CONTRACT CLAUSES AND SOLICITATION PROVISIONS In the case of a cost-plus-incentive-fee contract, substitute “Allowable Cost, Incentive Fee, and Payment" for "Allowable Cost, Fixed Fee, and Payment" in paragraph (a) of the foregoing clause. (b) In accordance with 3-704.2, insert the following clause in contracts with educational institutions. NEGOTIATED OVERHEAD RATES (POSTDETERMINED) (1970 SEP) (a) Notwithstanding the provisions of the clause of this contract entitled “Allowable Cost and Payment", the allowable indirect costs under this contract shall be obtained by applying negotiated overhead rates to bases agreed upon by the parties, as specified below. (b) The Contractor, as soon as possible but not later than six (6) months after the expiration of each period specified in the Schedule shall submit to the Contracting Officer with a copy to the cognizant audit activity, a proposed final overhead rate or rates for that period based on the Contractor's actual cost experience during that period, together with supporting cost data. Negotiation of final overhead rates by the Contractor and the Contracting Officer shall be undertaken as promptly as practicable after receipt of the Contractor's proposal. (c) Allowability of costs and acceptability of cost allocation methods shall be determined in accordance with the Armed Services Procurement Regulation, Section XV, Part 3, as in effect on the date of this contract. (d) The results of each negotiation shall be set forth in a written overhead rate agreement, executed by both parties. Such agreement is automatically incorporated in this contract upon execution and shall specify (i) the agreed final rates, (ii) the bases to which the rates apply, (iii) the periods for which the rates apply, and (iv) the items treated as direct costs. The overhead rate agreement shall not change any monetary ceiling, contract obligation, or specific cost allowance or disallowance provided for in this contract. (e) Pending establishment of final overhead rates for any period, the Contractor shall be reimbursed either at negotiated billing rates as provided in the Schedule or at billing rates acceptable to the Contracting Officer, subject to appropriate adjustment when final rates for that period are established. To prevent substantial over or under payment, billing rates may, at the request of either party, be revised by mutual agreement, either retroactively or prospectively. Any such revision of the negotiated billing rates provided in the Schedule shall be set forth in a modification to this contract. (f) Any failure by the parties to agree on any final rate or rates under this clause shall be considered a dispute concerning a question of fact for decision by the Contracting Officer within the meaning of the "Disputes" clause of this contract. (End of clause) 7-204.17 Employment of Ocean-Going Vessels-Ocean Transport of Government-Owned Supplies. (a) In accordance with 1-1404(a), insert the clause in 7-104.19(a). (c) In accordance with 1-1404(b)(2), insert the clause in 7-104.19(c). 7-204.18 Limitation on Withholding of Payments. In accordance with 7-104.21, insert the clause therein. 7-204.19 Management Systems Requirements. In accordance with 16–827.1, insert the clause in 7-104.50. 7-204.20 Make-or-Buy Program. (a) Changes to Make-or-Buy Program. In accordance with 3-902.4, insert the following clause. 7-204.20 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS CHANGES TO MAKE-OR-BUY PROGRAM (1967 APR) The Contractor shall perform this contract in accordance with the "make-or-buy" program incorporated in this contract except as hereinafter provided. If the Contractor proposes to change the "make-or-buy" program, he shall notify the Contracting Officer thereof in writing at a time reasonably in advance of the proposed change and shall therewith submit justification in sufficient detail to permit evaluation of the proposed change. Changes in the place of performance of work on any "make" items in the "make-or-buy” program are subject to this requirement. With respect to items deferred at the time of negotiation of this contract for later addition to the "make-orbuy" program, the Contractor shall notify the Contracting Officer of each proposed addition at the earliest possible time, together with justification in sufficient detail to permit evaluation. This contract shall be deemed modified in accordance with such proposed change or addition upon receipt by the Contractor of the Contracting Officer's written approval thereof. (End of clause) (b) Price Adjustment for Make-or-Buy Changes. In accordance with 3-902.5, insert the following clause. PRICE ADJUSTMENT FOR MAKE-OR-BUY CHANGES (1967 APR) This clause applies only to items that are designated elsewhere in this contract as being "make" items or "buy" items subject to this clause. If the Contractor desires to "make" any designated "buy" item or to "buy" any designated "make" item, he shall give written notice to the Contracting Officer reasonably in advance of the proposed change and shall include significant and reasonably available cost and pricing data in sufficient detail to permit evaluation of the proposed change. Promptly thereafter, if the Contractor proceeds with the change, the Contractor and the Contracting Officer shall negotiate an equitable reduction in the contract price* to reflect any decrease in costs which should reasonably result from the change, and the contract shall be modified in writing accordingly. Failure to agree on an equitable reduction shall be a dispute concerning a question of fact within the meaning of the "Disputes" clause of this contract. (End of clause) *Substitute "target cost and target fee" for "contract price" in cost-plus-incentive-fee contracts. 7-204.21 Flight Risks. In accordance with 10-504, insert the following clause. FLIGHT RISKS (1975 OCT) (a) Notwithstanding any other provision of this contract, and particularly subparagraph (g)(1) of the "Government Property" clause and paragraph (c) of the "Insurance-Liability to Third Persons" clause, the Contractor shall not (i) be relieved of liability for, damage to, or loss or destruction of, aircraft sustained during flight, or (ii) be reimbursed for liabilities to third persons for loss of or damage to property, or for death or bodily injury, which are caused by aircraft during flight, unless the flight crew members have previously been approved in writing by (See footnote at end of clause.) (b) For purposes of this clause: (i) Unless otherwise specifically provided in the Schedule, the term “aircraft" means any aircraft, whether furnished by the Contractor under this contract (either before or after acceptance by the Government) or furnished by the Government to the Contractor under this contract, including all Government Property placed or installed therein or attached thereto; provided, however, that such aircraft and property are not covered by a separate bailment agreement. (ii) The term "flight” means any flight demonstration, flight test, taxi test, or other flight, made in the performance of this contract, or for the purpose of safeguarding the air 7-204.21 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS craft, or previously approved in writing by the (iii) The term "flight crew members" means the pilot, the co-pilot and, unless otherwise (c) If any aircraft is damaged, lost, or destroyed during flight, and if the amount of such damage, loss, or destruction exceeds one hundred thousand dollars ($100,000) or twenty percent (20%) of the estimated cost (exclusive of any fee) of this contract, whichever is less, and if the Contractor is not liable for the damage, loss or destruction pursuant to the “Government Property" clause of this contract together with paragraph (a) above, then an equitable adjustment for any resulting repair, restoration, or replacement that is required under this contract shall be made (i) in the estimated cost, delivery schedule, or both, and (ii) in the amount of any fee to be paid to the Contractor, and the contract shall be modified in writing accordingly; provided, in determining the amount of adjustment in the fee that is equitable, any fault of the Contractor, his employees, or any subcontractor, which materially contributed to the damage, loss, or destruction shall be taken into consideration. Failure to agree on any adjustment shall be a dispute concerning a question of fact within the meaning of the "Disputes" clause of this contract. (End of clause) *In the foregoing clause, insert in contracts of the Department of the Army, the Department of the Navy, the Department of the Air Force, and in contracts to be administered by the Defense Contract Administration Services the activity designated in combined regulation identified as Air Force Regulation 55-22. Army Regulation 95-20, NAVAIR Instruction 3710.1A, Defense Supply Agency Regulation 8210.1, dated 18 November 1964, subject, Requirements for Contractor Operating Procedures and Flight Crews, enclosure 1. In the foregoing clause, the definition of “aircraft” may be appropriately modified in the Schedule if the contract covers helicopters, vertical take-off aircraft, lighter-than-air airships, or other nonconventional types of aircraft. 7-204.22 Duty-Free Entry. (a) Duty-Free Entry for Designated Items. In accordance with 6-603.3(a), insert the clause in 7-104.31(a). (b) Duty-Free Entry for Items Not Identified in the Contract. In accordance with 6-603.3(b), insert the clause in 7-104.31(b). 7-204.23 Duty-Free Entry of Listed Canadian Supplies. In accordance with 6-605.2, insert the clause in 7-104.32. 7-204.24 Taxes. (a) Contractor Not a Foreign Government. In accordance with 11-403.2(c), insert the following clause. 7-204.24 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS TAXES (1960 JUL) Any tax or duty from which the United States Government is exempt by agreement with the Government of or from which the Contractor or any subcontractor hereunder is exempt under the laws of shall not constitute an allowable cost under this contract. (b) Foreign Government as Contractor. In accordance with 11-403.2(d), insert the following clause. TAXES (1960 JUL) Any tax or duty from which the United States Government is exempt by agreement with the Government of ............ or from which any subcontractor hereunder is exempt under the laws of shall not constitute an allowable cost under this contract. (End of clause) 7-204.25 Advance Payments. When advance payments are to be made in accordance with Appendix E, Part 4, insert the appropriate clauses in 7-104.34. 7-204.26 Frequency Authorization. In accordance with 7-104.61, insert the clause therein. 7-204.27 Required Source for Jewel Bearings. In accordance with 1-2207.2, insert the clause in 7-104.37. 7-204.28 General Services Administration Supply Sources. In accordance with 5-907, insert the following clause. GENERAL SERVICES ADMINISTRATION SUPPLY SOURCES (1965 JAN) The Contracting Officer may issue the Contractor an authorization to utilize General Services Administration supply sources for property to be used in the performance of this contract. Title to all property acquired under such an authorization shall be in the Government. All property acquired under such an authorization shall be subject to the provisions of the clause of this contract entitled "Government Property", except paragraphs (a) and (b) thereof. (End of clause) 7-204.29 Special Termination Costs. In accordance with 8-712, insert the clause in 7-108.3. 7-204.30 Interest. In accordance with E-620, insert the clause in 7-104.39. 7-204.31 United States Products (Military Assistance Program). In accordance with 6-703.4, insert the clause in 7-2003.51. 7-204.32 Value Engineering. (a) Use of the Incentive and Program Requirement Clauses. In accordance with 1-1702 and 1-1707, insert the applicable clause or clauses in 7-104.44(a) and (b), as modified in (b) or (c) below. (b) Cost-Plus-Incentive-Fee Contracts. Substitute the following "Sharing" provision for paragraph (e) of the applicable clause in 7-104.44(a) and (b): (e) Sharing. If a VECP submitted by the Contractor pursuant to this clause is accepted, the Contractor shall share in the savings realized by the Government in accordance with the following provisions: (1) Instant Contract. (i) Definitions: 7-204.32 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS (A) Instant contract savings to the Contractor (ICS) is the unit cost reduction times the number of units affected in the instant contract. The proposed unit cost reduction includes estimated allowable Contractor development and implementation costs (CC). The Contractor's development and implementation costs include any subcontractor development and implementation costs and any subcontractor incentive payments (see (h) below). For purposes of this clause, Contractor development costs are those costs incurred after the Contractor has identified a specific value engineering project and prior to acceptance by the Government. (B) Government Costs (GC) are those DoD costs which directly result from development and implementation of the VECP, such as test and evaluation of the VECP, and any increased costs in DoD operations, maintenance, and logistic support. (ii) Calculations and Actions: (A) Reduce the target cost of items affected by the VECP by ICS. The estimated cost for “limitation of cost” or “limitation of funds" purposes (7-203.3), if different or separately stated, should also be reduced by the same amount. (B) If ICS exceeds GC, add 35% (20% if this is a VE Program Requirement Change (C) If GC exceeds ICS, but acceptance of the VECP is still desirable due to concur- (2) Concurrent Contracts. (i) If the VECP accepted under this contract is also used on concurrent contracts of the purchasing office for essentially the same items the Contractor shall be paid a share of any savings as calculated in (ii) below. (ii) Calculations: (A) Determine the reduction in the price of each concurrent contract(s) as a result of incorporating the VECP. (B) Subtract from the total amount in (A) any Government costs (GC) not yet offset (if GC was greater than ICS) in (e)(1)(ii)(C) or (D) above, and any increase in the instant contract target cost, i.e., if ICS was negative in (e)(1)(ii)(D). If the resulting number is positive, multiply it by 35% (20% if this is a VEPRC). Add this amount to the instant contract as a separate line item independent of the incentive sharing arrangement and without adjustment to any of the contract incentive parameters. (3) Future Contracts. (i) Definition. The term unit cost reduction for future contract sharing shall be the unit cost reduction under this instant contract without deducting any cost of development or implementation. (ii) If the VECP accepted under this contract is used on future purchases of essentially the same item by the purchasing office, or its successor, the Contractor shall share in the savings on all affected end items scheduled for delivery not later than three years after acceptance of the first item incorporating the VECP, or until the originally scheduled delivery date of the last affected end item under the instant contract, whichever is later. When sharing on future contracts is expected, the Contractor shall be responsible for the following: (A) Maintaining records adequate to support identification of the first delivered unit to which the VECP applies. These records are considered an integral part of contract documentation and shall be maintained for a period of three years after final payment on the contract under which the VECP was accepted. 7-204.32 ARMED SERVICES PROCUREMENT REGULATION |