As used throughout this subpart, the terms "fixed-price supply contract" shall mean any contract (a) entered into either by formal advertising or by negotiation, other than (1) purchase orders (but see §§ 7.104-15 and 7.104-16), (2) short form negotiated supply contracts (see § 16.202(b) of this chapter), (3) letter contracts, (4) notices of award, and (5) supplemental agreements to contracts or purchase orders, which do not effect new procurement; (b) at a fixed price (with or without provision for price redetermination, escalation or

Contracts subject in part to incentive price revision.

When a contract is partly a firm fixedprice contract and partly a fixed-price incentive contract, the clauses required for both types of contracts shall be included. When any provision is applicable only to firm fixed-price items, or only to items subject to incentive price revision, such provision shall be so labeled.

[28 F.R. 2097, Mar. 5, 1963] § 7.103-1

Definitions.

DEFINITIONS (FEB. 1962)

As used throughout this contract, the following terms shall have the meanings set forth below:

(a) The term "head of the agency" or "Secretary" means the Secretary, the Under Secretary, any Assistant Secretary, or any other head or assistant head of the executive or military department or other Federal agency; and the term "his duly authorized representative" means any person or persons or board (other than the Contracting Officer) authorized to act for the head of the agency or the Secretary.

(b) The term "Contracting Officer" means the person executing this contract on behalf of the Government, and any other offcer or civilian employee who is a properly designated Contracting Officer; and the term includes, except as otherwise provided in this contract, the authorized representative of a Contracting Officer acting within the limits of his authority.

(c) Except as otherwise provided in this contract, the term "subcontracts" includes purchase orders under this contract.

Additional definitions may be included provided they are not inconsistent with the foregoing clause or the provisions of this subchapter.

[27 F.R. 3450, Apr. 11, 1962]

§ 7.103-2 Changes.

CHANGES (JAN. 1958)

The Contracting Officer may at any time, by a written order, and without notice to the sureties, make changes, within the general scope of this contract, in any one or more of the following: (i) Drawings, designs, or specifications, where the supplies to be furnished are to be specially manufactured for the Government in accordance therewith; (ii) method of shipment or packing; and (iii) place of delivery. If any such change causes an increase or decrease in the cost of, or the time required for the performance of any part of the work under this contract, whether changed or not changed by any such order, an equitable adjustment shall be made in the contract price or delivery schedule, or both, and the contract shall be modified in writing accordingly. Any claim by the Contractor for adjustment under this clause must be asserted within 30 days from the date or receipt by the Contractor of the notification of change, provided, however, that the Contracting Officer, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract. Where the cost of property made obsolete or excess as result of a change is included in the Contractor's claim for adjustment, the Contracting Officer shall have the right to prescribe the manner of disposition of such property. Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes". However, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed.

In the foregoing clause, the period of "30 days" within which any claim for adjustment must be asserted may be varied in accordance with Departmental procedures. In accordance with 10 U.S.C. 2306 (f), prior to the pricing of any change order that is expected to exceed $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 shall require the contractor to furnish a Certificate of Current Cost or Pricing Data (see § 3.807-4 of this chapter) and shall assure that the contract includes or is modified to include a defective pricing data clause (see § 7.104-29). [28 F.R. 4885, May 16, 1963]

Prior Amendments

1963: 28 F.R. 2097, Mar. 5.

(a) All supplies (which term throughout this clause includes without limitation raw asmaterials, components, intermediate semblies, and end products) shall be subject to inspection and test by the Government, to the extent practicable at all times and places including the period of manufacture, and in any event prior to acceptance.

(b) In case any supplies or lots of supplies are defective in material or workmanship or otherwise not in conformity with the requirements of this contract, the Government shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction. Supplies or lots of supplies which have been rejected or required to be corrected shall be removed or, if permitted or required by the Contracting Officer, corrected in place by and at the expense of the Contractor promptly after notice, and shall not thereafter be tendered for acceptance unless the former rejection or requirement of correction is disclosed. If the Contractor fails promptly to remove such supplies or lots of supplies which are required to be removed or promptly to replace or correct such supplies or lots of supplies, the Government either (1) may by contract or otherwise replace or correct such supplies and charge to the Contractor the most occasioned the Government thereby; or (ii) may terminate this contract for default as provided in the clause of this contract entitled "Default." Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contracting Officer may require the delivery of such supplies at a reduction in price which is equitable under the circumstances. Failure to agree to such reduction of price shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes."

(c) If any inspection or test is made by the Government on the premises of the Contractor or a subcontractor, the Contractor without additional charge shall provide all reasonable facilities and assistance for the safety and convenience of the Government inspectors in the performance of their duties. If Government inspection or test is made at a point other than the premises of the Contractor or a subcontractor, it shall be at the expense of the Government except as otherwise provided in this contract; Provided, That in case of rejection the Government shall not be liable for any reduction in value of samples used in connection with such inspection or test. All inspections and tests by the Government shall be performed in such a manner as not to unduly delay the

work. The Government reserves the right to charge to the Contractor any additional cost of Government inspection and test when supplies are not ready at the time such inspection and test is requested by the Contractor or when reinspection or retest is necessitated by prior rejection. Acceptance or rejection of the supplies shall be made as promptly as practicable after delivery, except as otherwise provided in this contract; but failure to inspect and accept or reject supplies shall neither relieve the Contractor from responsibility for such supplies as are not in accordance with the contract requirements nor impose liability on the Government therefor.

(d) The inspection and test by the Government of any supplies or lots thereof does not relieve the Contractor from any responsibility regarding defects or other failures to meet the contract requirements which may be discovered prior to acceptance. Except as otherwise provided in this contract, acceptance shall be conclusive except as regards latent defects, fraud, or such gross mistakes as amount to fraud.

(e) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the supplies hereunder. Records of all inspection work by the Contractor shall be kept complete and available to the Government during the performance of this contract and for such longer period as may be specified elsewhere in this contract.

(b) The clause set forth in paragraph (a) of this section shall be included in all fixed-price incentive contracts except that paragraph (b) thereof shall be deleted and the following substituted:

(b) In case any supplies or lots of supplies are defective in material or workmanship or otherwise not in conformity with the requirements of this contract, the Government shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction. Supplies or lots of supplies which have been rejected or required to be corrected shall be removed or, if permitted or required by the Contracting Officer, corrected in place by the Contractor promptly after notice, and shall not thereafter be tendered for acceptance unless the former rejection or requirement of correction is disclosed. Prior to establishment of the total final price, the cost of replacement or correction shall be considered as a cost incurred, or to be incurred, for the purpose of negotiating the total final negotiated cost under the incentive price revision clause of this contract. After the establishment of the total final price, all replacements or corrections made by the Contractor shall be accomplished at no increase in the total final price. If the Contractor fails either promptly to remove such supplies or lots of supplies, which are required to be removed, or prompt

ly to replace or correct such supplies or lots of supplies, the Government either (i) may by contract or otherwise replace or correct such supplies, and equitably reduce any target price, or, if it is established, the total final price of this contract; or (ii) may terminate this contract for default as provided in the clause of this contract entitled "Default." Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contracting Officer may require the delivery of such supplies, and equitably reduce any target price or, if it is established, the total final price of this contract. Failure to agree to such equitable reduction shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." (Nov. 1962)

(c) The clause set forth in parargraph (a) of this section shall be included in contracts utilizing either the clause in § 7.109-3 or that in § 7.109-4, except that paragraph (b) shall be deleted and the following substituted:

(b) In case any supplies or lots of supplies are defective in material or workmanship or otherwise not in conformity with the requirements of this contract, the Government shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction. Supplies or lots of supplies which have been rejected or required to be corrected shall be removed or, if permitted or required by the Contracting Officer, corrected in place by the Contractor promptly after notice, and shall not thereafter be tendered for acceptance unless the former rejection or requirement of correction is disclosed. Prior to the establishment of the redetermined prices, the cost of replacement, or correction shall be considered as a cost incurred, or to be incurred, for the purpose of negotiation to redetermine the fair and reasonable contract prices under the price redetermination clause of this contract. After the establishment of the redetermined prices all replacements shall be accomplished at no increase in the redetermined prices. If the Contractor fails either promptly to remove such supplies or lots of supplies which are required to be removed, or promptly to replace or correct such supplies or lots of supplies, the Government either (1) may by contract or otherwise replace or correct such supplies and equitably reduce the initial contract prices, if it is established, the redetermined prices of this contract, or (ii) may terminate this contract for default as provided in the clause of this contract entitled "Default." Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contracting Officer may require the delivery of such supplies, and equitably reduce the initial contract price or, if it is established, the redetermined prices of this contract. Failure to agree to

§ 7.103-8

Assignment of claims.

ASSIGNMENT OF CLAIMS (FEB. 1962)

(a) Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), if this contract provides for payments aggregating $1,000 or more, claims for monies due or to become due the Contractor from the Government under this contract may be assigned to a bank, trust company, or other financing institution, including any Federal lending agency, and may thereafter be further assigned and reassigned to any such institution. Any such assignment or reassignment shall cover all amounts payable under this contract and not already paid, and shall not be made to more than one party, except that any such assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in such financing. Unless otherwise provided in this contract, payments to an assignee of any monies due or to become due under this contract shall not, to the extent provided in said Act, as amended, be subject to reduction or set-off.

(b) In no event shall copies of this contract or any plans, specifications, or other similar documents relating to work under this contract, if marked "Top Secret," "Secret," or "Confidential," be furnished to any assignee of any claim arising under this contract or to any other person not entitled to receive the same. However, a copy of any part or all of this contract so marked may be furnished, or any information contained therein may be disclosed, to such assignee upon the prior written authorization of the Contracting Officer.

Where Standard Form 32 is used, the Form need not be changed to delete the parenthetical sentence at the end of paragraph (a) of this clause.

CODIFICATION: § 7.103-8 was amended in the following respects, 27 F.R. 3450, Apr. 11, 1962:

1. The clause was amended.

2. An undesignated paragraph beginning "Where Standard Form 32 is used" was added to the section.

§ 7.103-12 Disputes.

(b) • In accordance with departmental procedures, the foregoing clauses may be modified to provide for intermediate appeal in oversea areas.

(c) In accordance with departmental procedures, the foregoing clauses may be modified to provide for intermediate appeal in overseas areas and in Alaska and Hawaii. Such modification may provide that decisions rendered pursuant thereto may be final and conclusive upon the parties, to the extent permitted by law, when the amount involved in the appeal is $50,000 or less.

CODIFICATION: § 7.103-12 was amended in the following respects:

1. In paragraph (b), the last sentence was amended, 27 F.R. 11653, Nov. 27, 1962.

2. Former paragraph (c) was deleted, 27 F.R. 11653, Nov. 27, 1962. Subsequently, a new paragraph (c) was added, 28 F.R. 12570, Nov. 23, 1963.

§ 7.103-13 Renegotiation.

*

(b) A renegotiation clause is not required on contracts with foreign governments or agencies thereof. Except in such contracts, one of the clauses set forth in subparagraphs (1) or (2) of this paragraph shall be used in lieu of the clause set forth in paragraph (a) of this section.

(1) Insert the following clause in contracts which are to be wholly performed outside the United States, its possessions, and Puerto Rico by a contractor who is not engaged in a trade or business in the United States and is:

(i) An individual who is not a national of the United States; or

(ii) A partnership or joint venture in which individuals who are not nationals of the United States or corporations which are not created by, or organized under the laws of the United States or any state or possession thereof or Puerto Rico are entitled to more than 50 percent of the profits; or

(iii) A corporation (other than a corporation created by, or organized under the laws of the United States or any State or possession thereof or Puerto Rico) more than 50 percent of the voting stock of which is owned directly or indirectly by persons described in subdivisions (i) and (ii) of this subparagraph: RENEGOTIATION (OCT. 1959)

(a) This contract has been determined to be exempt from the provisions of the Renegotiation Act of 1951 (50 U.S.C. App. 1211, et seq.), as amended, since it is intended to be wholly performed outside the United States and the Contractor is not engaged in a trade or business in the United States and is:

(1) An individual who is not a national of the United States;