the Government shall remain in the Government. In order to define the obligations of the parties under this clause, title to each item of facilities, special test equipment, and special tooling (other than that subject to a "Special Tooling" clause) acquired by the Contractor for the Government pursuant to this contract shall pass to and vest in the Government when its use in the performance of this contract com- mences, or upon payment therefor by the Government, whichever is earlier, whether or not title previously vested. All Government- furnished property, together with all property acquired by the Contractor title to which vests in the Government under this para- graph, is subject to the provisions of this clause and is hereinafter collectively referred to as "Government property." Title to Govern- ment property shall not be affected by the incorporation or at- tachment 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. (d) Property Administration. The Contractor shall comply with the provisions of Appendix B, Armed Services Procurement Reg- ulation, as in effect on the date of the contract, which is hereby incorporated by reference and made a part of this contract. Mate- rial to be furnished by the Government shall be ordered or re- turned by the Contractor, when required, in accordance with the "Manual for Military Standard Requisitioning and Issue Procedure (MILSTRIP) for Defense Contractors" (Appendix H, Armed Services Procurement Regulation) as in effect on the date of this contract, which Manual is hereby incorporated by reference and made a part of the contract. (e) Use of Government Property. The Government property shall, unless otherwise provided herein or approved by the Con- tracting Officer, be used only for the performance of this contract. (f) Utilization, Maintenance and Repair of Government Property. The Contractor shall maintain and adminster, in accordance with sound industrial practice, and in accordance with applicable pro- visions of Appendix B, a program for the utilization, maintenance, repair, protection, and preservation of Government property until disposed of by the Contractor in accordance with this clause. In the event that any damage occurs to Government property the risk of which has been assumed by the Government under this con- tract, the Government shall replace such items or the Contractor shall make such repair of the property as the Government directs; provided, however, that if the Contractor cannot effect such repair within the time required, the Contractor shall dispose of such pro- perty in the manner directed by the Contracting Officer. The con- tract price includes no compensation to the Contractor for the per- formance of any repair or replacement for which the Government is responsible, and an equitable adjustment will be made in any con- tractual provisions affected by such repair or replacement of Gov- ernment property made at the direction of the Government, in ac- cordance with the procedures provided for in the "Changes" clause of this contract. Any repair or replacement for which the Contractor is responsible under the provisions of this contract shall be accomp- lished by the Contractor at his own expense. Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 (g) Risk of Loss. Unless otherwise provided in this contract, the Contractor assumes the risk of, and shall be responsible for, any loss of or damage to Government property provided under this con- tract upon its delivery to him or upon passage of title thereto to the Government as provided in paragraph (c) hereof, except for rea- sonable wear and tear and except to the extent that such property is consumed in the performance of this contract. (h) Access. The Government, and any persons designated by it, shall at all reasonable times have access to the premises wherein any Government property is located, for the purpose of inspecting the Government property. (i) Final Accounting and Disposition of Government Property. Upon the completion of this contract, or at such earlier dates as may be fixed by the Contracting Officer, the Contractor shall sub- mit, in a form acceptable to the Contracting Officer, inventory schedules covering all items of Government property not con- sumed in the performance of this contract (including any resulting scrap) or not theretofore delivered to the Government, and shall prepare for shipment, deliver f.o.b. origin, or dispose of the Gov- ernment property, as may be directed or authorized by the Con- tracting Officer. The net proceeds of any such disposal shall be credited to the contract price or shall be paid in such other manner as the Contracting Officer may direct. (j) Restoration of Contractor's Premises and Abandonment. Un- less otherwise provided herein, the Government: (i) may abandon any Government property in place, and thereupon all obligations of the Government regarding such aban- doned property shall cease; and (ii) has no obligation to the Contractor with regard to restora- tion or rehabilitation of the Contractor's premises, neither in case of abandonment (paragraph (j) (i) above), disposition on comple- tion of need or of the contract (paragraph (i) above), nor other- wise, except for restoration or rehabilitation costs which are prop- erly included in an equitable adjustment under paragraph (b) above. (k) Communications. All communications issued pursuant to this clause shall be in writing or in accordance with the "Manual for Military Standard Requisitioning and Issue Procedure (MILSTRIP ) for Defense Contractors" (Appendix H, Armed Services Procure- ment Regulation), (b) Overseas Contracts. If the contract is an overseas contract, insert the words "United States" before the words "Government" and Government-furnished" whenever they appear in the above clause. Also, substitute the following paragraphs (d) and (k) for paragraphs (d) and (k) of the above clause. (d) Property Administration. The Contractor shall comply with the provisions of Appendix B, Armed Services Procurement Reg- ulation, as in effect on the date of the contract, which is hereby in- corporated by reference and made a part of this contract. (k) Communications. All communications issued pursuant to this clause shall be in writing. (c) Negotiated Contracts. In negotiated fixed price contracts for which the price is not based on (i) adequate price competition, (ii) established catalog or market prices of commercial items sold in substantial quantities to the general public (see 3-807.1(b) ), or (iii) prices set by law or regulation, substitute the following para- graph (g) for paragraph (g) of the clause in (a) above. (g) Risk of Loss. (1) Except as provided in (2) below, the Contractor shall not be liable for loss or destruction of or damage to the Government property provided under this contract: (i) caused by any peril while the property is in transit off the Contractor's premises; or (ii) caused by any of the following perils while the property is on the Contractor's or subcontractor's premises, or on any other premises where such property may properly be located, or by re- moval therefrom because of any of the following perils- (A) fire; lightning, windstorm, cyclone, tornado, hail; explosion; riot, riot attending a strike, civil commotion; vandalism and malicious mischief; sabotage; aircraft or objects falling there- from; vehicles running on land or tracks; excluding vehicles owned or operated by the Contractor or any agent or employee of the Contractor; smoke; sprinkler leakage; earthquake or volcanic erup- tion; flood, meaning thereby rising of a body of water; nuclear reaction, nuclear radiation or radioactive contamination; hostile or warlike action, including action in hindering, combating, or defending against an actual, impending or expected attack by any government or sovereign power (de jure or de facto), or by any authority using military, naval, or air forces; or by an agent of any such government, power, authority, or forces; or (B) other peril, of a type not listed above, if such other peril is customarily covered by insurance (or by a reserve for self-insurance) in accordance with the normal practice of the Contractor, or the prevailing practice in the industry in which the Contractor is engaged with respect to similar property in the same general locale. The perils as set forth in (i) and (ii) above are hereinafter called "excepted perils." If the Contractor transfers Government property to the posses- sion and control of a subcontractor, the transfer shall not affect the liability of the Contractor for loss or destruction of or damage to the property as set forth above. However, the Contractor shall require the subcontractor to assume the risk of, and be responsible for, any loss or destruction of or damage to the property while in the latter's possession or control, except to the extent that the subcontract, with the prior approval of the Contracting Officer, provides for the relief of the subcontractor from such liability. In the absence of such approval, the subcontract shall contain appropriate provisions requiring the return of all Government prop- erty 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. (2) Notwithstanding (1) above, the Contractor shall be re- sponsible for any loss or damage (i) to the extent specifically provided in the clause or clauses of this contract designated in the schedule, or (ii) which results from: (A) willful misconduct or lack of good faith of any of the Contractor's managerial personnel; or (B) a failure on the part of the Contractor, due to willful misconduct or lack of good faith of the Contractor's mana- gerial personnel, (i) to maintain and administer the program for maintenance, repair, protection, and preservation of the Govern- ment property as required by paragraph (f) hereof, or (ii) to establish, maintain and administer a system for control of Gov- ernment property as required by paragraph (d) of this clause. Any failure of the Contractor to act, as provided in this (B), shall be conclusively presumed to be a failure resulting from willful misconduct, or lack of good faith on the part of one of the Contractor's managerial personnel if the Contractor is notified by the Contracting Officer by registered or certified mail ad- dressed to one of the Contractor's managerial personnel, of the Government's disapproval, withdrawal of approval, or nonaccept- ance of the Contractor's program or system. In such event, it shall be presumed that any loss of or damage to Government property resulted from such failure. The Contractor shall be liable for such loss or damage unless he can establish by clear and convincing evidence that such loss or damage did not result from his failure to maintain an approved program or system, or oc- curred during such time as an approved program or system for control of Government property was maintained. The term "Contractor's managerial personnel" as used herein means the Contractor's directors, officers and any of his managers, superintendents, or other equivalent representatives who have supervision or direction of: (i) all or substantially all of the Contractor's business; (ii) all or substantially all of the Contractor's operation at any one plant or separate location at which the contract is being performed; or (iii) a separate and complete major industrial operation in connection with the performance of this contract. Approved For cease 2006/10/20: CIA-R DP89B0055000700050013-3 Approved For F ease 2006/10/20: CIA-RDP89B0055 )O0700050013-3 (3) The Contractor represents that he is not including in the price hereunder, and agrees that he will not hereafter include in any price to the Government, any charge or reserve for in- surance (including any self-insurance funds or reserve) covering loss or destruction of or damage to the Government property caused by an excepted peril. (4) Upon the happening of loss or destruction of or damage to any Government property caused by an excepted peril, 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 Contracting Officer has directed that no such organi- zation be employed), shall take all reasonable steps to protect the Government property from further damage, separate the dam- aged and undamaged Government property, put all the Govern- ment property in the best possible order, and furnish to the Con- tracting Officer a statement of: (i) the lost, destroyed, and damaged Government property; (ii) the time and origin of the loss, destruction, or damage; (iii) all known interests in commingled property of which the Government property is a part; and (iv) the insurance, if any, covering any part of or interest in such commingled property. The Contractor shall be entitled to an equitable adjustment in the contract price for the expenditures made by him in performing his obligations under this subparagraph (4) (including charges made to the Contractor by the Loss and Salvage Organization, except any of such charges the payment of which the Govern- ment has, at its option, assumed directly), in accordance with the procedures provided for in the "Changes" clause of this contract. (5) With the approval of the Contracting Officer after loss or destruction of or damage to Government property, and subject to such conditions and limitations as may be imposed by the Contracting Officer, the Contractor may, in order to minimize the loss to the Government or in order to permit resumption of business or the like, sell for the account of the Government any item of Government property which has been damaged beyond practicable repair, or which is so commingled or combined with property of others, including the Contractor, that separation is impracticable. (6) Except to the extent of any loss or destruction of or damage to Government property for which the Contractor is relieved of liability under the foregoing provisions of this clause, and except for reasonable wear and tear or depreciation, or the utilization of the Government property in accordance with the provisions of this contract, the Contractor assumes the risk of, and shall be responsible for, any loss or destruction of or damage to the Government property, and such property (other than that which is permitted to be sold) shall be returned to the Govern- ment in as good condition as when received by the Contractor in connection with this contract, or as repaired under paragraph (f) above. (7) In the event the Contractor is reimbursed or compensated for any loss or destruction of or damage to the Government prop- erty, caused by an excepted peril, he shall equitably reimburse the Government. The Contractor shall do nothing to prejudice the Government's rights to recover against third parties for any such loss, destruction or damage and, upon the request of the Contracting Officer, shall at the Government's expense, furnish to the Government all reasonable assistance and cooperation (in- cluding the prosecution of suit and the execution of instruments of assignment in favor of the Government) in obtaining recovery. In addition, where a subcontractor has not been relieved from liability for any loss or destruction of or damage to the Govern- ment 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. *(8) If this contract is for the development, production, modi- fication, maintenance or overhaul of aircraft, or otherwise involves the furnishing of aircraft by the Government, the "Ground and Flight Risk" clause of this contract shall control, to the extent it is applicable, in the case of loss or destruction of, or damage to, aircraft. (1970 SEP) 7-302.27 GOVERNMENT DELAY OF WORK (1968 SEP) (a) If the performance of all or any part of the work is delayed or interrupted by an act of the Contracting Officer in the admin- istration of this contract, which act is not expressly or impliedly authorized by this contract, or by his falure to act within the time specified in this contract (or within a reasonable time if no time is specified), an adjustment (excluding profit) shall be made for any increase in the cost of performance of this contract caused by such delay or interruption and the contract modified in writing accordingly. Adjustment shall be made also in the delivery or performance dates and any other contractual provision affected by such delay or interruption. However, no adjustment shall be made under this clause for any delay or interruption (i) to the extent that performance would have been delayed or interrupted by any other cause, including the fault or negligence of the Con- tractor; or (ii) for which an adjustment is provided or excluded under any other provision of this contract. (b) No claim under this clause shall be allowed (i) for any costs incurred more than twenty (20) days before the Contractor shall have notified the Contracting Officer in writing of the act or failure to act involved; and (ii) unless the claim, in an amount stated, is asserted in writing as soon as practicable after the termination of such delay or interruption, but not later than the date of final payment under the contract. 7-302.29 PRICING OF ADJUSTMENTS (1970 JUL) When costs are a factor in any determination of a contract price adjustment pursuant to the "Changes" clause or any other pro- vision of this contract, such costs shall be in accordance with Section XV of the Armed Services Procurement Regulation as in effect on the date of this contract. 7-304.11 STOP WORK ORDER (1971 APR) (a) The Contracting Officer may, at any time, by written order to the Contractor, require the Contractor to stop all, or any part, of the work called for by this contract for a period of ninety (90) days after the order is delivered to the Contractor, and for any further period to which the parties may agree. Any such order shall be specifically identified as a Stop Work Order issued pursuant to this clause. Upon receipt of such an order, the Contractor shall forthwith comply with its terms and take all rea- sonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Within a period of ninety (90) days after a stop work order is delivered to the Contractor, or within any extension of that period to which the parties shall have agreed, the Contracting Officer shall either- (i) cancel the stop work order, or (ii) terminate the work covered by such order as provided in the "Default" or the "Termination for Convenience" clause of this contract. *This subparagraph may be omitted where it is clearly inapplicable and shall be deleted when the Ground and Flight Risk clause is omitted pursuant to 10-404(b)(2). Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 (b) If a stop work order issued under this clause is canceled or the period of the order or any extension thereof expires, the Contractor shall resume work. An equitable adjustment shall be made in the delivery schedule or contract price, or both, and the contract shall be modified in writing accordingly, if- (i) the stop work order results in an increase in the time required for, or in the Contractor's cost properly allocable to, the performance of any part of this contract, and (ii) the Contractor asserts a claim for such adjustment within thirty (30) days after the end of the period of work stoppage; provided that, if the Contracting Officer decides the facts justify such action, he may receive and act upon any such claim asserted at any time prior to final payment under this contract. (c) If a stop work order is not canceled and the work covered by such order is terminated for the convenience of the Govern- ment, the reasonable costs resulting from the stop work order shall be allowed in arriving at the termination settlement, (d) If a stop work order is not canceled and the work covered by such order is terminated for default, the reasonable costs result- ing from the stop work order shall be allowed by equitable ad- justment or otherwise. 7-302.28 TITLE AND RISK OF LOSS (1968 JUN) (a) Unless this contract specifically provides for earlier pas- sage of title, title to supplies covered by this contract shall pass to the Government upon formal acceptance, regardless of when or where the Government takes physical possession. (b) (1) Unless this contract specifically provides otherwise, risk of loss of or damage to supplies covered by this contract shall remain with the Contractor until, and shall pass to the Govern- ment upon: (i) delivery of the supplies to a carrier, if transportation is f.o.b. origin; (ii) acceptance by the Government or delivery of possession of the supplies to the Government at the destination specified in this contract, whichever is later, if transportation is f.o.b. destina- tion. (2) Notwithstanding (1) above, the risk of loss or damage to supplies which so fail to conform to the contract as to give a right of rejection shall remain with the Contractor until cure or acceptance, at which time (1) above shall apply. (c) Notwithstanding (b) above, the Contractor shall not be liable for loss of or damage to supplies caused by the negligence of officers, agents, or employees of the Government acting within the scope of their employment. 7-302.23(a) PATENT RIGHTS (TITLE) (1969 DEC) (a) Definitions Used in This Clause. (1) Subject Invention means any invention or discovery, whether or not patentable, conceived or first actually reduced to practice in the course of or under this contract. The term "Subject Invention" includes, but is not limited to, any art, method, process, machine, manufacture, design or composition of matter, or any new and useful improvement thereof, or any variety of plant, which is or may be patentable under the patent laws of the United States of America or any foreign country. (2) Government purpose means the right of the Govern- ment of the United States (including any agency thereof, state or domestic municipal government) to practice and have practiced (make or have made, use or have used, sell or have sold) any Subject Invention throughout the world by or on behalf of the Government of the United States. (3) Contract means any contract, agreement, grant, or other arrangement, or subcontract entered into with or for the benefit of the Government where a purpose of the contract is the con- duct of experimental, developmental, or research work. (4) Subcontract and subcontractor means any subcontract or subcontractor of the Contractor, any lower-tier subcontract or subcontractor under this contract. (5) To bring to the point of practical application means to manufacture in the case of composition or product, to practice in the case of a process, or to operate in the case of a machine or system and, in each case, under such conditions as to establish that the invention is being worked and that its benefits are rea- sonably accessible to the public. (b) Rights Granted to the Government. Except as provided in (e) and (h) of this clause, the Contractor agrees to grant the Government all right, title and interest in and to each Subject Invention (made by the Contractor), subject to the reservation of a nonexclusive and royalty-free license to the Contractor. The license shall extend to existing and future associated and affilated companies, if any, within the corporate structure of which the Contractor is a part and shall be assignable to the successor of that part of the Contractor's business to which such Invention pertains. Nothing contained in this Patent Rights clause shall be deemed to grant any rights with respect to any invention other than a Subject Invention. (c) Invention Disclosures and Reports. (1) With respect to Subject Inventions (made by the Con- tractor) except those which are obviously unpatentable under the patent laws of the United States, the Contractor shall furnish to the Contracting Officer: (i) a written disclosure of each invention within six (6) months after conception or first actual reduction to practice, which- ever occurs first under this contract, sufficiently complete in tech- nical detail to convey to one skilled in the art to which the Invention pertains a clear understanding of the nature, purpose, operation, and to the extent known the physical, chemical, or elec- trical characteristics of the Invention; when unable to submit a complete disclosure, the Contractor shall within said six (6) month period submit a disclosure which includes all such tech- nical detail then known to him and shall, unless the Contracting Officer authorizes a different period, submit all other technical detail necessary to complete the disclosure within three (3) months of the expiration of said six (6) month period; (ii) interim reports at least every twelve (12) months, the initial period of which shall commence with the date of this contract, each report listing all such Inventions conceived or first actually reduced to practice more than six (6) 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; (iii) prior to final settlement of this contract, a final report listing all such Inventions including all those previously listed in interim reports, or certifying that there are no such unreported Inventions (This Final Report and any Interim Report under (ii) above shall be submitted on DD Form 882 or other format ac- ceptable to the Contracting Officer.) ; (iv) information in writing, as soon as practicable, of the date and identity of any public use, sale, or publication of such Invention made by or known to the Contractor or of any con- templated publication by the Contractor; (v) upon request, such duly executed instruments and other papers (prepared by the Government) as are deemed neces- sary to vest in the Government the rights granted it under this clause and to enable the Government to apply for and prosecute any patent application, in any country, covering such Invention where the Government has the right under this clause to file such application; and (vi) upon request, an irrevocable power of attorney to inspect and make copies of each United States patent application filed by, or on behalf of, the Contractor covering any such In- vention. (2) With respect to each Subject Invention in which the Contractor has been granted greater rights under paragraph (h) Approved For Re ase 2006/10/20: CIA-R DP89B00552R00700050013-3 Approved For Ruse 2006/10/20: CIA-RDP89B00552RO 0700050013-3 of this clause, the Contractor agrees to provide written reports at reasonable intervals, when requested by the Government as to: (i) the commercial use that is being made or is intended to be made of such Invention; (ii) the steps taken by the Contractor to bring the Inven- tion to the point of practical application, or to make the Invention available for licensing. (d) Subcontracts. (1) The Contractor shall, unless otherwise authorized or directed by the Contracting Officer, include a patent rights clause containing all the provisions of this Patent Rights clause except provision (g) in any subcontract hereunder where a purpose of the subcontract is the conduct of experimental, developmental, or research work. In the event of refusal by a subcontractor to accept this Patent Rights clause, or if in the opinion of the Contractor this Patent Rights clause is inconsistent with the policy set forth in ASPR 9-107.2 and 9-107.3, the Contractor: (i) shall promptly submit a written report to the Contract- ing Officer setting forth the subcontractor's reasons for such refusal or the reasons Contractor is of the opinion that the in- clusion of this clause would be so inconsistent, and other pertinent information which may expedite disposition of the matter; and (ii) shall not proceed with the subcontract without the written authorization of the Contracting Officer. The Contractor shall not, in any subcontract or by using such a subcontract as consideration therefor, acquire any rights to Sub- ject Inventions for his own use (as distinguished from such rights as may be required solely to fulfill his contract obligations to the Government in the performance of this contract). Reports, instru- ments, and other information required to be furnished by a sub- contractor 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 Con- tractor for transmission to the Contracting Officer. (2) The Contractor, at the earliest practicable date, shall also notify the Contracting Officer in writing of any subcontract con- taining a patent rights clause, furnish to the Contracting Officer a copy of such subcontract, and notify him when such subcontract is completed. It is understood that the Government is a third party beneficiary of any subcontract clause granting rights to the Government in Subject Inventions, 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. (e) Domestic Filing of Patent Applications by Contractor. (1) If greater rights are granted in and to a Subject Inven- tion pursuant to paragraph (h) of this clause, the Contractor shall file in due form and within six (6) months of the granting of such greater rights a United States Patent application claiming the in- vention referred to in said paragraph, and shall furnish, as soon as practicable, the serial number and filing date of each such application and the patent number of any resulting patent. As to each Invention in which the Contractor has been given greater rights, the Contractor shall notify the Contracting Officer at the end of the six (6) month period if he has failed to file or caused to be filed a patent application covering such invention. If the Contractor has filed or caused to be filed such an application within the six (6) month period, but elects not to continue prose- cution of such application, he shall notify the Contracting Officer not less than sixty (60) days before the expiration of the response period. In either of the situations covered by the two immediately- preceding sentences, the Government shall be entitled to all rights, title and interest in such Invention subject to the reservation to the Contractor of a license as specified in paragraph (b). (2) The following statement shall be included within the first paragraph of any patent application filed and any patent issued on an Invention which was made under Government contract or subcontract thereunder. "The Invention herein described was made in the course of or under a contract or subcontract there- under (or grant) with (here state the Department or Agency)." (f) Foreign Filing of Patent Applications. (1) If the Contractor acquires greater rights in a Subject Invention pursuant to paragraph (h) of this clause and has filed a United States patent application claiming the Invention, the Contractor, or those other than the Government deriving rights from the Contractor, shall as between the parties hereto, have the exclusive right, subject to the rights of the Government under paragraph (i) of this clause, to file applications on the Inventions in each foreign country within: (i) nine (9) months from the date a corresponding United States patent application is filed; (ii) six (6) months from the date permission is granted to file foreign applications where such filing has been prohibited for security reasons; or r (iii) such longer period as may be approved by the Con- tracting Officer. The Contractor shall notify the Contracting Officer of each foreign application filed and, upon written request of the Contracting Officer, furnish an English translation of such application, and convey to the Government the entire right, title and interest in the Invention in each foreign country in which an application has not been filed within the time specified above, subject to the reservation of a royalty-free license as specified in paragraph (b). (2) If the Contractor does not acquire greater rights pursuant to paragraph (h) of this clause and the Government determines not to file a patent application on any Subject Invention (made by the Contractor) in any particular foreign country, the Con- tracting Officer, upon request of the Contractor, may authorize the Contractor to file a patent application on such Invention in such foreign country and retain ownership thereof, subject to an irrevocable, nonexclusive and royalty-free license to practice and have practiced such Subject Invention throughout the world for Governmental purposes, including the practice of each such Subject Invention (i) in the manufacture, use, and disposition of any article or material, (ii) in the use of any method, or (iii) in the performance of any service, acquired by or for the Government or with funds derived through the Military Assistance Program of the Government or funds otherwise derived through the Govern- ment. (g) Withholding of Payment. (1) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer the final report required by (c) (1) (iii ), all written invention disclosures required by (c) (1) (i ), and all information as to subcontracts required by (d) (2). (2) If at any time before final payment under this contract the Contractor fails to deliver an interim report required by (c) (1) (ii ), or a written invention disclosure required by (c) (1) (i), the Contracting Officer shall withhold from payment $50,000 or five percent (5% ), of the amount of this contract whichever is less (or whatever lesser sum is available if payments have exceeded ninety-five percent (95%) of the amount of this con- tract) until the Contractor corrects all such failures. (3) After payments total eighty percent (80%) of the amount of this contract, and if no amount is required to be with- held under (2) above, the Contracting Officer may, if he deems such action warranted because of the Contractor's performance under the Patent Rights clause of this contract or other known Government contracts, withhold from payment such sum as he considers appropriate, not exceeding $50,000 or five percent (5% ), of the amount of this contract whichever is less, to be held as a reserve until the Contractor delivers all the reports, disclosures, and information specified in (1) above. Subject to the five per- cent (5%) or $50,000 limitation, the sum withheld under this subparagraph (3) may be increased or decreased from time to time at the discretion of the Contracting Officer. Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 Approved For Release 2006/10/20: CIA-RDP89B00552R000700050013-3 (4) No amount shall be withheld under this paragraph (g) while the amount specified by this paragraph is being withheld under other provisions of this contract. The total amount withheld under (1), (2) and (3) above shall not exceed $50,000 or five percent (5% ), of the amount of this contract whichever is less. The withholding of any amount or subsequent payment thereof to the Contractor shall not be construed as a waiver of any rights accruing to the Government under this contract. This paragraph shall not be construed as requiring the Contractor to withhold any amounts from a subcontractor to enforce compliance with the patent provision of a subcontract. As used in this paragraph (g), "this contract" means "this contract as from time to time amended." In cost-type contracts, "amount of this contract" means "estimated cost of this contract." (h) Contractor's Request for Greater Rights. The Contractor at the time of first disclosing a Subject Invention pursuant to para- graph (c) (1) (i) of this clause, but not later than three (3) months thereafter, may submit in writing to the Contracting Of- ficer, in accordance with applicable regulations, a request for greater rights than the license reserved to the Contractor in para- graph (b) of this clause if : (i) the Invention is not the primary object of this contract; and (ii) the acquisition of such greater rights is consistent with the intent of ASPR 9-107.3(a) and is necessary to call forth private risk capital and expense to bring the Invention to the point of practical application. The Contracting Officer will review the Contractor's request for greater rights and will notify the Contractor whether such re- quest is granted in whole or in part. Any rights granted to the contractor shall be subject to, but not necessarily limited to, the provisions of paragraph (i) of this clause. (i) Reservation o f Rights to the Government. (1) In the event greater rights in any Subject Invention are vested in or granted to the Contractor pursuant to paragraph (h) above, such greater rights shall, as a minimum, be subject to an irrevocable, nonexclusive and royalty-free license to practice and have practiced each such Subject Invention (made by the Contractor) throughout the world for Governmental purposes, and including the practice of each such Subject Invention (i) in the manufacture, use, and disposition of any article or material, (ii) in the use of any method, or (iii) in the performance of any service, acquired by or for the Government or with funds derived through the Military Assistance Program of the Govern- ment or funds otherwise derived through the Government. (2) In the event greater rights are vested in the Contrac- tor, the Contractor further agrees to and does hereby grant to the Government the right to require the granting of a license to an applicant under any such Invention: (i) on a nonexclusive, royalty-free basis, unless the Contractor, his licensee, or his assignee demonstrates to the Government, at its request, that effective steps have been taken within three (3) years after a patent issues on such Invention to bring the Invention to the point of practical appli- cation or that the Invention has been made available for licens- ing royalty-free or on terms that are reasonable in the circum- stances, or can show cause why the title should be retained for further priod of time; or (ii) royalty-free or on terms that are reasonable in the circumstances to the extent that the Invention is required for public use by Governmental regulations or as may be necessary to fulfill health needs, or for other public purposes stipulated in the Schedule of this contract. (j) Right to Disclose Subject Inventions. The Government may duplicate and disclose reports and disclosures of Subject Inventions required to be furnished by the Contractor pursuant to this Patent Rights clause. (k) Forfeiture of Rights in Unreported Subject Inventions. The Contractor shall forfeit to the Government all rights in any Subject Invention which he fails to report to the Contracting Officer at or prior to the time he (i) files or causes to be filed a United States or foreign application thereon, or (ii) submits the final report required by (c) (iii) of this clause, whichever is later, provided that the Contractor shall not forfeit rights in a Subject Invention if (A) contending that the invention is not a Subject Invention, he nevertheless reports the invention and all the facts pertinent to his contention to the Contracting Officer within the time specified in (i) of (ii) above, or (B) he establishes that the failure to report was due entirely to causes beyond his control and without his fault or negligence, The Contractor shall be deemed to hold any such forfeited Subject Invention, and the patent applications and patents pertaining thereto, in trust for the Government pending written assign- ment of the Invention. The rights accruing to the Government under this paragraph shall be in addition to and shall not super- sede any other rights which the Government may have in rela- tion to unreported Subject Inventions. Nothing contained here- in shall be construed to require the Contractor to report any invention which is not in fact a Subject Invention. (1) Examination of Records Relating to Inventions. The Con- tracting Officer, or his authorized representative shall, until the expiration of three (3) years after final payment under this contract, have the right to examine any books, records, documents, and other supporting data of the Contractor which the Contracting Officer or his authorized representative shall reasonably deem directly pertinent to the discovery or identi- fication of Subject Invention or to compliance by the Con- tractor with the requirements of this clause. 7-304.2 ALTERATIONS IN CONTRACT (1949 JUL) The following alterations have been made in the provisions of this contract: Approved For Release 2006/10/20: CIA-R DP89B00552''00700050013-3