his account, and that he will be held liable for any excess costs.

(v) That the Government reserves all rights and remedies provided by law or under the contract, in addition to charging excess costs. (Where liquidated damages are provided for, substitute a reference thereto.)

(vi) That the notice constitutes a finding of fact pursuant to the Disputes article from which he has the right of appeal as specified therein.

(3) The same distribution will be made of the termination notice as was made of the contractual documents. In addition thereto, a copy will be furnished to the Disbursing Officer who will be advised to withhold further payments to the Contractor pending additional instructions.

(4) Notice of termination of a contract will be furnished to the Contractor within a reasonable time after the default occurs, or after efforts to arrange for compliance with the terms of the contract have resulted in failure. This requirement must be complied with in order to fulfill the Government's obligation to mitigate damages.

(5) If the default consists of the failure to perform any provision of the contract other than specified in subparagraph (1) of this paragraph, or if the Contractor so fails to make progress as to endanger performance of the contract, a notice of termination will not be issued unless the Contracting Officer has previously notified the Contractor in writing of the specific default or failure, and has by the terms of such notice afforded the Contractor an opportunity to cure such default or failure within a period of time which shall be not less than 10 days from the date of receipt of such notice. The notice of termination in such cases will refer to the notice of default.

(e) Repurchase against Contractor's account. (1) In the event of termination of a contract for default, the Government is under a duty to mitigate damages.

(2) Accordingly, where the supplies or services are still required after termination, repurchase will be made against the Contractor's account either from other Contractors or Government facilities (i) as soon as possible after termination, (ii) of supplies or services similar to those called for in the contract, (iii) at as reasonable a price as practicable

considering the quantity and quality required by the Government and the time within which the supplies or services are required; (iv) in construction contracts, the work will be let according to the same plans and specifications to such other responsible Contractor who offers the lowest price or it will be completed by Government plant and hired labor.

(f) Action by commanding officer. (1) If repurchase will not be effected, compute actual (or liquidated damages when clause contained in § 7.105-5 of this title is used), and make written demand upon the Contractor for the amount thereof.

(2) If repurchase is effected, compute excess costs and actual (or liquidated damages, when clause contained in § 7.105-5 of this title is used), and make written demand upon the Contractor for the total amount.

(g) Amount chargeable against defaulting Contractor. A purchase or purchases against the account of a defaulting Contractor must not exceed the quantity originally ordered, with consideration given, of course, to the variation clause, if any, in the contract, and must be secured if practicable on the same unit basis, such as each, dozen, pound. This, however, does not preclude the Government from entering into one contract with the completing Contractor which includes additional needed supplies provided that the excess costs to be charged against the account of the defaulting Contractor are determined as provided in the preceding sentence of this paragraph. In any event, actual damages (or liquidated damages, if clause contained in § 7.105-5 of this title is used) resulting from delay, may be assessed in addition to excess costs.

(h) Action in connection with Federal Supply Schedule Contracts-(1) Action by contracting officer-(i) Ordering office. Before declaring a Contractor in default, it is suggested that ordinarily ordering offices should notify the Contractor in writing that unless satisfactory performance occurs by a specified date, which should allow a reasonable time for performance, his right to proceed further under the delivery order will be considered terminated and he will be held liable for any excess costs resulting from purchasing the supplies or services elsewhere. This step would not be taken ordinarily when the default involves an attempted fraud on the United States, or when it obviously would be futile, as for

example, when the Contractor has already declined to perform. Where excess costs are anticipated, the ordering office may likewise decide to withhold sufficient funds due the Contractor as offset security. Ordering offices will endeavor to minimize excess costs to be charged against the Contractor and to collect, by check or setoff, excess costs owed. Such collected funds are usually for deposit into the Treasury as miscellaneous receipts.

Or

(ii) Federal Supply Service. Where ordering offices are notified by the Federal Supply Service that it has declared the Contractor in default, ordering offices will thereafter refuse to accept further performance by the Contractor or place further delivery orders with him. dering offices will thereafter purchase against the account of the Contractor from replacing contractors designated by the Federal Supply Service or in such other manner as directed by the Federal Supply Service.

(2) Reports. Ordering offices will report to the Purchase Branch, Federal Supply Service, Washington 25, D. C., the details concerning all material instances of unsatisfactory performance by the Contractor, whether or not properly adjusted and settled. Ordering offices also will report, as may be directed by the Federal Supply Service, all purchases made against the account of a Contractor placed in default by the Federal Supply Service.

(i) Excusable delay. Where, following termination for default, it is subsequently determined that the Contractor's delay was excusable, the procedure outlined in paragraph (e) of the Default Clause (§ 7.103-11 of this title) will be followed.

(j) Applicability to oversea commands. The default clause is applicable to oversea commands except where any of its provisions are inconsistent with or prohibited by local law, in which case the clause should be amended to conform to local law. For the purpose of this paragraph, local law is defined as the law of the foreign country or legal entity which is applicable to the execution and performance of contracts therein.

(k) Excusable delay. [Revoked]

(1) Applicability to oversea commands. [Revoked]

CODIFICATION: § 596.103-11 was amended as follows, 22 F. R. 7175, Sept. 7, 1957:

1. Paragraphs (f), (g), (h), (1), and (J) were amended to read as set forth above. 2. Paragraphs (k) and (1) were revoked.

§ 596.103-12 Disputes-(a) General— (1) Contract Clause. The "Disputes" Clause contained in § 7.103-12 of this title will be inserted as specified, except for contracts entered into by major oversea commanders and to be performed outside the United States (48 States and the District of Columbia) (paragraph (c) of this section). The "Disputes" Clause may be modified to provide for an intermediate appeal to the Head of the Procuring Activity concerned.

(2) Armed Services Board of Contract Appeals. The charter and rules of the Armed Services Board of Contract Appeals are set forth in § 30.1 of this title. References herein to "rules" are to the mentioned rules.

(3) Correspondence and communications. All official correspondence with the Board will be addressed to the "Army Contract Appeals Panel, Armed Services Board of Contract Appeals, Office of the Secretary of the Army, Washington 25, D. C." All official correspondence with the Chief Trial Attorney, will be addressed "Chief Trial Attorney, Office of The Judge Advocate General, Department of the Army, Washington 25, D. C." The Chief Trial Attorney and the attorneys assigned to his office are authorized to communicate directly by telephone or otherwise with any person or organization to secure any witnesses, documents or information considered necessary in connection with properly protecting the interests of and representing the Government in matters before the Board.

(4) Time of filing of appeal to be indorsed. When a notice of appeal has been received by the Contracting Officer or the Head of a Procuring Activity, as the case may be, there shall be indorsed thereon the date of receipt, and also, where apparent, the date of mailing or, if dispatched by appellant by other means, the date of such dispatch.

(b) Procedure for handling disputes— (1) Screening. (i) The Contracting Officer should screen disputes arising under contracts to insure that findings and decision appealable under the "Disputes" Clause are rendered only on disputes concerning questions of fact or disputes otherwise made subject to the "Disputes" procedure by specific contract provisions,

or

such as a dispute as to an equitable adjustment under § 7.103-2 of this title and § 596.103-12, "Changes" Clause, § 7.103-5 of this title, "Inspection" Clause, or a dispute resulting from failure to agree on a redetermined price under § 596.150-5, "Price Redetermination" Clause. For example, an appealable decision and findings should not be issued by the Contracting Officer: (a) Where a mistake in bid is alleged by the Contractor after award in that the procedure outlined in § 2.405-3 of this title and $591.405 of this subchapter covers such cases, or (b) where § 7.104-16 of this title, "Gratuities" Clause, is to be invoked in that under such clause and § 30.4 of this title, findings of fact are made by duly designated representatives of the Secretary.

(ii) Whenever a Contracting Officer has doubt as to whether findings and a decision should be made pursuant to the "Disputes" Clause he should obtain the advice of legal counsel.

(2) Findings and decision-(i) Definitions—(a) Decision. The "Decision" means that document furnished by the Contracting Officer to the Contractor which sets forth the findings of fact and the conclusion of the Contracting Officer deciding the matter in dispute.

(b) Findings of fact. "Findings of Fact" means that portion of the decision of the Contracting Officer which recites his determination of the facts in dispute.

(c) Complaint. A "Complaint" is a written statement from the Contractor filed with the Board stating the reasons which entitle him to relief from the decision of the Contracting Officer. For the purposes of this procedure, a Complaint need not be formally labeled as a "Complaint," but may be submitted as part of, or simultaneously with, the Notice of Appeal, or in letter or memorandum form subsequent to the filing of the Notice of Appeal.

(ii) Findings. Whenever it becomes necessary to render a decision on a dispute the Contracting Officer will prepare and sign findings, a true copy of which with his written decision will be promptly furnished the Contractor. When the Contractor has a right of appeal under the contract and such right is directly to the Secretary, the Contracting Officer will conclude his decision with the following paragraph:

If the decision herein before set forth results in a dispute concerning a question of

fact or a dispute otherwise made subject to the Disputes procedure by specific contract provisions, you are hereby notified that you may appeal from this decision to the Secretary of the Army in accordance with the provisions of Clause ----, "Disputes" of the above numbered contract. A notice of appeal must be in writing and should indicate that an appeal is thereby intended, and should identify the contract (by number) and the decision from which the appeal is taken. The original, together with two copies, should be filled with the undersigned Contracting Officer. If a Notice of Appeal is filed, it will be forwarded to the Armed Services Board of Contract Appeals and the Recorder of that Board will docket the appeal and will forward to you a copy of the Rules of the Board. Under the Rules, the original and three copies of a complaint may be filled with the Contracting Officer at the time the Notice of Appeal is filed, or it may be filed with the Recorder of the Board after the Appeal has been docketed. The rules provide that a complaint should set forth a simple, concise, and direct statement of each claim and show wherein a Contractor contends that he is entitled to relief. The rules further provide that each claim shall be stated with as much particularity as is practical, that each claim should be separately identified, that documentary evidence in support of claims may be filed as exhibits to the complaint, that all documents filed as exhibits to the complaint shall be plainly listed and identified in the complaint, and that an original and three copies of the complaint shall be filed.

(iii) Determinations. It is emphasized that, where a contract provides for a decision or a determination to be made by a Contracting Officer, he must give his personal and independent consideration to the making of each determination or decision, with the aid of such technical and legal advice as may be available to him.

(3) Appeals to Secretary from decisions of Contracting Officers-(i) Action by Contracting Officer. (a) Within 10 days after receipt of a Notice of Appeal or a Complaint from the Contractor, the Contracting Officer will forward the same to the Board through the Head of the Procuring Activity concerned.

(b) Within 30 days after the receipt of the Notice of Appeal, the Contracting Officer will forward to the Head of the Procuring Activity concerned a comprehensive report in narrative form concerning the dispute. The following will be included in or attached to the report:

(1) The Findings of Fact supporting the Decision and the Decision from which the appeal is taken;

(2) The complete contract including all amendments, supplemental agreements and change orders, and the pertinent plans and specifications. In case of a negotiated procurement, a copy of the request for proposal will be included;

(3) All correspondence and memoranda or transcripts of meetings or telephone conversations pertinent to the appeal;

(4) The names and addresses of all potential witnesses, including those of the Contractor, if known, having information concerning the facts in dispute. A statement signed by each Government witness reflecting the facts to which he will be able to testify (or a summary thereof if it is impossible to get the signed statement), and a statement as to the expected availability of each Government witness at the hearing;

(5) A discussion of the validity of the reasons submitted by the Contractor for setting aside the decision of the Contracting Officer;

(6) A memorandum by the legal adviser to the Contracting Officer setting forth an analysis of the legal issues involved in the dispute and comments upon the adequacy of the "Findings of Fact" and the legal sufficiency of the decision;

(7) Such additional information as the Contracting Officer may consider pertinent, including such items as interoffice memoranda, sample photographs, and inspection, audit and financial reports.

(c) If a "Complaint" is received by the Contracting Officer subsequent to transmittal of the original comprehensive report referred to in (b) of this subdivision, the Contracting Officer, within 20 days after receipt of such complaint, will forward to the Head of the Procuring Activity concerned a supplemental report of matters stated in the Complaint which were not previously covered in the comprehensive report. If the original report is sufficient to answer the matters alleged in the complaint, the Contracting Officer will forward the "Complaint" with a statement to this effect and need not forward a supplemental report.

(d) Copies of all correspondence and all other data and information pertinent to the dispute received by the Contracting Officer, after the comprehensive report has been submitted, will be forwarded to the Chief Trial Attorney.

(e) Where the complaint is filed with the Contracting Officer with the Notice

of Appeal under Rule 3, the Contracting Officer will forward the Notice of Appeal and the original and three copies of the complaint to the Board through the Head of the Procuring Activity within 10 days. Within 20 days after eceipt of the notice of appeal and complaint from the Contractor, the Contracting Officer will prepare and forward to the Chief Trial Attorney, through the Head of the Procuring Activity a single comprehensive report containing the items described in (a) and (b) of this subdivision, and substantiating the position taken by the Contracting Officer.

(f) In order that the Chief Trial Attorney may file an answer under Rule 6 within 60 days after service of the complaint, or in order that he may have jurisdiction for any request for extension of time, the above time limits must either be met or the Chief Trial Attorney must be notified of the reason for the delay and the estimated extent thereof.

(ii) Action by Head of a Procuring Activity. The Head of the Procuring Activity receiving an appeal to the Secretary from a decision of a Contracting Officer will:

(a) Forward the required copies of the Notice of Appeal and the complaint (if the complaint was furnished to the Contracting Officer with the Notice of Appeal) to the Board without delay.

(b) Carefully review the decision from which the appeal is taken to ascertain that all basic findings of fact are complete as to all issues bearing on the matter in dispute.

(c) Insure that the reports submitted by the Contracting Officer under subdivision (i) of this subparagraph are complete and ascertain that the evidence relied upon in support of the decision does support the Government's position.

(d) Refer to the Contracting Officer for supplemental findings cases in which the original findings of fact do not contain all of the basic findings required to support the decision or in which the findings of fact are not complete as to all issues bearing upon the matter in dispute.

(e) Return to the Contracting Officer for reconsideration, along with appropriate instructions, all cases wherein a timely appeal has been taken and it is clear from the evidence, contractual provisions and the applicable law, that the

Contracting Officer's decision is erroneous or not supported by competent and available evidence.

(f) Notify the Chief Trial Attorney within 10 days after action has been taken by the Head of the Procuring Activity under (d) and (e) of this subdivision; this notification will indicate the nature thereof, and will include an estimate as to when the appeal will be either (1) withdrawn, or (2) ready for preparation of an answer.

(g) Where action is not taken under (d) and (e) of this subdivision, forward to the Chief Trial Attorney (within 10 days after receipt) each of the reports of the Contracting Officer referred to in subdivision (i) of this subparagraph together with the Head of the Procuring Activity's evaluation of the factual and legal issues involved as well as his conclusions and recommendations thereon. Where action is taken under (d) and (e) of this subdivision and the action does not dispose of the appeal, the Head of the Procuring Activity will take the same steps with regard to the reports of the Contracting Officer as are outlined in the foregoing sentence. The Head of the Procuring Activity will also furnish any additional evidence (documents, statements of witnesses, etc.) considered essential to enable the Trial Attorney to properly protect the interests of and represent the Government before the Board.

(h) Insure that assistance is rendered to the Chief Trial Attorney in obtaining additional evidence or in making other necessary preparations for presenting the Government's position to the Board. In order that the Chief Trial Attorney may file timely pleadings in accordance with the rules of the Board or that he may have justification for any request for extensions of time, it is imperative that Heads of Procuring Activities furnish information within the prescribed time limit, or that the reason for the delay and estimated extent thereof be furnished to the Chief Trial Attorney.

(4) Intermediate appeal to Heads of Procuring Activities. Where a clause providing for intermediate appeal to the Head of a Procuring Activity has been authorized, necessary instructions covering the processing of such appeals to the Head of the Procuring Activity may be issued: Provided, That appeal taken from decision of the Head of the Procuring Activity must be processed in accord

ance with the procedure prescribed in this paragraph.

(5) Appeals to Secretary from decisions of Heads of Procuring Activities. Within 15 days after receipt of a Notice of Appeal, the Head of a Procuring Activity will prepare and forward to the Chief Trial Attorney a complete report containing a statement of the factual and legal issue involved in the appeal and inclosing therewith the following: a copy of his decision; the advisory report, if there be one, of the contract settlement board in his office; a transcript of any testimony taken during the course of the proceedings; a duplicate original or a certified copy of the contract, including plans and specifications and all changes and supplemental agreements; the decision of the Contracting Officer; all papers and correspondence pertaining to the contract and pertinent to the consideration of the appeal; the name of each witness having knowledge that will support the Government's position; a statement signed by each witness reflecting facts to which he will be able to testify or a summary thereof if it is impossible to get the signed statement (a statement signed by individual witness may be omitted if the substance of expected testimony is set forth in the transcript of proceedings); a statement as to the expected availability at the hearing of each witness; and such other information as may be necessary to substantiate the position taken by the Head of the Procuring Activity with regard to the appeal. Additionally, the Chief Trial Attorney shall transmit to the Head of the Procuring Activity a copy of the complaint, and the Head of the Procuring Activity will furnish comments as to each allegation of fact in such complaint (treating them in the order set forth herein) and comments as to whether it is well founded and, if not, a recital of the evidence to refute the same. Further, he shall insure that all essential witnesses and documentary evidence will be available at the time of the hearing of the appeal.

(6) Appeals filed with the Secretary or the Board. In cases wherein an appeal is filed directly with the Office of the Secretary of the Army or the Armed Service Board of Contract Appeals, the Board, pursuant to its rules of procedure, will promptly furnish a copy thereof to the Procuring Activity concerned, through the Chief, Trial Attorney's of