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.

The Con

(d) Property administration. tractor 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 Govern

ment shall replace such items or the of tractor shall make such repair of the propert as the Government directs: Provided, ever, That if the Contractor cannot such repair within the time required. Contractor shall dispose of such property the manner directed by the Contracting ficer. The contract price includes no cus pensation to the Contractor for the f formance of any repair or replacement which the Government is responsible, an equitable adjustment will be made any contractual provisions affected by s repair or replacement of Government po erty made at the direction of the Gove ment, in accordance with the proced provided for in the "Changes" clause of contract. Any repair or replacement which the Contractor is responsible un the provisions of this contract shall be complished by the Contractor at his expense.

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

(h) Access. The Government, and persons designated by it, shall at all reas able times have access to the premi wherein any Government property is locat for the purpose of inspecting the Gove ment property.

(1) Final accounting and disposition Government property. Upon the complet of this contract, or at such earlier dates may be fixed by the Contracting Officer, Contractor shall submit, in a form accepta to the Contracting Officer, inventory sche ules covering all items of Government proj erty not consumed in the performance of contract (including any resulting scrap) not theretofore delivered to the Governme and shall prepare for shipment, deliver 1.03 origin, or dispose of the Government pro erty, as may be directed or authorized by Contracting Officer. The net proceeds of such disposal shall be credited to the c tract price or shall be paid in such oth manner as the Contracting Officer may dire

(1) Restoration of Contractor's premi Unless otherwise provided herein, the Go ernment:

(1) May abandon any Government pro erty in place, and thereupon all obligatio of the Government regarding such abat doned property shall cease; and

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

) Communications.

communica

All 3 issued pursuant to this clause shall be writing or in accordance with the "Manfor Military Standard Requisitioning and e Procedure (MILSTRIP) for Defense tractors" (Appendix H, Armed Services curement Regulation).

D) In negotiated fixed-price concts for which the price is not based on adequate price competition, (2) blished catalog or market prices of mercial items sold in substantial ntities to the general public (see 807-1(b)), or (3) prices set by law or ulation, substitute the following for agraph (g) of the clause in paraph (a) of this section:

Risk of loss. (1) Except for loss, dection or damage resulting from a failure he Contractor due to willful misconduct ack of good faith of any of the Contrac

managerial personnel as defined ein, to maintain and administer the prom for the maintenance, repair, protection preservation of the Government property required by paragraph (f) hereof, and ept as specifically provided in the clause clauses of this contract designated in the edule, the Contractor shall not be liable loss or destruction of or damage to the vernment property provided under this tract:

1) Caused by any peril while the prop7 is in transit off the Contractor's mises; or

ii) Caused by any of the following perils le the property is on the Contractor's or contractor's premises, or on any other mises where such property may properly located, or by removal therefrom because any of the following perils

A) Fire; lightning, windstorm, cyclone, mado, hail; explosion; riot, riot attending strike, civil commotion; vandalism and licious mischief; sabotage; aircraft or obts falling therefrom; vehicles running on d or tracks, excluding vehicles owned or erated by the Contractor or any agent or ployee of the Contractor; smoke; sprinkler kage; earthquake or volcanic eruption; od, meaning thereby rising of a body of er; nuclear reaction, nuclear radiation or ioactive contamination; hostile or ware action, including action in hindering, mbating, or defending against an actual, peding or expected attack by any governnt or sovereign power (de jure or de to), or by any authority using military, wal, or air forces; or by an agent of any ch government, power, authority, or forces;

(B) Other peril, of a type not listed above, such other peril is customarily covered by Surance (or by a reserve for self-insurce) in accordance with the normal pracce of the Contractor, or the prevailing prace 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 (11) 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;

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

(iii) 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;

(11) 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 such property (other than that which is permitted to be sold) shall be returned to the Government in as good condition as when received by the Contractor in connection with this contract, or as repaired under paragraph (f) above.

(6) In the event the Contractor is reimbursed or compensated for any loss or destruction of or damage to the Government property, caused by an excepted peril, he shall equitably reimburse the Government. The Contractor shall do nothing to prejudice the Government's rights to recover against third parties for any such loss, destruction or damage and, upon the request of the Contracting Officer, shall at the Government's expense, furnish to the Government all reasonable assistance and cooperation (including the prosecution of suit and the execution of instruments of assignment in favor of the Government) in obtaining recovery. In addition, where a subcontractor has not been relieved from liability for any loss or destruction of or damage to the Government property, the Contractor shall enforce the liabil

ity of the subcontractor for such lo destruction of or damage to the Govern property for the benefit of the Govern

(7) If this contract is for the developme production, modification, maintenance overhaul of aircraft, or otherwise invol the furnishing of aircraft by the Governme the "Ground and Flight Risk" clause of contract shall control to the extent it applicable, in the case of loss or destruct of, or damage to, aircraft.

[30 F.R. 1744, Feb. 9, 1965, as amended 30 F.R. 6013, Apr. 29, 1965; 30 FR. 191 Sept. 21, 1965; 31 F.R. 13336, Oct. 14, 1966) Government property cla

§ 13.703

for cost-reimbursement contracts. The following clause shall be used cost-reimbursement contracts for s plies and services (except contracts experimental, developmental, or resear work with educational or nonprofit ins tutions, where no profit to the contrac is contemplated) under which a Depar ment is to furnish to the contractor, the contractor is to acquire, Governme property.

GOVERNMENT PROPERTY

(COST-REIMBUS

MENT) (JUNE 1965)

(a) Government-furnished property. Government shall deliver to the Contract for use in connection with and under terms of this contract, the property descri as Government-furnished property in Schedule or specifications, together w such related data and information as Contractor may request and as may reaso ably be required for the intended use of su property (hereinafter referred to as “Go ernment-furnished property"). The delive or performance dates for the supplies or ser ices to be furnished by the Contractor und this contract are based upon the expectatio that Government-furnished property suitab for use will be delivered to the Contractor the times stated in the Schedule or, if so stated, in sufficient time to enable Contractor to meet such delivery or perfor ance dates. In the event that Government furnished property is not delivered to Contractor by such time or times, the Co tracting Officer shall, upon timely writte request made by the Contractor, make a termination of the delay, if any, occasion the Contractor and shall equitably ad the estimated cost, fixed fee, or delivery performance dates, or all of them, and other contractual provisions affected by an such delay, in accordance with the proc dures provided for in the clause of this co tract entitled "Changes." In the event the

2 This subparagraph may be omitted whe it is clearly inapplicable and shall be delet when the Ground and Flight Risk clause omitted pursuant to § 10.404 (b) (2) of the chapter.

nment-furnished property is received e Contractor in a condition not suitable he intended use, the Contractor shall, receipt thereof notify the Contracting r of such fact and, as directed by the acting Officer, either (i) return such rty at the Government's expense or wise dispose of the property or (ii) efTepairs or modifications. Upon compleof (1) or (ii) above, the Contracting r upon written request of the Contrachall equitably adjust the estimated cost, fee, or delivery or performance dates, or them, and any other contractual proviaffected by the return or disposition, or epair or modification in accordance with procedures provided for in the clause of contract entitled "Changes." The fore

provisions for adjustment are excluand the Government shall not be liable it for breach of contract by reason of any in delivery of Government-furnished arty or delivery of such property in a ition not suitable for its intended use. ) Changes in Government-furnished erty. (1) By notice in writing, the Coning Officer may (1) decrease the propfurnished or to be furnished by the rnment under this contract, or (ii) subte other Government-owned property roperty to be furnished by the Governt, or to be acquired by the Contractor for Government, under this contract. The ractor shall promptly take such action as Contracting Officer may direct with ret to the removal and shipping of propcovered by such notice.

) In the event of any decrease in or titution of property pursuant to parah (1) above, or any withdrawal of authoro use property provided under any other ract or lease, which property the Governit had agreed in the Schedule to make lable for the performance of this cont, the Contracting Officer, upon the writrequest of the Contractor (or, if the subation of property causes a decrease in the of performance, on his own initiative), d equitably adjust such contractual proons as may be affected by the decrease, stitution or withdrawal, in accordance 1 the procedures provided for in the anges" clause of this contract.

) Title. Title to all property furnished the Government shall remain in the Govnent. Title to all property purchased by Contractor, for the cost of which the tractor is entitled to be reimbursed as a ct item of cost under this contract, shall to and vest in the Government upon very of such property by the vendor. e to other property, the cost of which is abursable to the Contractor under the tract, shall pass to and vest in the Govment upon (1) issuance for use of such perty in the performance of this contract, (11) commencement of processing or use such property in the performance of this tract, or (iii) reimbursement of the cost reof by the Government in whole or in

part, whichever first occurs. All Government-furnished property, together with all property acquired by the Contractor title to which vests in the Government under this paragraph, are subject to the provisions of this clause and are hereinafter collectively referred to as "Government property". Title to the 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 therof, 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 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 so as to assure its full availability and usefulness for the performance of this contract. The Contractor shall take all reasonable steps to comply with all appropriate directions or instructions which the Contracting Officer may prescribe as reasonably necessary for the protection of Government property.

(g) Risk of loss. (1) The Contractor shall not be liable for any loss of or damage to the Government property, or for expenses incidental to such loss or damage, except that the Contractor shall be responsible for any such loss or damage (including expenses incidental thereto):

(1) Which results from willful misconduct or lack of good faith on the part of any one of the Contractor's directors or officers, or on the part of any of his managers, superintendents, or other equivalent representatives, who has supervision or direction of

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

(B) All or substantially all of the Contractor's operations at any one plant or separate location, in which this contract is being performed; or

present unusual problems in relation to the time required for their preparation for shipment, installation, and preparation for operation: Provided, That the Office of Emergency Planning has approved the general program involving such equipment;

(3) Government production and research property left in place or installed on contractor-owned property for mobilization or future production purposes of the Government: Provided, That a rental charge computed in accordance with paragraph (a) of this section shall apply to so much of such property or its capacity as may be used or authorized for use; or

(4) Such other Government production and research property as may be otherwise excepted by the Office of Emergency Planning.

§ 13.405 Non-Government use.

Prior approval of the Office of Emergency Planning shall be obtained through the Assistant Secretary of Defense (Installations and Logistics) before more than 25 percent non-Government use of Government-owned machinery and tools (Production Equipment Code Nos. 3411341999 and 3441-34490) having a unit acquisition cost of $500 or more may be authorized. For purposes of this paragraph, use for a foreign government authorized under § 13.406 is Government

use.

§ 13.406 Rent-free use of Government production and research property on work for foreign governments.

(a) It is the policy of the Department of Defense to encourage the maximum feasible sales of supplies manufactured or services performed in the United States to friendly foreign governments or organizations thereof. Rent-free use of Government production and research property to promote this policy should be authorized when the requirements of paragraph (b) of this section are satisfied. Requests made for such use shall be processed as expeditiously as possible.

(b) Upon the request of a foreign government, or a contractor certifying that he is acting on behalf of a foreign government, the Secretary or his designee cognizant of Government production and research property located in the United States, its possessions, or Puerto Rico, may give written approval for its use without charge on contracts of foreign

governments or subcontracts thereuna Cha

if:

(1) The foreign government would authorized to place the contract with Department concerned under the Fore Assistance Act of 1961, as amended. such use is authorized by an agreem with the foreign government;

(2) The foreign government's plac ment of the contract directly with contractor is consistent with the be interest of the United States;

(3) It appears that the foreign go ernment will place the contract with contractor whether or not such use authorized, or that no competitive pr ing advantage will accrue to the co tractor by virtue of such use;

(4) The contractor agrees that charge for the use of such property be included in the price charged foreign government under the contras and

(5) Such use will not interfere w foreseeable requirements of the Unit States.

§ 13.407

Use of Government producti and research property without charg by nonprofit organizations.

The head of a procuring activity or designee may authorize the contract officer cognizant of Government produ tion and research property in the posse sion of a nonprofit organization to a prove the use of such property by sud organization without charge, for r search, development or educational work if:

(a) Such use is directly or indirect in the national interest;

(b) Such use is not for the direct bene fit of a profit-making organization; ar (c) The Government receives some di rect benefit from such use (such bene fit shall, at a minimum, include the furnishing of a report by the contractor of the work for which the property was pro vided, and may include rights to use the results of the work without charge, any other benefit that may be appro priate).

Subpart E-Competitive Advantage § 13.501 Policy.

It is the policy of the Department a Defense to eliminate the competitive advantage that might otherwise arise from the acquisition or use of Govern ment production and research property