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(b) Language suggesting cancellation of the contract shall be avoided in issuing the notice of termination.

(c) The termination notice shall be signed by the contracting officer or other person properly vested with such authority.

(d) In order to assure that the contractor receives the termination notice, the contracting officer shall forward such notice via certified mail, return receipt requested, or other appropriate means which will assure a signed receipt for the notice.

(e) With respect to the distribution of the termination notice see $ 1-8.6023(e) of this title. A copy of the notice shall also be furnished to any assignee of the contractor for the particular contract involved.

PART 14-10_BONDS AND

INSURANCE

Subpart 14-10.1-Bonds Sec. 14-10.109 Execution and administration

of bonds. 14-10.109-50 Additional requirements re

specting bonds. Subpart 14–10.4— Insurance Under Fixed-Price

Contracts 14-10.450 Indemnification.

AUTHORITY: The provisions of this Part 14–10 issued under sec. 205(c), 63 Stat. 390; 40 U.S.C. 486(c).

SOURCE: The provisions of this Part 14-10 appear at 33 F.R. 7436, May 18, 1968 and 35 F.R. 290, Jan. 8, 1970, unless otherwise noted.

Subpart 14-10.1-Bonds $ 14–10.109 Execution and administra

tion of bonds. (36 F.R. 22577, Nov. 25, 1971) § 14–10.109–50 Additional requirements

respecting bonds. The clauses prescribed for use under the conditions provided in § 14–7.602-50 are to be used, as indicated, by the heads of bureaus and offices. Subpart 14-10.4— Insurance Under

Fixed-Price Contracts 8 14–10.450 Indemnification.

(a) Ordinarily, the Department of the Interior is not concerned with the insur

ance programs of fixed-price contractors. However, the Department may be concerned with contractor insurance programs when special circumstances exist. See § 1-10.401 of this title. An example of such a situation is where a substantial portion of the work under a contract contemplates the use of the equipment of a private individual or concern under an equipment rental-type agreement and the activities of the equipment and operator are to be subject to some degree of direction and control by the Government. The Department has determined that in such circumstances the potential monetary losses to the Government resulting from personal injuries or damage to or loss of property arising out of accidents or tortious acts resulting from activities of such contractors outweigh the costs involved in a required insurance program. In such cases, the clause set out in paragraph (b) below may be used. The use of contract provisions requiring insurance coverage in all other instances shall be governed by the provisions of $ 1-10.301 of this title.

(b) The following clause may be used in the instances described above:

INDEMNIFICATION The contractor shall indemnify and hold the Government harmless for any and all losses, damages, or liability on account of personal injury, death, or property damage, or claims for personal injury, death, or property damage of any nature whatsoever and by whomsoever made, arising out of the activities of the contractor, his employees, subcontractors, or agents under the contract. For the purpose of fulfilling his obligations under this paragraph, the contractor shall procure and maintain during the term of this contract and any extension thereof liability insurance in form satisfactory to the contracting officer by an insurance company which is acceptable to the contracting officer. The named insured parties under the policy shall be the contractor and the United States of America. The amounts of the insurance shall be not less than as follows:

1 Each Person.
-1 Each Occurrence.

-1 Property Damage. Prior to the commencement of work hereunder the contractor shall furnish the contracting officer with acceptable evidence showing that the insurance coverage described in this clause has been obtained.

1 These amounts to be set by the contracting officer.

PART 14-11-FEDERAL, STATE, AND

LOCAL TAXES Subpart 14–11.3—State and Local

Taxes 814–11.302 Applicability.

The clauses prescribed for use in fixed price construction contracts in States with sales, excise, and use taxes may be found in § 14–7.602–50(6). (Sec. 205(c), 63 Stat. 390; 40 U.S.C. 486(c)) (33 F.R. 7436, May 18, 1968]

termination shall be specific with respect to the following:

(1) Instructions regarding the safeguarding and disposition of any Government property in the possession of the contractor;

(2) Where applicable, a statement that the defaulting contractor and his surety will be liable for liquidated damages at the rate specified until such reasonable time as may be required to complete the work; and

(3) Instructions regarding the acquisition by the Government of such materials, appliances, and plant as may be on the site of the construction work and necessary therefor.

(b) Language suggesting cancellation of the contract shall be avoided in issuing the notice of termination.

(c) The termination notice shall be signed by the contracting officer or other person properly vested with such authority.

(d) In order to assure that the contractor receives the termination notice, the contracting officer shall forward such notice via certified mail, return receipt requested, or other appropriate means which will assure a signed receipt for the notice.

(e) A copy of the notice shall be furnished to any assignee of the contractor for the particular contract involved.

PART 14–18-PROCUREMENT OF

CONSTRUCTION CONTRACTS

Subpart 14–18.1-General Provisions Sec. 1418.104 Subcontracting.

Subpart 14-18.2—Formal Advertising 14-18.208 Award. Subpart 14-18.8—Termination of Construction

Contracts 14-18.803 Default termination of fixed

price construction contracts. 14-18.803-5 Procedure in case of default.

AUTHORITY: The provisions of this part 14-18 issued under sec. 205(c), 63 Stat. 390; 40 U.S.C. 486(c).

SOURCE: The provisions of this part 14-18 appear at 35 F.R. 356, Jan, 9, 1970, unless otherwise noted. Subpart 14-18.1—General Provisions $ 14-18.104 Subcontracting.

For provisions relating to "Listing of subcontractors”, see § 14–7.602-50(1) of this chapter. Subpart 14-18.2—Formal Advertising $ 14–18.208 Award.

See $ 14–2.407–1 relative to advance notices required prior to making contract award. [36 F.R. 19438, Oct. 6, 1971] Subpart 14-18.8-Termination of

Construction Contracts $ 14–18.803 Default termination of

fixed price construction contracts. $ 14-18.803–5 Procedure in of

default. (a) In addition to the requirements of § 1-18.803-5 of this title, the notice of

PART 14-30_CONTRACT FINANCING Sec. 14-30.250 Contract debts-compromise,

suspension or termination. Subpart 14-30.4—Advance Payments 14-30.406 Responsibility-delegation of

authority. 14-30.406-50 Special approvals.

AUTHORITY: The provisions of this part 14–30 issued under sec. 205(c), 63 Stat. 390; 40 U.S.C. 486(c).

SOURCE: The provisions of this part 1430 appear at 33 F.R. 16278, Nov. 6, 1968, unless otherwise noted. $ 14–30.250 Contract

debts- compromise, suspension or termination. The Federal Claims Collections Act of 1966 (80 Stat. 308, 31 U.S.C. 951-953) authorizes the compromise of civil claims of the Federal Government that do not exceed $20,000. This statute also authorizes termination or suspension of

case

collection action on such claims. Actions veys of physical resources and the under this statute must conform to development of studies of social and standards prescribed jointly by the At- economic factors affecting Indian tribes, torney General of the United States and the Commissioner of Indian Affairs is the Comptroller General of the United authorized, without specific security, to States. These controlling standards have make advance payments for periods not been established by joint regulations (4 in excess of 90 days. The Commissioner CFR Ch. II, 31 F.R. 13381, Oct. 15, 1966). is required to make a detailed report to Interior authority under the above stat- the Assistant Secretary-Management ute and joint regulations concerning in- and Budget of such payments at the debtedness arising in connection with close of each fiscal year. contracts for procurement of property or [33 F.R. 16278, Nov. 6, 1968, as amended at services, contracts for sale or use of Gov- 36 F.R. 15116, Aug. 13, 1971) ernment property, and charges for Gov.. ernment services has been delegated as

PART 14-51-AUDIT follows:

Sec. (a) For compromise of such indebted

14-51.000 Scope of part. ness, to the Solicitor.

(b) For termination or suspension of Subpart 14-51.1-Audit of Contractor's Records such indebtedness, to the head of the

14-51.101 Audit responsibility. bureau or office having jurisdiction over 14-51.102 Purpose of audit. the contracts under which such indebt- 14-51.103 Types of contracts subject to edness arises with the approval of the

audit.

14-51.104 Solicitor.

Contract clauses.

14-51.104-1 Examination of records by the (35 F.R. 226, Jan. 7, 1970. Redesignated 36 F.R.

Secretary of the Interior. 18306, Sept. 11, 1971)

14–51.104–2 Audit of contract changes or

modifications. Subpart 14-30.4- Advance Payments

14-51.104-3 Examination of contract & 14–30.406 Responsibility delegation

changes or modifications recof authority.

ords clause.

14-51.105 Payments under contracts subProposed contracts (or class of simi

ject to audit. lar contracts) that are to contain provi. 14-51.105–1 Submission and processing of sions for advance payments shall be

invoices or vouchers. executed only after the clause pertain- 14–51.105–2 Action upon receipt of an audit ing to the advance payment and any

report. other terms or conditions related thereto

14-51.105–3 Suspension and disapprovals of

amounts claimed. have been approved. Approval shall be

14-51.106 Waiver. obtained from the Assistant SecretaryManagement and Budget after he has de- AUTHORITY: The provisions of this part

14-51 issued under 5 U.S.C. 301. termined, based upon written findings as provided in § 1-30.405 of this chapter, SOURCE: The provisions of this Part 14-51 that the making of the advance payments appear at 36 F.R. 9295, May 27, 1971, unless is in the public interest. The contracting

otherwise noted. officer may make the advance payment $ 14-51.000 Scope of part. once the approval has been obtained.

This part prescribes policies and pro(33 F.R. 16278, Nov. 6, 1968, as amended at

cedures to be followed by Office of Sur36 F.R. 15116, Aug. 13, 1971)

vey and Review in fulfilling their con§ 14–30.406-50 Special approvals. tract audit responsibilities. (a) Under contracts with States or

Subpart 14-51.1-Audit of similar public bodies for foster home care

Contractor's Records of Indian children, the Commissioner of Indian Affairs is authorized to make ad

$ 14-51.101 Audit responsibility. vance payments for periods not in excess The Director, Office of Survey and Reof 90 days. The Commissioner is re- view, through Audit Operations conducts quired to make a detailed report to the audits of contractors' records to the exAssistant Secretary-Management and tent that such audits are required by law, Budget of such payments at the close of regulation, or sound business judgment. each fiscal year.

Such audits include the conduct of pe(b) Under contracts with State Uni- riodic or requested audits of contractors versities or similar public bodies for sur- as are warranted by such factors as the

amount of the contract, the financial (3) Where advance payments, progcondition, integrity, and reliability of the ress payments based on costs, or guarcontractor, prior audit experience, and anteed loans are to be made; the adequacy of the contractor's account- (4) Contracts for supplies or services ing system and other internal controls. containing a price warranty or price reThe audits also include reviews of cost or duction clause; pricing data for contractors' proposals (5) Contracts or leases involving infor negotiated contracts (see § 1-3.809 of come to the Government where the inthis title). In order that the Government come is based on operations that are may benefit to the maximum extent from under the control of the contractor or such audits, a coordinated and coopera- lessee; tive effort shall be made by contracting (6) Fixed-price contracts with escalaofficers, technical specialists, and finance tion (see 8$ 1-2.104–3 and 1-3.404-3 of and audit personnel. It is the responsi- this title), incentives (see $$ 1-3.404-4 bility of the contracting officer to have and 1-3.407 of this title), and redeteran audit clause inserted in all contracts mination (see $$ 1-3.404-5 and 1-3.404–7 subject to audit pursuant to § 14-51.103. of this title);

and (7) Requirements

indefinite $ 14–51.102 Purpose of audit.

quantity (call-type) contracts (see $$ 1In addition to the provisions of

2.104-4 and 1-3.409 of this title); $ 1-3.809 of this title, Contract audit as

(8) Time and materials and labora pricing aid, audits are conducted to

hour contracts (see $$ 1-3.406-1 and 1advise and make recommendations to the

3.406–2 of this title); and contracting officer concerning the:

(9) Leases (i) where the rental is sub(a) Propriety of amounts paid, or to

ject to adjustment (such as for a change be paid to contractors where such

in real estate taxes or service costs) or amounts are based on a cost (including

(ii) where the rental is dependent upon modifications or change orders for all

actual costs. types of contracts) or time determina

(b) In some of the contracts listed in tion or on variable features related to

paragraph (a) of this section, it may be the results of contractors' operations;

appropriate to contractually define the (b) Adequacy of measures taken by

scope or extent of any audit, such as contractors regarding the use and safe

with respect to (1) the use or disposition guarding of Government assets under of Government-furnished property or their custody or control;

(2) variable or other special features of (c) Compliance by contractors with the contract, e.g., price escalation, and contractual provisions having financial compliance with the price warranty or implications, such as progress payments, price reduction clauses. In such cases, advance payments, guaranteed loans, the contract clause in § 14-51.104 may be cash return provisions, and price appropriately modified with the concuradjustments;

rence of the Office of Survey and Review. (d) Reasonableness of contractors' (c) Inclusion of the contract clause settlement proposals in termination of ir. $ 14-51.104 (whether or not modified) contracts;

in contracts does not affect in any way (e) Compliance with contract provi- the requirements for (1) use of the sions; and

Examination of Records clause permit(f) Contractors' financial condition ting review of contractor books and recand ability to perform or to continue to ords by the Comptroller General (see perform under Government contracts. § 1-3.814-2(e) of this title) or (2) the

clauses on Audit and Records pertaining $ 14-51.103 Types of contracts subject

to the verification of cost or pricing data to audit.

(see § 1-3.814-2 of this title). (a) The following types of contracts (d) A notice for each contract, change estimated to cost in excess of $25,000

order, or modification entered into of the shall include the Examination of Records types described in paragraph (a) of this by the Secretary clause (§ 14-51.104): section and $ 14-51.104–2 shall be for(1) Cost-reimbursement type

warded to the Director, Audit Operatracts (see $$ 1-3.405 and 1-3.814-2(e) tions, Office of Survey and Review, withof this title);

in 15 days after the effective date of the (2) Advertised or negotiated contracts contract. The notice shall include the involving the use or disposition of Gov- following information: ernment-furnished property;

(1) Contract identifying number,

con

(2) Contractor's name and address,

(3) A brief description of the work involved,

(4) Effective date of the document,

(5) Completion date (estimated) of the work involved,

(6) Estimated dollar amount. In addition, a copy of a notice of termination of contracts of the types described in this $ 14-51.103 shall be forwarded to the Director, Audit Operations, Office of Survey and Review, within 15 days after effective date of termination. Such notice shall contain the contract number and the contractor's name and address and the estimated dollar amount of the costs incurred by the contractor as of the effective date of termination. $ 14–51.104 Contract clauses.

The following contract clauses are prescribed for use as indicated in this § 14-51.104. $ 14–51.104–1 Examination of records

by the Secretary of the Interior. The following contract clause is prescribed for use in contracts listed in § 14-51.103(a). EXAMINATION OF RECORDS BY THE

SECRETARY OF THE INTERIOR (a) The contractor shall maintain books, records, documents, and other evidence and accounting procedures and practices, suffcient to reflect properly all direct and indirect costs of whatever nature claimed to have been incurred and anticipated to be incurred for the performance of this contract. The foregoing constitute “records" for the purposes of this clause.

(b) The contractor's plants, or such part thereof as may be engaged in the performance of this contract, and his records shall be subject at all reasonable times to inspection and audit by the Secretary or his authorized representatives. In addition, the Secretary, or his authorized representatives, shall, until the expiration of 3 years from the date of final payment under this contract, or of the time periods for the particular records specified in Part 1-20 of the Federal Procurement Regulations, whichever expires earlier, have the right to examine those books, records, documents, papers, and other supporting data which involve transactions related to this contract along with the computations and projections used therein.

(c) The contractor shall preserve and make available his records (1) until the expiration of 3 years from the date of final payment under this contract, or of the time periods for the particular records specified

in Part 1-20 of the Federal Procurement Regulations, whichever expires earlier, and (2) for such longer period, if any, as is required by applicable statute, or by other clauses of this contract, or by (1) or (11) below.

(1) If this contract is completely or partially terminated, the records relating to the work terminated shall be preserved and made available for a period of 3 years from the date of any resulting final settlement. (ii) Records which relate to (A) appeals under the “Disputes" clause of this contract, (B) litigation or the settlement of claims arising out of the performance of this contract, or (C) costs and expenses of this contract as to which exception has been taken by the contracting officer or any of his duly authorized representatives, shall be retained until such appeals, litigation, claims, or exceptions have been resolved.

(d) The contractor shall insert the substance of clause, including the whole of this paragraph (d), in each subcontract hereunder. When so inserted, changes shall be made to designate the higher-tier subcontractor at the level involved in place of the contractor; to add "of the Government prime contract" after “contracting officer"; and to substitute “the Government prime contract" in place of “this contract" in (B) of paragraph (c) above. $ 14–51.104–2 Audit of contract changes

or modifications. The following clause shall be included in all contracts, which are estimated to exceed $100,000, except those listed in § 14-51.103:

AUDIT OF CHANGES OR MODIFICATIONS The “Examination by the Secretary of the Interior of Records of Contract Changes or Modifications" clause contained in the Interior Procurement Regulations at $14 51.104–3 shall be included in every change order or modification under this contract which results in a net price adjustment (increase or decrease) in excess of $100,000. $ 14–51.104–3 Examination of contract

changes or modifications records

clause. The following clause is prescribed for use in contract changes or modifications which result in a net price adjustment (increase or decrease) in excess of $100,000 in accordance with the "Audit of Changes or Modifications" in $ 14-51.104-2: EXAMINATION

SECRETARY
INTERIOR OF RECORDS OF CONTRACT CHANGES
OR MODIFICATIONS

(a) For the purpose of verifying that the cost or pricing data submitted in conjunc

BY

THE

OF

THE

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