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i. Repairs, maintenance, inspection, replacement, and disposal of Governmentowned property and the restoration or clean-up of site and facilities to the extent directed or approved by the Contracting Officer.

j. Subcontracts and purchase orders, subject to approvals required by other provisions of this contract.

k. Subscriptions to trade, business, technical, and professional periodicals, as approved by the Contracting Officer.

1. Taxes, fees, and charges levied by public agencies which the Corporation is required by law to pay, except those which are expressly made unallowable under other provisions of this contract.

m. Utility services, including electricity, gas, water, steam, and sewerage. n. Establishment and maintenance of bank accounts in connection with the work hereunder, including, but not limited to, service charges, the cost of disbursing cash, necessary guards, cashiers, and paymasters. If payments to employees are made by check, facilities and arrangements for cashing checks may be provided without expense to the employees, subject to the approval of the Contracting Officer.

5. Examples of Items of Unallowable Costs.-The following examples of items of costs are unallowable under this contract to the extent indicated:

a. Advertising, except (i) help-wanted advertising, and (ii) other advertising (such as costs of participation in exhibits) approved by the Contracting Officer as clearly in furtherance of work performed under the contract.

b. Bad debts (including expenses of collection) and provisions for bad debts arising out of other business of the Corporation.

c. Bidding expenses and costs of proposals.

d. Bonuses and similar compensation under any other name, which (i) are not pursuant to an agreement between the Corporation and employee prior to the rendering of the services or an established plan consistently followed by the Corporation, (ii) are in excess of those costs which are allowable by the Internal Revenue Code and regulations thereunder, or (iii) provide total compensation to an employee in excess of reasonable compensation for the services rendered.

e. Central and branch office expenses of the Corporation, except as specifically set forth in the contract or approved by the Commission.

f. Commissions, bonuses, and fees (under whatever name) in connection with obtaining or negotiating for a Government contract or a modification thereto. g. Contingency reserves, provision for.

h. Contributions and donations.

i. Dividend provisions or payments and, in the case of sole proprietors and partners, distributions of profit.

j. Entertainment costs, except the costs of such recreational activities for on-site employees as may be approved by the Contracting Officer or provided for elsewhere in this contract.

k. Fines and penalties including assessed interest resulting from violations of, or failure of the Corporation to comply with Federal, State, or local laws or regulations, except when incurred in accordance with the written approval of the Contracting Officer as a result of compliance with the provisions of this contract.

1. Insurance (including any provision of a self-insurance reserve) on any person where the Corporation under the insurance policy is the beneficiary, directly or indirectly, and insurance against loss of or damage to Government property as defined in the article entitled "Property."

m. Interest, however represented (except interest incurred in compliance with the article entitled "Taxes"), bond discounts and expenses, and costs of financ ing and refinancing operations.

n. Legal, accounting, and consulting services and related costs incurred in connection with the preparation of prospectuses, preparation and issuance of stock rights, corporate organization or reorganization, prosecution or defense of antitrust suits, prosecution of claims against the United States, contesting actions or proposed actions of the United States, and prosecution or defense of patentinfringement litigation.

o. Losses (including litigation expenses, counsel fees, and settlements) on, or arising from the sale, exchange, or abandonment of the Corporation's capital assets, including investments; losses on other contracts, including the Corporation's contributed portion under cost-sharing contracts; losses in connection with

price reductions to and discount purchases by employees and others from any source; and losses where such losses or expenses

(i) are compensated for by insurance or otherwise or which would have been compensated by insurance required by law or by written direction of the Contracting Officer but which the Corporation failed to procure or maintain through its own fault or negligence;

(ii) result from willful misconduct or lack of good faith on the part of any of the Corporation's directors, corporate officers, or a supervising representative of the Corporation, as defined in the article entitled "Description of Work and Services" of this contract; and

(iii) represent liabilities to third persons for which the Corporation has expressly accepted responsibility under other terms of this contract.

p. Membership in trade, business, and professional organizations except as approved by the Commission.

q. Precontract costs, except as expressly made allowable under other provisions in this contract.

r. Research and development costs, unless specifically provided for elsewhere in this contract.

s. Selling and distribution activities and related expenses not applicable to the performance of this contract.

t. Storage of records pertaining to this contract after completion of operations under this contract irrespective of contractual or statutory requirement of the preservation of records.

u. Taxes, fees, and charges in connection with corporate financing, refinancing, or refunding operations, including the listing of securities on exchanges; taxes which are paid contrary to the article entitled "Taxes"; taxes on income and excess profits.

v. Travel expenses of the Corporation's responsible supervising representative, and officers, proprietors, executives, administrative heads, and other employees of the Corporation's central office or branch office organizations concerned with the general management, supervision, and conduct of the Corporation's business as a whole, except to the extent that particular travel is in connection with the contract and approved by the Commission.

w. Salary or other compensation (and expenses related thereto) of any individual employed under this contract as a consultant or in another comparable employment capacity who is an employee of another organization and concurrently performing work on a full-time basis for that organization under a cost-type contract with the Commission, except to the extent that cash payment therefor is required pursuant to the provisions of this contract or procedure of the Commission applicable to the borrowing of such an individual from another cost-type contractor.

ARTICLE VI. PAYMENTS AND ADVANCES

1. Payment of Fixed Fee.-The fixed fee provided in Article V shall be paid in equal monhly installments as it accrues.

2. Payments on Account of Allowable Cost.-Payment for allowable costs shall be made by the Corporation from the special bank account or accounts, consisting of advances of Government funds and revenues received in the performance of the contract work as hereinafter provided. Accordingly, the Government shall advance to the Corporation, from time to time (generally weekly, but in any event at such times as, in the opinion of the Commission, the Corporation's need therefor develops), such Government funds (hereinafter referred to as "advances") as the Commission, after consultation with the Corporation, deems adequate to enable the Corporation to continue to make payments for allowable costs under this contract in furtherance of its performance.

3. Special Bank Account-Use.—All advances of Government funds shall be made by check payable to the Corporation and shall be deposited only in the Special Bank Account referred to in the Agreement for Special Bank Account, which is attached hereto and incorporated into this contract as an appendix. The Corporation shall likewise deposit in the Special Bank Account any other revenues received by the Corporation in connection with the work under this contract. No part of the funds in the Special Bank Account shall be (a) mingled with any funds of the Corporation or (b) used for a purpose other than that of making payments for costs allowable under this contract or payments for other items specifically approved in writing by the Contracting Officer. If the Contracting Officer shall at any time determine that the balance on such bank ac

count exceeds the Corporation's current needs, the Corporation shall promptly make such disposition of the excess as the Contracting Officer may direct.

4. Title to Funds Advanced.-Title to the unexpended balance of any funds advanced and of any bank account established pursuant to this article shall remain in the Government and be superior to any claim or lien of the bank of deposit or others. It is understood that an advance to the Corporation hereunder is not a loan to the Corporation, and will not require the payment of interest by the Corporation, and that the Corporation acquires no right, title, or interest in or to such advance other than the right to make expenditures therefrom as provided in this article.

5. Review and Approval of Costs Incurred.-The Corporation shall prepare and submit annually as of June 30 a voucher, for the total of net expenditures accrued (i.e., net costs incurred) for the period covered by the voucher, and the Commission, after audit and appropriate adjustment will approve such voucher. This approval by the Commission will constitute an acknowledgment by the Commission that the net costs incurred are allowable under the contract and that they have been recorded in the accounts maintained by the Corporation in accordance with the Commission accounting policies, but will not relieve the Corporation of responsibility for the Commission's assets in its care, for appropriate subsequent adjustments, or for errors later becoming known to the Commission. 6. Financial Settlement.—The Government shall promptly pay to the Corporation the unpaid balance of allowable costs and fixed fee upon termination of the work, expiration of the term of the contract, or completion of the work after (a) compliance by the Corporation with the Commission's patent clearance requirements, and (b) the furnishing by the Corporation of

(1) an assignment of the Corporation's rights (to the extent such rights are not already vested in the Government) to any refunds, rebates, allowances, accounts receivable, or other credits applicable to allowable costs under the contract;

(2) a closing financial statement;

(3) the accounting for Government-owned property required by the article entitled "Property"; and

(4) a release discharging the Government, its officers, agents, and employees from all liabilities, obligations, and claims arising out of or under this contract, subject only to the following exceptions:

(1) specified claims in stated amounts or in estimated amounts where the amounts are not susceptible of exact statement by the Corporation; (ii) claims, together with reasonable expenses incidental thereto, based upon liabilities of the Corporation to third parties arising out of the performance of this contract; provided that such claims are not known to the Corporation on the date of the execution of the release; and provided further that the Corporation gives notice of such claims in writing to the Contracting Officer not more than six (6) years after the date of the release or the date of any notice to the Corporation that the Government is prepared to make final payment, whichever is earlier; and

(iii) claims for costs (other than expenses of the Corporation by reason of any indemnification of the Government against patent liability), including reasonable expenses incidental thereto, incurred by the Corporation under the provisions of this contract relating to patents. In arriving at the amount due the Corporation under this article, there shall be deducted (1) any claim which the Government may have against the Corporation in connection with this contract, and (2) deductions due under the terms of this contract, and not otherwise recovered by or credited to the Government. In the event any advances in the Special Bank Account have not been fully liquidated, the unliquidated balance thereof shall be returned or accounted for to the Government in such manner as the Commission directs.

7. Claims.-Claims for credit against funds advanced or for payment shall be accompanied by such supporting documents and justifications as the Contracting Officer shall prescribe.

8. Discounts. The Corporation shall take and afford the Government the advantage of all known and available cash and trade discounts, rebates, allowances, credits, salvage, and commissions unless the Contracting Officer finds that such action is not in the best interest of the Government.

9. Revenues. All revenues, other than the Corporation's fixed-fee, received by the Corporation from its operations hereunder including, but not limited to,

the operation of restaurant, commissaries, or other facilities, and rebates, discounts, refunds, etc., shall be for the account of the Government and shall be received, held, and utilized as part of the advances of Government funds pursuant to Article VI.

10. Direct Payment of Charges-Deductions.-The Government reserves the right, upon ten days' written notice from the Contracting Officer to the Corporation, to pay directly to the persons concerned all amounts due which otherwise would be allowable under this contract. Any payment so made shall discharge the Government of all liability to the Corporation therefor.

ARTICLE VII. ASSIGNMENT

AECPR 9-7.5004-7

ARTICLE VIII. ACCOUNTS, RECORDS AND INSPECTION

1. Accounts.-AECPR 9-7.5006-1(a).

2. Inspection and Audit of Accounts and Records.-AECPR 9–7.5006-1(b). 3. Audit of Subcontractors' Records.-AECPR 9–7.5006–1(c).

4. a. Disposition of Records.-Except as agreed upon by the Government and the Corporation, all sketches, drawings, designs, design data, plans, specifications, technical notes and data, medical records, financial and cost reports, books of account and supporting documents relating to this contract, and other data evidencing costs allowable and revenues received, earned or accrued under this contract, and any notebooks, photographs, negatives, reports, findings, recommendations, data, and memoranda of every description and any copies of the foregoing relating to the foregoing or the work under this contract, and the information contained therein shall be the property of the Government, and, subject to the right of the Corporation to retain a copy of any such material for its own use, shall be delivered to the Government or otherwise disposed of by the Corporation either as the Commission may from time to time direct during the progress of the work or in any event as the Commission shall direct upon completion or termination of this contract and final audit of all accounts hereunder. The Government shall have the right to use all or any part of said material and information which is the property of the Government for any purpose whatsoever including but not limited to the right to reproduce said material and disseminate it to the public. All other records in the possession of the Corporation relating to this contract shall be preserved by the Corporation for a period of six (6) years after settlement of the contract or otherwise disposed of in such manner as may be agreed upon by the Government and the Corporation.

b. Background Technical Data.-In addition to the rights of the parties in technical data set forth above the Corporation agrees to and does hereby grant to the Government an irrevocable license and right to use any secret process, technical information, or know-how of the Corporation, made, developed, or acquired prior to or on the effective date of expiration or completion of this contract, which shall be or is utilized, tested, or embodied in the work under this contract, or which shall be or is specifically incorporated in any scientific or technical report rendered under this contract.

5. Reports.-AECPR 9-7.5006-1(e).

6. Inspections.—AECPR 9-7.5006-1 (f).

7. Subcontracts.-AECPR 9-7.5006-1(g).

8. Internal Audit.-AECPR 9-7.5006-1(h).

ARTICLE IX. EXAMINATION OF RECORDS

1. The Corporation agrees that the Commission and the Comptroller General of the United States or any of their duly authorized representatives shall have access to and the right to examine any directly pertinent books, documents, papers and records of the Corporation involving transactions related to this contract until the expiration of three years after final payment under this contract unless the Commission authorizes their prior disposition.

2. The Corporation further agrees to include in all its subcontracts hereunder a provision to the effect that the subcontractor agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under the subcontract, have access to and the right to examine any directly pertinent books, documents, papers, and records of such subcontractor, involving transactions 26-024 0-64-pt. 1--22

related to the subcontract, unless the Commission authorizes their prior disposition. To the extent directed by the Commission, the Corporation will also include in such provision agreement that the Commission shall have the same right of examination as is hereinbefore provided for the Comptroller General. The term "subcontract" as used in this paragraph excludes (1) purchase orders not exceeding $2,500 and (2) subcontracts or purchase orders for public utility service at rates established for uniform applicability to the general public. 3. Nothing in this contract shall be deemed to preclude an audit by the General Accounting Office of any transaction under this contract.

PROPERTY

ARTICLE X. REQUIRED BONDS AND INSURANCE-EXCLUSIVE OF GOVERNMENT AECPR 9-7.5004-19.

ARTICLE XI. PROPERTY

1. Title to Property.-The Government reserves the right to furnish any property or services required for the performance of the work under this contract. Title to all Government-owned property in the care, custody or possession of the Corporation in connection with the performance of this contract shall remain vested in the Government throughout the term hereof, except for such as may be transferred or disposed of in accordance with this contract; and upon the completion or termination of the contract, the Corporation shall return care, custody and possession of all of the same not so transferred or disposed of or consumed to the Government. Except as otherwise directed by the Commission, title to all materials, equipment, supplies, and tangible personal property of every kind and description purchased by the Corporation, the cost of which is allowable under this contract, shall pass directly from the vendor to the Government and not to the Corporation. The Government reserves the right to inspect, and to accept or reject, any item of such property. The Contractor shall make such disposition of rejected items as the Contracting Officer shall direct. Title to other property, the cost of which is reimbursable to the Contractor under this contract, shall pass to and vest in the Government upon (i) issuance for use of such property in the performance of this contract, or (ii) commencement of processing or use of such property in the performance of this contract, or (iii) reimbursement of the cost thereof by the Government, whichever first occurs. Property furnished by the Government and property purchased or furnished by the Contractor, title to which vests in the Government, under this paragraph are hereinafter referred to as Government Property. Title to Government Property shall not be affected by the incorporation of the property into or the attachment of it to any property not owned by the Government, nor shall such Government Property or any part thereof, be or become a fixture or lose its identity as personalty by reason of affixation to any realty.

2. Identification.-To the extent directed by the Commission, the Corporation shall identify Government property coming into the Corporation's possession or custody by marking or segregating in such a way, satisfactory to the Commission, as shall indicate its ownership by the Government.

3. Disposition.-The Corporation shall make such disposition of Government property which has come into the possession or custody of the Corporation under this contract as the Commission shall direct. When authorized in writing by the Commission during the progress of the work or upon completion or termination of this contract, the Corporation may, upon such terms and conditions as the Commission may approve, sell or exchange such property, or acquire such property at a price agreed upon by the Commission and the Corporation as the fair value thereof. The proceeds of any disposition shall be received for the account of the Government, and shall be received, held, and utilized as a part of the advances of Government funds pursuant to the article hereof entitled "Payments and Advances" or otherwise credited to the account of the Government as the Commission may direct. Upon completion of the work or the termination of this contract, the Corporation shall render an accounting, as prescribed by the Commission, of all Government property which had come into the possession or custody of the Corporation under this contract.

4. Protection of Government Property, Classified Materials.-The Corporation shall take all reasonable precautions, as directed by the Commission, or in the absence of such directions in accordance with sound industrial practice, to safeguard and protect Government property in the Corporation's possession or custody. Special measures shall be taken by the Corporation in the protection of

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