contract shall be modified in writing to reflect such adjustment.

(b) Failure to agree on a reduction shall be a dispute concerning a question of fact within the meaning of the "Disputes" clause of this contract.

(c) The Contractor agrees to insert the substance of paragraphs (a) and (c) of this clause in each of his cost-reimbursement type, price redeterminable, or incentive subcontracts hereunder, and in any other subcontract hereunder in excess of $100,000 unless the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quanties to the general public, or prices set by law or regulation. In each such excepted subcontract hereunder which exceeds $100,000, the Contractor shall insert the substance of the following clause.

PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA-PRICE ADJUSTMENTS

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000, except where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. The right to price reduction under this clause shall be limited to such price adjustments.

(b) If the Contractor determines that any price, including profit or fee, negotiated in connection with any price adjustment within the purview of paragraph (a) above was increased by any significant sum because the subcontractor or any of his subcontractors in connection with a subcontract covered by paragraph (c) below, furnished incomplete or inaccurate cost or pricing data, or data not current as of the date of execution of the subcontractor's certificate of current cost or pricing data, then such price shall be reduced accordingly and the subcontract shall be modified in writing to reflect such adjustment.

(c) The subcontractor agrees to insert the substance of this clause in each subcontract hereunder which exceeds $100,000.

(b) Insert the following clause in all contracts, both formally advertised and negotiated, in excess of $100,000 other than those described in paragraph (a) of this section.

PRICE REDUCTION FOR DEFECTIVE COST OF PRICING DATA-PRICE ADJUSTMENTS (MAR. 1963)

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000, except where the price is based on adequate price competition, established catalog or market

prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. The right to price reduction under this clause shall be limited to such price adjustments.

(b) If the Contracting Officer determines that any price, including profit, or fee, negotiated in connection with any price adjustment under this contract was increased by any significant sums because the Contractor or any subcontractor in connection with a subcontract covered by paragraph (d) below, furnished incomplete or inaccurate cost or pricing data or data not current as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data, then such price shall be reduced accordingly and the contract shall be modified in writing to reflect such adjustment.

(c) Failure to agree on a reduction shall be a dispute concerning a question of fact within the meaning of the "Disputes" clause of this contract.

(d) The Contractor agrees to insert the substance of paragraphs (a), (b), and (d) of this clause in each subcontract hereunder that exceeds $100,000.

(c) The requirement for inclusion of the above clauses in contracts with foreign governments or agencies thereof may be waived in exceptional cases by the head of a procuring activity, stating in writing his reasons for such determination.

[28 F.R. 4886, May 16, 1963, as amended at 29 F.R. 14820, Oct. 31, 1964, 30 FR. 6868, May 25, 1965]

§ 7.104-30 Humane slaughter of live stock.

When required by Subpart F, Part 4 of this chapter, the procedure set forth in § 4.604 of this chapter will be followed. [26 F.R. 9638, Oct. 12, 1961]

§ 7.104-31 Duty-free entry.

In accordance with the requirements of § 6.603-2, insert any or all of the clauses set forth in § 6.603-3, as appropriate.

[31 F.R. 1050, Jan. 27, 1966]

§ 7.104-32 Duty-free entry of listed Canadian supplies.

In accordance with the requirements of § 6.605 of this chapter, insert the clause set forth therein.

[26 F.R. 9638, Oct. 12, 1961] § 7.104-33 Taxes.

In accordance with the requirements of § 11.403-2 of this chapter, in contracts to be performed outside the United States, its possessions and Puerto Rico,

The following clause shall be included in all negotiated contracts over $10,000, except in firm fixed-price contracts where award is on the basis of effective price competition or where prices are established by law or regulation.

COMPETITION IN SUBCONTRACTING (APR. 1962)

The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract.

[27 FR. 6188, June 29, 1962] 87.104-41 Audit and records.

(a) Insert the following clause only in firm fixed-price and fixed-price with escalation negotiated contracts which

exceed $100,000, except where the price negotiated is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. AUDIT (SEPT. 1964)

(a) For purposes of verifying that cost or pricing data submitted, in conjunction with the negotiation of this contract or any contract change or other modification involving an amount in excess of $100,000 are accurate, complete, and current, the Contracting officer, or his authorized representatives, shall-until the expiration of three years from the date of final payment under this contract-have the right to examine those books, records, documents and other supporting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein, which were available to the Contractor as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data.

(b) The Contractor agrees to insert the substance of this clause including this paragraph (b) in all subcontracts hereunder in excess of $100,000, so as to apply until three years after final payment under the subcontract, unless the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. In each such excepted subcontract hereunder in excess of $100,000, the Contractor shall insert the substance of the following clause to apply until three years after final payment under the subcontract.

AUDIT PRICE ADJUSTMENTS

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000 unless the price adjustment is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation and further provided that such change or other modification to this contract must result from a change or other modification to the Government prime contract.

(b) For purposes of verifying that cost or pricing data submitted in conjunction with a contract change or modification involving an amount in excess of $100,000 are accurate, complete and current, the Contracting officer or his authorized representative shall— until the expiration of three years from the date of final payment under this contract— have the right to examine those books, records, documents, and other supporting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used

therein, which were available to the Contractor as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data.

(c) The Contractor agrees to insert the substance of this clause, including this paragraph (c), in all subcontracts hereunder in excess of $100,000 so as to apply until three years after final payment of the subcontract.

(b) Insert the following clause in formally advertised contracts which are expected to exceed $100,000, and in firm fixed-price and fixed-price with escalation negotiated contracts which exceed $100,000 when the price is based on adequate price competition, established catalog or market prices of commercial items solds in substantial quantities to the general public, or prices set by law or regulation. In negotiated contracts, delete from paragraph (b) of the clause the words "the Comptroller General of the United States".

AUDIT PRICE ADJUSTMENTS (SEPT. 1964)

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000, unless the price adjustment is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation.

(b) For purposes of verifying that cost or pricing data submitted in conjunction with a contract change or other modification involving an amount in excess of $100,000 are accurate, complete, and current, the Contracting Officer, the Comptroller General of the United States, or any authorized representatives, shall-until the expiration of three years from the date of final payment under this contract-have the right to examine those books, records, documents and other supporting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein, which were available to the Contractor as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data.

(c) The Contractor agrees to insert the substance of this clause in all subcontracts hereunder in excess of $100,000 so as to apply until three years after final payment under the subcontract and only when the change or other modification to the subcontract results from a change or other modification to the Government prime contract.

(c) Insert the following clause in any negotiated cost-reimbursement type, incentive, time and materials, labor hour, or price redeterminable contract.

AUDIT AND RECORDS (SEPT. 1964)

(a) The Contractor shall maintain books records, documents, and other evidence and accounting procedures and practices, suff cient to reflect properly all direct and indirec costs of whatever nature claimed to hav been incurred and anticipated to be incurre for the performance of this contract. Th foregoing constitute "records" for the pur poses of this clause.

(b) The Contractor's plants, or such par thereof as may be engaged in the performanc of this contract, and his records shall be sub ject at all reasonable times to inspection an audit by the Contracting Officer or his au thorized representative.

(c) The Contractor shall preserve an make available his records (1) until th expiration of three years from the date o final payment under this contract, and (ii for such longer period, if any, as is require by applicable statute, or by other clauses o this contract, or by (A) or (B) below.

(A) If this contract is completely or par tially terminated, the records relating to th work terminated shall be preserved and mad available for a period of three years from the date of any resulting final settlement.

(B) Records which relate to (1) appeal under the "Disputes" clause of this contrac or (ii) litigation or the settlement of claims arising out of the performance of this con tract, shall be retained until such appeals litigation, or claims have been disposed of

(d) (1) The Contractor shall insert the substance of this clause, including the whole of this paragraph (d), in each subcontract hereunder that is not on a firm fixed-price basis.

(2) The Contractor shall insert the substance of the following clause in each firm fixed-price subcontract hereunder in excess of $100,000, except those subcontracts covered by subparagraph (3) below.

AUDIT

(a) For purposes of verifying that cost of pricing data submitted in conjunction with the negotiation of this contract or any contract change or other modification involving an amount in excess of $100,000 are accurate complete, and current, the Contracting Officer, or his authorized representatives shall-until the expiration of three years from the date of final payment under this contract-have the right to examine those books, records, documents, and other sup porting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein, which were avall able to the Contractor as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data.

(b) The Contractor agrees to insert the substance of this clause including this para graph (b) in all subcontracts hereunder in excess of $100,000 unless the price is based on adequate price competition, established

catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation.

(3) The Contractor shall insert the substance of the following clause in each firm fixed-price subcontract hereunder in excess of $100,000 where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation.

AUDIT PRICE ADJUSTMENTS

(a) This clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000 unless the price adjustment is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation and further provided that such change or other modification to this contract must result from a change or other modification to the Government prime contract.

(b) For purposes of verifying that any cost or pricing data submitted in conjunction with a contract change or other modification involving an amount in excess of $100,000 are accurate, complete, and current, the Contracting Officer, or his authorized representatives, shall-until the expiration of three years from the date of final payment under this contract-have the right to examine those books, records, documents and other supporting data which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein, which were available to the Contractor as of the date of execution of the Contractor's Certificate of Current Cost or Pricing Data.

(c) The Contractor agrees to insert the substance of this clause including this paragraph (c) in all subcontracts hereunder in excess of $100,000, so as to apply until three years after final payment of the subcontract. In cost-reimbursement type contracts that have separate periods of performance and that are to include, in the Examination of Records clause prescribed by § 7.203-7, the alternate subparagraph (a) (4) which is set forth in 7.203-7(b), the clause set forth above in this paragraph shall be modified by adding the following to paragraph (c) thereof:

Notwithstanding the foregoing, the Contractor's obligation to preserve and make available his records shall not extend beyond the period of his like obligation under the "Examination of Records" clause of this con

tract.

Such contracts may be administered as indicated in § 7.203-7(b).

(d) The requirement for inclusion of the clauses in paragraphs (a) and (b) of this section may be waived for contracts with foreign governments or agencies thereof under circumstances where the requirement for the clauses in §§ 7.104– 29 and 7.104-42 may be waived. [29 F.R. 14821, Oct. 31, 1964, as amended at 30 F.R. 6968, May 25, 1965]

§ 7.104-42 Subcontractor cost and pricing data.

(a) The following clause shall be inserted in any cost-reimbursement type, incentive, time and materials, labor hour, or price redeterminable contract. In addition, it shall also be inserted in all other negotiated contracts over $100,000, except where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. The contracting officer may include this clause, with appropriate reduction in the dollar amounts included therein, in other negotiated contracts where a Certificate of Current Cost or Pricing Data is required (see § 3.807-3(a) (4) of this chapter) in connection with initial pricing of the contract.

SUBCONTRACTOR COST AND PRICING DATA
(SEPT. 1964)

(a) The Contractor shall require subcontractors hereunder to submit cost or pricing data under the following circumstances: (i) prior to award of any cost-reimbursement type, incentive, or price redeterminable subcontract; (ii) prior to the award of any subcontract the price of which is expected to exceed $100,000; (iii) prior to the pricing of any subcontract change or other modification for which the price adjustment is expected to exceed $100,000; except in the case of (ii) or (iii) where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. (b) The Contractor shall require subcontractors to certify, in substantially the same form as that used in the certificate by the Prime Contractor to the Government, that to the best of their knowledge and belief, the cost and pricing data submitted under (a) above is accurate, complete, and current as of the date of execution, which date shall be as close as possible to the date of agreement on the negotiated price of the subcontract.

(c) The Contractor shall insert the substance of this clause including this paragraph (c) in each of his cost-reimbursement type, price redeterminable, or incentive subcontracts hereunder, and in any other subcontract hereunder which exceeds $100,000

except where the price thereof is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. In each such excepted subcontract hereunder in excess of $100,000, the Contractor shall insert the substance of the following clause: SUBCONTRACTOR COST AND PRICING DATAPRICE ADJUSTMENTS

(a) Paragraphs (b) and (c) of this clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000. The requirements of this clause shall be limited to such price adjustments.

(b) The Contractor shall require subcontractors hereunder to submit cost or pricing data under the following circumstances: (1) prior to award of any cost-reimbursement type, incentive or price redeterminable subcontract; (ii) prior to award of any subcontract, the price of which is expected to exceed $100,000; (iii) prior to the pricing of any subcontract change or other modification for which the price adjustment is expected to exceed $100,000; except, in the case of (ii) or (iii), where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation.

(c) The Contractor shall require subcontractors to certify, in substantially the same form as that used in the certificate by the Prime Contractor to the Government, that to the best of their knowledge and belief the cost and pricing data submitted under (b) above is accurate, complete, and current as of the date of execution, which date shall be as close as possible to the date of agreement on the negotiated price of the contract modification.

(d) The Contractor shall insert the substance of this clause including this paragraph (d) in each subcontract hereunder which exceeds $100,000.

(b) Insert the following clause in all contracts, both formally advertised and negotiated, which exceed $100,000 other than those described in paragraph (a) of this section:

SUBCONTRACTOR COST AND PRICING DATA

PRICE ADJUSTMENTS (MAY 1963)

(a) Paragraphs (b) and (c) of this clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000. The requirements of this clause shall be limited to such price adjustments.

(b) The Contractor shall require subcontractors hereunder to submit cost or pricing data under the following circumstances: (1)

prior to award of any cost-reimbursement type, incentive, or price redeterminable subcontract; (ii) prior to the award of any subcontract the price of which is expected to exceed $100,000; (111) prior to the pricing of any subcontract change or other modification for which the price adjustment is expected to exceed $100,000; except in the case of (ii) or (iii) where the price is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation.

(c) The Contractor shall require subcontractors to certify that to the best of their knowledge and belief the cost and pricing data submitted under (b) above is accurate, complete, and current as of the date of execution, which date shall be as close as possible to the date of agreement on the negotiated price of the contract modification.

(d) The Contractor shall insert the substance of this clause including this paragraph (d) in each subcontract hereunder which exceeds $100,000.

(c) The requirement for inclusion of the above clauses in contracts with foreign governments or agencies thereof may be waived in exceptional cases by the Head of a Procuring Activity, stating in writing his reasons for such determination.

[28 F.R. 2099, Mar. 5, 1963, as amended at 28 F.R. 6068, June 14, 1963; 29 F.R. 14822, Oct. 31, 1964; 30 F.R. 6968, May 25, 1965] § 7.104-43 United States Products (Military Assistance Program).

In accordance with the requirements of § 6.703 of this chapter, insert the contract clause set forth in § 6.703-4. [28 F.R. 2581, Mar. 16, 1963]

§ 7.104-44 Value engineering incentive.

In accordance with the requirements of § 1.1702 of this chapter, insert the applicable clause set forth in § 1.1705 of this chapter.

[30 F.R. 1735, Feb. 9, 1965]

§ 7.104-45 Value Engineering Program requirement.

In accordance with the requirements of § 1.1702 of this chapter, insert the clause set forth in § 1.1706 of this chapter.

[30 F.R. 1735, Feb. 9, 1965]

§ 7.104-46 Nonuse of foreign-flag vessels engaged in Cuban and North Vietnam trade.

In accordance with the requirements of § 1.1410, insert the clause set forth therein.

[31 F.R. 9856, July 21, 1966]