CONTRACT CLAUSES AND SOLICITATION PROVISIONS (d) One of the following paragraphs shall be added to the Option clause when the Government either knows or anticipates that the option may be exercised to fulfill Foreign Military Sales (FMS) requirements. These added provisions are not required nor shall they be placed into contracts for the establishment or replenishment of Department of Defense inventories or stocks, or procurements made under DoD Cooperative Logistic Support Arrangements. (1) Insert a paragraph substantially as follows when the Government and the contractor are able to negotiate a price in advance for FMS requirements: The U. S. Government may exercise the option or options under this clause to fulfill Foreign Military Sales commitments undertaken by the U. S. Government on behalf of a foreign country. (2) Insert a paragraph substantially as follows when the Government anticipates that the option may be exercised for FMS requirements and the Government and the contractor are unable to negotiate any additional cost or profit considerations attributable to FMS included in 6-1304 and 3-808.6 (b) (5)e until a specific country or countries are subsequently identified: The U. S. Government may exercise the option or options under this clause to fulfill Foreign Military Sales commitments undertaken by the U. S. Government on behalf of a foreign country. At the date of exercise of the option, the U. S. Government will identify the foreign country for the purpose of negotiating an equitable price adjustment for any additional cost or profit considerations attributable to Foreign Military Sales included in 6-1304 and 3–808. 6 (b) (5)e. Failure to agree to such an equitable adjustment shall be treated as a dispute within the meaning of the clause of this contract entitled "Disputes." 7-104.27 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS 7-104.28 Quality Program. In accordance with 14-304, insert the following clause. QUALITY PROGRAM (1967 AUG) The Contractor shall provide and maintain a quality program acceptable to the Government for supplies and services covered by this contract. The quality program shall be in accordance with the edition of Military Specification MIL-Q-9858 in effect on the date of this contract. (End of clause) 7-104.29 Price Reduction for Defective Cost or Pricing Data. (a) The following clause shall be inserted in negotiated contracts which when entered into exceed $500,000, 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(b)(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(d). PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA (1970 JAN) If any price, including profit or fee, negotiated in connection with this contract or reimbursable under this contract was increased by any significant sums because: (i) the Contractor furnished cost or pricing data which was not complete, accurate (iii) a subcontractor or prospective subcontractor furnished cost or pricing data (iv) the Contractor or a subcontractor or prospective subcontractor furnished any 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 there matters for negotiation and agreement between the contractor and the subcontractor, prøv that they are consistent with ASPR 23–203 relating to Disputes provisions in subcontracts. also expected that any subcontractor subject to such indemnification will generally require ́stantially similar indemnification for defective cost or pricing data required to be submitted by lower tier subcontractors. (End of 7-104.29 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS (b) Insert the following clause in all contracts, both formally advertised and negotiated, which when entered into exceed $500,000 except those containing | the clause in (a) above. PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA-PRICE ADJUSTMENTS (1982 DEC) (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 $500,000 unless the modification is priced on the basis of adequate competition, established | catalog or market prices of commercial items sold in sustantial 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 connection with any price adjustment under this contract was increased by any significant sums because: (i) the Contractor furnished cost or pricing data which was not complete, accurate and (iii) a subcontractor or prospective subcontractor furnished cost or pricing data which (iv) the Contractor or a subcontractor or prospective subcontractor 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 subcontract 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 prospective subcontract cost estimate submitted by the Contractor, 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 generally require substantially similar indemnification for defective cost or pricing data required to be submitted by his lower tier subcontractors. (End of clause) (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. 7-104.29 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS 7-104.30 Reserved. 7-104.31 Duty-Free Entry. (a) Duty-Free Entry for Designated Items. In accordance with 6–603.3(a), insert the provision in 7-2003.49 and the following clause. DUTY-FREE ENTRY FOR CERTAIN SPECIFIED ITEMS (1971 FEB) (a) Except as otherwise approved by the Contracting Officer, no amount is or will be included in the contract price on account of duty with respect to those supplies that are specifically identified in the Schedule as supplies to be accorded duty-free entry. (b) The Contractor warrants that all such supplies for which duty-free entry is to be claimed are intended to be delivered to the Government or incorporated in the end items to be delivered under this contract, and that duty shall be paid by the Contractor to the extent that such supplies, or any portion thereof, (if not scrap or salvage), are diverted to nongovernmental use other than as a result of a competitive sale made, directed or authorized by the Contracting Officer. (c) The Government agrees to execute duty-free entry certificates and to afford such assistance as appropriate in order to obtain the duty-free entry of supplies as to which the shipping documents bear the notation specified in paragraph (d) below, except as the Contractor may otherwise agree. (d) All shipping documents covering those supplies that are specifically identified in the Schedule as supplies to be accorded duty-free entry, shall consign the shipments to the appropriate Military Department, in care of the particular Contractor including the Contractor's delivery address or the appropriate military installation and shall bear the following information: (i) Government prime contract number; (ii) identification of carrier; (iii) the notation: "UNITED STATES DEPARTMENT OF DEFENSE-DUTY-FREE ENTRY TO BE CLAIMED pursuant to Schedule 8, Part 3, Item No. 832.00, Tariff Schedules of the United States. Upon arrival of shipment at port of entry, District Director of Customs, kindly release shipment under section 8.59CR and notify the appropriate DCASR for execution of Customs Forms 7501 and 7501A and the DutyFree Entry Certificate;" (iv) gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight); and (v) estimated value in United States dollars. (e) The Contractor agrees to instruct the foreign supplier to consign the shipment as specified in (d) above and mark all packages UNITED STATES DEPARTMENT OF DEFENSE to qualify for duty-free and to prepare a sufficient number of copies of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the District Director of Customs at the port of entry. (f) The Contractor agrees to notify the Contract Administration Office (CAO) in writing of any purchase by the Contractor of foreign supplies identified in the schedule as supplies to be accorded duty-free entry. Such notice shall be furnished to the CAO immediately upon the award by the Contractor to the overseas supplier. The notice shall identify (i) the foreign supplies, (ii) the country of origin, (iii) the prime contract number, and (iv) the scheduled delivery date(s). (g) The Contractor will make appropriate provisions in subcontracts hereunder to assure that the entire substance of this clause is agreed to by each first- or lower-tier subcontractor, if any, who will import into the United States, its possessions, or Puerto Rico, supplies identified in the Schedule as supplies to be accorded duty-free entry. (End of clause) ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS (b) In accordance with 6–603.3(b), insert the following clause. NOTICE OF IMPORTS-POSSIBLE DUTY-FREE ENTRY (1971 FEB) (a) Except as provided in paragraph (c) below, the Contractor shall notify the Contracting Officer in writing of any purchase in excess of $10,000 by the Contractor of foreign supplies (including without limitation raw materials, components, and intermediate assemblies) that are to be imported into the United States, its possessions, or Puerto Rico, for delivery to the Government, or for incorporation in end items to be delivered to the Government, under this contract; provided, that if this contract contains any other clause providing for duty-free entry, such notice is not required for any supplies that are to be accorded duty-free entry under any other such clause. Any such notice shall be furnished to the Contracting Officer at least twenty (20) days before the importation of any supplies pursuant to any such purchase. The notice shall identify (i) the foreign supplies, (ii) the estimated amount of duty payable thereon, and (iii) the country of origin. (b) If, within ten (10) days of receipt of any notice under (a) above, the Contracting Officer notifies the Contractor in writing that the Government will issue duty-free entry certificates for such foreign supplies, or if the Government otherwise tenders and the Contractor agrees to the issuance of such a duty-free entry certificate, the following subparagraphs shall apply: (1) Except as otherwise approved by the Contracting Officer, the contract price shall be reduced by (or the allowable cost shall not include) the amount of duty which would be payable if duty-free entry certificates were not issued pursuant to the provisions of this clause. (2) The Contractor warrants that all such foreign supplies for which duty-free entry certificates are to be issued in accordance with this clause are intended to be delivered to the Government or incorporated in end items to be delivered under this contract, and that duty shall be paid by the Contractor to the extent that such supplies or any portion thereof (if not scrap or salvage), are diverted to nongovernmental use other than as a result of a competitive sale made, directed or authorized by the Contracting Officer. (3) The Government agrees to execute duty-free entry certificates and to afford appropriate assistance in order to obtain the duty-free entry of such foreign supplies as to which, pursuant to subparagraph (4) below, the shipping documents bear the notation specified therein, except as the Contractor may otherwise agree. (4) All shipping documents submitted to Customs, covering foreign supplies for which dutyfree entry certificates are to be issued in accordance with this clause shall consign the shipments to the appropriate (i) Military Department in care of the particular Contractor including the Contractor's delivery address, or (ii) the appropriate military installation and shall bear the following information: (i) Government prime contract number; (iii) the notation: "UNITED STATES DEPARTMENT OF DEFENSE-DUTY-FREE ENTRY TO BE CLAIMED pursuant to Schedule 8, Part 3, Item No. 832.00, Tariff Schedules of the United States. Upon arrival of shipment at port of entry, District Director of Customs, kindly release shipment under section 8.59CR and notify the appropriate DCASR for execution of Customs Forms 7501 and 7501A and the DutyFree Entry Certificate;" (iv) gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight); and (v) estimated value in United States dollars. (5) The Contractor agrees to instruct the foreign supplier to consign the shipment as specified in (4) above and mark all packages UNITED STATES DEPARTMENT OF DEFENSE to qualify for duty-free entry and to prepare a sufficient number of copies of the bill of lading (or other shipping document) so that at least two of the copies accompanying the shipment will be available for use by the District Director of Customs at the port of entry. (6) The Contractor agrees to notify the Contract Administration Office (CAO) in writing of any purchase by the Contractor of foreign supplies for which duty-free entry certificates are to be 7-104.31 ARMED SERVICES PROCUREMENT REGULATION 33-103 0-84--12 |