CONTRACT CLAUSES

SECURITY (SEPTEMBER 1962)

If the subject matter of this contract is classified in the interest of national security, or if it appears that performance on the contract will require access to classified information, the Contractor shall be governed by a Department of Defense Security Agreement (DD Form 441), and the attachment thereto, "The Industrial Security Manual for Safeguarding Classified Information." Further, if information or material is developed pursuant to this contract which appears to require protection in the interest of national security, the Contractor shall notify NASA immediately in order that the appropriate classification category may be assigned, and a Security Agreement executed, if necessary.

7.350-7 Patent Rights. Insert the "Patent Rights (Small Business Firm or Nonprofit Organization)" clause of 9.108–5 if appropriate (see 9.108–4(a)(1).)

7.350-8 Disputes. Insert the clause set forth in 7.103-12.

7.350-9 Termination at the Option of the Government.

TERMINATION AT THE OPTION OF THE GOVERNMENT (SEPTEMBER 1962)

The performance of work under this contract may be terminated by the Government in whole or in part, whenever the Contracting Officer shall determine that such action is in the best interest of the Government. If this contract is so terminated, fair compensation for work performed will be provided for the Contractor.

7.350-10 Authorization and Consent. Insert the clause set forth in 9.102(b).

7.350-11 Notice and Assistance Regarding Patent and Copyright Infringement. Insert the clause set forth in 9.104.

7.350-12 Buy American Act and Trade Agreements Act. Insert the clause set forth in 6.104-5. 7.350–13 Examination of Records by Comptroller General. Insert the clause set forth in 7.104-15. 7.350-14 Equal Opportunity. In accordance with the provisions of 12.804, insert the appropriate clause set forth therein.

7.350-15 Covenant Against Contingent Fees. Insert the clause set forth in 1.503.

7.350-16 Officials Not To Benefit. Insert the clause set forth in 7.103-19.

7.350-17 Convict Labor. In accordance with Part 12, Subpart 2, insert the clause set forth in 7.104-17.

7.350-18 Audit By National Aeronautics and Space Administration. In accordance with 7.10442(a), insert the clause set forth therein.

7.350-19 Cost Accounting Standards. In accordance with 3.1204, insert the clause set forth in 7.104-55.

7.350-20 Additional Clauses. When circumstances justify it, the clauses prescribed in 7.302, 7.303, and 7.304 may be added to or substituted for the clauses set forth in 7.350-1 through 7.350-19; however, care should be exercised to ensure that there are no inconsistencies. 7.350-21 Clean Air and Water. Insert the clause set forth in 1.2302–2.

7.350-22 Notice of Intent to Disallow or Not Recognize Costs. Insert the clause in 7.203-30 in all fixed-price incentive contracts and contracts providing for price redetermination.

7.350-7

CFR TITLE 41 CHAPTER 18

Subpart 4-Clauses for Cost-Type R&D Contracts

7.400 Scope of Subpart. This Subpart sets forth uniform clauses for use in NASA costreimbursement type research and development contracts as defined in 7.401.

7.401 Applicability. As used throughout this Subpart, the term "cost-reimbursement type research and development contract" means any contract, including letter contracts (except notices of award, contracts placed under Small Purchases Procedures, and amendments or supplemental agreements which do not effect new procurement), which (i) is entered into on a cost, cost-sharing, or cost-plus-a-fixed-fee basis, and (ii) is for experimental, developmental, or research work.

7.402 Required Clauses for Contracts With Fee.

The following clauses shall be inserted in all cost-reimbursement type research and development contracts providing for a fee.

7.402-1 Definitions. Insert the clause set forth in 7.103-1. Additional definitions may be included provided they are not inconsistent with such clause or the provisions of this Regulation. 7.402-2 Limitation of Cost. Insert the following clause, except that in letter contracts insert clause 3 of NASA Form 551-3 set forth in 16.859-4(d).

LIMITATION OF COST (OCTOBER 1969)

(a) It is estimated that the total cost to the Government, exclusive of any fee, for the performance of this contract will not exceed the estimated cost set forth in the Schedule, and the Contractor agrees to use his best efforts to perform the work specified in the Schedule and all obligations under this contract within such estimated cost. If at any time the Contractor has reason to believe that the costs which he expects to incur in the performance of this contract in the next succeeding sixty (60) days, when added to all costs previously incurred, will exceed seventy-five percent (75%) of the estimated cost then set forth in the Schedule, or if at any time the Contractor has reason to believe that the total cost to the Government, exclusive of any fee, for the performance of this contract will be greater or substantially less than the then estimated cost thereof, the Contractor shall notify the Contracting Officer in writing to that effect, giving the revised estimate of such total cost for the performance of this contract.

(b) The Government shall not be obligated to reimburse the Contractor for costs incurred in excess of the estimated cost set forth in the Schedule, and the Contractor shall not be obligated to continue performance under the contract or to incur costs in excess of the estimated cost set forth in the Schedule, unless and until the Contracting Officer shall have notified the Contractor in writing that such estimated cost has been increased and shall have specified in such notice a revised estimated cost which shall thereupon constitute the estimated cost of performance of this contract. When and to the extent that the estimated cost set forth in the Schedule has been increased, any costs incurred by the Contractor in excess of such estimated cost prior to the increase in estimated cost shall be allowable to the same extent as if such costs had been incurred after such increase in estimated cost.

7.402-3 Allowable Cost, Fixed-Fee, and Payment. In accordance with the instructions set forth in 7.203-4(a), insert the clause set forth therein.

7.402-4 Standards of Work. Insert the clause set forth in 7.302-3. 7.402-5 Inspection and Correction of Defects.

INSPECTION AND CORRECTION OF DEFECTS (APRIL 1975)

(a) All work under this contract shall be subject to inspection and test by the Government (to the extent practicable) at all times (including the period of performance) and places, and in any event prior to acceptance. The Contractor shall provide and maintain an inspection system acceptable to the Government covering the work hereunder. The Government, through any authorized representative, may inspect the plant or plants of the Contractor or of any of its subcontractors engaged in the performance of this contract. If any inspection or test is made by the Government on the premises of the Contractor or a subcontractor, the Contractor shall provide and shall require subcontractors to provide all reasonable facilities and assistance for the safety and convenience of the Government inspectors in the performance of their duties. All inspections and tests by the Government shall be performed in such a manner as will not unduly delay the work. Except as otherwise provided in this contract, final inspection and acceptance shall be made at the place of delivery as promptly as practicable after delivery and shall be deemed to have been made no later than ninety (90) days after the date of such delivery, if final acceptance has not been made earlier within such period.

(b) At any time during performance of this contract, but not later than six (6) months (or such other period as may be provided in the Schedule) after acceptance of all the end items (other than designs, drawings, or reports) to be delivered under this contract, the Government may require the Contractor to remedy by correction or replacement, as directed by the Contracting Officer, any failure by the Contractor to comply with the requirements of this contract. Any time devoted to such correction or replacement shall not be included in the computation of the period of time specified in the preceding sentence, except as provided in (d) below. Except as otherwise provided in paragraph (c) below, the

NASA PROCUREMENT REGULATION

7.402-5

CONTRACT CLAUSES

allowability of the cost of any such replacement or correction shall be determined as provided in the clause of this contract entitled "Allowable Cost, Fixed Fee, and Payment," but no additional fee shall be payable with respect thereto. Corrected articles shall not be tendered again for acceptance unless the former tender and the requirement of correction is disclosed. If the Contractor fails to proceed with reasonable promptness to perform such replacement or correction, the Government (i) may by contract or otherwise perform such replacement or correction and charge to the Contractor any increased cost occasioned the Government thereby, or may reduce any fixed fee payable under this contract (or require repayment of any fixed fee theretofore paid) in such amount as may be equitable under the circumstances, or (ii) in the case of articles not delivered, may require the delivery of such articles, and shall have the right to reduce any fixed fee payable under this contract (or to require repayment of any fixed fee theretofore paid) in such amount as may be equitable under the circumstances, or (iii) may terminate this contract for default as provided in the clause of this contract entitled "Termination." Failure to agree to the amount of any such increased cost to be charged to the Contractor or to such reduction in, or repayment of, the fixed fee shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes."

(c) Notwithstanding the provisions of paragraph (b) above, the Government may at any time require the Contractor to remedy by correction or replacement, without cost to the Government, any failure by the Contractor to comply with the requirements of this contract if such failure is due to fraud, lack of good faith, or willful misconduct on the part of any one of the Contractor's directors or officers, or on the part of any of its managers, superintendents, or other equivalent representatives, who has supervision or direction of (i) all or substantially all of the Contractor's business, or (ii) all or substantially all of the Contractor's operations at any one plant or separate location in which this contract is being performed, or (iii) a separate and complete major industrial operation in connection with the performance of this contract. The Government may at any time also require the Contractor to remedy by correction or replacement, without cost to the Government, any such failure caused by one or more individual employees selected or retained by the Contractor after any such supervisory personnel has reasonable grounds to believe that any such employee is habitually careless or otherwise unqualified.

(d) The provisions of paragraph (b) above shall apply to any corrected or replacement end item or component until six (6) months after its acceptance.

(e) The Contractor shall make his records of all inspection work available to the Government during the performance of this contract and for such longer period as may be specified in this contract.

(f) Except as provided in this clause and as may be provided in the Schedule, the Contractor shall have no obligation or liability to correct or replace articles which at the time of delivery are defective in material or workmanship or otherwise not in conformity with the requirements of this contract.

(g) Except as otherwise provided in the Schedule, the Contractor's obligation to correct or replace Governmentfurnished property (which is property in the possession of or acquired directly by the Government and delivered or otherwise made available to the Contractor) shall be governed by the provisions of the clause of this contract entitled "Government Property."

In the foregoing clause, the Words "Task Order" or other suitable designation may be substituted for "Schedule," as appropriate.

7.402-6 Assignment of Claims. In accordance with the requirements in 7.103-8, insert the clause set forth therein.

7.402-7 Examination of Records by Comptroller General. In accordance with 7.104-15, insert the clause set forth therein. In the case of research and development contracts with nonprofit institutions and subcontracts thereunder, and pursuant to procedures approved by the Comptroller General, original documentary evidence in support of costs of the transportation of things will not be required pursuant to said clause.

7.402-8 Subcontracts.

(a) In accordance with the requirements in 23.201-2, and subject to the instructions in (b) and (c), below, insert the following clause.

SUBCONTRACTS (SEPTEMBER 1977)

(a) The Contractor shall give advance notification to the Contracting Officer of any proposed subcontract hereunder which (i) is cost-reimbursement, time and materials, or labor-hour, or (ii) is fixed-price type and exceeds in dollar amount either $25,000 or five percent (5%) of the total estimated cost of this contract, (iii) provides for the fabrication, purchase, rental, installation, or other acquisition of special test equipment having a value in excess of $1,000 or of any items of industrial facilities; or (iv) has experimental, developmental, or research work as one of its purposes.

(b) In the case of a proposed subcontract which (i) is cost-reimbursement, time and materials, or labor-hour which would involve an estimated amount in excess of $10,000, including any fee, (ii) is proposed to exceed $100,000, or (iii) is one of a number of subcontracts under this contract with a single subcontractor for the same or related supplies or services which, in the aggregate are expected to exceed $100,000, the advance notification required by (a) above shall include:

(1) a description of the supplies or services to be called for by the subcontract;

(2) identification of the proposed subcontractor and an explanation of why and how the proposed subcontractor was selected, including the degree of compétition obtained;

(3) the proposed subcontract price, together with the Contractor's cost or price analysis thereof;

7.402-6

CFR TITLE 41 CHAPTER 18

CLAUSES FOR COST-TYPE R&D CONTRACTS

(4) the subcontractor's current, complete, and accurate cost or pricing data and Certificate of Current Cost or Pricing Data when such data and certificate are required by other provisions of this contract to be obtained from the subcontractor; and

(5) identification of the type of subcontract to be used.

(c) The Contractor shall obtain the written consent of the Contracting Officer prior to placing any subcontract for which advance notification is required under (a) above. The Contracting Officer may, in his discretion, ratify in writing any such subcontract; such action shall constitute the consent of the Contracting Officer as required by this paragraph (c). (d) The Contractor agrees that no subcontract placed under this contract shall provide for payment on a cost-plus-apercentage-of-cost basis.

(e) The Contracting Officer may, in his discretion, specifically approve in writing any of the provisions of a subcontract. However, such approval or the consent of the Contracting Officer obtained as required by this clause shall not be construed to constitute a determination of the allowability of any cost under this contract, unless such approval specifically provides that it constitutes a determination of the allowability of such cost.

(f) The Contractor shall give the Contracting Officer immediate notice in writing of any action or suit filed, and prompt notice of any claim made against the Contractor by any subcontractor or vendor which in the opinion of the Contractor, may result in litigation, related in any way to this contract, with respect to which the Contractor may be entitled to reimbursement from the Government.

(g) Notwithstanding (c) above, the Contractor may enter into subcontracts within (i) and (ii) of (a) above, without the consent of the Contracting Officer, if the Contracting Officer has approved in writing the Contractor's procurement system and the subcontract is within the scope of such approval.

(h) The Contractor shall (i) insert in each price redetermination or incentive price revision subcontract hereunder the substance of the "Limitation on Payments" paragraph set forth in the appropriate clause prescribed by paragraph 7.108 of the NASA Procurement Regulation, including subparagraph (4) thereof, modified to omit mention of the Government and reflect the position of the Contractor as purchaser and of the subcontractor as vendor, and to omit that portion of subparagraph (3) thereof relating to tax credits, and (ii) include in each cost-reimbursement type subcontract hereunder a requirement that each price redetermination and incentive price revision subcontract thereunder will contain the substance of the "Limitation on Payments" provision, including subparagraph (4) thereof, modified as outlined in (i) above. (i) To facilitate small business participation in subcontracting under this contract, the Contractor agrees to provide progress payments on the fixed-price types of subcontracts of those subcontractors which are small business concerns, in conformity with the standards for customary progress payments stated in paragraphs 503 and 514 of Appendix E of the NASA Procurement Regulation, as in effect on the date of this contract. The Contractor further agrees that the need for such progress payments will not be considered as a handicap or adverse factor in the award of subcontracts.

(b) In contracts of the types listed in 23.201-2(b), insert the following paragraph (g) in lieu of paragraph (g) of the clause set forth in (a) above.

(g) Notwithstanding (c) above, the Contractor may enter into subcontracts within (i), (ii), or (iii) of (a) above without the prior written consent of the Contracting Officer, if the Contracting Officer has in writing approved the Contractor's procurement system and the subcontract is within the scope of such approval. (AUG 1969)

(c) In contracts without fee with educational institutions, change “(iii)” in paragraph (a) of the clause in (a) above to read:

(iii) provides for the fabrication, purchase, rental, installation, or other acquisition of equipment or of industrial facilities. (JUNE 1978)

(d) In accordance with 12.804, insert the "Equal Opportunity Preaward Clearance of Subcontracts" clause set forth therein.

7.402-9 Utilization of Small Business and Small Disadvantaged Business Concerns. In accordance with the requirements of 1.707-3, insert the appropriate clause set forth therein.

7.402-10 Termination. In accordance with the requirements of 8.702, insert the appropriate clause set forth therein.

7.402-11 Disputes. Insert the clause set forth in 7.103-12.

7.402-12 [Reserved]

7.402-13 Buy American Act and Trade Agreements Act. In accordance with the requirements of Part 6, Subpart 1, insert the clause set forth in 6.104-5.

7.402-14 Convict Labor. In accordance with the requirements in Part 12, Subpart 2, insert the clause set forth in 7.104-17.

7.402-15 Walsh-Healey Public Contracts Act. Insert the clause set forth in 12.605.

7.402-16 Contract Work Hours Standards Act-Overtime Compensation. Insert the clause set forth in 12.303-1. Note the introductory language required by 12.303-2 for inclusion in contracts with a State or political subdivision thereof.

NASA PROCUREMENT REGULATION

7.402-16

CONTRACT CLAUSES

7.402-17 Equal Opportunity. In accordance with the provisions of 12.804, insert the appropriate clause set forth therein.

7.402-18 Officials Not To Benefit. Insert the clause set forth in 7.103-19.

7.402-19 Covenant Against Contingent Fees. Insert the clause set forth in 1.503. 7.402-20 Authorization and Consent. Insert the clause prescribed in 9.102(b).

7.402-21 Notice and Assistance Regarding Patent and Copyright Infringement. Insert the clause set forth in 9.104.

7.402-22 New Technology. In accordance with the requirements of 9.107-4, insert the clause set forth in 9.107-5 or 9.107-6 as appropriate.

7.402-23 Rights in Data. If data is to be delivered under the contract, insert the appropriate clause in accordance with the instructions in 9.203.

7.402-24 Security Requirements. Insert the Security Requirements clause in accordance with 7.104-12, modified in accordance with 7.204-12. In contracts without fee with educational institutions, add the following paragraphs (e), (f), and (g).

(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 an unclassified status to a classified status or from a lower classification to a higher classification, or (2) in more restrictive area controls than previously required, the Contractor shall exert every reasonable effort compatible with his established policies to continue the performance of work under the contract in compliance with such change in security classification 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, he 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 the expiration of fifteen (15) days after receipt by the Contracting Officer of the notification 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 (2) 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."

7.402-25 Government Property. In accordance with 13.703, insert the clause(s) required therein. 7.402-26 Insurance-Liability to Third Persons.

(a) Except under the circumstances stated in (b) or (c) below, insert the clause set forth in 7.203-22.

(b) If the contractor claims total immunity from tort liability as a State agency or as a charitable institution, the clause set forth below shall be used in lieu of the clause contained in 7.203-22.

LIABILITY TO THIRD PERSONS (SEPTEMBER 1962)

(a) The Government does not assume any liability to third persons, nor will the Government reimburse the Contractor for his liability to third persons with respect to loss due to death, bodily injury, or damage to property resulting in any way from the performance of this contract or any subcontract thereunder.

(b) The Contractor shall give the Government or its representatives immediate notice of any suit or action filed, or prompt notice of any claim made, against the Contractor arising out of the performance of this contract, the cost and expense of which may be reimbursable to the Contractor under the provisions of this contract. The Contractor shall furnish immediately to the Government copies of all pertinent papers received by the Contractor. The Contractor shall, if required by the Government, authorize representatives of the Government to settle or defend any such claim and to represent the Contractor in or take charge of any litigation in connection therewith. The Contractor may, at his own expense, be associated with the representatives of the Government in the settlement or defense of any such claim or litigation.

(c) If the contractor claims partial immunity from tort liability as a State agency or as a charitable institution (as where work may be performed under the contract in a place or under the conditions where the contractor is not immune from tort liability), the paragraph (e) set forth below may be added to the Insurance-Liability to Third Persons clause contained in 7.203-22.

(e) Notwithstanding paragraphs (a) and (c) of this clause, (i) the Government does not assume any liability to third persons, nor will the Government reimburse the Contractor for his liability to third persons, with respect to loss due to 7.402-17 CFR TITLE 41 CHAPTER 18