CONTRACT CLAUSES AND SOLICITATION PROVISIONS 7-403.7 Priorities, Allocations, and Allotments. In accordance with 1-307.2, insert the clause in 7-104.18. 7-403.8 Communist Areas. In accordance with 6-403, insert the clause in 7-103.15. 7-403.9 Negotiated Overhead Rates. In accordance with 3-704, insert the appropriate clause in 7-204.16 or the following clause. NEGOTIATED OVERHEAD RATES-PREDETERMINED (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 predetermined overhead rates to bases agreed upon by the parties, as specified below. (b) The Contractor, as soon as possible but not later than three (3) months after the expiration of his fiscal year shall submit to the Contracting Officer with a copy to the cognizant audit activity, a proposed predetermined overhead rate or rates based on the Contractor's actual cost experience during that fiscal year, together with supporting cost data. Negotiation of predetermined 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) Predetermined rate agreements in effect on the effective date of this contract shall be incorporated into the contract schedule. Rates for subsequent periods shall be negotiated and the results set forth in a written overhead rate agreement executed by both parties. Such agreement shall be automatically incorporated into this contract upon execution and shall specify (i) the agreed predetermined overhead rates, (ii) the bases to which the rates apply, (iii) the fiscal year unless the parties agree to a different period for which the rates apply, and (iv) the specific items treated as direct costs or any changes in the items previously agreed to be 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 predetermined overhead rates for any fiscal year or different period agreed to by the parties, the Contractor shall be reimbursed either at the rates fixed for the previous fiscal year or other period or at billing rates acceptable to the Contracting Officer subject to appropriate adjustment when the final rates for that fiscal year or other period are established. (f) Any failure by the parties to agree on any predetermined overhead rate or rates under this clause shall not 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. If for any fiscal year or other period specified in the Schedule of this contract the parties fail to agree to a predetermined overhead rate or rates it is agreed that the allowable indirect costs under this contract shall be obtained by applying negotiated final overhead rates in accordance with the terms of the "Negotiated Overhead Rates-Postdetermined" clause set forth in 3-704.2 of the Armed Services Procurement Regulation as in effect on the date of this contract. (g) Allowable indirect costs for the period until the end of the Contractor's fiscal year during which performance begins shall be obtained by applying the predetermined overhead rate set forth in the Schedule to the bases set forth therein. (End of clause) 7-403.10 Notice to the Government of Labor Disputes. In accordance with 7-104.4, insert the clause therein. 7-403.11 Gratuities. In accordance with 7-104.16, insert the clause therein. 7-403.12 Limitation on Withholding of Payments. (a) Except as provided in (b) below the following clause shall be inserted in contracts which include more than one clause or Schedule provision authorizing 7-403.12 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS the temporary withholding of amounts otherwise payable to the contractor for supplies delivered or services performed: LIMITATION ON WITHHOLDING OF PAYMENTS (1959 FEB) If more than one clause or Schedule provision of this contract authorized the temporary withholding of amounts otherwise payable to the Contractor for work performed under this contract, the total of the amounts so withheld at any one time shall not exceed the greatest amount which may be withheld under any one such clause or Schedule provision at that time; provided that this limitation shall not apply to: (i) withholdings pursuant to any clause relating to wages or hours of employees; (iii) the recovery of overpayments. (End of clause) (b) The clause in (a) above is not required when: (i) the contracting officer or the procuring activity determines that the withholding limitation in the said clause is incompatible with the purpose of the particular withholding provisions involved; or (ii) all of the contract clauses or Schedule provisions (in excess of one) which provide for the withholding of payments either (A) are exempt from the limitations in the clause set forth in (a) above under the proviso thereof, or (B) provide that their withholding provisions do not require any additional withholdings where the amounts required to be withheld under them are being withheld under other provisions of the contract. If it is determined that the withholding limitation in the clause set forth in (a) above is incompatible with the purpose of particular withholding provisions, the said clause may be omitted or modified to make it inapplicable to such withholding provisions. 7-403.13 Bills of Lading Covering Shipments To or From Contractor's Plant. In accordance with the requirements of 19-217.1(b), insert the clause in 7-203.14. 7-403.14 Changes to Make-or-Buy Program. In accordance with Section III, Part 9, insert the clauses in 7-204.20. 7-403.15 Quality Program. In accordance with 14-304, insert the appropriate clause. 7-403.16 Flight Risks. In accordance with 10-504, insert the clause in 7-204.21. 7-403.17 Duty-Free Entry. In accordance with Section VI, Part 6, insert the appropriate clause or clauses in 7-104.31. 7-403.18 Duty-Free Entry of Listed Canadian Supplies. In accordance with 6-605, insert the clause in 7-104.32. 7-403.19 Taxes. In accordance with 11-403, insert one of the clauses in 7-204.24. 7-403.20 Advance Payments. When advance payments are to be made in accordance with Appendix E, Part 4, insert the clause in 7-104.34. 7-403.21 Workmen's Compensation and War Hazard Insurance Overseas. In accordance with 10-403, insert the clauses in 7-104.2(a) and/or 7-104.2(b) de 7-403.21 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS pending on whether all contract employees are subject to the Defense Base Act or whether the Act has been waived as to all or part of the contract employees. Also insert the clause Reimbursement for War Hazard Losses in 7-104.2(c) and the language at 10-502 (b) and (c) according to the instructions stated in those paragraphs. 7-403.22 Required Source for Jewel Bearings. In accordance with 1-2207.2, insert the clause in 7-104.37. 7-403.23 General Services Administration Supply Sources. In accordance with 5-907, insert the clause in 7-204.28. 7-403.24 Safety Precautions for Ammunition and Explosives. In accordance with 7-104.79, insert the clause therein. 7-403.25 Interest. In accordance with E-620, insert the clause in 7-104.39. 7-403.26 United States Products (Military Assistance Program). In accordance with 6-703.4, insert the clause in 7-2003.51. 7-403.27 Value Engineering. Subject to the limitations in 1-1702, insert the appropriate clause(s) in 7-104.44, substituting the “Sharing" paragraph (e) in 7-204.32(b) or (c) for paragraph (e) of the clause in 7-104.44, as applicable. 7-403.28 Notice of Radioactive Materials. In accordance with 7-104.80, insert the clause therein. 7-403.29 Non-Use of Foreign Flag Vessels Engaged in Cuban and North Vietnam Trade. In accordance with 1-1404, insert the clause in 7-104.19 (d). 7-403.30 New Material. In accordance with 1-1208, insert the clause in 7-104.48. 7-403.31 Special Termination Costs. In accordance with 8-712, insert the clause in 7-108.3. 7-403.32 Management Systems Requirements. In accordance with 16–827.1, insert the clause in 7-104.50. 7-403.33 Special Test Equipment. Insert the clause in 7–104.26 in negotiated contracts which provide that the contractor will acquire special test equipment for the Government but do not specify the items to be acquired (see 13-306.3(c)). 7-403.34 First Article Approval. In accordance with Section I, Part 19, insert the appropriate clause in 7-104.55. 7-403.35 Order of Precedence. In accordance with 3–501(b)Sec.C(xxxi), insert the clause in 7-2003.41. 7-403.36 United States Products and Services (Balance of Payments Program). In accordance with Section VI, Part 8, insert the clause in 7-2003.53. 7-403.37 Identification of Expenditures in the United States. In accordance with 6-807, insert the clause in 7-104.58. 7-403.38 Reserved. 7-403.39 Care of Laboratory Animals. In accordance with 7-303.44, insert the clause therein. 7-403.40 Frequency Authorization. In accordance with 7-104.61, insert the clause therein. 7-403.41 Material Inspection and Receiving Report. In accordance with 7-104.62, insert the clause therein. 7-403.41 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS 7-403.42 Recovery of Nonrecurring Costs on Foreign Sales of Major Defense Equipment. In accordance with 4-109(a), insert the applicable clause in 7-104.64. 7-403.43 Use of Excess and Near Excess Currency. In accordance with 6-1110, insert the clause in 7-104.66. 7-403.44 Limitation of Liability. In accordance with 1-330, insert the appropriate clause in 7-104.45(a) or 7-204.33. 7-403.45 Aircraft, Missile, and Space Vehicle Accident Reporting and Investigation. In accordance with 7-104.81, insert the clause therein. 7-403.46 Procurement of Miniature and Instrument Ball Bearings. In accordance with 1-2207.3, insert the clause in 7-104.38. 7-403.47 Procurement of Precision Components for Mechanical Time Devices. In accordance with 1-2207.4, insert the clause in 7-104.46. 7-403.48 Payment of Interest on Contractors' Claims. In accordance with 1-333, insert the clause in 7-104.82. 7-403.49 Rights in Data. In accordance with 7-104.9 insert the appropriate clause, or clauses, therein. 7-403.50 Cost Accounting Standards. In accordance with 3-1204, insert the clauses in 7-104.83. 7-403.51 Contractor's Identification of Changes. In accordance with 26-802, insert a clause as provided in 7-104.86. 7-403.52 Cost/Schedule Control Systems. In accordance with 1-331(h) and 3-501(b) Section C (xlv), insert the clause in 7-104.87. 7-403.53 Engineering Change Proposals (ECP's). In accordance with 26-205, insert the clause in 7-104.89. 7-403.54 Change Order Accounting. In accordance with 26–205, insert the clause in 7-104.90. 7-403.55 Capture and Detention. In accordance with 10-406, insert the clause in 7-104.94. 7-403.56 Indemnification Under 10 USC 2354. In accordance with 10-701, insert the following clause. INDEMNIFICATION UNDER 10 U.S.C. 2354 — COST REIMBURSEMENT (1974 APR) (a) Pursuant to the authority of 10 U.S.C. 2354, notwithstanding any other provision of this contract, but subject to the following paragraphs of this clause, the Government shall hold harmless and indemnify the Contractor against: (i) claims (including reasonable expenses of litigation or settlement) by third persons (including employees of the Contractor) for death, bodily injury (including sickness or disease), or loss of, damage to, or loss of use of property; (ii) loss of or damage to property of the Contractor, and loss of use of such property, but excluding loss of profit; and (iii) loss of, damage to, or loss of use of property of the Government; to the extent that such a claim, loss or damage (A) arises out of the direct performance of this contract; (B) is not compensated by insurance or otherwise; and (C) results from a risk defined in this contract to be unusually hazardous. Any such claim, loss, or damage within deductible amounts of Contractor's insurance shall not be covered under this clause. (b) The Government shall not be liable for any such claim, loss or damage that results from willful misconduct or lack of good faith on the part of any of the Contractor's directors or officers, or on the part of any of his managers, superintendents, or other equivalent representatives, who has supervision or direction of (i) all or substantially all of the Contractor's business, or (ii) 7-403.56 ARMED SERVICES PROCUREMENT REGULATION CONTRACT CLAUSES AND SOLICITATION PROVISIONS all or substantially all of the Contractor's operations at any one plant or separate location in which this contract is being performed, or (iii) a separate and complete major industrial operation in connection with the performance of this contract. The Contractor shall not be indemnified under this clause for liability assumed under any contract or agreement (except for subcontracts which are covered by paragraph (d) below) unless such assumption of liability has been specifically approved by the Contracting Officer; (or in contracts with the Department of the Navy, The Department). (c) No payment shall be made by the Government under this clause unless the amount thereof shall first have been certified to be just and reasonable by the Secretary or his representative designated for such purpose. Such payments shall be made from funds as stated in 10 U.S.C. 2354. The rights and obligations of the parties under this clause shall survive the termination, expiration, or completion of this contract. (d) With the prior written approval of the Contracting Officer, the Contractor may include in any subcontract under this contract the same provisions as those in this clause, whereby the Contractor shall indemnify the subcontractor against any risk defined in this contract to be unusually hazardous. Such a subcontract shall provide the same rights and duties, and the same provisions for notice, furnishing of papers, and the like, between the Contractor and the subcontractor as are established by this clause. The Contracting Officer may also approve similar indemnification of lower tier subcontractors upon the same terms and conditions. Subcontracts providing for indemnification within the purview of this clause shall entitle the Contractor or the Government, or both, to direct, participate in, and supervise the settlement or defense of relevant actions and claims. The Government shall indemnify the Contractor with respect to his obligations to subcontractors under subcontract provisions thus approved by the Contracting Officer. The Government may discharge its obligations under this paragraph by making payments directly to subcontractors or to persons to whom the subcontractors may be liable. (e) If insurance coverage maintained by the Contractor on the date of the execution of this contract is reduced, the liability of the Government under this clause shall not, by reason of such reduction, be increased to cover risks theretofore insured, unless the Contracting Officer consents thereto in consideration of an equitable adjustment to the Government, if appropriate, of the price in a fixed-price contract, or the fee in a cost-reimbursement type contract, in such amount as the parties may agree. (f) In addition to the Contractor's responsibilities under the "Insurance-Liability to Third Persons" clause of this contract, which are hereby made applicable to claims under this clause, the Contractor shall (i) promptly notify the Contracting Officer of any occurrence he learns of that reasonably may be expected to involve indemnification under this clause, (ii) furnish evidence or proof of any claim, loss or damage covered by this clause in the manner and form required by the Government, and (iii) to the extent required by the Government, permit and authorize the Government to direct, participate in, and supervise the settlement or defense of any such claim or action. The cost of insurance (including self insurance), covering a risk defined in this contract as unusually hazardous, shall not be reimbursed either as a direct or indirect cost except to the extent that such insurance has been required or approved under the “Insurance-Liability to Third Persons" clause hereof. (g) The "Limitation of Cost" clause of this contract does not apply to the Government's obligations under this clause. Such obligations shall be excepted from the release required under the "Allowable Cost, Fee, and Payment" clause of this contract. (h) For purposes of this clause, a claim, loss or damage shall be considered to have arisen out of the direct performance of this contract if the cause for such claim, loss or damage occurred during the period of performance of this contract or as a result of the performance of this con tract. (End of clause) 7-403.57 Indemnification Under Public Law 85-804 — Cost-Reimbursement Type Contracts. In accordance with 10-702, insert the following clause. 7-403.57 ARMED SERVICES PROCUREMENT REGULATION |