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ation until use of the equipment is terminated by the lessee, and replacement (at the value agreed upon by the lessor and the lessee with the approval of DOE at or prior to the time of acceptance by the lessee and set forth in the initial inspection report, less depreciation) of accepted equipment, lost or destroyed during such time, shall be at the expense of the lessee. Except, however, such maintenance, repair, or replacement will not be at the expense of the lessee if it is made necessary by loss or damage covered by any policy of insurance (or self-insurance), or caused by willful misconduct or lack of good faith on the part of the lessor, of an individual, or the partners or corporate officers of the lessor, of a supervising representative of the lessor, or is made necessary by defect not reasonably ascertainable on initial inspection by the lessee.

(c) Condition on termination. Upon termination by the lessee of the use of any item of equipment, the item shall be returned by the lessee to the lessor at the job site in as good conditions as when received by the lessee (as shown by the initial inspection report), less normal wear and tear, except for any loss or damage which is due to willful misconduct or lack of good faith on the part of the lessor, of an individual, or the partners or corporate officers of the lessor or a supervising representative of the lessor, or defects not reasonably ascertainable on initial inspection by the lessee, or which is covered by any policy of insurance (or selfinsurance). If the inspection report is to be made immediately prior to the scheduled return shipment of an item of equipment discloses the necessity for repairs or replacements, the cost of which is the responsibility of the lessee under this paragraph, the lessee may, at its election, either (1) effect such repairs or replacements, or (2) with the approv of DOE, allow the lessor the agreed estimated reasonable cost of such repairs (or the agreed value less depreciation, if replacement is required), and a sum in lieu of rental for the time estimated by the lessee to be necessary for such repairs.

(d) Inspection. For the purpose of establishing the condition, the equipment shall be inspected, tested, and inventoried by representatives of the lessee and, at the lessor's option, together with representatives of the lessor (and of DOE, if DOE so elects), prior to its acceptance by the lessee and immediately prior to scheduled return shipment. The results of such inspections and tests, and the inventories compiled, shall be incorporated in reports submitted to the lessor and to the lessee (and to DOE if DOE so requires). For any item of equipment which the lessor has failed to inspect, test, and inventory, or has failed to report as provided herein, the lessor agrees that the report submitted hereunder by a representative of

the lessee shall be conclusive evidence of the condition as the date of inspection.

(e) Excessive repairs. DOE may require the lessee to deduct from payments otherwise due the lessor any amounts previously allowed the lessor under this agreement for repairs made at the lessee's expense which DOE finds to have been in excess of the requirements of this agreement.

Article VIIProtection of equipment, Steps to be taken in event of loss.

(a) The lessee shall take all reasonable and necessary precautions to safeguard and protect the equipment. Any loss of or damage to the equipment will be at the lessor's risk to the extent that such loss or damage is required to be covered by insurance under Article III(d) of this agreement.

NOTE: When Article III(d) of the agreement provides that rental rates do not include any factor representing the cost of insurance or self-insurance covering loss of or damage to the equipment during rental periods, the following paragraph (a) shall be used:

“(a) The lessee shall take all reasonable and necessary precautions to safeguard and protect the equipment. Any loss of or damage to the equipment will be at the lessor's risk to the extent that such loss or damage is covered by any policy of insurance (or self-insurance)."

(b) Upon the happening of any loss or damage which is at the risk of the lessee under this agreement, the lessee shall immediately notify the lessor of the occasion and extent thereof, and the lessor shall thereupon, at the lessee's request, effect an assignment and subrogation in favor of the lessee or the Government of all the lessor's rights and claims (except those against the lessee or the Government) arising out of any such loss or damage, shall, if required by the lessee or the Government, authorize representatives of the lessee or the Government to settle or prosecute to final judgment any such claims, and shall furnish to the lessee or the Government on request all reasonable assistance in obtaining recovery.

Article VII-Liquidation of indebtedness. The lessor warrants full and complete title and right to possession of all the equipment, subject only to those liens, encumbrances or claims to title or possession securing the indebtedness detail on Schedule 1, Part 2. The lessor agrees to apply such portion of the rental payable hereunder as may be necessary for the prompt discharge of such indebtedness. If at any time, any person holding a lien, encumbrance, or claim against any item of the equipment shall submit to the lessee evidence that the lessor is not discharging the indebetedness secured thereby in accordance with the terms under which the indebtedness is payable or discharge

(Continue, if necessary, on reverse side or on separate sheets.) Part 2–Liens, Encumbrances and Claims

The following is a complete and correct statement of the amount of any and all indebtedness secured by liens or other encumbrances of any nature, legal or equitable, which are held by any person, firm or corporation against the equipment, items Nos. 1 through (Contractor) By (Title) Item No.

able, the lessee shall have the right upon three day's written notice to the lessor to impound such part of the unpaid rental hereunder as the lessee, with the approval of DOE, deems necessary until the rights of the lessor and any such person are determined and all just and proper claims of such person are satisfied, provided that nothing contained in this paragraph shall be construed to require the lessor to pay to such person any sum not required to be paid by the terms under which the indebtedness was incurred or to pay any sum prior to the time it becomes due.

Article IX-Taxes. Unless otherwise directed by DOE, the lessor shall at the lessor's own expense pay and discharge any and all taxes levied upon any item of equipment.

Article X-Definition. As used herein the term “DOE” means the U.S. Department of Energy or any duly authorized representative thereof, including the contracting officer under the construction contract.

In witness, thereof, the lessor and the lessee have executed this agreement as of the day and year above written. (Lessor) By (Title) (Lessee) By (Title)

NOTE: The following articles shall be inserted along with the required socio-economic articles:

Name and address of present creditor

Present unpaid balance

Amounts and date of future payments

(Continue, if necessary, on the reverse side or on separate sheets.)

PART 937—SERVICE CONTRACTING

AUTHORITY: 42 U.S.C. 7254; 40 U.S.C. 486(c).

EXAMINATION OF RECORDS

Subpart 937.2-Consulting Services

Covenant Against Contingent Fees

SCHEDULE 1

Part 1-Items and Rental Rates Item No.

Item description (equipment No.; type of

equipment; serial No.; manufacturer; year of model; original point of shipment; etc.)

937.205 Management controls.

(b) DOE contracting personnel should familiarize themselves with the pertinent DOE Directives coverage before any acquisition involving consulting services is undertaken and shall comply with the appropriate DOE Directives. See DOE Orders 3304.1 and 4200.3.

(7) In accordance with FAR 37.205(b)(7), purchase requests for consulting services initiated in the fourth quarter of the fiscal year, must be approved at the second management level above that of the initiator or such equivalent level as the Head of Contracting Activity may designate. (49 FR 12026, Mar. 28, 1984)

Description of any insurance coverage for

loss or damage to equipment

Item Rental Rates

Attach certified copy of insurance policy.

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942.704 Billing rates. 942.705-1 Contracting officer determina

tion procedure. 942.705-3 Educational institutions. 942.705-4 State and local governments. 942.705-5 Nonprofit organizations other

than educational and state and local

governments. 942.708 Quick closeout procedures.

Subpart 942.8—Disallowance of Costs

942.803 Disallowing costs after incurrence.

Subpart 942.10—Negotiating Advance Agree

ments for Independent Research and Development/Bid and Proposal Costs

942.1004 Location of negotiators in a cen

tral office. 942.1008 Administrative appeals.

942.001 General.

(a) Those government actions taken subsequent to award of a contract to monitor the performance of the contractor and the contractor's adherence to the terms and conditions thereof through completion of the contract are commonly referred to as contract management and administration. The specific actions included in this process are as generally defined in FAR 42.302. This post-award management is essential to ensure the purpose of the contract is achieved and is in accordance with the terms and conditions of the contractual instrument. Contract management is broad and involves the expertise of many specialists including technical (programmatic) legal, financial, administrative, acquisition, and others.

(b) Post-award contract management functions are executed by the various specialists assigned the responsibility and procedural guidance as to how to perform the required functions. Generally, acquisition personnel in the person of a contracting officer, act as the overall business manager for administering and maintaining the integrity of the contract. Such respoisibility ensures that only a contracting officer modifies a contract, payments are prompt and represent reimbursements or payments for only allowable cost, funds are obligated in a timely

Subpart 942.14—Traffic and Transportation

Management

942.1401 General. 942.1402 Volume movements within the

continental United States. 942.1403-1 U.S. Government bills of lading. 942.1403-2 Contractor-prepaid commercial

bills of lading.

Subpart 942.70—Audit Services 942.7000 Scope of subpart. 942.7001 Definition. 942.7002 General. 942.7003 Types of services. 942.7003-1 Incurred cost. 942.7003-2 Indirect expenses (overhead

cost).

manner, and contracts are officially closed.

Sometimes such services may be acquired from a cognization Defense CAO, when dealing with a defense contractor.

(c) The DOE has no field or resident contract administration offices. Contract management of DOE contracts is performed by the contracting office or is obtained from a Department of Defense (DOD) Contract Administration Office (CAO) if the contract warrants requesting contract administration services from such an activity. There is no specific DOE rule or policy on requesting and assigning DOE contracts for DOD administration services. It is a matter of judgment of the contracting office. To the extent any functions cited in FAR 42.302 are required for proper post-award management of the contract, assignment to a DOD CAO or the requesting of certain supporting services (FAR 42.201) from the CAO should be considered if it is (1) beyond capability of the DOE office (2) cost effective (3) eliminates duplication of effort, and (4) would provide for consistent treatment of the contractor.

942.002 DOE policy and responsibilities.

(a) It is the policy of the Department of Energy that the performance of its contractors be monitored to assure compliance with the terms and conditions of the contract instrument and products are received on time, at a reasonable cost which meet technical requirements and specifications.

(b) The responsibility for ensuring effective post-award management of DOE contractual programs involves many elements of the Department. The various procedures and policies that implement and support project and contract management systems are promulgated in various DOE Orders. 942.003 Organizational structure.

(a) The Department of Defense has initiated a formal system of independent organizations responsible for performance of post-award management functions. A field structure of Contract Administration Offices (CAO) responsible for contract management and administration of contracts for major defense contractors has been established. DOD agencies (Army, Navy, Air Force) have organized plant residencies of contract management specialists for specific DOD contractors and their various business units. The Defense Logistics Agency performs contract management functions both at onsite residencies of contractors not assigned to a service and on a mobile basis from centrally located management areas for other defense contractors. A complete listing of the DOD's contract administration service components is contained in the Defense Di. rectory cited in FAR 42.102.

(b) Civilian agencies for the most part have not established formal, organizationally independent CAO's responsible for performance of contract management functions.

The postaward contract management and administration functions performed by civilian agencies are performed by contracting, program and other staff (accounting, legal, etc.) personnel and specialists located in the contracting offices and/or Operational units in a less formal manner than the DOD.

Subpart 942.1- Interagency Contract Administration and Audit Services

942.101 Policy.

(a) The Department of Energy has entered into cross-servicing contract management arrangements with:

(1) The Defense Logistic Agency

(2) The Air Force Contract Management Division

(3) The Office of Naval Research

(b) The above arrangements are established and maintained by the Business and Financial Policy Branch, Office of Policy, Procurement and Assistance Management Directorate, Headquarters. Questions concerning these agreements should be directed to that organization.

(c) The Department of Energy Inspector General has established a memorandum of understanding with the Defense Contract Audit Agency and the Office of Audit of the Department of Health and Human Services for providing audit support service (942.70) to the DOE in support of its procurement mission. Procedures for

acquiring these services are discussed in 942.70.

Subpart 942.2-Assignment of

Contract Administration

to submit their final indirect cost rate proposals reflecting actual cost experience during the covered period to the auditor. The DOE negotiating official shall request all needed audit service in accordance with the procedures in 942.70, Audit Services.

942.202 Assignment of contract adminis

tration. (d)(5) Contracts assigned for administration support shall be entered and reported in the Procurement and Assistance Data System.

942.705–3 Educational institutions.

(a)(2) The negotiated rates established for the institutions cited in OMB circular No. A-88 are centrally maintained by the Business and Fi. nancial Policy Branch, Office of Policy, Procurement and Assistance Management Directorate, Headquarters.

Subpart 942.7-Indirect Cost Rates

942.704 Billing rates.

(b) When the contracting officer or auditor responsible for establishing billing rates, in accordance with FAR 42.704, has not established such rates or such rates are not current for the performance periods (contractor FY) under contract, the DOE contracting officer responsible for administration of the contract shall establish an appropriate rate(s) for billing purposes. If the contractor holds more than one DOE contract covering that period of performance, the DOE office with the largest unliquidated obligations as of the beginning of that performance period shall take the lead in establishing the required billing rate for use on DOE contracts. Once appropriate billing rates are established by the responsible contracting officer designated by FAR 42.704, such rates shall be adopted by the contracting officer and all billings and payments shall be retroactively revised to reflect the agreed upon rate(s).

942.705-4 State and local governments.

A list of cognizant agencies for State/local government organizations is maintained by the Office of Management and Budget (OMB) which is periodically published in the FEDERAL REGISTER. The responsible agencies are notified of such assignments. A listing of the cognizant agencies and the current negotiated rates for State/local government activities is maintained by the Business and Financial Policy Branch, Office of Policy, Procurement and Assistance Management Directorate, Headquarters.

942.705-1 Contracting officer determina

tion procedure. (a)(3) The Department of Energy shall use the contracting officer determination procedure for all business units for which it shall be required to negotiate final indirect cost rates. A listing of such business units is maintained by the Business and Financial Policy Branch, Office of Policy, Procurement and Assistance Management Directorate, Headquarters, and published as a separate publication in the DOE Order system.

(b)(1) The Department of Energy shall not require or direct contractors

942.705-5 Nonprofit organizations other

than educational and state and local

governments. OMB Circular A-122 establishes the rules for assigning cognizant agencies for the negotiation and approval of indirect cost rates. The Federal agency with the largest dollar value of awards (contracts plus federal financial assistance dollars) will be designated as the cognizant agency. DOE is not currently assigned cognizance over any such nonprofit organizations. There is no published listing of assigned agencies. The Business and Financial Policy Branch, Office of Policy, Procurement and Assistance Directorate, Headquarters, does maintain a DOE central file of rates established by the cognizant agency.

942.708 Quick closeout procedures.

(a) Contracting officers shall use the quick-closeout procedure to finalize in

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