§ 7.104-1 Davis-Bacon Act. In accordance with the requirements of Subpart D of Part 12 of this subchapter, insert the applicable contract clauses set forth in § 12.403-1 or § 12.403-4 of this subchapter, as the case may be. [18 F. R. 6405, Oct. 8, 1953]

§ 7.104-2 Copeland Act. In accordance with the requirements of Subpart D of Part 12 of this subchapter, insert the applicable contract clauses set forth in § 12.403-1 or § 12.403-4 of this subchapter, as the case may be. [18 F. R. 6405, Oct. 8, 1953]

§ 7.104-3 Employment of aliens. In accordance with the requirement of section 10 (j) of the Act of July 2, 1926 (10 U. S. C. 310 (j)) all contracts for furnishing or constructing aircraft, aircraft parts, or aeronautical accessories shall contain the following clause:

EMPLOYMENT OF ALIENS

No aliens employed by the Contractor shall be permitted to have access to the plans or specifications, or the work under construction, or to participate in the contract trials, without the written consent beforehand of the Secretary or his duly authorized representative.

§ 7.104-4

Neutrality Act of 1939. In accordance with section 12 (g) of the Neutrality Act of 1939 (Resolution of November 4, 1939; 22 U. S. Code 452), which prohibits the purchase by the Government of arms, ammunition, or implements of war (as listed in a proclamation by the President) from any manufacturer, exporter, importer or dealer who has failed to register under said act, all contracts with any manufacturer, exporter, importer or dealer for the purchase of any supplies listed in the then applicable Presidential proclamation shall contain the following clause:

NEUTRALITY ACT OF 1939

If any of the supplies to be delivered under this contract are arms, ammunition, or implements of war, as listed in the current proclamation issued by the President pursuant to the Neutrality Act of 1939 (22 Ū. S. Code 452), the Contractor either (i) represents that it is properly registered under said Act and agrees to furnish satisfactory evidence thereof upon request, or (ii) represents that it is not subject to said Act and agrees to furnish satisfactory evidence thereof upon request.

§ 7.104-5 Filing of patent applications. In accordance with the require

ments of § 9.104 of this subchapter, insert the contract clause set forth in said section.

§ 7.104-6 Patent indemnity. In accordance with the requirements of § 9.105 of this subchapter, insert the contract clause set forth in said section.

§ 7.104-7 Patent rights. In accordance with the requirements of §§ 9.107 to 9.107-5 of this subchapter, insert the appropriate contract clause or clauses, with additional provisions as prescribed, set forth in said section.

$7.104-8 Reporting of royalties. In accordance with the requirements of § 9.103 of this subchapter, insert the contract clause set forth in said section.

§ 7.104-9 Copyrights. In accordance with the requirements of Subpart B of Part 9 of this subchapter, insert the contract clause set forth in §§ 9.202 or 9.204 of this subchapter, as the case may be.

(a) This contract shall be subject to any act of the Congress, whether heretofore or hereafter enacted and to the extent indicated therein, providing for the renegotiation of said contract and shall be deemed to contain all the provisions required by any such act without subsequent amendment of this contract specifically incorporating such provisions.

(b) The Contractor (which term, as used in this clause, means the party contracting to furnish the materials or perform the work required by this contract) agrees to insert the provisions of this clause, including this paragraph (b), in subcontracts, as defined in section 103 (g) of the Renegotiation Act of 1951 (Pub. Law 9, 82d Cong.), except any subcontracts of a class or type described in section 106 (a) of the Renegotiation Act of

1951.

(c) Nothing contained in this clause shall impose any renegotiation obligation with respect to this contract or any subcontract hereunder which is not imposed by an act of the Congress, heretofore or hereafter enacted.

(b) Section 106 (a) of the Renegotiation Act of 1951 grants a mandatory exemption from the applicability of the act with respect to the following contracts and subcontracts:

(1) Any contract by a Department with any Territory, possession, or State, or any agency or political subdivision thereof, or with any foreign government or any agency thereof;

(2) Any contract or subcontract for an agricultural commodity in its raw or natural state, or if the commodity is not customarily sold or has not an established market in its raw or natural state, in the first form or state, beyond the raw or natural state, in which it is customarily sold or in which it has an established market. The term "agricultural commodity" includes but is not limited to

(i) Commodities resulting from the cultivation of the soil such as grains of all kinds, fruits, nuts, vegetables, hay, straw, cotton, tobacco, sugarcane, and sugar beets;

(ii) Natural resins, saps, and gums of trees;

(iii) Animals, such as cattle, hogs, poultry, and sheep, fish and other marine life, and the produce of live animals, such as wool, eggs, milk and cream;

(3) Any contract or subcontract for the product of a mine, oil or gas well, or other mineral or natural deposit, or timber, which has not been processed, refined, or treated beyond the first form or state suitable for industrial use;

(4) Any contract or subcontract with a common carrier for transportation, or with a public utility for gas, electric energy, water, communications, or transportation, when made in either case at rates not in excess of published rates or charges filed with, fixed, approved, or regulated by a public regulatory body, State, Federal, or local, or at rates not in excess of unregulated rates of such a public utility which are substantially as favorable to users and consumers as are regulated rates. In the case of the furnishing or sale of transportation by common carrier by water, this exemption ap. plies only to such furnishing or sale which is subject to the jurisdiction of the Interstate Commerce Commission under Part III of the Interstate Commerce Act or subject to the jurisdiction of the Federal Maritime Board under the Intercoastal Shipping Act, 1933;

(5) Any contract or subcontract with an organization exempt from taxation under section 101 (6) of the Internal Revenue Code, but only if the income from such contract or subcontract is not includible under section 422 of such code in computing the unrelated business net income of such organization;

(6) Any contract which the Renegotiation Board determines does not have a direct and immediate connection with the national defense;

(7) Any subcontract directly or indirectly under a contract or subcontract exempted under this paragraph.

(c) Under section 106 (d) of the act, the Renegotiation Board is authorized in its discretion to grant permissive exemptions in the following contracts or subcontracts, either individually or by general classes or types:

(1) Any contract or subcontract to be performed outside of the territorial limits of the continental United States or in Alaska;

(2) Any contracts or subcontracts under which, in the opinion of the Board, the profits can be determined with reasonable certainty when the contract price is established, such as certain classes of (i) agreements for personal services or for the purchase of real property, perishable goods, or commodities the minimum price for the sale of which has been fixed by a public regulatory body, (ii) leases and license agreements, and (iii) agreements where the period of performance under such contract or subcontract will not be in excess of thirty days;

(3) Any contract or subcontract or performance thereunder during a specified period or periods if, in the opinion of the Board, the provisions of the contract are otherwise adequate to prevent excessive profits;

(4) Any contract or subcontract the renegotiation of which would jeopardize secrecy required in the public interest;

(5) Any subcontract or group of subcontracts not otherwise exempt if, in the opinion of the Board, it is not administratively feasible in the case of such subcontract or in the case of such group of subcontracts to determine and segregate the profits attributable to such subcontract or group of subcontracts from the profits attributable to activities not subject to renegotiation,

Procedures and instructions with respect to permissive exemptions shall be prescribed by each of the Departments.

(d) The Renegotiation Board has published regulations which set forth procedures and provide interpretations with respect to the applicability of the act.

[18 F. R. 1226, Mar. 5, 1953, as amended at 19 F. R. 162, Jan. 9, 1954]

§ 7.104-11 Vinson Trammell Act. (a) In accordance with the requirement of section 3 of the Vinson-Trammell Act as amended and extended (34 U. S. C. 496 and 10 U. S. C. 311), and except as provided in paragraphs (b) and (c) of this section, any contract in an amount which exceeds or may exceed $10,000, known to be for the construction or manufacture of any complete aircraft or naval vessel, or any portion thereof, shall contain the following clause, except that in any advertised contract there may be inserted at the beginning of such clause the words "if this contract is in an amount which exceeds $10,000,":

VINSON-TRAMMELL ACT

The Contractor agrees that, unless otherwise provided by law, this contract shall be subject to all the provisions of the VinsonTrammell Act as amended and extended (34 U. S. Code 496, and 10 U. S. Code 311) and shall be deemed to contain all the agreements required by Section 3 of said Act: Provided, however, that this clause shall not be construed to enlarge or extend by contract the obligations imposed by said Act. In compliance with said Act, the Contractor agrees to insert in such subcontracts hereunder as are specified in said Act either the provisions of this clause or the provisions required by said Act.

(b) In any contract where only certain items or lots totalling more than $10,000 are subject to the VinsonTrammell Act, the foregoing clause should be modified to make the agreement of the Contractor applicable only to such items or lots. In any contract where only certain items or lots totalling $10,000 or less would otherwise be subject to the act, the foregoing clause should not be included in the contract even though the total amount of the entire contract exceeds $10,000.

(c) In any contract, otherwise subject to the Vinson-Trammell Act, for scientific equipment used for communication, target detection, navigation or fire control, as is designated by the Sec

retary of the Department concerned, the clause prescribed in paragraph (a) of this section shall not be included in such contract, and the following clause shall be inserted in lieu thereof:

VINSON-TRAMMELL ACT

The Secretary having designated the supplies called for by this contract to be scientific equipment used for communication, target detection, navigation or fire control, the provisions of the Vinson-Trammell Act as amended and extended (34 U. S. Code 496 and 10 U. S. Code 311) are not applicable to this contract.

[17 F. R. 5648, June 24, 1952, as amended at 19 F. R. 688, Feb. 5, 1954]

§ 7.104-12 Military security requirements. Insert the following clause in all contracts which are classified "Top Secret", "Secret", or "Confidential", by a Department, and in any other contracts the performance of which will require access to such classified information or material, except that this clause is not required to be used in contracts performed outside the continental limits of the United States, its territories and possessions.

MILITARY SECURITY REQUIREMENTS

(a) The provisions of this clause shall apply to the extent that this contract involves access to security information classified "Top Secret," "Secret," or "Confidential."

(b) The Government shall notify the Contractor of the security classification of this contract and the elements thereof, and of any subsequent revisions in such security classification, by the use of a Security Requirements Check List (DD Form 254) and Appendage thereto (DD Form 254-1).

(c) To the extent the Government has indicated as of the date of this contract, or thereafter indicates, security classification under this contract as provided in paragraph (b) above, the Contractor shall safeguard all classified elements of this contract and shall provide and maintain a system of security controls within its own organization in accordance with the requirements of (i) the Department of Defense Industrial Security Manual for Safeguarding Classified Security Information as in effect on date of this contract, which Manual is hereby incorporated by reference and made a part of this contract, (ii) any amendments to said manual required by the demands of national security as determined by the Government and made after the date of this contract notice of which has been furnished to the Contractor by the Contracting Officer, and (iii) those provisions of written agreements entered into by the parties pertaining to the adaptation of the Manual to the Contractor's business.

(d) Designated representatives of the Government responsible for inspection pertaining to industrial security shall have the right to inspect at reasonable intervals the procedures, methods and facilities utilized by the contractor in complying with the requirements of the terms and conditions of this clause. Should the Government, through its authorized representative, determine that the Contractor has not complied with such requirements, the Government shall inform the Contractor in writing of the proper actions to be taken in order to effect compliance with such requirements.

(e) If, subsequent to the date of this contract, the security classifications or requirements under this contract are changed by the Government as provided in this clause and the security costs under this contract are thereby increased or decreased, the contract price shall be subject to an equitable adjustment by reason of such increased or decreased costs. Any equitable adjustment shall be accomplished in the same manner as if such changes were directed under the clause in this contract entitled "Changes.'

(f) The Contractor agrees to insert, in all subcontracts hereunder which involve access to classified security information, provisions which shall conform substantially to the language of this clause, including this paragraph (f) but excluding the last sentence of paragraph (e) of this clause.

(g) The Contractor also agrees that it shall determine that any subcontractor proposed by it for the furnishing of supplies and services which will involve access to classified security information in the Contractor's custody has been granted an appropriate facility security clearance, which is still in effect, prior to being accorded access to classified security information.

[18 F. R. 7174, Nov. 11, 1953, as amended at 19 F. R. 688, Feb. 5, 1954; 19 F. R. 7488, Nov. 20, 1954]

§ 7.104-13

Domestic food, clothing, cotton or wool. In all contracts for the procurement of any article of food, clothing, cotton or wool, not excepted from the prohibition of annual appropriation acts as set forth in §§ 6.106-1 and 6.107 of this subchapter, insert the following clause:

DOMESTIC FOOD, CLOTHING, COTTON OR WOOL

The Contractor agrees that there will be delivered under this contract only such articles of food, clothing, cotton or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles) as have been grown, reprocessed, reused, or produced in the United States or its possessions.

[19 F. R. 688, Feb. 5, 1954]

§ 7.104-14 Utilization of small business concerns. Insert the clause set forth below in all fixed-price supply con

tracts, in amounts exceeding $5,000, except those contracts entered into with foreign contractors which are to be performed outside of the continental limits of the United States, its territories and possessions:

UTILIZATION OF SMALL BUSINESS CONCERNS

(a) It is the policy of the Government as declared by the Congress to bring about the greatest utilization of small business concerns which is consistent with efficient production.

(b) The Contractor agrees to accomplish the maximum amount of subcontracting to small business concerns that the Contractor finds to be consistent with the efficient performance of this contract.

[18 F. R. 7174, Nov. 11, 1953]

§ 7.104-15 Examination of records. In accordance with requirements of section 4 of the act, as amended, the following clause will be inserted in all negotiated ñxed-price supply contracts and purchase orders in excess of $1,000.

ΕΧΑΜΙΝΑΤΙION OF RECORDS

(a) The Contractor agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under this contract, have access to and the right to examine any directly pertinent books, documents, papers and records of the Contractor involving transactions related to this contract.

(b) The Contractor further agrees to include in all his subcontracts hereunder a provision to the effect that the subcontractor agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under the subcontract, have access to and the right to examine any directly pertinent books, documents, papers, and records of such subcontractor involving transactions related to the subcontract. The term "subcontract" as used in this clause excludes (i) purchase orders not exceeding $1,000 and (ii) subcontracts or purchase orders for public utility services at rates established for uniform applicability to the general public.

[18 F. R. 3641, June 25, 1953]

§ 7.104-16 Gratuities. Insert the clause set forth below in all fixed price supply contracts and purchase orders, except contracts and purchase orders with foreign governments obligating solely funds other than those contained in Department of Defense appropriation acts.

GRATUITIES

(a) The Government may, by written notice to the Contractor, terminate the right

of the Contractor to proceed under this contract if it is found, after notice and hearing, by the Secretary or his duly authorized representative, that gratuities (in the form of entertainment, gifts, or otherwise) were offered or given by the Contractor, or any agent or representative of the Contractor, to any officer or employee of the Government with a view toward securing a contract or securing favorable treatment with respect to the awarding or amending, or the making of any determinations with respect to the performing, of such contract: Provided, That the existence of the facts upon which the Secretary or his duly authorized representative makes such findings shall be in issue and may be reviewed in any competent court. (b) In the event this contract is terminated as provided in paragraph (a) hereof, the Government shall be entitled (i) to pursue the same remedies against the Contractor as it could pursue in the event of a breach of the contract by the Contractor, and (ii) as a penalty in addition to any other damages to which it may be entitled by law, to exemplary damages in an amount (as determined by the Secretary or his duly authorized representative) which shall be not less than three nor more than ten times the costs incurred by the Contractor in providing any such gratuities to any such officer or employee.

(c) The rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract.

[18 F. R. 2585, May 2, 1953]

§ 7.104-17 Convict labor. In accordance with the requirements of Subpart B of Part 12 of this subchapter, insert the contract clause set forth in § 12.203 of this subchapter.

[18 F. R. 2102, Apr. 15, 1953]

§ 7.105 Additional clauses. The following clauses shall be inserted in fixedprice supply contracts in accordance with Department procedures when it is desired to cover the subject matter thereof in such contracts.

§ 7.105-1 Alterations in contract.

ALTERATIONS IN CONTRACT

The following alterations have been made in the provisions of this contract:

§ 7.105-2 Approval of contract.

APPROVAL OF CONTRACT

This contract shall be subject to the written approval of or his duly authorized representative and shall not be binding until so approved.

§ 7.105-3 Notice to the Government of labor disputes.

NOTICE TO THE GOVERNMENT OF LABOR DISPUTES

Whenever the Contractor has knowledge that any actual or potential labor dispute is delaying or threatens to delay the timely performance of this contract, the Contractor shall immediately give notice thereof, including all relevant information with respect thereto, to the Contracting Officer. § 7.105-4 Notice of shipments.

NOTICE OF SHIPMENTS

At the time of delivery of any shipment of supplies to a carrier for transportation, the Contractor shall give prepaid notice of shipment to the consignee establishment, and to such other persons or installations designated by the Contracting Officer, in accordance with instructions of the Contracting Officer. If such instructions have not been received by the Contractor at least 24 hours prior to such delivery to a carrier, the Contractor shall request instructions from the Contracting Officer concerning the notice of shipment to be given.

§ 7.105-5 Liquidated damages.

LIQUIDATED DAMAGES

Where it is desired to provide for liquidated damages, the clause entitled "Default", set forth in § 7.103-11 of this subchapter, shall be used except that paragraph (f) thereof shall be deleted and the following two paragraphs shall be added:

(f) If the Contractor fails to deliver the supplies or perform the services within the time specified in this contract, or any extension thereof, the actual damage to the Government for the delay will be impossible to determine, and therefore in lieu thereof the Contractor shall pay to the Government as fixed, agreed, and liquidated damages for each calendar day of delay the amount set forth elsewhere in this contract: Provided, That the Government may terminate this contract in whole or in part as provided in paragraph (a) of this clause, and in that event the Contractor shall be liable, in addition to the excess costs provided in paragraph (c) above, for liquidated damages accruing until such time as the Government may reasonably provide for the procurement of similar supplies or services. The Contractor shall not be charged with liquidated damages when the delay arises out of causes beyond the control and without the fault or negligence of the Contractor, as defined in paragraph (b) above, and in such event, subject to the clause of this contract entitled "Disputes," the Contracting Officer shall ascertain the facts and extent of the delay and shall extend the time for performance when in his judgment the findings of fact justify an extension.

(g) The rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract.