The Contracting Officer may, at any time, by a written order and without notice to the sureties, if any, make changes within the general scope of the contract in any one or more of the following: (a) Specifications, (b) work or services, (c) the place of origin, (d) the place of delivery, (e) tonnage to be shipped, or (f) amount of Government-furnished property. If any such change causes an increase or decrease in the cost of, or in the time required for, performance of any part of the work or services under this contract, whether changed or not changed by any such order, an equitable adjustment shall be made in the contract price, or time of performance, 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. 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.

§ 1-7.703-3 Extras.

Insert the clause set forth in § 17.102-3.

[40 FR 44140, Sept. 25, 1975]

§ 1-7.703-4 Inspection.

INSPECTION

All services, facilities, and equipment shall be subject to inspection and test by representatives of the Government. The Contractor shall, at all reasonable times, allow inspectors and other Government personnel free access to its facilities, equipment, and operations for this purpose, and shall provide such reasonable facilities and assistance as may be required for this work. § 1-7.703-5 Payments.

PAYMENTS

The Contractor shall be paid, upon the submission of proper invoices or vouchers, the amount due for services rendered and accepted, less deductions, if any, as herein provided. Submission of invoices should be in accordance with the requirements set forth in paragraph 13, Standard Form 33A, as modified herein.

§ 1-7.703-6 Assignment of claims.

Insert the clause set forth in § 130.703 under the conditions contained therein.

§ 1-7.703-7 Examination of records by Comptroller General.

Insert the clause set forth in § 17.103-3 under the conditions contained therein.

[40 FR 44140, Sept. 25, 1975]

§ 1-7.703-8 Default.

DEFAULT

(a) The Government may, subject to the provisions of paragraph (c), below, by written notice of default to the Contractor, terminate the whole or any part of this con

tract in any one of the following circumstances:

(1) If the Contractor fails to pick up the commodities or to perform the services, including delivery services, within the time specified herein or any extension thereof; or (2) If the Contractor fails to perform any of the other provisions of this contract, or so fails to make progress as to endanger performance of this contract in accordance with its terms, and in either of these two circumstances does not cure such failure within a period of (time to be inserted), or such longer period as the Contracting Officer may authorize in writing, after receipt of notice from the Contracting Officer specifying such failure.

(b) In the event the Government terminates this contract in whole or in part as provided in paragraph (a) of this clause, the Government may procure, upon such terms and in such manner as the Contracting Officer may deem appropriate, services similar to those so terminated, and the Contractor shall be liable to the Government for any excess costs of such similar services: Provided, however, That the Contractor shall continue the performance of this contract to the extent not terminated under the provisions of this clause.

(c) Except with respect to defaults of subcontractors, the Contractor shall not be liable for any excess costs if the failure to perform the contract arises out of causes beyond the control and without the fault or negligence of the Contractor. Such causes may include, but are not restricted to, acts of God or of the public enemy, acts of the Government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather; but in every case the failure to perform must be beyond the control and without the fault or negligence of the Contractor. If the failure to perform is caused by the default of a subcontractor, and if such default arises out of causes beyond the control of both the Contractor and subcontractor, and without the fault or negligence of either of them, the Contractor shall not be liable for any excess costs for failure to perform, unless the services to be furnished by the subcontractor were obtainable from other sources in sufficient time to permit the Contractor to meet the required delivery schedule.

(d) If, after notice of termination of this contract under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the provisions of this clause, or that the default was excusable under the provisions of this clause, the rights and obligations of the parties shall, if the contract contains a clause providing for termination for convenience of the Government, be the same as if the notice of termination had been issued pur

suant to such clause. If, after notice of termination of this contract under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the provisions of this clause, and if this contract does not contain a clause providing for termination for convenience of the Government, the contract shall be equitably adjusted to compensate for such termination and the contract modified accordingly; failure to agree to any such adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes."

(e) In case of termination while the Contractor has the Government goods covered by this contract in its possession, the Contractor shall surrender the goods to the Government or its agent on demand.

(f) The rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract.

(g) The term "subcontractor" as used in this clause means subcontractor at any tier. § 1-7.703-9 Disputes.

Insert the clause set forth in § 17.102-12.

§ 1-7.703-15 Federal, State, and local taxes.

Insert either the clause in § 1-11.4011 or the clause in § 1-11.401-2 and, when appropriate, insert the supplementary clause in § 1-11.401-3(a), in accordance with the conditions contained in those sections.

§ 1-7.703-16 Utilization of concerns in labor surplus areas.

Insert the clause set forth in § 11.805-3(a) under the conditions and in the manner prescribed therein.

§ 1-7.703-17 Contract not affected by oral agreement.

CONTRACT NOT AFFECTED BY ORAL

AGREEMENT

No oral statement of any person shall modify or otherwise affect the terms, conditions, or specifications herein stated. All modifications to the contract must be made in writing by the Government's Contracting Officer or his authorized representative.

§ 1-7.703-18 Service Contract Act of 1965. Insert either the clause set forth in § 1-12.904-1 or the clause in § 1-12.9042 in accordance with the conditions contained in those sections.

§ 1-7.703-19 Termination for convenience of the Government.

Insert either the clause set forth in § 1-8.705-1 under the conditions prescribed in § 1-8.700-2(a)(2).

§ 1-7.703-20 Moving contracts for the relocation of a Federal office.

To insure that a prospective contractor is properly authorized and competent to perform a moving contract involving the relocation of a Federal office, whether a move of this type takes place between States including the District of Columbia (i.e., an interstate move), or wholly within the borders of one State or the District of Columbia (i.e., an intrastate move), the following provisions shall be included in each such invitation and in the resulting contract:

PERFORMANCE CAPABILITY

(a) If the move specified herein is to be performed by the Contractor as a carrier within the borders of more than one State, including the District of Columbia (i.e., an

interstate move), the Contractor shall have obtained and hold appropriate and current operating authority from the Interstate Commerce Commission.

(b) If the move specified herein is to be performed by the Contractor as a carrier wholly within the borders of one State or the District of Columbia (i.e., an intrastate move), the Contractor shall, when required by the State or the District of Columbia in which the move is to take place, have obtained and hold appropriate and current operating authority from such jurisdiction, in the form of a certificate, permit, or equivalent license to operate, or if no such authority to operate is required by the State or the District of Columbia in which the move is to take place, then the Contractor as carrier shall maintain facilities, equipment, and a business address within the jurisdiction in which the move is to take place: Provided, That if the move is to originate and/or terminate within an area of one State, or the District of Columbia, which comprises a part of a recognized Commercial Zone (see 49 CFR Part 1048), whose boundaries encompass portions of more than one State or the District of Columbia, it shall be sufficient if the Contractor as carrier maintains facilities, equipment, and a business address within the Commercial Zone and holds appropriate operating authority, if required, from the jurisdiction within which he maintains such facilities, equipment, and business address.

(c) If the move specified herein will not be performed by the Contractor as carrier it must be performed for the Contractor by a carrier operating under a subcontract with the Contractor. In such instance, the Contractor shall not be subject to the requirements of paragraphs (a) and (b), above, but it shall be the responsibility of the Contractor to require and insure that the subcontractor carrier complies with such requirements in every respect.

(d) There shall be compliance with the applicable requirements of this clause at least 14 days before the date on which performance of the contract shall commence under the terms and conditions herein specified: Except that, if the period from the date of award of the contract to the date that performance shall commence is less than 28 days, the Contractor need only comply with the applicable requirements of this clause midway between the time of award and the time of commencement of performance.

§ 1-7.703-21 Employment of the handicapped.

Insert the clause set forth in § 112.1304-1 under the conditions contained in the section.

[39 FR 26642, July 22, 1974]

§ 1-7.703-22 Cost accounting standards.'

(a) National defense procurements. Insert the notices set forth in § 13.1203-3(a) in solicitations of proposals and the appropriate contract clauses set forth in § 1-3.1204-1 in negotiated contracts in accordance with the provisions of Subpart 1-3.12.

(b) Nondefense procurements. Insert the notice set forth in § 1-3.1203-3(b) in solicitations of proposals and the appropriate contract clause set forth in § 1-3.1204-2 in negotiated contracts in accordance with the provisions of Subpart 1-3.12.

[43 FR 14122, Apr. 4, 1978]

§ 1-7.703-23 Clean air and water.

Insert the clause prescribed by § 11.2302-2 under the conditions set forth therein.

[40 FR 36341, Aug. 20, 1975]

§ 1-7.703-24 Privacy Act.

Insert the clause prescribed by § 11.327-5 under the conditions set forth therein.

[40 FR 44504, Sept. 26, 1975]

§ 1-7.703-25 Use of U.S. flag commercial vessels.

Insert the clause prescribed by § 119.108-2 under the conditions set forth therein.

[41 FR 52457, Nov. 30, 1976]

§ 1-7.704 [Reserved]

APPENDIX

BACKGROUND AND NATURE OF REVISIONS TO CONTRACT CLAUSES

1. Background. This amendment prescribes three revised contract clauses for use by executive agencies in fixed-price construction contracts, namely: "Changes;" "Differing Site Conditions" (formerly designated "Changed Conditions"); and "Suspension of Work" (formerly designated "Price Adjustment for Suspension, Delay, or Interruption of the Work").

a. For many years problems have been encountered in the administration of these clauses. A study of the problems was initiated by GSA on June 18, 1964. The Study

Group (which included the representatives of major construction contracting agencies) submitted a report on March 1, 1966, in which it set forth basic objectives, analyzed administrative difficulties, and recommended revised contract clauses. Included in the basic objectives were:

(1) Clarification of the authority of the contracting officer with respect to the making of changes.

(2) Express recognition in the contract document itself of the doctrine of "constructive changes."

(3) Elimination of the adverse effects of the "Rice" doctrine (insofar as it has been interpreted to preclude appropriate consideration of the effect of a change upon affected aspects of contract work not specifically covered by the change order).

(4) Clarification and revision of notice requirements imposed by the Government on the contractor.

Underlying these objectives was the desire to facilitate administrative adjustment of claims arising under construction contracts. It was believed that the elimination of "fractionalization" problems in the handling of such cases by contracting officers, contract appeals boards, the General Accounting Office, and courts will benefit both the Government and contractors.

b. The proposals set forth in the report of the Study Group were submitted for comment both to Government agencies and to construction industry representatives (including industry associations, professional bar groups, and interested individuals). In the light of the comments received from these organizations, the Study Group submitted on May 8, 1967, a supplemental report which set forth additional revisions in the text of the respective clauses. Thereafter, further reconciliations were made by GSA and the prescribed texts of the clauses were developed, giving due consideration to the views and recommendations of all interested parties, consistent with the interests of the Government.

2. Nature of revisions to contract clauses.-a. Changes clause. (1) Paragraph (a), like a counterpart provision in the clause previously prescribed, establishes the authority of the contracting officer to make changes within the general scope of the work. The revised clause makes it clear, however, that the change may relate to any aspect of the work to be performed under the contract. To effect this clarification, the clause sets forth illustrative categories for the making of changes, which embrace changes not only in the drawing, designs and specifications, but also changes in the method and manner of performance; in the provision of sites and services; or requiring acceleration in performance. These categories are intended to be descriptive of the kind of change actions which historically

have been accommodated under the Changes clause. Deceleration actions not related to a change or unreasonable delay in the issuance of a change order were intentionally omitted since they are in the nature of a suspension, delay, or interruption covered by the Suspension of Work clause, which is now made a mandatory clause. Hence, it is not intended that the Changes clause cover actions which (i) are clearly denoted as a suspension order or (ii) have as a primary purpose the effecting of a suspension, delay, or interruption of the work. While the contracting officer is authorized to make changes in any aspect of the work itself, the clause does not authorize him to alter any of the collateral aspects of contract performance, such as are covered by the payment and so-called boilerplate clauses.

(2) Paragraph (b) of the clause (for which there is no counterpart provision in the clause previously prescribed) concerns "constructive changes." This paragraph provides that other written or oral orders (including directions, instructions, interpretations, or determinations) from the contracting officer which cause a change within the general scope of the work will be treated as changes under the clause. However, as a prerequisite to the consideration of a claim based on a constructive change, the contractor must notify the contracting officer that he considers such order to be one directing a change in the work to be performed.

(3) Paragraph (c) (for which there is no counterpart provision in the clause previously prescribed) provides that no order, statement, or conduct of the contracting officer shall be treated as a change, except as specifically provided for in the clause itself. With respect to constructive changes, accordingly, only those provided for in paragraph (b) may be considered under the Changes clause. This paragraph does not, of course, preclude the contractor from seeking such administrative relief as may be available under another clause contained in the contract, such as the Suspension of Work or a Government-furnished property clause. Likewise, it does not preclude the contractor from seeking judicial relief for breach of contract.

(4) Paragraph (d), like a counterpart provision in the clause previously prescribed, establishes the contractor's right to an equitable adjustment in situations involving the making of changes. More specifically, the paragraph states that if any change effected under the clause causes an increase in the cost of, or in the time required for, the performance of any part of the work, "whether or not changed by any order," an equitable adjustment is to be made.

(i) A significant revision in the clause is the adoption of additional text designed to eliminate the application of the "Rice" doc

trine (which reflected interpretive rulings relating to the meaning of the clause previously prescribed). The elimination of the "Rice" doctrine has been accomplished primarily by adding the phrases "any part of the work" and "whether or not changed." These phrases now appear in the Changes clause of Standard Form 32, the general provisions for standard supply contracts. An equitable adjustment clearly encompasses the effect of a change order upon any part of the work, including delay expense; provided, of course, that such effect was the necessary, reasonable, and foreseeable result of the change.

(ii) Except for defective specifications, the Changes clause as revised will continue to have no application to any delay prior to the issuance of a change order. An adjustment for such type of delay, if appropriate, will be for consideration under the provisions of the Suspension of Work clause.

(iii) A further revision in the equitable adjustment provision in paragraph (d) has been made by reason of the recognition in the clause of constructive changes under paragraph (b). Under this revision, a contractor who seeks relief in a constructive change situation not involving defective specifications cannot recover for any costs arising more than 20 days prior to his furnishing an apprisal notice as prescribed under paragraph (b). Accordingly, a cost limitation which has heretofore been prescribed for suspensions arising under the Suspension of Work clause will now also be prescribed for constructive changes arising under the Changes clause. The 20-day limitation is not waiverable, and costs may not be recovered contrary to this limitation.

(iv) Notwithstanding the inapplicability of the 20-day cost incurrence limitation to constructive change orders involving defective specifications, the apprisal notice required by paragraph (b) must be given. Moreover, paragraph (d) also limits the equitable adjustment to costs reasonably incurred in attempting to comply with defective specifications. Thus, the time of the notice in relation to when the contractor becomes aware of the defect could be a factor in determining reasonableness of costs. Of course, no adjustment is intended to be allowed in connection with defective specifications unless the Government is responsible therefor.

(5) Paragraph (e) requires the contractor to submit to the contracting officer a statement setting forth the general nature and monetary extent of his claim for an equitable adjustment within 30 days after the receipt of a written change order issued under paragraph (a), or within 30 days after the furnishing by the contractor to the contracting officer of an apprisal notice pursuant to paragraph (b). The paragraph also indicates that in a constructive change situation arising under paragraph (b), the con