(3) Correction of Deficiencies by Contractor. The Contractor shall promptly comply with any timely written direction by the Contracting Officer to correct or partially correct a deficiency, at no increase in the contract price. The Contractor shall also prepare and furnish to the Government data and reports applicable to any correction required under this clause (including revision and updating of all other affected data called for under this contract) at no increase in the contract price.

(4) Modification of Contract With Respect to Uncorrected Deficiencies. In the event of timely notice of a decision not to correct or only to partially correct, the Contractor shall promptly submit a technical and cost proposal to amend the contract to permit acceptance of the affected supplies or services in accordance with the revised requirements, and an equitable reduction in contract price shall promptly be negotiated by the parties and reflected in a supplemental agreement to this contract.

(d) Deficiencies in Supplies or Services Not Yet Accepted. If the Contractor becomes aware at any time before acceptance by the Government (whether before or after tender to the Government) that a deficiency exists in any supplies or services, he shall promptly correct the deficiency or, if he elects to invoke the procedures in (c) above, he shall promptly communicate information concerning the deficiency to the Contracting Officer in writing, together with his detailed recommendation for corrective action.

(e) No Extension in Time for Performance, No Increase in Contract Price. (1) In no event shall the Government be responsible for extension or delays in the scheduled deliveries or periods of performance under this contract as a result of the Contractor's obligations to correct deficiencies, nor shall there by any adjustment of the delivery schedule or period of performance as a result of such correction of deficiencies, except as may be agreed to by the Government in a supplemental agreement with adequate consideration.

(2) It is hereby specifically recognized and agreed by the parties hereto that this clause shall not be construed as obligating the Government to increase the contract price of this contract.

(f) Transportation Charges. (1) When the Government returns supplies to the Contractor for correction or replacement pursuant to this clause, the Contractor shall be liable for transportation charges up to an amount equal to the cost of transportation by the usual commercial method of shipment from the designated destination point under this contract to the Contractor's plant, in addition to any charges provided for by (2) below. The Contractor shall also bear the responsibility for the supplies while in transit.

(2) When compliance with the terms of this clause by the Contractor involves ship

ment of corrected or replacement supplies from the Contractor to the Government, the Contractor shall be liable for transportation charges up to an amount equal to the cost of transportation by the usual commercial method of shipment from the Contractor's plant to the designated destination point under this contract, in addition to any charges provided for by (1) above. The Contractor shall also bear the responsibility for the supplies while in transit.

(g) Failure To Correct. If the Contractor fails or refuses to (1) present a detailed recommendation for corrective action in accordance with (c) above, (ii) correct deficiencies in accordance with (c) (3) above, or (111) prepare and furnish data and reports in accordance with paragraph (e) (3) above, the Contracting Officer shall give the Contractor written notice specifying the failure or refusal and setting a period after receipt of the notice within which it must be cured. If the failure or refusal is not cured within the specified period, the Contracting Officer may, by contract or otherwise, as required:

(1) Obtained detailed recommendations for corrective action;

or

(11) (A) Correct the supplies or services,

(B) Replace the supplies or services-and if the Contractor fails to furnish timely disposition instructions, the Contracting Officer may dispose of nonconforming supplies for the Contractor's account in a reasonable manner, in which case the Government is entitled to reimbursement from the Contractor or from the proceeds for the reasonable expenses of care and disposition, as well as for excess costs incurred or to be incurred; and

(111) Obtain applicable data and reports; and charge to the Contractor the cost occasioned to the Government thereby.

(h) Correction of Deficient Replacements and Reperformances. Any supplies or parts thereof corrected or furnished in replacement and any services reperformed pursuant to this clause shall also be subject to all the provisions of the clause to the same extent as supplies or services initially accepted.

(b) Depending on the circumstances of the procurement, one or more of the alternate paragraphs in § 18-1.324-7 (c), · (d), or (e) above may be substituted for the appropriate paragraphs in the "Correction of Deficiencies" clause in (a) above. Similarly, the alternate paragraph in § 18-1.324-7(f) above may be added to the clause.

§ 18-1.324-10 Example of warranty clause for fixed-price construction

contracts.

(a) The following clause is an example which is authorized for insertion in fixedprice type construction contracts in accordance with §§ 18-1.324-2 and 181.324-3.

WARRANTY OF CONSTRUCTION (JUNE 1972)

(a) In addition to any other warranties set out elsewhere in this contract, the Contractor warrants that the work performed under this contract conforms to the contract requirements and is free of any defect of equipment, material or design furnished, or workmanship performed by the Contractor or any of his subcontractors or suppliers at any tier. Such warranty shall continue for a period of 1 year from the date of final acceptance of the work, but with respect to any part of the work which the Government takes possession of prior to final acceptance, such warranty shall continue for a period of one year from the date the Government takes possession. Under this warranty, the Contractor shall remedy at his own expense any such failure to conform or any such defect. In addition, the Contractor shall remedy at his own expense any damage to Government owned or controlled real or personal property, when that damage is the result of the Contractor's failure to conform to contract requirements or any such defect of equipment, material, workmanship, or design. The Contractor shall also restore any work damaged in fulfilling the terms of this clause. The Contractor's warranty with respect to work repaired or replaced hereunder will run for 1 year from the date of such repair or replacement.

(b) The Government shall notify the Contractor in writing within a reasonable time after the discovery of any failure, defect, or damage.

(c) Should the Contractor fall to remedy any failure, defect or damage described in (a) above within reasonable time after receipt of notice thereof, the Government shall have the right to replace, repair, or otherwise remedy such failure, defect, or damage at the Contractor's expense.

(d) In addition to the other rights and remedies provided by this clause, all subcontractors', manufacturers', and suppliers' warranties expressed or implied, respecting any work and materials shall, at the direction of the Government, be enforced by the Contractor for the benefit of the Government. In such case if the Contractor's warranty under (a) above has expired, any suit directed by the Government to enforce a subcontractor's, manufacturer's or supplier's warranty shall be at the expense of the Government. The Contractor shall obtain any warranties which the subcontractors, manufacturers, or suppliers would give in normal commercial practice.

(e) If directed by the Contracting Officer, the Contractor shall require any such warranties to be executed in writing to the Government.

(f) Notwithstanding any other provision of this clause, unless such a defect is caused by the negligence of the Contractor or his subcontractors or suppliers at any tier, the Contractor shall not be liable for the repair of any defects of material or design furnished

by the Government nor for the repair of any damage which results from any such defect in Government furnished material or design.

(g) The warranty specified herein shall not limit the Government's rights under the Inspection and Acceptance clause of this contract with respect to latent defects, gross mistake, or fraud.

(b) If the Government specifies the use of any equipment by "brand name and model," the following paragraph (h) should be added to the Warranty of Construction clause of the contract.

(h) Defects in design or manufacture of equipment, specified by the Government on a "brand name and model" basis, shall not be included in this warranty. The Contractor shall require any subcontractors, manufacturers, or suppliers thereof to execute their warranties in writing directly to the

It has been determined to be in the public interest to establish a Government Use Program requiring, to the maximum practicable extent, purchase of excess aluminum in the Government stockpile by Government contractors, directly or through subcontractors or suppliers, equal in weight to the weight of aluminum products defined in § 181.327-2, purchased by the Government or used in the production of items delivered under Government contracts. In implementation of this program, all contracts in the categories listed below, shall contain the clause in § 18-1.327-2, or, in the case of construction contracts, the clause as modified in § 18-1.327-3:

(a) Purchases in the amount of $500 or more of aluminum products as defined in § 18-1.327-2.

(b) Purchases of supplies of construction in the amount of $25,000 or more where the aluminum products used in the production of items delivered under the contract or in the production of items incorporated in construction performed under the contract are estimated by the contracting officer to approximate 10,000 pounds or more.

These provisions do not apply to procurements of supplies or construction effected by purchasing activities located outside, for use outside, the United States, its possessions, and Puerto Rico. These provisions are applicable to new procurements that are effected by modifications to an existing contract. In such cases, only the new procurement portion of the total contract is considered in determining whether the clause is required and, if required, the extent of its applicability.

[36 F.R. 25103, Dec. 29, 1971]

§ 18-1.327-2 Contract clause.

REQUIRED SOURCE FOR ALUMINUM INGOT (OCTOBER 1971)

(a) As used in this clause (1) the term "aluminum products" means aluminum or aluminum alloy in its last commercial form delivered by the producer, mill, or foundry as an end item under this contract, or used to produce an end item under this contract, such as by way of example (but not limited to) wrought aluminum products; forgings and castings; rolled bar, rod, structural shapes, and bare wire; aluminum conductor steel reinforced and bare aluminum cable; insulated or covered wire or cable; extruded bar, rod, shapes and tube (extruded, drawn and welded tube); sheet, strip and plate; pig or ingot; granular or shot; slab; foil; and powder, flake or paste; and (ii) the term "supplier" includes vendors, materialmen, warehousemen, distributors or manufacturers of aluminum products or other items containing aluminum in any form.

(b) Except as provided in (c) below, the Contractor (or subcontractor or supplier, where applicable) shall purchase from the General Services Administration (GSA) a quantity of aluminum pig or ingot equal in weight to the gross weight of aluminum products constituting, or used in the production of, the items to be delivered under this contract. Such purchase shall be in accordance with the terms and conditions of sale prescribed therefor by GSA. Each order placed with GSA pursuant to this clause shall state that it is placed in accordance therewith and shall be sent to:

Director, Stockpile Disposal Division, Property Management and Disposal Service, General Services Administration, Washington, D.C. 20405.

Aluminum purchased pursuant to this clause may be used in any manner the Contractor desires and need not be earmarked in any way after delivery to the Contractor, nor physically incorporated in the items to be delivered hereunder.

(c) To the extent the Contractor (or subcontractor or supplier, where applicable) places subcontracts or purchase orders for

aluminum products or for items other than aluminum products and containing aluminum in any form, he is not required with respect to such subcontracts or purchase orders to purchase aluminum from the GSA. However, he agrees to incorporate this clause:

(1) In any such subcontract or purchase order for aluminum products in the total amount of $500 or more, or

(11) In any such subcontract or purchase order in the total amount of $25,000 or more for any items containing aluminum in any form where the quantity of aluminum products used in the production of such items is estimated to be 10,000 pounds or more.

(d) The requirements of this clause are not intended to preclude basic agreements or other arrangements between the parties to any contracts (subcontracts or purchase orders) subject to this clause that will permit reference in such contracts to the applicability of the requirements of this clause, without the need for physically incorporating this clause in its entirety in each affected subcontract or purchase order.

(e) In placing subcontracts and purchase orders subject to the clause, the Contractor and all subcontractors and suppliers are authorized and encouraged to consolidate aluminum product purchases hereunder with other rated order purchases (ACM, DO, or DX) and other identifiable Government orders so as to apply the requirements of this clause to the total purchase. Otherwise, it is required either that aluminum product purchases subject to this clause be separately made, or, if consolidated with other aluminum product purchases, that the quantities (by weights) of aluminum products subject to this clause be separately set forth in the purchase document and identified as subject to this clause.

(1) Required purchases of aluminum from GSA by Contractors, subcontractors, or suppliers, shall be made within 90 days from the date (1) of final delivery pursuant to a contract, subcontract, or purchase order containing the requirements of this clause, or (11) when the Contractor, subcontractor or supplier, has completed deliveries of aluminum products aggregating 100,000 pounds whichever is earlier: Provided, however, That any Contractor, subcontractor or supplier, may defer required purchases of aluminum for the purpose of consolidating purchases to meet the requirement of two or more contracts, subcontracts or purchase orders containing this clause until 90 days after the aggregate purchase requirements of such contracts, subcontracts or purchase orders equal the minimum order quantities established by GSA (approximately 10,000 pounds or more). Successive consolidated purchases thereafter may be made at any time within 90-day intervals. The 90-day limitations may be extended upon approval in writing by the GSA.

(g) Certain producers of aluminum have entered into contracts with GSA effective as of November 1, 1965, under which they have made long term commitments to purchase certain minimum and maximum quantities of aluminum from that Agency. The obligations of such producers under this clause shall be governed by the provisions of those contracts to the extent of any inconsistency.

(h) All purchases made pursuant to this clause, other than from GSA, are required to be rated (ACM, DO, or DX) in accordance with DMS Regulation 1, DMS Order 3, and DPS Regulation 1, and are subject to the provisions of those regulations concerning the maintenance of records, rights of inspection and audit, and the penalty provisions contained therein for willful noncompliance. [36 F.R. 25103, Dec. 29, 1971]

The clause contained in § 18-1.327-2 shall be modified by deletion of paragraph (c) thereof and substitution of the following paragraph in all contracts for construction:

(c) To the extent the Contractor or subcontractor or supplier, where applicable places subcontracts or purchase orders for aluminum products, or for items other than aluminum products and containing aluminum in any form, or for construction where the subcontractor is to furnish materials containing aluminum in any form, he is not required with respect to such subcontracts or purchase orders to purchase aluminum from the GSA. However, he agrees to incorporate this clause, except paragraph (d):

(1) In any such subcontract or purchase order for aluminum products in the total amount of $500 or more, or

(11) In any such subcontract or purchase order in the total amount of $25,000 or more for any items containing aluminum in any form where the quantity of aluminum products used in the production of such items is estimated to be 10,000 pounds or more, or

(111) Construction, where the materials are to be supplied by the subcontractor and the total value of such materials containing aluminum (in any form) is estimated to be $25,000 or more, and where the quantity, of aluminum products used in the production of such items is estimated to be 10,000 pounds

ness enterprises in Federal procurement programs. In support of this policy, continuing efforts will be made (1) to facilitate the placement of minority individuals and minority-owned firms on source lists to assure that they are appropriately solicited, (2) to counsel such individuals and firms with respect to procurement policies and procedures and NASA business opportunities so as to enhance their potential participation, and (3) to inform such individuals and firms concerning subcontracting opportunities, including identification of major NASA programs and current or prospective prime contractors that might offer opportunity for participation. Unless otherwise assigned by the head of the installation, the small business/labor surplus area specialist at each installation is assigned primary responsibility for this effort.

(b) The implementation of this policy involves other types of assistance such as contracting with the Small Business Administration under section 8(a) of the Small Business Act (see § 18-1.7055). Additionally, to further the opportunities of minority business enterprises to participate in the performance of Government contracts, maximum practicable opportunity should be provided for these firms to participate as subcontractors and suppliers to prime contractors and subcontractors under Government contracts.

(c) Accordingly, effort should be put forth to provide to minority business enterprises counseling services with respect to procurement policy and procedures and information covering NASA business opportunities, and to have the names of such firms included on source lists at the various procurement offices. Also, the Minority Business Subcontracting Program (§ 18-1.332-2) shall be effectively implemented.

(d) Definition: A minority business enterprise is defined in paragraph (b) of the clause in § 18-1.332-3(a). [37 FR 14920, July 26, 1972]

§ 18-1.332-2 Minority business enterprises subcontracting program.

The Government's minority business enterprises subcontracting program requires Government contractors to assume affirmative obligations with respect to subcontracting with minority business enterprises. These obligations are in addition to those required under the small

business subcontracting program (§ 181.707) and under the labor surplus area subcontracting program (§ 18-1.805). In contracts which range from $5,000 to $500,000, the contractor undertakes the accomplishment of a maximum amount of subcontracting with minority business enterprises, consistent with efficient performance of the contract. This is set forth in the clause in § 18-1.332-3(a). For contracts which may exceed $500,000 the clause set forth in § 18-1.332-3(b) requires that the contractor undertake a number of specific responsibilities designed to assure that minority business enterprises are given all possible consideration in the placement of subcontracts and to impose similar responsibilities on major subcontracts. [37 FR 14920, July 26, 1972]

§ 18-1.332-3 Required clauses.

(a) The following clause shall be included in all contracts in amounts which may exceed $5,000 except contracts which, including all subcontracts thereunder, are to be performed entirely outside the United States, its possessions, Puerto Rico, and the Trust Territory of the Pacific Islands.

UTILIZATION OF MINORITY BUSINESS
ENTERPRISES (DECEMBER 1971)

(a) It is the policy of the Government that Minority Business Enterprises shall have the maximum practicable opportunity to participate in the performance of Government contracts.

(b) The Contractor agrees to use his best efforts to carry out this policy in the award of his subcontracts to the fullest extent consistent with the efficient performance of this contract. As used in this contract, the term "minority business enterprise" means a business, at least 50 percent of which is owned by minority group members or, in case of publicly owned businesses, at least 51 percent of the stock of which is owned by minority group members. For the purposes of this definition, minority group members are Negroes, Puerto Ricans, Spanish-speaking American persons, AmericanOrientals, American-Indians, American Eskimos, and American Aleuts. Contractors may rely on written representations by subcontractors regarding their status as minority business enterprises in lieu of an independent investigation.

(b) The following clause shall be included in all contracts (except maintenance, repair and construction contracts) which may exceed $500,000, which require the clause in paragraph (a) of this section and which, in the

opinion of the contracting officer, offer substantial subcontracting possibilities. Furthermore, prime contractors who are to be awarded contracts which may not exceed $500,000 but which, in the opinion of the contracting officer, offer substantial subcontracting possibilities, shall be urged to accept the clause.

MINORITY BUSINESS ENTERPRISES SUBCON-
TRACTING PROGRAM (JUNE 1973)

(a) The Contractor agrees to establish and conduct a program which will enable minority business enterprises (as defined in the clause, entitled, "Utilization of Minority Business Enterprises") to be considered fairly as subcontractors and suppliers under this contract. In this connection, the Contractor shall:

(1) Designate a liaison officer who will administer the Contractor's "Minority Business Enterprises Program."

(2) Provide adequate and timely consideration of the potentialities of known minority business enterprises in all "make-or-buy" decisions.

(3) Assure that known minority business enterprises will have an equitable opportunity to compete for subcontracts, particularly by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery schedules so as to facilitate the participation of minority business enterprises.

(4) Maintain records showing (1) procedures which have been adopted to comply with the policies set forth in this clause, including the establishment of a source list of minority business enterprises, (ii) awards to minority business enterprises on the source list, and (iii) specific efforts to identify and award contracts to minority business enterprises.

(5) Include the "Utilization of Minority Business Enterprises" clause in subcontracts which offer substantial minority business enterprise subcontracting opportunities.

(6) Cooperate with the Contracting Offcer in any studies and surveys of the Contractor's minority business enterprises procedures and practices that the Contracting Officer may from time to time conduct.

(7) Submit NASA Form 524 report to the Procurement Office, (DK-1), NASA Headquarters, Washington, D.C. 20546, in accordance with the instructions contained therein.

(b) The Contractor further agrees to insert, in any subcontract hereunder which may exceed $500,000 provisions which shall conform substantially to the language of this clause, including this paragraph (b), and to notify the Contracting Officer of the names of such subcontractors.

[39 FR 13074, Apr. 11, 1974]

§ 18-1.333 Payment of interest on contractors' claims.

All contracts except small purchases (See Subpart 18-3.6) which contain the