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(a) In accordance with DOTPR 123.704-50, the following clause shall be used when the contractor's normal method of interim overhead reimbursement is based on billing rates approved by the Contracting Officer (normally through an exchange of correspondence) rather than on formally negotiated provisional rates:

INDIRECT COSTS (BILLING RATES)

Pending the establishment of final overhead rates as provided for in the clause entitled "Negotiated Overhead Rates", the Contractor shall be reimbursed for indirect costs on the basis of billing rates mutually agreed upon by the Contracting Officer and the Contractor.

(End of clause)

Prior to establishing or changing the billing rates, the Contracting Officer should seek the advice of the cognizant audit activity as to the acceptability of the billing rates proposed by the contractor.

(b) The following clause shall be used when the contractor's normal method of interim overhead reimbursement is based on negotiated provisional rates. The provisional rates will remain in effect until such time as the contract is amended. The rates shall be listed immediately below the clause along with the base of applications for each rate listed:

INDIRECT COSTS (PROVISIONAL RATES) Pending establishment of final overhead rates as provided for in the clause entitled "Negotiated Overhead Rates", the Contractor shall be reimbursed for indirect costs on the basis of the negotiated provisional rates set forth below, which rates shall remain in effect until the contract is amended to incorporate either (a) final overhead rates for a specific period or periods or (b) revised negotiated provisional overhead rates as provided for in paragraph (e) of the clause of this contract entitled "Negotiated Overhead Rates".

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hensive automobile liability (bodily injury and property damage) insurance, with respect to performance under this contract, and such other insurance as the Contracting Officer may from time to time require with respect to performance under this contract: provided, That the Contractor may, with the approval of the Contracting Officer, maintain a self-insurance program: And provided further, That with respect to workmen's compensation the Contractor is qualified pursuant to statutory authority. All insurance required pursuant to the provisions of this paragraph shall be in such form, in such amount, and for such periods of time, as the Contracting Officer may from time to time require or approve, and with insurers approved by the Contracting Officer.

(b) The Contractor agrees, to the extent and in the manner required by the Contracting Officer, to submit for the approval of the Contracting Officer any other insurance maintained by the Contractor in connection with the performance of this contract and for which the Contractor seeks reimbursement hereunder.

(c) The Contractor shall be reimbursed: (1) For the portion allocable to this contract of the reasonable cost of insurance as required or approved pursuant to the provisions of this clause, and (2) for liabilities to third persons for loss of or damage to property (other than property (i) owned, occupied or used by the Contractor or rented to the Contractor or (ii) in the care, custody, or control of the Contractor), or for death or bodily injury, not compensated by insurance or otherwise, arising out of the performance of this contract, whether or not caused by the negligence of the Contractor, his agent, servants or employees: Provided, Such liabilities are represented by final judgments or by settlements approved in writing by the Government and expenses incidental to such liabilities, except liabilities (a) for which the Contractor is otherwise responsible under the express terms of the clause or clauses, if any, specified in the Schedule, or (b) with respect to which the Contractor has failed to insure as required or maintain insurance as approved by the Contracting Officer or (c) which results from willful misconduct or lack of good faith on the part of any of the Contractor's directors or officers, or the part of any of its managers, superintendents, or other equivalent representatives, who has supervision or direction of (1) all or substatially all of the Contractor's business, or (2) all or substantially all of the Contractor's operations at any one plant or separate location in which this contract is being performed, or (3) a separate and complete major industrial operation in connection with the performance of this contract. The foregoing shall not restrict the right of the Contractor to be reimbursed for the cost of insurance maintained

by the Contractor in connection with the performance of this contract, other than insurance required to be submitted for approval or required to be procured and maintained pursuant to the provisions of this clause: Provided, Such cost would constitute allowable cost under the clause of this contract entitled "Allowable Cost, Fixed Fee and Payment."

(d) The Contractor shall give the Government or its representatives immediate notice of any suit or action filed, and prompt notice of any claim made, against the Contractor arising out of the performance of this contract, the cost and expense of which may be reimbursable to the Contractor under the provisions of this contract, and the risk of which is then uninsured or in which the amount claimed exceeds the amount of coverage. The Contractor shall furnish immediately to the Government copies of all pertinent papers received by the Contractor. If the amount of the liability claimed exceeds the amount of coverage, the Contractor shall authorize representatives of the Government to collaborate with counsel for the insurance carrier, if any, in setting or defending such claim. If the liability is not insured or covered by bond, the Contractor shall, if required by the Government, authorize representatives of the Government to settle or defend any such claim and to represent the Contractor in or take charge of any litigation in connection therewith; Provided, That the Contractor may, at his own expense, be associated with the representatives of the Government in the settlement or defense of any such claim or litigation.

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§ 12-7.251-7 Military security require

ments.

When required by DOTPR 12-1.352, insert the Military Security Requirements clause in DOTPR 12-7.151-9, modified by deleting paragraphs (c) and (d) and substituting the following:

(c) If, subsequent to the date of this contract, the security classifications or security requirements under this contract are changed by the Government as provided in this clause, and if such changes cause an increase or decrease in the estimated cost or time required for performance of this contract, the estimated cost, fee, delivery schedule, or any other provision of the contract that may be affected, shall be subject to an equitable adjustment. Any such equitable adjustment shall be accomplished in the manner set forth in the "Changes" clause of this contract.

(d) The Contractor agrees to insert, in all subcontracts hereunder which involve access to classified information, provisions which shall conform substantially to the language of this clause, including this paragraph (d) but excluding the last sentence of paragraph (c) of this clause. (1971 APR.)

(End of clause paragraphs)

§ 12-7.251-8 Stop work orders.

The clause set forth in DOTPR 127.151-12 may be included in any costreimbursement type contract under the conditions described therein: Provided, The clause is modified as follows:

(a) The words "the "Termination for Convenience' clause of this contract" shall be changed to read "the "Termination' clause of the contract"; and

(d) The words "an equitable adjustment shall be made in the delivery schedule or contract price, or both" shall be changed to read "an equitable adjustment shall be made in the delivery schedule, the estimated cost, the fee, or a combination thereof, and in any other provisions of the contract that may be affected."

(End of clause paragraphs)

§ 12-7.251-9 Value engineering.

(a) Use of a value engineering incentive clause: In accordance with DOTPR 12-1.5202-2 insert the value engineering incentive clause set forth in DOTPR 12-7.151-13(a) as modified in paragraph (b) or (c) of this section.

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