fice. Upon the receipt of such appeal the Procuring Activity will process the same as though it had been initially filed with the Activity. (7) Appeals improperly filed. If any officer or agency of the Department other than the officer or agency designated in the contract, should receive a written appeal, the recipient will, after endorsing thereon the date of its receipt, immediately transmit the appeal to the Head of the Procuring Activity concerned: (i) For appropriate action as provided in subparagraph (5) of this paragraph if the appeal is from the decision of the Head of a Procuring Activity, or (ii) If the appeal is from the decision of a Contracting Officer, then for action as required by subparagraph (3) of this paragraph. (8) Functions of the Office of the Chief Trial Attorney—(i) New facts or circumstances. Upon discovery of new facts or circumstances the Chief Trial Attorney is authorized, in appropriate cases, to return appeals to the Procuring Activity for reconsideration in the light of the additional facts or circumstances disclosed. (ii) Agreements or stipulations. Pursuant to Rule 27, the Office of the Chief Trial Attorney may enter into an agreement, by stipulation or otherwise with appellant or his attorney on matters as to which there is no substantial controversy. Such agreements may be of two types: (a) Agreements on matters not disposing of an appeal. An agreement on matters as to which there is no substantial controversy and which will not have the effect of disposing of an appeal may be entered into by the Chief Trial Attorney or by an individual Trial Attorney provided authority therefor shall have been granted in advance by the Chief Trial Attorney. (b) Agreement on matters disposing of an appeal. Pursuant to Rule 27, the Board may suspend further processing of an appeal in order to permit reconsideration by the Contracting Officer whenever it appears that appellant and the Trial Attorney are in agreement as to the disposition of a controversy, subject to the provision that if the case is not actually disposed of by agreement it may be restored to the Board's calendar for hearing. In appropriate cases, such as those in which it is desirable to avoid time consuming delays incident to re turning the appeal to the Contracting Officer, the Chief Trial Attorney (or an individual Trial Attorney acting with prior approval of the Chief Trial Attorney) may enter into an agreement with an appellant which will have the effect of disposing of an appeal after concurrence has been obtained from a representative of the Head of the Procuring Activity. Such agreement may then become the basis of a Board decision disposing of the appeal. (c) Major oversea commands. (1) the following Disputes clause shall be inserted in all contracts entered into by major oversea commands and to be performed outside the United States in lieu of the clause set forth in § 7.103-12 of this title. 1 of the Commanding General (--‒‒‒‒ -‒‒‒‒‒‒‒), or that of his duly authorized representative (other than the Contracting Officer under this contract) for the hearing of such appeals, shall unless determined by a court of competent jurisdiction to have been fraudulent, arbitrary, capricious, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence, be final and conclusive upon the parties thereto when the amount involved in the appeal is $50,000 or less: Provided, That if no appeal is taken, within the said 30 days, the decision of the Contracting Officer shall be final and conclusive. When the amount involved is more than $50,000 the decision of the Commanding General -------) shall be subject to written appeal within 30 days after the receipt thereof by the Contractor to the Secretary of the Army and the decision of the Secretary or his duly authorized representative for the hearing of such appeals shall, unless determined by a court of competent jurisdiction to have been fraudulent, arbitrary, capricious, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence, be final and conclusive: Provided, That if no such further appeal is taken, within the said 30 days, the decision of the Commanding General -------) or that of his duly 1 1 Specify name of major oversea command concerned. authorized representative shall be final and conclusive. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with Contracting Officer's decision. (b) This "Disputes" clause does not preclude consideration of questions of law in connection with decisions provided for in paragraph (a) above: Provided, That nothing in this contract shall be construed as making final decision of any administrative official, representative, or board on a question of law. CODIFICATION: Paragraph (c) was amended, 22 F. R. 7175, Sept. 7, 1957 and subsequently amended to read as set forth above, 23 F. R. 6105, Aug. 9, 1958. § 596.103-14 Buy American Act. [Revoked, 23 F. R. 6105, Aug. 9, 1958] § 596.103-16 Eight-Hour Law of 1912. In effecting procurement outside the United States, its Territories and possessions, this clause will be deleted. § 596.103-17 Walsh-Healey Public Contracts Act. In effecting procurement outside the United States, its Territories and possessions, this clause will be deleted. Nondiscrimination in § 596.103-18 employment. In effecting procurement outside the United States, its Territories and possessions, this clause will be deleted. § 596.104 Clauses to be used when applicable. The contract clauses set forth in § 7.104 of this title and in § 596.10412A shall be used when applicable subject to the instructions contained in § 7.104 of this title and in § 596.104-12A and § 596.050. § 596.104-1 Davis-Bacon Act. In effecting procurement outside the United States, its Territories and possessions, this clause will be deleted. § 596.104-2 Copeland Act. In effecting procurement outside the United States, its Territories and possessions, this clause will be deleted. § 596.104-12A Military security requirements; research and development contracts. The following clause is approved for use in research and development contracts with educational or nonprofit institutions, as a deviation from AND DEVELOPMENT CONTRACTS (a) The provisions of this clause shall apply to the extent that this contract involves access to information classified "Confidential" including "Confidential-Modified Handling Authorized" or higher. (b) The Government shall notify the Contractor of the security classification of this contract and the elements thereof, and of any subsequent revisions in such security classification, by the use of a Security Requirements Check List (DD Form 254) and Appendage to Security Rquirements Check List (DD Form 254-1). (c) To the extent the Government has indicated as of the date of this contract, or thereafter indicates, security classification under this contract as provided in paragraph (b) above, the Contractor except as otherwise provided in this clause, shall safeguard all classified elements of this contract and shall provide and maintain a system of security controls within its own organization in accordance with the requirements of (1) the Department of Defense Industrial Security Manual for Safeguarding Classified Security Information as in effect on the date of this contract, which Manual is hereby incorporated by reference and made a part of this contract, and (11) any amendments to said Manual required by the demands of national security as determined by the Government and made after the date of this contract, notice of which has been furnished to the Contractor by the Contracting Officer. (d) Designated representatives of the Government responsible for inspection pertaining to industrial security shall have the right to inspect at reasonable intervals the procedures, methods, and facilities utilized by the Contractor in complying with the requirements of the terms and conditions of this clause. Should the Government, through its authorized representative, determine that the Contractor has not complied with such requirements, the Government shall inform the Contractor in writing of the proper actions to be taken in order to effect compliance with such requirements. (e) In the event a change in security requirements, as provided in paragraphs (b) and (c), results (1) in a change in the security classification of this contract or any element thereof from a nonclassified status to a classified status or from a lower classification to a higher classification, or (ii) in more restrictive area controls than previously required, the Contractor shall exert every reasonable effort compatible with its established policies to continue the performance of work under the contract in compliance with such change in security class!fication or requirements. If, despite such reasonable efforts, the Contractor determines that the continuation of work under this contract is not practicable because of such change in security classification or requirements it shall so notify the Contracting officer in writing. (f) After receiving such written notification, the Contracting Officer shall explore the circumstances surrounding the proposed change in security classification or requirements and shall endeavor to work out a mutually satisfactory method whereby the Contractor can continue performance of the work under this contract. (g) If, upon expiration of fifteen (15) days after receipt of the notification by the Contracting Officer of the Contractor's stated inability to proceed, (1) the application to this contract of such change in security classification or requirements has not been withdrawn or (ii) a mutually satisfactory method for continuing performance of work under this contract has not been agreed upon, the Contractor may request the Contracting Officer to terminate the contract in whole or in part. Thereupon, the Contracting Officer shall terminate the contract in whole or in part, as may be appropriate, and such termination shall be deemed a termination under the provisions of the clause of this contract entitled "Termination for the Convenience of the Government." (h) The Contractor agrees to insert, in all subcontracts hereunder which involve access to classified security information, provisions which shall conform substantially to the language of this clause, including this paragraph (h) but excluding paragraphs (e), (f), and (g) of this clause. (1) The Contractor also agrees that it shall determine that any subcontractor proposed by it for the furnishing of supplies and services which will involve access to classified security information in the Contractor's custody has been granted an appropriate facility security clearance which is still in effect, prior to being accorded access to such classified security information. § 596.104-13 Domestic food, clothing, cotton, spun silk yarn for cartridge cloth, or wool. In effecting procurements outside the United States, its Territories and possessions, for any article of food, clothing, cotton, spun silk yarn for cartridge cloth, or wool excepted from the prohibition of the annual appropriation acts, the clause set forth in § 7.104-13 of this title will be deleted. § 596.104-15 Examination of records. Contracts or purchase orders for public utility services are exempted from compliance with the requirements of § 7.10415 of this title when such contracts are at rates not in excess of those established for uniform applicability to the general public, or at such rates plus reasonable connection charges incident to such services. § 596.104-50 Title II, First War Powers Act, 1941, as amended. All contracts and amendments to contracts made under the authority of the Title II, First War Powers Act, 1941, as amended, will contain the clauses and conform to the requirements prescribed in § 606.416 of this subchapter. § 596.104-51 Marine risk. The following clause may be used in contracts for chartering vessels for coastal, harbor, inland water or similar services. MARINE RISKS The owner shall assume all marine risks of whatever nature or kind, including all risks or liability for breach of law or statutes or for damage caused to other vessels, persons or property, except as otherwise provided herein. When official storm warnings have been issued or weather and water or other conditions render an operation unusually hazardous and the owner or master protests in writing to the Contracting Officer or his authorized representative against undertaking the operation but thereafter the Contracting Officer or his authorized representative orders him to perform the operation and he undertakes to do so and the vessel is damaged or lost as the proximate result of the unusual hazard protested against and not of the negligence of the owner, master or crew, the Government shall, at its discretion, repair the damage to the vessel or reimburse the owner for the cost of such repairs or for the loss of the vessel, to the extent not covered by insurance and within the limits of funds against which indemnification by the Government to the contractor for such loss or damage may lawfully be charged, but in no case in excess of the value of the vessel immediately preceding the incident causing the damage or loss; and shall, for a period not to exceed days (insert the number of days estimated to repair or replace the vessel), reimburse the owner, within the funds limitation as indicated above, for the actual expenses of stand-by-time, as determined by the Contracting Officer. The Contractor shall file a report of such damage or loss within three working days after the date of the incident or the date of the vessel's return to port, whichever is the later date. Failure to file such a report within the time specified shall constitute a waiver of liability of the Government for the damage to or loss of the vessel. Failure to agree to any findings or determinations made by the Contracting Officer hereunder shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." [23 F. R. 6105, Aug. 9, 1958] contracts in accordance with the instructions of each Procuring Activity where necessary or desirable to cover the subject matter contained in such clauses. § 596.105-5 Liquidated damages—(a) Contract provision. If a contract is to provide for liquidated damages, a provision will be inserted in accordance with § 7.105-5 of this title. (b) Accrual. Where a contract provides for liquidated damages in the event of default, and a default occurs, liquidated damages accrue to the Government, in accordance with the terms of the contract. (c) Mitigation. If there is a liquidated-damage provision in a contract for the purchase of ordinary supplies and default should occur, time should not be permitted to run indefinitely, the result of which would make the liquidated damages chargeable exceed the contract price of the supplies to be delivered. The law imposes the duty upon a party subjected to injury by the action of another to mitigate the damages which result from such wrongful action, and that must be as true where liquidated damages run as in the ordinary case of actual damages. Efforts must be made to procure supplies elsewhere if delivery is not forthcoming within a reasonable time after the default occurs. While the course to be followed must depend upon the facts in each case, the rule may be stated that damages to run must be conserved and, as promptly as possible, according to what may be the attitude of the Contractor respecting delivery, administrative action should be taken to procure the supplies elsewhere. (d) Remission. Whenever any contract includes a provision for liquidated damages for delay, the Comptroller General on the recommendation of the Secretary is authorized and empowered to remit the whole or any part of such damages as in his discretion may be just and equitable. Recommendations submitted by a Contracting Officer to the Head of a Procuring Activity or to the Secretary will not be furnished the Contractor. § 596.106 Price escalation clauses (established prices). Price escalation clauses (as distinguished from price redetermination clauses) may be inserted in contracts entered into after formal advertising or negotiation in accordance with the instructions set forth in §§ 3.403-2 and 7.106 of this title and in §§ 591.201 (i) and 591.406 (b) of this subchapter. § 596.106-50 The Price escalation (labor and material). (a) The escalation clause set forth in this paragraph is authorized for use in formally advertised or negotiated contracts for the procurement of supplies under conditions wherein it is desired to effect one or more possible price adjustments, during the life of the contract, solely upon the basis of rates of pay for certain specified types of labor and/or costs of certain specified types of materials. clause is not to be used in those instances wherein it is desired to adjust contract prices upon the basis of changes in the original estimates of hours of labor or quantities of materials. The clause may be used in the procurement of items other than those of a standard commercial nature in those instances where adequate cost experience has been obtained on previous contracts and where the design of the supplies has been stabilized. (b) Paragraph (b) of the clause provides that prices may be adjusted only if the change results in an increase or decrease of at least 3 percent of the aggregate contract price. Authority is granted to deviate from this percentage to provide for a lesser percentage if it is deemed that the value of the contract warrants the administration of price adjustments involving a smaller percentage change. (c) The percentage increase to be specified in subparagraph (d) (3) of the clause shall not exceed fifteen percent. (d) When it is planned to include this clause in contracts to be awarded as a result of formal advertising, the invitation for bids will clearly so state, and will further state that all bids will be evaluated after applying the maximum amount of escalation. §§ 591.201 (1) and 591.406 (b) of this subchapter.) PRICE ESCALATION (LABOR AND MATERIALS) (a) The Contractor represents and warrants that the prices set forth in this contract do not include any contingency allowance to cover the possibility of increased costs of performance resulting from increases in either (1) the Contractor's rates of pay for labor or (2) the prices which the Contractor is required to pay for materials, as set forth in detail in paragraph (b) hereunder. The Contractor further represents and warrants that the net price or prices paid or to be paid by the Government under this contract do not and shall not exceed then in such event the contract unit price may be adjusted upward or downward in accordance with the provisions of paragraph (c). Such adjustment shall apply to the units completed subsequent to the effective date of any such increase or decrease and shall be by an amount equivalent to the increase or decrease in cost per uncompleted unit occasioned by the increase or decrease in rates of pay for the labor or prices for material specified above. No adjustment shall be made, however, that does not result in an increase or decrease of at least three percent (3%) of the then aggregate contract price of the uncompleted units of the contract. (c) Not later than twenty (20) days after the effective date of any increase or decrease as referred to in paragraph (b) hereof, the Contractor shall notify the Contracting Offcer of any such increase or decrease, and with such notification shall submit a supporting cost breakdown. Such cost breakdown will: (1) Be prepared in accordance with recognized commercial accounting principles; (2) Indicate changes in estimated labor and/or material costs resulting from any increase or decrease as referred to in paragraph (b) hereof; and (3) Be signed by a responsible official of the Contractor. Upon the basis of such notification and cost breakdown, and such other data as may be available to the Contracting Officer or as shall be furnished to him upon request to the Contractor, a price adjustment to reflect the increase or decrease in costs as referred to in paragraph (b) hereof shall be determined by mutual agreement between the Contractor and the Contracting Officer, and shall be set forth in an amendment to this contract. In the event that the Contractor fails to give notice of any decrease as required herein, a downward adjustment shall be later effected with respect to the units completed subsequent to the effective date of any such decrease. The Contracting Officer or any person authorized by him may examine any or all of the Contractor's records and information available to the Contractor relating to rates paid for labor and prices paid for materials specified in paragraph (b) hereof. (d) Price adjustments may be agreed upon at any time and from time to time during the performance of this contract in accordance with the provisions of this clause. In no event, however, shall any price adjustment be made: (1) For any increase or decrease in costs other than those for the types of labor and materials specified in paragraph (b) hereof. (2) For increased or decreased costs resulting from an increase or decrease as related to the original contract estimates in number of hours of labor or in amounts of materials. (3) For increases or accumulated increases in unit prices in excess of percent (----%) of the original contract unit price. (4) For rates of pay for labor or prices for materials in excess of those established by the Economic Stabilization Agency or other authorized Government Agency. (e) Pending a determination of any price adjustment under this clause the Contractor shall continue deliveries hereunder. Failure of the parties to agree upon a price adjustment pursuant to the provisions of this clause shall be deemed to be a dispute as to a question of fact within the meaning of the clause of this contract entitled "Disputes." (e) In the use of the above escalation article, it is emphasized that considerable latitude is permitted and encouraged in the selection of types of labor and material and rates of pay or price per unit to be negotiated under paragraph (b) of the article. Wherever possible and practicable, costs selected for escalation should be reduced to a type of material price or rate of pay agreement that will require little if any audit review if a price adjustment is called for by either of the contracting parties. The following may be considered as examples of acceptable forms of pricing agreements. (1) Materials. Escalation should be only on the raw material(s) which constitute a major portion of material costs. The market prices of many raw materials are published periodically in accepted trade journals or newspapers. Accordingly, an example material escalation in paragraph (b) of the article could be expressed as follows: Type of material Unit of Price measure per unit Ton $59.00 Cost of steel in this contract represents 25 percent of the total of all costs. |