§ 13.601-1 Facilities contracts.

(a) To the extent practicable, the Schedule of each facilities contract containing the Maintenance clause set forth in § 7.702-14 of this chapter shall specify or incorporate by reference a normal maintenance program.

(b) Where no provisions are made pursuant to paragraph (a) of this section, the contractor shall be required to submit a normal maintenance program to the contracting officer as promptly as practicable after the execution of the facilities contract. The contracting officer shall examine such program and shall negotiate with the contractor for an agreement thereon.

(c) Any normal maintenance program that is agreed to pursuant to either paragraph (a) or (b) of this section shall provide specific details which will insure protection, preservation, maintenance, and repair of the Government production and research property in accordance with sound industrial practice. In addition, such program shall include general language covering any aspects of maintenance which are not specifically provided for. Such program may also provide for:

(1) A specified degree of inspection procedures, maintenance, and repairs that is less than sound industrial practice as to any part of the Government production and research property which is determined by the Department concerned to be nonessential to future utilization of the property as a whole; and

(2) Reimbursement by the Government for the cost of protecting, preserving, maintaining, and repairing Government production and research property not authorized for use by the contractor. (d) The contracting officer shall order a decrease in maintenance when the cur

rent maintenance is not necessary to assure the standards set forth in paragraph (c) of this section, and when such an order will result in savings to the Government.

(e) The contracting officer may order more than the normal maintenance when necessary, but only after authority has been obtained pursuant to § 13.302 and adequate funds are available therefor. The Government shall reimburse the contractor for the costs incurred.

§ 13.601-2 Contracts other than facilities contracts.

Government production and research property provided under a contract other than a facilities contract shall be maintained in accordance with sound industrial practice pursuant to the appropriate clause of the contract under which it is provided. However, the Schedule of any contract under which such Government production and research property is provided may contain specific maintenance requirements for such property when appropriate.

§ 13.602 Risk of loss or damage and liability.

When justified by the circumstances of any particular contract, the contract may require the contractor to assume greater risks than those enumerated in the clause set forth in § 7.702-18 of this chapter, or the applicable contract clause set forth in Subpart G of this part, as appropriate.

A facilities contract shall be terminated when the Government production and research property covered thereby is no longer required for the performance of Government contracts or subcontracts, unless such termination is detrimental to the Government's interests. The contractor shall not be granted the unilateral right, at his election, to extend the time during which he is entitled to use the property provided under the facilities contract. § 13.604 Standby or layaway provision.

(a) A facilities contract may include | appropriate provisions for maintenance and storage of Government production and research property in standby or layaway status. Such provisions shall include specifications for the care and maintenance of the property appropriate for its intended future use.

These

provisions may be the same as or different from the Maintenance clause set forth in § 7.702-14 of this chapter, depending upon the purpose and scope of the standby or layaway provisions, the expected duration of the standby or layaway status and other pertinent considerations.

(b) If the Government is required to pay the contractor for maintenance and storage of Government production and research property in standby or layaway, the facilities contract shall define with particularity what constitutes standby or layaway, and when and under what circumstances such payments will commence and terminate with respect to all or any part of the property.

(c) The facilities contract shall proIvide that, if the contractor is required to pay any state or local property tax measured by his possession of or interest in Government production and research property in standby or layaway, he shall be reimbursed therefor to the extent provided under § 15.205-41 of this chapter.

§ 13.605

Retention of special tooling and special test equipment. Upon termination or completion of a I contract under which the Government has obtained title to or the right to acquire title to special tooling or special test equipment, the procuring activity shall review the Government's need for its continued retention. In addition, the procuring activity shall periodically review the Government's need for retaining all special tooling and special test equipment, not currently in use, to which it has title or the right to acquire title. In either case, consideration shall be given to the factors set forth in § 13.305-2(b) in determining the Government's need for retention of the special tooling and special test equipment. § 13.606 Disposition.

(a) Disposition of Government proIduction and research property shall be in accordance with applicable regulations and contract provisions (see, for example, § 13.307). See Part 8 of this chapter for disposition of contractor inventory and Departmental regulations for disposition of surplus property generally.

(b) Contracts under which Government production and research property is provided to a contractor shall reserve to the Government the right to abandon

such property in place, without any obligation to restore or rehabilitate the premises of the contractor. However, this right may be waived if the prior approval of the head of a procuring activity is obtained. The authority of the head of a procuring activity to grant such approval shall not be delegated. § 13.607 Insurance.

When less than 75 percent of the total use of facilities is for Government work, consideration shall be given to requiring that the contractor procure and maintain insurance against loss of or damage to the facilities. If necessary, facilities contracts may be modified to require such insurance.

§ 13.608 Property control and accounting procedures.

Property control and accounting procedures shall be maintained in accordance with the provisions of the "Manual for Control of Government Property in Possession of Contractors", Appendix B, "Manual for Control of Government Property in Possession of Nonprofit Research and Development Contractors", Appendix C (§§ 30.2 and 30.3 of this chapter).

Subpart G-Contract Clauses

§ 13.701 Applicability.

(a) As used throughout this subpart, the term "fixed-price contract” shall include any advertised or negotiated fixedprice type contract (see § 3.404 of this chapter) and any letter contract which will be converted into a fixed-price type definitive contract, but shall exclude small purchases made under Subpart F, Part 3 of this chapter, and short form negotiated supply contracts (see § 16.202 of this chapter) under which Government property having an acquisition cost of $25,000 or less is to be furnished.

(b) As used throughout this subpart, the term "cost-reimbursement contract" shall include any cost-reimbursement type contract (see § 3.405 of this chapter) and any letter contract which will be converted to a cost-reimbursement type definitive contract, but shall exclude facilities contracts (see § 13.10111).

(c) As used throughout this subpart, the term "short form contract" shall include small purchases made under Subpart F, Part 3 of this chapter, and short form negotiated supply contracts (see § 16.202 of this chapter) under which

Government property having an acquisition cost of $25,000 or less is to be furnished.

§ 13.702 Government property clause for fixed-price contracts.

(a) Except as provided in paragraph (b) of this section, the following clause shall be used in fixed-price contracts (except contracts for experimental, developmental, or research work with educational or nonprofit institutions, where no profit to the contractor is contemplated) under which a Department is to furnish to the contractor, or the contractor is to acquire, Government property. GOVERNMENT PROPERTY (FIXED PRICE) (JUNE 1965)

(a) Government-furnished property. The Government shall deliver to the Contractor, for use in connection with and under the terms of this contract, the property described as Government-furnished property in the Schedule or specifications, together with such related data and information as the Contractor may request and as may reasonably be required for the intended use of such property (hereinafter referred to as "Governmentfurnished property"). The delivery or performance dates for the supplies or services to be furnished by the Contractor under this contract are based upon the expectation that Government-furnished property suitable for use (except for such property furnished "as is") will be delivered to the Contractor at the times stated in the Schedule or, if not so stated, in sufficient time to enable the Contractor to meet such delivery or performance dates. In the event that Governmentfurnished property is not delivered to the Contractor by such time or times, the Contracting Officer shall, upon timely written request made by the Contractor, make a determination of the delay, if any, occasioned Contractor to meet such delivery or performthe Contractor thereby, and shall equitably adjust the delivery or performance dates or the contract price, or both, and any other contractual provision affected by any such delay, in accordance with the procedures provided for in the clause of this contract entitled "Changes." Except for Government-furnished property furnished "as is", in the event the Government-furnished property is received by the Contractor in a condition not suitable for the intended use the Contractor shall, upon receipt thereof, notify the Contracting Officer of such fact and, as directed by the Contracting Officer, either (1) return such property at the Government's expense or otherwise dispose of the property, or (11) effect repairs or modifications. Upon the completion of (1) or (ii) above, the Contracting Officer upon written request of the Contractor shall equitably adjust the delivery or performance dates or the contract price, or both, and any other contractual provision

affected by the rejection or disposition, orl the repair or modification, in accordance with the procedures provided for in the clause of this contract entitled "Changes." The foregoing provisions for adjustment are exclusive and the Government shall not be liable: to suit for breach of contract by reason ofany delay in delivery of Government-furnished property or delivery of such property in a condition not suitable for its intended use.

(b) Changes in Government-furnished property. (1) By notice in writing, the Contracting Officer may (1) decrease the property provided or to be provided by the Government under this contract, or (ii) substi tute other Government-owned property for property to be provided by the Government, or to be acquired by the Contractor for the Government, under this contract. The Contractor shall promptly take such action as the Contracting Officer may direct with respect to the removal and shipping of property covered by such notice.

(2) In the event of any decrease in or substitution of property pursuant to subparagraph (1) above, or any withdrawal of authority to use property provided under any other contract or lease, which property the Government had agreed in the Schedule to make available for the performance of this contract, the Contracting Officer, upon the written request of the Contractor (or, if the substitution of property causes a decrease in the cost of performance, on his own initiative), shall equitably adjust such contractual provisions as may be affected by the decrease, substitution, or withdrawal, in accordance with the procedures provided for in the "Changes" clause of this contract.

(c) Title. Title to all property furnished by the Government shall remain in the Government. In order to define the obligations of the parties under this clause, title to each item of facilities, special test equipment, and special tooling (other than that subject to a "Special Tooling" clause) acquired by the Contractor for the Government pursuant to this contract shall pass to and vest in the Government when its use in the performance of this contract commences, or upon payment therefor by the Government, whichever is earlier, whether or not title previously vested. All Government-furnished property. together with all property acquired by the Contractor title to which vests in the Government under this paragraph, is subject to the provisions of this clause and is hereinafter collectively referred to as "Government property". Title to Government property shall not be affected by the incorporation or attachment thereof 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.

(d) Property administration. The Contractor shall comply with the provisions of the "Manual for Control of Government

Property in Possession of Contractors" (Appendix B, Armed Services Procurement Regulation) as in effect on the date of the contract, which Manual is hereby incorporated by reference and made a part of this contract. Material to be furnished by the Government shall be ordered or returned by the Contractor, when required, in accordance with the "Manual for Military Standard Requisitioning and Issue Procedure (MILSTRIP) for Defense Contractors" (Appendix H, Armed Services Procurement Regulation) as in effect on the date of this contract, which Manual is hereby incorporated by reference and made a part of this contract.

(e) Use of Government property. The Government property shall, unless otherwise provided herein or approved by the Contracting Officer, be used only for the performance of this contract.

(f) Maintenance and repair of Government property. The Contractor shall maintain and administer, in accordance with sound industrial practice, a program for the maintenance, repair, protection, and preservation of Government property, until disposed of by the Contractor in accordance with this clause. In the event that any damage occurs to Government property the risk of which has been assumed by the Government under this contract, the Government shall replace such items or the Contractor shall make such repair of the property as the Government directs: Provided, however, That if the Contractor cannot effect such repair within the time required, the Contractor shall dispose of such property in the manner directed by the Contracting officer. The contract price includes no compensation to the Contractor for the performance of any repair or replacement for which the Government is responsible, and an equitable adjustment will be made in any contractual provisions affected by such repair or replacement of Government property made at the direction of the Government, in accordance with the procedures provided for in the "Changes" clause of this contract. Any repair or replacement for which the Contractor is responsible under the provisions of this contract shall be accomplished by the Contractor at his own expense.

(g) Risk of loss. Unless otherwise provided in this contract, the Contractor assumes the risk of, and shall be responsible for, any loss of or damage to Government property provided under this contract upon its delivery to him or upon passage of title thereto to the Government as provided in paragraph (c) hereof, except for reasonable wear and tear and except to the extent that such property is consumed in the performance of this contract.

(h) Access. The Government, and any persons designated by it, shall at all reasonable times have access to the premises wherein any Government property is located, for the purpose of inspecting the Government property.

(1) Final accounting and disposition of Government property. Upon the completion of this contract, or at such earlier dates as may be fixed by the Contracting Officer, the Contractor shall submit, in a form acceptable to the Contracting Officer, inventory schedules covering all items of Government property not consumed in the performance of this contract (including any resulting scrap) or not theretofore delivered to the Government, and shall prepare for shipment, deliver f.o.b. origin, or dispose of the Government property, as may be directed or authorized by the Contracting Officer. The net proceeds of any such disposal shall be credited to the contract price or shall be paid in such other manner as the Contracting Officer may direct.

(1) Restoration of Contractor's premises. Unless otherwise provided herein, the Government:

(1) May abandon any Government property in place, and thereupon all obligations of the Government regarding such abandoned property shall cease; and

(ii) Shall not be under any duty or obligation to restore or rehabilitate, or to pay the costs of the restoration or rehabilitation of, the Contractor's plant or any portion thereof which is affected by the abandonment or removal of any Government property.

(k) Communications. All communications issued pursuant to this clause shall be in writing or in accordance with the "Manual for Military Standard Requisitioning and Issue Procedure (MILSTRIP) for Defense Contractors" (Appendix H, Armed Services Procurement Regulation).

(b) In fixed-price contracts under which the contractor is required to submit certified cost or pricing data (see §§ 3.807-3 of this chapter), substitute the following for paragraph (g) of the clause in paragraph (a) of this section:

(g) Risk of loss. (1) Except for loss, destruction or damage resulting from a failure of the Contractor due to willful misconduct or lack of good faith of any of the Contractor's managerial personnel as defined herein, to maintain and administer the program for the maintenance, repair, protection and preservation of the Government property as required by paragraph (f) hereof, and except as specifically provided in the clause or clauses of this contract designated in the Schedule, the Contractor shall not be liable for loss or destruction of or damage to the Government property provided under this contract:

(1) Caused by any peril while the property is in transit off the Contractor's premises; or

(11) Caused by any of the following perils while the property is on the Contractor's or subcontractor's premises, or on any other premises where such property may properly be located, or by removal therefrom because of any of the following perils

(A) Fire; lightning, windstorm, cyclone, tornado, hail; explosion; riot, riot attending a strike, civil commotion; vandalism and malicious mischief; sabotage; aircraft or objects falling therefrom; vehicles running on land or tracks, excluding vehicles owned or operated by the Contractor or any agent or employee of the Contractor; smoke; sprinkler leakage; earthquake or volcanic eruption; flood, meaning thereby rising of a body of water; nuclear reaction, nuclear radiation or radioactive contamination; hostile or warlike action, including action in hindering, combating, or defending against an actual, impeding or expected attack by any government or sovereign power (de jure or de facto), or by any authority using military, naval, or air forces; or by an agent of any such government, power, authority, or forces;

or

(B) Other peril, of a type not listed above, if such other peril is customarily covered by insurance (or by a reserve for self-insurance) in accordance with the normal practice of the Contractor, or the prevailing practice in the industry in which the Contractor is engaged with respect to similar property in the same general locale.

The perils as set forth in (1) and (ii) above are hereinafter called "excepted perils."

If the Contractor transfers Government property to the possession and control of a subcontractor, the transfer shall not affect the liability of the Contractor for loss or destruction of or damage to the property as set forth above. However, the Contractor shall require the subcontractor to assume the risk of, and be responsible for, any loss or destruction of or damage to the property while in the latter's possession or control, except to the extent that the subcontract, with the prior approval of the Contracting Officer, provides for the relief of the subcontractor from such liability. In the absence of such approval, the subcontract shall contain appropriate provisions requiring the return of all Government property in as good condition as when received, except for reasonable wear and tear or for the utilization of the property in accordance with the provisions of the prime contract.

The term "Contractor's managerial personnel" as used herein means the Contractor's directors, officers and any of his managers, superintendents, or other equivalent representatives who have supervision or direction of:

(1) All or substantially all of the Contractor's business;

(11) All or substantially all of the Contractor's operation at any one plant or separate location at which the contract is being performed; or

(111) A separate and complete major industrial operation in connection with the performance of this contract.

(2) The Contractor represents that he is not including in the price hereunder, and agrees that he will not hereafter include in

any price to the Government, any charge or reserve for insurance (including any self-insurance funds or reserve) covering loss or destruction of or damage to the Government property caused by any excepted peril.

(3) Upon the happening of loss or destruction of or damage to any Government property caused by an excepted peril, the Contractor shall notify the Contracting Officer thereof, and shall communicate with the Loss and Salvage Organization, if any, now or hereafter designated by the Contracting Officer, and with the assistance of the Loss and Salvage Organization so designated (unless the Contracting Officer has directed that no such organization be employed), shall take all reasonable steps to protect the Government property from further damage, separate the damaged and undamaged Government property, put all the Government property in the best possible order, and furnish to the Contracting Officer a statement of:

(1) The lost, destroyed, and damaged Government property;

(ii) The time and origin of the loss, destruction, or damage;

(111) All known interests in commingled property of which the Government property is a part; and

(iv) The insurance, if any, covering any part of or interest in such commingled property.

The Contractor shall be entitled to an equitable adjustment in the contract price for the expenditures made by him in performing his obligations under this subparagraph (3) (including charges made to the Contractor by the Loss and Salvage Organization, except any of such charges the payment of which the Government has, at its option, assumed directly), in accordance with the procedures provided for in the "Changes" clause of this contract.

(4) With the approval of the Contracting Officer after loss or destruction of or damage to Government property, and subject to such conditions and limitations as may be imposed by the Contracting Officer, the Contractor may, in order to minimize the loss to the Government or in order to permit resumption of business or the like, sell for the account of the Government any item of Government property which has been damaged beyond practicable repair, or which is so commingled or combined with property of others, including the Contractor, that separation is impracticable.

(5) Except to the extent of any loss or destruction of or damage to Government property for which the Contractor is relieved of liability under the foregoing provisions of this clause, and except for reasonable wear and tear or depreciation, or the utilization of the Government property in accordance with the provisions of this contract, the Contractor assumes the risk of, and shall be responsible for, any loss or destruction of or damage to the Government property, and