(a) The following clause shall be inserted in all fixed-price contracts (except contracts with educational institutions) containing the clause set forth in § 9.203-1:

DATA WITHHOLDING OF PAYMENT (APR. 1962)

If "Subject Data" (as defined in the clause of this contract entitled "Data"), or any part thereof, is not delivered within the time specified by this contract or is deficient upon delivery (including having restrictive markings not specifically authorized by this contract), the Contracting Officer may, until such data is delivered or deficiencies are corrected, withhold payment to the Contractor of ten percent (10%) of the contract price unless a lesser withholding is specified in the schedule. Payments shall not be withheld nor any other action taken pursuant to this clause where the Contractor's failure to make timely delivery or to deliver data without deficiencies arises out of causes beyond the control and without the fault or negligence of the Contractor within the meaning of the clause hereof entitled "Default". The withholding of any amount or subsequent payment thereof to the Contractor shall not be construed as a waiver of any rights accruing to the Government under this contract.

(b) The following clause shall be used in all cost-reimbursement type contracts (except contracts with educational institutions) containing the clause set forth in § 9.203-1:

DATA WITHHOLDING OF PAYMENT (APR. 1962)

If "Subject Data" (as defined in the clause of this contract entitled "Data"), or any part thereof, is not delivered within the time specified by this contract or is deficient upon delivery (including having restrictive markings not specifically authorized by the contract), the Contracting Officer may, until such data is delivered or deficiencies are corrected, withhold payment due the Contractor on account of allowable costs and fixed fee, of ten percent (10%) of the contract price, unless a lesser withholding is specified in the schedule. Payments shall not be withheld nor any other action taken pursuant to this clause where the Contractor's failure to make timely delivery or to deliver data without deficiencies arises out of causes beyond the control and without the fault negligence of the Contractor within the meaning of the clause thereof entitled "Excusable Delays." The withholding of any amount or subsequent payment thereof to the Contractor shall not be construed as a waiver of any rights accruing to the Government under this contract. [27 F.R. 6136, June 29, 1962]

or

Pursuant to Section 414 of the Mutual Security Act of 1954, as amended (22 U.S.C. 1934), the Department of State controls the exportation of data relating to articles designated in the United States Munitions List as arms, ammunition, or munitions of war. (The Munitions List and pertinent procedures are set forth in the International Traffic in Arms Regulations, 22 CFR 121 et seq.) Before authorizing such exportation, the Department of State generally requests comments from the Department of Defense. Each Military Department will, on request of the Office of the Assistant Secretary of Defense (International Security Affairs), submit comments thereon as the basis for a Department of Defense reply to the Department of State. Such comments will be prepared in the light of the following excerpt from the International Traffic in Arms

Regulations.

§ 124.04 Required provisions in agreements. (a) Manufacturing license or technical assistance agreements should define in precise terms the following:

(1) The equipment and technology involved;

(2) The scope of the information to be furnished;

(3) The period of duration of the agreement;

(4) Statement of ownership of equipment and special tools involved which would be made available in connection with the agreement. In lieu of inclusion as an integral part of the agreement, the applicant may submit this information in the form of an attachment or enclosure to the agreement submitted for review.

(b) (1) It is the policy of the United States Government not to pay or allow to be paid in connection with purchases made with Mutual Security Program funds, a charge for patent rights in which it holds a royalty-free license, or for technical data which it has a right to use and disclose to others for purposes of the Mutual Security Program, or which are in the public domain, or with respect to which it has been placed in possession without restriction upon their use and disclosure to others. Reasonable charges for reproduction, handling, mailing, and other similar administrative costs do not fall within this policy.

(2) Pursuant to the above policy (subparagraph (1) of this paragraph) agree

ments shall be written in such a way as to provide that (i) purchases of items by or for the United States Government, or with funds derived through the Mutual Security Program, will not include a charge (a) for technical data in the possession of the United States Government, or in which the United States Government has a right to possession, and regarding which there is no prohibition against use by the United States Government and disclosure to others and (b) for royalties or amortization for patents or inventions in which the United States Government holds a royalty-free license; and (ii) the license rights transferred by such agreements will be subject to existing rights of the United States Government. [27 F.R. 8874, Sept. 6, 1962]

§ 9.304-2 Review of agreements.

CODIFICATION: § 9.304-2 was amended in the following respects, 27 F.R. 8874, Sept. 16, 1962:

1. In paragraph (a), the reference "§ 124.3 of the International Traffic in Arms Regulations" was changed to "§ 124.04 of the International Traffic in Arms Regulations".

2. In paragraph (b)(1), the reference "requirements of § 124.3 (b)" was changed to "requirements of § 124.04(b)".

3. In paragraph (c) (2), the reference "in accordance with § 124.3(b)" was changed to "§ 124.04 (b)".

Bid guarantee means a form of security accompanying a bid as assurance that the bidder (a) will not withdraw his bid within the period specified therein for acceptance, and (b) will execute a written contract and furnish such bonds as may be required within the period specified in the bid (unless a longer period is allowed) after receipt of the specified forms. [26 F.R. 2615, Mar. 28, 1961] § 10.102 Bid guarantees. [26 F.R. 2615, Mar. 28, 1961]

§ 10.102-1 Applicability to negotiated

Bid guarantees shall not be required unless the invitation for bids specifies that the contract must be supported by a performance bond or by performance and payment bonds. In no event shall a bid not in excess of $2,000 be required to be supported by a bid guarantee (see § 10.102-4(a)(1)).

[26 F.R. 2615, Mar. 28, 1961]

§ 10.102-3 Amount required.

(a) Whenever a bid guarantee is deemed necessary, the contracting officer shall determine the percentage (or amount) which in his best judgment,

when applied to the bid price, will produce a bid guarantee amount adequate to protect the Government from loss should the successful bidder fail to furnish the required performance bond or performance and payment bonds. The percentage determined shall be not less than 20 percent of the bid price except that the maximum amount required shall be $3,000,000.

(b) The penal sum of a bid bond may be expressed as a specified percentage of the bid price. In this fashion, the bid bond may be written by the surety before the bidder's final determination of his bid price.

[26 F.R. 2615, Mar. 28, 1961] § 10.102-4

sions.

Invitation for bids provi

(a) Where a bid guarantee is determined to be necessary, the invitation for bids shall contain (1) a statement requiring that a bid guarantee be submitted with any bid in excess of $2,000 and containing such details as are necessary to enable bidders to determine the proper amount of bid guarantee to be submitted; and (2) the following provision:

BID GUARANTEE (JAN. 1961)

Failure to furnish a required bid guarantee in the proper amount, by the time set for opening of bids, may be cause for rejection of the bid.

A bid guarantee may be in the form of a bid bond, postal money order, certified check, cashier's check, irrevocable letter of credit or, in accordance with Treasury Department regulations, bonds or notes of the United States. Bid guarantees, other than bid bonds, will be returned (1) to unsuccessful bidders as soon as practicable after the opening of bids, and (2) to the successful bidder upon execution of such further contractual documents and bonds as may be required by the bid as accepted.

If the successful bidder withdraws his bid within the period specified therein for acceptance (60 days if no period is specified) or, upon acceptance thereof by the Government, fails to enter into the contract and give bonds within the time specified (10 days if no period is specified) after the forms are presented to him, he shall be liable for any difference by which the cost of procuring the work exceeds the amount of his bid, and the bid guarantee shall be available toward offsetting such difference.

(b) The requirement for the provision in paragraph (a)(2) of this section is met where Standard Form 22 (Instructions to Bidders (Construction Contracts)) is used in accordance with

§§ 16.401-1(e) and 16.401–3 of this chapter.

(c) The provisions required by paragraph (a)(2) of this section may be appropriately modified in negotiated contracts.

[26 F.R. 2615, Mar. 28, 1961]

§ 10.102-5 Failure to submit proper bid

guarantee.

Where an invitation for bids requires that bids be supported by a bid guarantee, noncompliance with such requirement will require rejection of the bid, except that rejection of the bid is not required in these situations:

(a) where only a single bid is received (in such cases the purchasing activity may or may not require the furnishing of the bid guarantee before award);

(b) where the amount of the bid guarantee submitted, though less than the amount required by the invitation for bids, is equal to or greater than the difference between the price stated in the bid and the price stated in the next higher acceptable bid;

(c) where the bid guarantee is received late and the late receipt may be waived under the rules established in § 2.303 of this chapter for consideration of late bids; and

(d) where an otherwise adequate bid guarantee becomes inadequate as a result of the correction of a mistake in bid under § 2.406 of this chapter, if the bidder will increase the amount of the bid guarantee in proportion to the authorized bid correction.

[26 F.R. 2615, Mar. 28, 1961]

§ 10.103-1 Performance bonds for contracts other than construction contracts.

(b) *

(2) Where the circumstances applicable to a particular procurement are such that, for financial reasons a performance bond is necessary to protect the interests of the Government. See for example, § 1.1602(c) (3) of this chapter.

[Subparagraph (2) amended, 27 F.R. 11660, Nov. 27, 1962]

(c) Subject to the general policy stated in paragraph (a) of this section, determinations that performance bonds will be required in specified classes of cases (e.g. for particular types of supplies or services) may be made (1) for the

Army by the Director and Deputy Director of Procurement and Production, Army Materiel Command; (2) for the Navy, by the Chief of Naval Material; and (3) for the Air Force, by the Deputy Chief of Staff, Systems and Logistics; and (4) for the Defense Supply Agency, by the Executive Director, Procurement and Production. A copy of each such determination covering a class of cases shall be forwarded to the Office of Assistant Secretary of Defense (Installations and Logistics) for information.

[Paragraph (c) amended, 28 F.R. 4891, May 16, 1963]

(d) Subcontracts. If a contracting officer requires a contractor to obtain payment bonds from his subcontractors, such payment bonds shall not be executed on Standard Form 25A or Standard Form 27A. The suggested format set forth in § 16.805 (k) of this chapter is authorized and may be adapted to fit specific cases.

[Paragraph (d) added, 28 F.R. 12571, Nov. 23, 1963]

Subpart B-Sureties on Bonds § 10.201

General requirements of sure

ties. Every bond required or used in connection with a contract for supplies, services, or construction shall be supported by good and sufficient surety (corporate or individual) except as provided in § 10.202. In connection with contracts for supplies, services, or construction to be delivered or performed in the United

States, its possessions (other than the Canal Zone), or Puerto Rico:

(a) Invitations for bids or requests for proposals shall not require that only corporate sureties may be furnished or that a particular corporate surety be furnished, except as may be otherwise specifically provided (e.g., position schedule bonds may be obtained only from corporate sureties); and

(b) Any corporate surety offered for a bond furnished the Government, or furnished pursuant to a Government contractual requirement, where the contracting officer has authority to approve the sufficiency of the surety, must appear on the Treasury Department List (TD Circular 570) and the amount of the bond must not be in excess of the underwriting limits stated in that list. In connection with contracts to be performed in the Canal Zone, corporate Panamanian surety companies which are acceptable on bonds required by the Panama Canal Company may be accepted in addition to the corporate sureties appearing on the Treasury List. The acceptability of Panamanian sureties shall be subject to the conditions and restrictions (including any requirement for security deposits) similar to those imposed by the Panama Canal Company, and to a determination by the contracting officer that the amount of the bond is commensurate with the underwriting capacity of the surety. For contracts to be performed in a foreign country, sureties not appearing on Treasury Department Circular 570 are acceptable if it is determined by the contracting officer that it is impracticable for the contractor to use Treasury listed sureties.

[28 F.R. 12571, Nov. 23, 1963] Prior Amendments 1963: 28 F.R. 4891, May 16.

§ 10.202 Options in lieu of sureties.

Any one or more of the following types of security listed below may be deposited by the contractor in lieu of furnishing corporate or individual sureties on bonds. Any such security accepted by the contracting officer shall be promptly turned over to the disbursing officer concerned for Army, Navy, and Defense Supply Agency contracts, and to the accounting and finance officer concerned for Air Force contracts, or when United States bonds or notes are involved, they shall be deposited as provided in

§ 10.202-1. Any such security or its equivalent shall be returned to the contractor when the obligation of the bond has by its terms ceased.

[27 F.R. 11660, Nov. 27, 1962]

§ 10.202-2

Certified

checks, bank drafts, money orders, or currency.

Any person required to furnish a bond has the option, in lieu of furnishing surety or sureties thereon, of depositing a certified or cashier's check, a bank draft, a Post Office money order, or currency, in an amount equal to the penal sum of the bond. Certified or cashier's checks, bank drafts, or Post Office money orders shall be drawn to the order of the Treasurer of the United States.

[27 F.R. 8874, Sept. 6, 1962]

Subpart D-Insurance Under Fixed Price Contracts

§ 10.403 Workmen's compensation in

(2) The Government need not assume the risk of damage to, or loss or destruction of, aircraft, as provided by the foregoing clause, if the best estimate of premium costs to be included in the contract price for insurance coverage for such damage, loss, or destruction at any plant or facility is less than $500. If it is determined not to assume such risks, the foregoing clause shall not be made a part of the contract. In such cases, however, if performance of the contract is expected to involve the flight of Government-furnished aircraft, the sub

The clause set forth in § 10.403 shall be included in all public work contracts as described in § 10.403 to be performed outside the United States.

[Last sentence amended, 27 F.R. 11660, Nov. 27, 1962]

§ 10.504 Aircraft-flight risk.

(a) Cost-reimbursement type contracts for the development, production, modification, maintenance, or overhaul of aircraft, or otherwise involving the furnishing of aircraft to the contractor by the Government, shall, except as provided in paragraph (b) of this section, include the following clause.

FLIGHT RISKS (Nov. 1961)

(a) Notwithstanding any other provision of this contract, and particularly subparagraph (f)(1) of the Government Property clause and paragraph (c) of the InsuranceLiability to Third Persons clause, the Contractor shall not (1) be relieved of liability for, damage to, or loss or destruction of, aircraft sustained during flight, or (11) be reimbursed for liabilities to third persons for loss or of damage to property, or for death or bodily injury, which are caused by aircraft during flight, unless the flight crew members have previously been approved in writing by

(b) For the purpose of this clause:

(1) Unless otherwise specifically provided in the Schedule, the term "aircraft" means any aircraft, whether furnished by the Contractor under this contract (either before

1 Insert in contracts of the Department of the Army, the words "the Contracting Offcer," and insert, in contracts of the Department of the Navy or the Department of the Air Force, the activity designated in accordance with Departmental procedures.