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or contract earnings deposited in the Special Bank Account shall be used in the performance of the contract and to liquidate the advance payment(s) made.

(g) Bank agreement. Before an advance payment(s) is made hereunder, the Contractor shall submit to the Contracting Officer, in the form prescribed, an Agreement for Special Bank Account, in triplicate, signed by the contractor and an official of the bank in which the Special Bank Account is established as the depository for the advance payment(s) and other payments. The agreement shall clearly set forth the character of the Special Bank Account and the responsibilities of the Contractor, the bank and the Contracting Officer thereunder. Wherever possible, such bank shall be a member of the Federal Reserve System, or an "insured" bank within the meaning of the Act creating the Federal Deposit Insurance Corporation (Act of August 23, 1935, 49 Stat. 684, as amended; 12 U.S.C. 264).

(h) Lien on Special Bank Account. The Government shall have a lien upon any balance in the Special Bank Account paramount to all other liens, which lien shall secure the repayment of any advance payment(s) made hereunder.

(i) Lien on property under contract. Any advance payment(s) made under this contract shall be secured, when made, by a lien in favor of the Government, paramount to all other liens, upon the supplies or other things covered by this contract. The Government's lien shall apply to all material and other property acquired for or allocated to the performances of this contract, except to the extent that the Government by virtue of any other provisions of this contract, or otherwise, shall have valid title to such supplies, materials, or other property as against other creditors of the Contractor. The Contractor shall identify, by marking or segregation, all property which is subject to a lien in favor of the Government by virtue of this contract in such a way as to indicate that it is subject to such lien and that it has been acquired for or allocated to the performance of this contract. If for any reason such supplies, materials, or other property are not identified by marking or segregation, the Government shall be deemed to have a lien to the extent of the Government's interest under this contract on any mass of property with which such supplies, materials, or other property are commingled. The Contractor shall maintain adequate accounting control over such property on his books and records. If at any time during the progress of the work on the contract it becomes necessary to deliver any item or items and materials upon which the Government has a lien as aforesaid to a third person, the Contractor shall notify such third person of the lien herein provided and shall obtain from such third

person a receipt, in duplicate, acknowledging, inter alia, the existence of such lien. A copy of each receipt shall be delivered by the Contractor to the Contracting Officer. If this contract is terminated in whole or in part and the Contractor is authorized to sell or retain termination inventory acquired for or allocated to this contract, such sale or retention shall be made only if approved by the Contracting Officer, which approval shall constitute a release of the Government's lien hereunder to the extent that such termination inventory is sold or retained, and to the extent that the proceeds of the sale, or the credit allowed for such retention on the Contractor's termination claim, is applied in reduction of advance payment(s) then outstanding hereunder.

(j) Insurance. The Contractor represents and warrants that he is now maintaining with responsible insurance carriers, (1) insurance upon his own plant and equipment against fire and other hazards to the extent that like properties are usually insured by others operating plants and properties of similar character in the same general locality; (2) adequate insurance against liability on account of damage to persons or property; and (3) adequate insurance under all applicable workmen compensation laws. The Contractor agrees that, until work under this contract has been completed and the advance payment(s) made hereunder has been liquidated, he will (i) maintain such insurance; (ii) maintain adequate insurance upon any materials, parts, assemblies, subassemblies, supplies, equipment, and other property acquired for or allocable to this contract and subject to the Government lien hereunder; and (iii) furnish such certificate with respect to his insurance as the Contracting Officer may from time to time require.

(k) Default provisions. Upon the happening of any of the following events of default, (1) termination of this contract by reason of fault of the Contractor; (2) a finding by the Contracting Officer that the Contractor: (i) has failed to observe any of the covenants, conditions, or warranties of these provisions or has failed to comply with any material provision of this contract; or (ii) has so failed to make progress or is in such unsatisfactory financial condition as to endanger performance of this contract; or (iii) has allocated inventory to this contract substantially exceeding reasonable requirements, or (iv) is delinquent in payment of taxes, or of the costs of performance of this contract in the ordinary course of business; (3) appointment of a trustee, receiver or liquidator for all or a substantial part of the Contractor's property or institution of bankruptcy, reorganization, arrangement, or liquidation proceedings by or against the Contractor; (4) service of any writ of attachment, levy of

execution, or commencement of garnishment proceedings with respect to the Special Bank Account; or (5) the commission of an act of bankruptcy; the Government, without limiting any rights which it may otherwise have, may in its discretion and upon written notice to the Contractor and Bank, withhold further withdrawals from the Special Bank Account and withhold further payments on this contract. Upon the continuance of any such events of default for a period of thirty (30) days after such written notice to the Contractor and Bank, the Government may, in its discretion, and without limiting any other rights which the Government may have, take the following additional actions as it may deem appropriate in the circumstances;

(A) Withdraw all or any part of the balance in the Special Bank Account by checks made payable to the Bureau of Indian Affairs signed solely by an official of the Bureau of Indian Affairs, authorized in writing by the Contracting Officer to take such action, and apply such amounts in reduction of the advance payment(s) then outstanding hereunder and in reduction of any other claims of the Government against the Contractor;

(B) Demand immediate repayment of the unliquidated balance of the advance payment(s) hereunder; or

(C) Take possession of and, with or without advertisement, sell at public sale at which the Government may be the purchaser, or at a private sale, all or any part of the property on which the Government has a lien under this contract and, after deducting any expenses incident to such sale, apply the net proceeds of such sale in reduction of the unliquidated balance of the advance payment(s) hereunder and in reduction of any other claims of the Government against the Contractor.

(1) Prohibition against assignment. Notwithstanding any other provision of this contract, the Contractor shall not, while any part of the advance payment(s) is unliquidated, pledge, or otherwise assign any monies due under this contract, or any claim arising thereunder, to any party or parties, bank, trust company, or other financing institution. (See clause titled ASSIGNMENT OF CLAIMS).

(m) Information-access to records. The Contractor shall furnish to the Contracting Officer signed or certified balance sheets and profit and loss statements monthly, if required by the Contracting Officer, together with a monthly bank statement for the Special Bank Account and such other information concerning the operation of the Contractor's business as may be requested. The Contractor shall afford to authorized representatives of the Government proper facilities for inspection of the Contractor's books, records, and accounts.

(n) Designations and determinations. (1) Amount. The amount of the advance payment(s) at any time outstanding hereunder shall not exceed the amount authorized in the Findings, Determinations, and Authorization for the advance payment(s) prepared pursuant to 41 CFR 14H-30.410.

(2) Depository. The advance payment(s) shall be deposited in the bank with which the Agreement for Special Account is established pursuant to 41 CFR 14H-30.414-1.

(0) Other security. The terms of this contract shall be considered adequate security for advance payment(s) hereunder.

(p) Representations and warranties. To induce the making of the advance payment(s), the Contractor represents and warrants that;

(1) No litigation or proceedings are presently pending or threatened against the Contractor.

(2) None of the provisions herein contravenes or is in conflict with the authority under which the Contractor is doing business or with the provision of any existing agreement of the Contractor.

(3) The Contractor has the power to enter into this contract and accept an advance payment(s) hereunder, and has taken all necessary action to authorize such acceptance under the terms and conditions of this contract.

(4) None of the assets of the Contractor is subject to any lien or encumbrance of any character except for current taxes not delinquent. There has been no assignment of claims under any contract affected by these advance payment provisions, or if there has been any assignment, such assignments have been terminated.

(5) All information furnished by the Contractor to the Contracting Officer in connection with the request for an advance payment is true and correct.

(6) These representations and warranties shall be continuing and shall be deemed to have been repeated by the submission of any subsequent request for additional advance payment(s) under this contract.

(q) Subadvances. Subject to the prior written approval of the Contracting Officer, funds from the Special Bank Account may be used by the Contractor to make advance payment(s) or down payments to subcontractors and suppliers of material in advance of performance by the subcontractor or suppliers of material. Such subadvances shall not exceed the subcontract price or estimated cost as the case may be, and the subcontractors or suppliers of material to whom such advance payment(s) is made shall furnish adequate security therefor. Unless other security is required by the Contracting Officer, covenants in subcontracts, expressly made for the benefit of the Government providing for a Special Bank

Account for the subadvance with Government lien thereon, and providing for a Government lien, paramount to all other liens, on all property under such subcontract, and imposing upon the subcontractor and the depository bank substantially the same duties and giving the Government substantially the same rights as are provided herein (and in the Agreement for Special Bank Account supplemental hereto) between the Government, the Contractor, and the Bank may be considered as adequate for such subadvance(s). Subadvances shall not be made without payment of interest of six percent per annum unless adequate justification is first furnished to and approval obtained by the Contracting Officer, as provided in 41 CFR 1-30.403(b).

(r) Covenants. During the period of time that an advance payment(s) made hereunder remains unliquidated, the Contractor shall not, without prior written consent of the contracting officer:

(1) Mortgage, pledge, or otherwise encumber, or suffer to be encumbered, any of the assets of the Contractor now owned or hereinafter acquired by it, or permit any preexisting mortgages, liens, or other encumbrances to remain on or attach to any assets of the Contractor which are allocated to the performance of this contract and with respect to which the Government has a lien hereunder;

(2) Sell, assign, transfer, or otherwise dispose of accounts receivable, notes, or claims for money due or to become due;

(3) Declare or pay any dividends, except dividends payable in stock of the corporation, or make any other distribution on account of any shares of its capital stock, or purchase, redeem, or otherwise acquire for value any such stock, except as required by sinking fund or redemption arrangements reported to the Contracting Officer incident to the establishment of these advance payment(s) provisions;

(4) Sell, convey, or lease all or a substantial part of its assets;

(5) Acquire for value the stock or other securities of any corporation, municipality, or governmental authority, except direct obligations, of the United States;

(6) Make any advance or loan to or incur any liability as guarantor, surety, or accommodation endorser for any other firm, person or corporation;

(7) Permit a writ of attachment or any similar process to be issued against its property without procuring release thereof or bonding the same within 30 days after the entry of the writ of attachment or any similar process;

(8) Pay any salaries, commissions, bonuses, or other remuneration in any form or manner to its directors, officers, or key employees in excess of existing rates of payments, or of rates provided by this contract,

or in existing agreements, in connection with which notice has been given to the Contracting Officer, or accrue such excess remuneration without first obtaining an agreement subordinating the same to all claims of the Government hereunder;

(9) Make any substantial change in management, ownership, or control of the organization with which this contract is made;

(10) Merge or consolidate with any other firm or corporation, change the type of its business, or engage in any transaction outside the ordinary course of its business as presently conducted;

(11) Deposit any of its funds except in a bank or trust company insured by the Federal Deposit Insurance Corporation; or

(12) Create or incur indebtedness, borrow money or advances other than advances to be made hereunder, except as specified herein.

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§ 14H-70.002 General.

The Act provides that, contracts with tribal organizations pursuant to Section 102 of the Act shall be in accordance with all contracting laws and regulations except that, in the discretion of the Secretary, contracts may be negotiated without advertising and need not conform with the provisions of the Act of August 24, 1935 (49 Stat. 793), as amended. The Secretary may waive any provision of such contracting laws or regulations which he determines are not appropriate for the purposes of the contract involved or inconsistent with the provisions of the Act.

§ 14H-70.003 Federal and Interior procurement regulations.

To the extent that the Federal Procurement Regulations and Interior Procurement Regulations, 41 CFR Chapter 1, Chapter 14, and Chapter 14H (except 41 CFR Part 14H-1) respectively are not made specifically applicable to contracts entered into pursuant to the Act by reference in this Part 14H-70 they are hereby waived. If this part conflicts with any of the provisions of either the Federal Procurement Regulations or Interior Procurement Regulations the provisions of this Part 14H-70 shall govern. When either the Federal Procurement Regulations or Interior Procurement Regulations are referenced in this Part, the reference shall be similar to the following:

(a) "Section 1-1.000 of this title", when referring to a section of the Federal Procurement Regulations.

(b) "Section 14-1.000 of this title", when referring to a section of the Interior Procurement Regulations.

§ 14H-70.004 Area Office implementation of Federal or Interior procurement regulation issuances.

Any regulations issued through the Federal Procurement Regulation or Interior Procurement Regulation System shall not be implemented by contracting officers insofar as contracts entered into pursuant to the Act are concerned unless such regulations are implemented in this Part 14H-70.

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