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Part 1—Fixed-Price Supply Contracts 7-100 Scope of Part. This part sets forth uniform contract clauses for use in fixed-price supply contracts as defined in 7-101.

7-101 Applicability. As used throughout this part, the term “fixed-price supply contract” shall mean any contract (i) entered into either by formal advertising or by negotiation other than (A) purchase orders (but see 7–104.15 and 7-104.16), (B) short form negotiated supply contracts (see 16–102.2(c)), (C) letter contracts, (D) notices of award, (E) general contracts for communication services and facilities and (F) supplemental agreements to contracts or purchase orders, which do not effect new procurement; (ii) at a fixed price (with or without provision for price redetermination, escalation, or other form of price revision as covered in 3–404; and (iii) for supplies other than (A) the construction, alteration, or repair of buildings, bridges, roads, or other kinds of real property, (B) experimental, developmental, or research work, or (C) facilities to be provided by the Government under a facilities contract as defined in Section XIII. However, there are supply contracts in which performance involves cost-reimbursement, construction, research and development, or other special factors. In such cases, see the particular Parts containing additional applicable clauses.

7-102 Contracts Subject in Part to Incentive Price Revision. When a contract is partly a firm fixed-price contract and partly a fixed-price incentive contract, the clauses required for both types of contracts shall be included. When any provision is applicable only to firm fixed-price items, or only to items subject to incentive price revision, such provision shall be so labeled.

7-103 Required Clauses. The following clauses shall be inserted in all fixedprice supply contracts.

7-103.1 Definitions.

DEFINITIONS (1962 FEB)

As used throughout this contract, the following terms shall have the meanings set forth below:

(a) The term "Head of the Agency” or “Secretary" means the Secretary, the Under Secretary, any Assistant Secretary, or any other head or assistant head of the executive or military department or other Federal agency: and the term “his duly authorized representative" means any person or persons or board (other than the Contracting Officer) authorized to act for the Head of the Agency or the Secretary.

(b) The term “Contracting Officer" means the person executing this contract on behalf of the Government, and any other officer or civilian employee who is a properly designated Contracting Officer; and the term includes, except as otherwise provided in this contract, the authorized representative of a Contracting Officer acting within the limits of his authority.

(c) Except as otherwise provided in this contract, the term “subcontracts" includes purchase orders under this contract.

(End of clause)

Additional definitions may be included provided they are not inconsistent with the foregoing clause or the provisions of this Regulation.

7-103.2 Changes. CHANGES (1958 JAN)

The Contracting Officer may at any time, by a written order, and without notice to the sureties, make changes, within the general scope of this contract, in any one or more of the following: (i) Drawings, designs, or specifications, where the supplies to be furnished are to be specially manufactured for the Government in accordance therewith: (ü) method of shipment or packing; and (ii) place of delivery. If any such change causes an increase or decrease in the cost of, or the time required for the performance of any part of the work under this contract, whether changed or not changed by any such order, an equitable adjustment shall be made in the contract price or delivery schedule, or both, and the contract shall be modified in writing accordingly. Any claim by the Contractor for adjustment under this clause must be asserted within 30 days from the date of receipt by the Contractor of the notification of change, provided, however, that the Contracting Officer, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract. Where the cost of property made obsolete or excess as result of a change is included in the Contractor's claim for adjustment, the Contracting Officer shall have the right to prescribe the manner of disposition of such property. Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled “Disputes". However, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed.

(End of clause)

In the foregoing clause, the period of “30 days" within which any claim for adjustment must be asserted may be varied in accordance with Departmental procedures. In accordance with 10 U.S.C. 2306(f), prior to the pricing of any change order that is 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 shall require the contractor to furnish a Certificate of Current Cost or Pricing Data (see 3-807.4) and shall assure that the contract includes or is modified to include a defective pricing data clause (see 7-104.29) and the audit clause required by 7-104.41.

7-103.3 Extras.

EXTRAS (1949 JUL)

Except as otherwise provided in this contract, no payment for extras shall be made unless such extras and the price therefor have been authorized in writing by the Contracting Officer.

(End ol clause)

7-103.4 Variation in Quantity. (a) Insert the following clause.

VARIATION IN QUANTITY (1949 JUL)

No variation in the quantity of any item called for by this contract will be accepted unless such variation has been caused by conditions of loading, shipping, or packing, or allowances in manufacturing processes, and then only to the extent, if any, specified elsewhere in this contract.

(End of clause)

(b) In accordance with 1-325, insert the following clause.

EXTENT OF QUANTITY VARIATION (1965 APR)

The permissiblc variation under the clause of the General Provisions entitled “Variation in Quantity" shall be limited to:

Increase (Insert.............k or None)

Decrease (Insert:...........% or None) This increase or decrease shall apply to.............*

(End of clause)

* Insert in the blank the designation(s) to which the percentages apply, such as: (1) the total contract quantity: (2) item 1 only: (3) each quantity specified in the delivery schedule of the "Time of Delivery" clause: (4) the total item quantity for each destination; (5) the total quantity of each item without regard to destination.

7-103.5 Inspection.

(a) The following clause shall be inserted in all fixed-price supply contracts, except as provided in (b) and (c) below.

INSPECTION (1958 MAY)

(a) All supplies (which term throughout this clause includes without limitation raw materials, components, intermediate assemblies, and end products) shall be subject to inspection and test by the Government, to the extent practicable at all times and places including the period of manufacture, and in any event prior to acceptance.

(b) In case any supplies or lots of supplies are defective in material or workmanship or otherwise not in conformity with the requirements of this contract, the Government shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction. Supplies or lots of supplies which have been rejected or required to be corrected shall be removed or, if permitted or required by the Contracting Officer, corrected in place by and at the expense of the Contractor promptly after notice, and shall not thereafter be tendered for acceptance unless the former rejection or requirement of correction is disclosed. If the Contractor fails promptly to remove such supplies or lots of supplies which are required to be removed or promptly to replace or correct such supplies or lots of supplies, the Government either (i) may by contract or otherwise replace or correct such supplies and charge to the Contractor the cost occasioned the Government thereby; or (ii) may terminate this contract for default as provided in the clause of this contract entitled "Default.” Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contracting Officer may require the delivery of such supplies at a reduction in price which is equitable under the circumstances. Failure to agree to such reduction of price shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled “Disputes",

(c) If any inspection or test is made by the Government on the premises of the Contractor or a subcontractor, the Contractor without additional charge shall provide all reasonable facilities and assistance for the safety and convenience of the Government inspectors in the performance of their duties. If Government inspection or test is made at a point other than the premises of the Contractor or a subcontractor, it shall be at the expense of the Government except as otherwise provided in this contract; provided, that in case of rejection the Government shall not be liable for any reduction in value of samples used in connection with such inspection or test. All inspections and tests by the Government shall be performed in such a manner as not to unduly delay the work. The Government reserves the right to charge to the Contractor any additional cost of Government inspection and test when supplies are not ready at the time such inspection and test is requested by the Contractor or when reinspection or retest is necessitated by prior rejection. Acceptance or rejection of the supplies shall be made as promptly as practicable after delivery, except as otherwise provided in this contract; but failure to inspect and accept or reject supplies shall neither relieve the Contractor from responsibility for such supplies as are not in accordance with the contract requirements nor impose liability on the Government therefor

(d) The inspection and test by the Government of any supplies or lots thereof does not relieve the Contractor from any responsibility regarding defects or other failures to meet the contract requirements which may be discovered prior to acceptance. Except as otherwise provided in this contract, acceptance shall be conclusive except as regards latent defects, fraud, or such gross mistakes as amount to fraud.

(e) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the supplies hereunder. Records of all inspection work by the Contractor shall be kept complete and available to the Government during the performance of this contract and for such longer period as may be specified elsewhere in this contract.

(End of clause)

(b) The clause in (a) above shall be included in all fixed-price incentive contracts except that paragraph (b) thereof shall be deleted and the following substituted:

(b) In case any supplies or lots of supplies are defective in material or workmanship or otherwise not in conformity with the requirements of this contract, the Government shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction. Supplies or lots of supplies which have been rejected or required to be corrected shall be removed or, if permitted or required by the Contracting Officer, corrected in place by the Contractor promptly after notice, and shall not thereafter be tendered for acceptance unless the former rejection or requirement of correction is disclosed. Prior to the establishment of the total final price, the cost of replacement or correction shall be considered as a cost incurred, or to be incurred, for the purpose of negotiating the total final negotiated cost under the incentive price revision clause of this contract. After the establishment of the total final price, all replacements or corrections made by the Contractor shall be accomplished at no increase in the total final price. If the Contractor fails either promptly to remove such supplies or lots of supplies which are required to be removed, or promptly to replace or correct such supplies or lots of supplies, the Goverment either (i) may by contract or otherwise replace or correct such supplies, and equitably reduce any target price, or, if it is established, the total final price of this contract; or (ü) may terminate this contract for default as provided in the clause of this contract entitled "Default". Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contract. ing Officer may require the delivery of such supplies, and equitably reduce any target price or, if it is established, the total final price of this contract. Failure to agree to such equitable reduction shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled “Disputes". (1962 NOV)

(c) The clause set forth in (a) above shall be included in contracts utilizing the clause in 7-109.3 except that paragraph (b) shall be deleted and the following substituted:

(b) In case any supplies or lots of supplies are defective in material or workmanship or otherwise not in conformity with the requirements of this contract, the Government shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction. Supplies or lots of supplies which have been rejected or required to be corrected shall be removed or, if permitted or required by the Contracting Officer, corrected in place by the Contractor promptly after notice, and shall not thereafter be tendered for acceptance unless the former rejection or requirement of correction is disclosed. Prior to the establishment of the redetermined prices, the cost of replacement or correction shall be considered as a cost incurred, or to be incurred, for the purpose of negotiation to redetermine the fair and reasonable contract prices under the price redetermination clause of this contract. After the establishment of the redetermined prices all replacements shall be accomplished at no increase in the redetermined prices. If the Contractor fails either promptly to remove such supplies or lots of supplies which are required to be removed, or promptly to such replace or correct such supplies or lots of supplies, the Government either (i) may by contract or otherwise replace or correct such supplies and equitably reduce the initial contract prices, or if it is established, the redetermined prices of this contract, or, (ii) may terminate this contract for default as provided in the clause of this contract entitled “Default". Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contracting Officer may require the delivery of such supplies, and

equitably reduce the initial contract price or, if it is established, the redetermined prices of this contract. Failure to agree to such equitable reduction shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled “Disputes". (1962 NOV).

7-103.6 Title and Risk of Loss.

TITLE AND RISK OF LOSS (1968 JUN)

(a) Unless this contract specifically provides for earlier passage 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 Government 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 trans

portation is f.o.b. destination. (2) Notwithstanding (1) above, the risk of loss of 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.

(End of clause)

7-103.7 Payments.

PAYMENTS (1958 JAN)

The Contractor shall be paid, upon the submission of proper invoices or vouchers, the prices stipulated herein for supplies delivered and accepted or services rendered and accepted, less deductions, if any, as herein provided. Unless otherwise specified, payment will be made on partial deliveries accepted by the Government when the amount due on such deliveries so warrants; or, when requested by the Contractor, payment for accepted partial deliveries shall be made whenever such payment would equal or exceed either $1,000 or 50 percent of the total amount of this contract.

(End of clause)

In contracts for the furnishing of transportation and accessorial services there will be substituted for the word “proper" above, the words “properly certified.”

7-103.8 Assignment of Claims.

ASSIGNMENT OF CLAIMS (1962 FEB)

(a) Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), if this contract provides for payments aggregating $1,000 or more, claims for monies due or to become due the Contractor from the Government under this contract may be assigned to a bank, trust company, or other financing institution, including any Federal lending agency, and may thereafter be further assigned and reassigned to any such institution. Any such assignment or reassignment shall cover all amounts payable under this contract and not already paid, and shall not be made to more than one party, except that any such assignment or

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