APPENDIX 3J-ARMED SERVICES PROCUREMENT REGULATION, EXCERPTS FROM SECTION VII, PART 1

1 April 1965, Rev. 10

7-104.29

CLAUSES FOR FIXED-PRICE SUPPLY CONTRACTS

Price Reduction for Defective Cost or Pricing Data.

713

(a) The following clause shall be inserted in any cost-reimbursement type, price redeterminable, time and materials, labor hour, or incentive contract except cost and cost-sharing contracts the estimated cost of which does not exceed $100,000 and under which the contractor receives no fee. It shall also be inserted in any other negotiated contract over $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 addition, 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) (iv) in connection with the initial pricing of the contract, and in such cases paragraph (c) may be appropriately modified in respect to subcontracts of less than $100,000.

ARMED SERVICES PROCUREMENT REGULATION

¶ 7-104.29

714

CONTRACT CLAUSES

1 September 1964, Rev. 7

PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA (SEP. 1964) (a) If the Contracting Officer determines that any price, including profit or fee, negotiated in connection with this contract was increased by any significant sums because the Contractor, or any subcontractor in connection with a subcontract covered by (c) below, furnished incomplete or inaccurate cost or pricing data or data not current as certified in the Contractor's Certificate of Current Cost or Pricing Data, then such price shall be reduced accordingly and the contract shall be modified in writing to reflect such adjustment.

(b) Failure to agree on a reduction shall be a dispute concerning a question of fact within the meaning of the "Disputes" clause of this contract.

(c) The Contractor agrees to insert the substance of paragraphs (a) and (c) of this clause in each of his cost-reimbursement type, price redeterminable, or incentive subcontracts hereunder, and in any other subcontract hereunder in excess of $100,000 unless 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 each such excepted subcontract hereunder which exceeds $100,000, the Contractor shall insert the substance of the following clause. PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA-PRICE

ADJUSTMENTS

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $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 right to price reduction under this clause shall be limited to such price adjustments. (b) If the Contractor determines that any price, including profit or fee, negotiated in connection with any price adjustment within the purview of paragraph (a) above was increased by any significant sum because the subcontractor or any of his subcontractors in connection with a subcontract covered by paragraph (c) below, furnished incomplete or inaccurate cost or pricing data, or data not current as of the date of execution of the subcontractor's certificate of current cost or pricing data, then such price shall be reduced accordingly and the subcontract shall be modified in writing to reflect such adjustment.

(c) The subcontractor agrees to insert the substance of this clause in each subcontract hereunder which exceeds $100,000.

(b) Insert the following clause in all contracts, both formally advertised and negotiated, in excess of $100,000 other than those described in (a) above. PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA-PRICE ADJUSTMENTS (MAR. 1963)

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $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 right to price reduction under this clanse shall be limited to such price adjustments. (b) If the Contracting Officer determines that any price, including profit, or fee, negotiated in connection with any price adjustment under this contract was increased by any significant sums because the Contractor or any subcontractor in connection with a subcontract covered by paragraph (d) below, furnished incomplete or inaccurate cost or pricing data or data not current as of the date of execution of the contractor's certificate of current Cost or Pricing Data, then such price shall be reduced accordingly and the contract shall be modified in writing to reflect such adjustment.

[Contract clause continued on next page]

17-104.29

ARMED SERVICES PROCUREMENT REGULATION

15 November 1963, Rev. 3

CLAUSES FOR FIXED-PRICE SUPPLY CONTRACTS

715

(c) Failure to agree on a reduction shall be a dispute concerning a question of fact within the meaning of the "Disputes" clause of this contract.

(d) The Contractor agrees to insert the substance of paragraphs (a), (b), and (d) of this clause in each subcontract hereunder that exceeds $100,000.

(c) The requirement for inclusion of the above clauses in contracts with foreign governments or agencies thereof may be waived in exceptional cases by the Head of a Procuring Activity, stating in writing his reasons for such determination.

7-104.30 Humane Slaughter of Livestock. When required by Section IV, Part 6, the procedures set forth in 4-604 will be followed.

7-104.31 Duty-Free Entry. In accordance with the requirements of 6-603.2, insert either or both of the clauses set forth in 6-603.3, as appropriate. 7-104.32 Duty-Free Entry of Listed Canadian Supplies. In accordance with the requirements of 6-605, insert the clause set forth therein.

7-104.33 Taxes. In accordance with the requirements of 11-403.2, in contracts to be performed outside the United States, its possessions and Puerto Rico, insert one of the clauses set forth in (a) and (b) thereof.

7-104.34 Advance Payments. When advance payments are to be made in accordance with Appendix E, Part 4, insert the appropriate clause as set forth in E-414.2.

7-104.35 Progress Payments. When progress payments are to be made in accordance with Appendix E, Part 5, insert the appropriate clause as set forth in E-510.

7-104.36 [Reserved]

7-104.37 Required Source for Jewel Bearings. In accordance with the requirements of 1-315, insert the clause set forth therein.

7-104.38 Labor Surplus Area Subcontracting Program. In accordance with the requirements of 1-805.3(b), insert the clause set forth therein.

7-104.39 Interest. In accordance with the requirements of E-620 and E-621, insert the clause set forth in E-620.

7-104.40 Competition in Subcontracting. The following clause shall be included in all negotiated contracts over $10,000, except in firm fixed-price contracts where award is on the basis of effective price competition or where prices are established by law or regulation.

COMPETITION IN SUBCONTRACTING (APR. 1962)

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.

7-104.41 Audit and Records.

(a) Insert the following clause only in firm fixed-price and fixed-price with escalation negotiated contracts which exceed $100,000, except where the price negotiated 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.

ARMED SERVICES PROCUREMENT REGULATION

Я7-104.41

716

1 September 1964, Rev. 7

CONTRACT CLAUSES

AUDIT (SEP. 1964)

(a) For purposes of verifying that cost or pricing data submitted, in conjunction with the negotiation of this contract or any contract change or other modification involving an amount in excess of $100,000 are accurate, complete, and current, the Contracting Officer, or his authorized representatives, shall-until the expiration of three years from the date of final payment under this contract-have the right to examine those books, records, documents and other supporting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein, which were available to the Contractor as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data.

(b) The Contractor agrees to insert the substance of this clause including this paragraph (b) in all subcontracts hereunder in excess of $100,000, so as to apply until three years after final payment under the subcontract, unless 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 each such excepted subcontract hereunder in excess of $100,000, the Contractor shall insert the substance of the following clause to apply until three years after final payment under the subcontract.

AUDIT-PRICE ADJUSTMENTS

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000 unless the price adjustment 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 and further provided that such change or other modification to this contract must result from a change or other modification to the Government prime contract.

(b) For purposes of verifying that cost or pricing data submitted in conjunction with a contract change or modification involving an amount in excess of $100,000 are accurate, complete and current, the Contracting Officer or his authorized representative shall-until the expiration of three years from the data of final payment under this contract-have the right to examine those books, records, documents, and other supporting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein, which were available to the Contractor as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data.

(c) The Contractor agrees to insert the substance of this clause, including this paragraph (c), in all subcontracts hereunder in excess of $100,000 so as to apply until three years after final payment of the subcontract.

(b) Insert the following clause in formally advertised contracts which are expected to exceed $100,000, and in firm fixed-price and fixed-price with escalation negotiated contracts which exceed $100,000 when 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 negotiated contracts, delete from paragraph (b) of the clause the words "the Comptroller General of the United States". [The next page is 716.1]

¶ 7-104.41

ARMED SERVICES PROCUREMENT REGULATION

1 April 1965, Rev. 10

CLAUSES FOR FIXED-PRICE SUPPLY CONTRACTS AUDIT-PRICE ADJUSTMENTS (SEP. 1964)

716.1

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000, unless the price adjustment 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. (b) For purposes of verifying that cost or pricing data submitted in conjunction with a contract change or other modification involving an amount in excess of $100.000 are accurate, complete, and current, the Contracting Officer, the Comptroller General of the United States, or any authorized representatives, shall-until the expiration of three years from the date of final payment under this contract-have the right to examine those books, records, documents and other supporting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein, which were available to the Contractor as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data.

(c) The Contractor agrees to insert the substance of this clause in all subcontracts hereunder in excess of $100,000 so as to apply untill three years after final payment under the subcontract and only when the change or other modification to the subcontract results from a change or other modification to the Government prime contract. (c) Insert the following clause in any negotiated cost-reimbursment type, incentive, time and materials, labor hour, or price redeterminable contract.

AUDIT AND RECORDS (SEP. 1964)

(a) The Contractor shall maintain 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. The foregoing constitute "records" for the purposes of this clause.

(b) The Contractor's plants, or such part thereof as may be engaged in the performance of this contract, and his records shall be subject at all reasonable times to inspection and audit by the Contracting Officer or his authorized representative.

(c) The Contractor shall preserve and make available his records (i) until the expiration of three years from the date of final payment under this contract, and (ii) for such longer period, if any, as is required by applicable statute, or by other clauses of this contract, or by (A) or (B) below.

(A) If this contract is completely or partially terminated, the records relating to the work terminated shall be preserved and made available for a period of three years from the date of any resulting final settlement.

(B) Records which relate to (i) appeals under the "Disputes" clause of this contract or (ii) litigation or the settlement of claims arising out of the performance of this contract, shall be retained until such appeals, litigation, or claims have been disposed of.

(d) (1) The Contractor shall insert the substance of this clause, including the whole of this paragraph (d), in each subcontract hereunder that is not on a firm fixed-price basis.

(2) The Contractor shall insert the substance of the following clause in each firm fixed-price subcontract hereunder in excess of $100,000, except those subcontracts covered by subparagraph (3) below.

AUDIT

(a) For purposes of verifying that cost or pricing data submitted in conjunction with the negotiation of this contract or any contract change or other modification involving an amount in excess of $100,000 are accurate, complete, and current, the Contracting Officer, or his authorized representatives, shall-until the expiration of three years from the date of final payment under this contract-have the right to examine those books, records, documents, and other supporting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein, which were available to the Contractor [Contract clause continued on next page]

ARMED SERVICES PROCUREMENT REGULATION

7-104.41