formance. The use of such standards, as may be appropriate, is encouraged with respect to FMS contracts. Any special criteria shall be set forth in the solicitation. In adition, the solicitation shall inform the offerors that due to the nature of the procurement all doubts as to responsibility shall be resolved against the offeror.

(2) When a Foreign Military Sales (FMS) contract requires that a product be obtained from a particular firm, the Navy procuring activities shall advise the foreign government of any contractor deficiencies that may adversely affect contract performance. In such event, a recommendation shall be made either to forego the requirment or provide a qualified United States contractor substitute.

[41 FR 55515, Dec. 21, 1976]

Manual directing disbursing officers to forward reports to the Navy Comptroller.

(b) Contracting officers negotiating contracts for supplies or services in Excess or Near-Excess Currency countries as set forth in NAVCOMPT Manual 042552-2d will become familiar with the general policy of utilizing U.S.-owned foreign excess and nearexcess currencies. When the Contracting Officer determines in accordance with the criteria set forth below that it is not feasible to utilize available excess or near-excess currencies he will execute the certificate set forth below. This certificate will be made a part of the contract file. One copy of this certificate will be forwarded to the designated paying office. The certificate will read as follows:

CONTRACT CERTIFICATION

I hereby certify, as required pursuant to Department of Defense Directive 5100.29, dated October 22, 1965, and under the authority delegated to me, that it was not feasible to make payment from foreign currency owned by the United States Government under this contract in the country of in the amount of $- for the

The following criteria shall be used in determining that payment of certain contracts in foreign currencies is not feasible.

1. The Treasury Department is not holding excess or near-excess foreign currencies in the country involved.

2. The contract is awarded in a foreign country where, to the extent provided by a treaty or Executive Agreement, or local laws, payments are required to be made in U.S. currency.

3. The contract provides for payment in U.S. currency to the extent necessary to cover contractors validated direct U.S. currency costs of the United States export content of the procurement involved.

4. The contract does not exceed $500.

5. The contract does not exceed $10,000 and is for a need which is compelling and of such unusual urgency that serious injury to the U.S. Government would likely be in

curred if payment in foreign currency were to be insisted upon.

6. Evaluation of the contract proposals has resulted in the determination that payment in foreign currency would increase the costs to the U.S. Government or to DOD appropriations.

8737.6-900 Government-to-Government

agreements and coordination with overseas commands.

8 737.6-902 U.S./Australian Contract Administration Services Agreement.

(a) The U.S./Australian Contract Administration Services Agreement of 17 March 1973 provides for the administration of Department of Defense contracts by the Australian Government where performance of contract administration services in Australia is required. The Agreement sets forth the following:

UNITED STATES-AUSTRALIA

AUSTRALIAN Contract ADMINISTRATION
PROCEDURE

Definition. Contract administration encompasses all those necessary actions to be accomplished in the field, for the benefit of the U.S. DOD purchasing office, which are necessary to the performance of the contract or in support of the purchasing office. Purpose. In general, contract administration includes the following matters:

i. Be responsible for assuring compliance with the terms of the contract;

ii. Serve as a focal point regarding status of delivery, production, quality of material and other pertinent matters;

iii. Advise the U.S. DOD purchasing office, as appropriate, on all pertinent matters related to the administration of the contract.

Procedure. The U.S. DOD purchasing office issuing a contract may request performance of contract administration in Australia. Requests for contract administration shall be directed to the Australian Government, Department of Supply, Attention Assistant Secretary of Sales and Aid Branch, Canberra ACT 2600 Australia, with a copy of each request forwarded to Chief. U.S. DOD Procurement Information Office (PIO), c/o Department of Supply, Constitution Avenue, Canberra ACT 2600 Australia. Each request shall be accompanied by a copy of the contract and will indicate the specific matters of contract administration the U.S. DOD purchasing officer desires to be performed.

Scope. Normally, the following contract administration functions will be performed

by the Department of Supply at the request of the U.S. DOD purchasing office:

i. Review and evaluate contractor's price proposals.

ii. Monitor contractor's financial condition so as to assure contract performance is not jeopardized.

iii. Perform production surveillance and report potential slippages in contract deliv. ery schedules.

iv. Assure contractor's compliance with all Australian laws that may affect its performance under the contract.

v. Perform transportation management as necessary.

vi. Review and evaluate preservation, packaging and packing to assure adequate protection to present damage in transit.

vii. Review contractor's engineering as it affects contract performance.

viii. Assist in settlement of terminations for convenience.

ix. Provide oversight function to assure contractor accountability for U.S. Government furnished property.

x. Review and effect changes as necessary to assure plant safety and security.

xi. Perform such other contract administration functions as may be requested and which are within the contract administration functions of the Department of Supply.

xii. Maintain liaison with the U.S. DOD purchasing office and advise as necessary on any matters including those listed above that may affect performance under the contract.

DEPARTMENT OF SUPPLY PROCEDURE. A contract approving officer of the Department of Supply will be responsible for carrying out the contract administration functions described in paragraphs above titled Procedure and Scope. He may call upon other representatives of the Department of Supply possessing special skills or because of their geographic location to assist him in performing contract administration. It will be his responsibility to immediately advise the U.S. DOD purchasing office of any matter that may adversely affect contract performance. For this purpose, it will be his decision whether such advice shall be transoceanic telephone, by telegraphic communication, or by letter.

The U.S. DOD purchasing office may provide U.S. personnel to perform, participate or assist in contract administration. This normally would occur only where the supply or service required by the contract is of such sensitive or critical nature that first hand observation and participation by U.S. personnel is essential.

§ 737.6-903 Coordination with overseas commands and activities procurements in Europe.

(a) The Naval Regional Procurement Office, Naples, serves as an area and centralized buying activity for naval activities in Europe, Africa, Iceland, and Middle East, operating forces in European waters, for all activities when purchase is effected in Europe; and such other area activities and operating forces as may be required. The Defense Contract Audit Agency, New York Branch, provides cost and audit information and support.

(b) Naval activities having requirements that can be satisfied only by European sources will normally forward their requisitions to the Naval Regional Procurement Office, Naples. This does not relieve such activities from complying with current Balance of Payments directives.

(c) Exceptions. The following does not apply to paragraphs (a) and (b) of this section:

(1) Procurement of complete vessels or aircraft.

(2) Procurement of equipment requiring servicing by representatives of foreign companies.

(3) Procurements within an activity's authorized purchase authority when material is readily available overseas (outside CONUS).

(4) Procurements of aviation support items.

(5) Other specific exceptions as may be granted by the Naval Supply Systems Command.

(d) Contracting Officers utilizing any of the above exceptions will:

(1) Ascertain the existence and application of any Government-to-Government agreements and, subject to the provisions of § 1.109-4 regarding conflicts with ASPR provisions based on requirements of law, shall comply with such agreements.

(2) Prior to commencement of negotiations with a United Kingdom supplier, contact the Naval Regional Procurement Office, Naples, Contract Administration Branch, London, England, for (i) a determination of whether the proposed supplier holds any U.S. furnished tooling, (ii) for advice as to the procedures to assure that no rental charges payable to Her Majes

ty's Government will be included in price charged, and (iii) for information relating to the elimination of research and development charges on certain British manufactured products.

§ 737.6-1000 Exemption of certain contracts with foreign contractors from the requirement for an examination of records clause.

§ 737.6-1001 Statutory Requirements.

The report required by § 6.1001(b) of determinations under § 6.1001(a)(ii) shall be prepared by the Chief of Naval Material (MAT 021) and submitted for Secretarial signature.

§ 737.6-1003 Requests for determinations and findings.

Requests for determinations and findings under § 6.1001(a) shall be submitted through normal procurement channels to the Chief of Naval Material (MAT 021) for processing.

§ 737.6-1100 Use of United States owned foreign currency for payment of contracts.

§ 737.6-1106 Awards.

§ 737.6-1106-3 Awards requiring approval by higher authority.

(a) The appropriate official in the Department of the Navy to whom proposed procurements shall be referred as required by § 6.1106-3 is the Comptroller of the Navy (NCB-133). Such referral shall be direct from the contracting officer and shall contain the information required by § 6.1106-3.

Subpart G-Contract Clauses

8 737.7-100 Clauses for fixed-price supply contracts.

8 737.7-104 Clauses to be used when applicable.

8 737.7-104-1 Equitable adjustments covering material and energy-related shortages.

(a) Discussion. The current material and energy-related shortage conditions introduce additional risk factors and contingencies into on-going current procurement negotiations. In

order to eliminate or substantially reduce certain of these contingencies which are near-term in nature and which can be specifically identified as to type prior to contract award (or prior to definitization of contract prices), it will be necessary and prudent to provide protection covering such specific near-term contingency(s) in lieu of accepting contingencies in contract pricing therefor.

(b) Policy. The clause as prescribed in paragraph (c) of this section may be used in Navy fixed-price-type contracts (including both FFP and FPI). The contractor's certificate as to contract price contingencies shall be made part of the contract file. Use of the clause is also encouraged in contracts with small business concerns.

(c) Clause.

EQUITABLE ADJUSTMENT CLAUSE

(MATERIAL AND ENERGY-RELATED SHORTAGES) a. The prices agreed to under this contract contain no provision for the certain specific contingencies specified in subparagraph b. below. The contractor represents that these contingent items represent near-term financial exposures under this contract for which provision was requested in contract prices negotiated under this contract. In lieu of such provision, the Contracting officer agrees that, in the event the specific contingencies outlined in subparagraph b. below occur, the prices under this contract will be equitably adjusted.

b. The following specific contingencies are identified:

c. The contractor shall notify the Contracting Officer within thirty (30) days of the occurrence of the above contingencies. Such notice shall include (i) the Contractor's proposal for equitable adjustment in the contract prices and (ii) support data, demonstrating the actual occurrence of the identified contingencies in such form as the Contracting Officer may require.

d. The aggregate of the increases in the contract prices made under this clause shall not exceed $

e. The price equitable adjustment shall not include material handling charges, overhead, general and administrative expenses, and profit.

[41 FR 55515, Dec. 21, 1976]

§ 737.7-104-11 Excess profit.

With respect to §7.104-11(c), see § 737.33-201.

§ 737.7-104-501 Progress payments.

The clause set forth below is authorized for use in fixed-price supply contracts where progress payments on the basis of completion of the contract are permitted by § 30.5 (see in particular paragraph 501).

(a) Progress Payments (Oct. 1963). Payments of the contract price shall be made as follows:

(1) Seventy-five percent (75 percent) (percentage may be varied by the procuring activity) of the contract price shall be paid as progress payments in accordance with the provisions of this paragraph 1. The Contractor, from time to time as the work progresses, but not more frequently than once a week, may submit invoices to the Field Contract Administrator for certification by him as to the percentage of completion of performance of the entire contract. The amount of each such invoice shall be that percentage of the total contract price equal to the percentage of completion of the contract, as so certified by the Field Contract Administrator, such sum to be less any amounts previously billed for progress payments. Progress payments shall be made to the Contractor of seventy-five percent (75 percent) of the net amount of each invoice so submitted and certified. If upon delivery and acceptance of all supplies called for by this contract, seventy-five percent (75 percent) of the total contract price has not been paid under this paragraph 1, any balance of such seventy-five percent (75 percent) shall be paid upon submission of a properly certified invoice.

(2) Twenty-five percent (25 percent) of the contract price of each item shall be paid upon delivery and acceptance thereof upon the submission of properly certified invoices showing the items delivered, the contract price of each, and the statement "twenty-five percent (25 percent) due upon delivery."

(b) Any and all progress payments made hereunder shall be secured, when made, by a lien in favor of the Government upon the supplies contracted for on account of all payments so made and on all material and other property acquired for or allocated to

the performance of this contract (except to the extent that the Government, by virtue of any other provision of this contract, or otherwise, shall have valid title to such supplies, materials, or other property) as against other creditors of the Contractor. If such property is not identified by marking or segregation, the Government shall be deemed to have a lien upon a proportionate part of any mass of property with which such property is commingled. Any lien provided for by virtue of this clause is paramount to all other liens under the provisions of 10 U.S.C. 7521.

(c) The Contractor, to the extent determined necessary and practicable by the Field Contract Administrator, shall identify by marking or segregation of all property which is subject to a lien in favor of the Government by virtue of any provision of this contract in such a way as to indicate that it is subject to such lien and that it has been acquired for or allocated to the performance of this contract. In any event, the Contractor shall maintain adequate accounting control over such property on its books and records.

(d) In the event that the Contractor shall procure or maintain insurance upon any materials or other property upon which a lien exists in favor of the Government pursuant to the terms of this contract, the policy or policies shall contain a loss payable clause making losses payable to the Secretary of the Navy on order. Any payments hereunder shall inure to the benefit of the Government to the extent of any loss suffered by the Government and to the Contractor as to any remaining balance. The foregoing provisions shall not be deemed to require that the Contractor procure or maintain any such insurance.

(e) The clause of this contract entitled "Payments" is hereby superseded and deleted.

§ 737.7-104-502 Invoicing instructions for multiple destinations.

(a) Generally, a separate billing for each destination is required by disbursing officers to facilitate abstracting public vouchers to receiving activities. Since invoicing instructions that accompany contracts and orders do

not clearly state that a bill shall cover supplies designated for one destination only, the following provisions shall be incorporated in the appropriate purchase document as provided below when more than one receiving activity is involved:

(1) Invitation for Bids and Request for Proposals (Standard Form 33): In connection with Paragraph 13 of the Terms and Conditions entitled "Seller Invoices," a separate invoice shall be prepared and submitted in quadruplicate for each activity designated to receive supplies or services.

(2) Negotiated contracts and orders: A separate invoice shall be prepared and submitted in quadruplicate for each activity designated to receive the supplies or services.

(b) In cases where (1) inspection and acceptance are at contractor's plant, and (2) the contractor's costs for individual billing to multiple destinations are considered disproportionate to the cost of the material to be delivered, the contracting officer may deviate from this policy enunciated herein by authorizing a consolidation of invoices at the election of the contractor. In such instances, the contracting officer shall substitute the following clauses in lieu of the clauses prescribed in paragraph (a) of this section:

(i) Invitation for Bids and Request for Proposals (Standard Form 33): In connection with Paragraph 13 of the Terms and Conditions, entitled "Sellers Invoices," the contractor may elect to prepare and submit his invoices in either of the following ways: (a) A separate invoice in quadruplicate for each activity designated to receive the supplies or services; or (b) consolidated invoice in quadruplicate covering all shipments delivered hereunder.

(ii) Negotiated contracts and orders: The contractor may elect to prepare and submit his invoices in either or two ways: (a) A separate invoice in quadruplicate for each activity designated to receive the supplies and services; or (b) a consolidated invoice in quadruplicate covering all shipments delivered hereunder.

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