(c) of this clause in each of his cost-reimbursement types, time and material, labor-hour, incentive, or price redeterminable subcontract, the price of which is expected to exceed $100,000.00; and

(2) Prior to the award of any other subcontract, the price of which is expected to exceed $1000,000.00 or to the pricing of any subcontract change or other modification for which the price adjustment is expected to exceed $100,000.00, where the price or price adjustment is not 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.

(b) The Contractor shall require subcontractor to certify, in substantially the same form as that used in the certificate by the Price Contractor to the Government, that, to the best of their knowledge and belief, the cost and pricing data submitted under (a) above are accurate, complete, and current as of the date of the execution, which date shall be as close as possible to the date of agreement on the negotiated price of the subcontract or subcontract change or modification.

(c) The Contractor shall insert the substance of this clause including this paragraph (c) in each of his cost-reimbursement type, time and material, labor-hour, price redeterminable, or incentive subcontracts hereunder, and in any other subcontractor hereunder which exceeds $100,000.00 unless the price thereof 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. In each such excepted subcontract hereunder which exceeds $100,000.00, the Contractor shall insert the substance of the following clause:

SUBCONTRACTOR COST AND PRICING DATA-PRICE ADJUSTMENTS

(a) Paragraphs (b) and (c) of this clause shall become operative only with respect to any change or other modification made pursuant to one or more provisions of this contract which involves a price adjustment in excess of $100,000.00. The requirements of this clause shall be limited to such price adjustments.

Audit and Records, Audit, and Audit-Price Adjustments

AUDIT AND RECORDS

(a) The Contractor shall maintain books, records, documents, and other evidence and accounting procedures and practices, sufficient to reflect properly all direct and indirect costs of whatever nature claimed to have been incurred and anticipated to be incurred for the performance of this contract. The foregoing constitute "records" for the purposes of this clause.

(b) The Contractor's plants, or such part thereof as may be engaged in the performance of this contract, and his records shall be subject at all reasonable times to inspection and audit by the Contracting Officer or his authorized representatives. In addition, for purposes of verifying the cost or pricing data submitted, in conjunction with the negotiation of this contract or any contract change or other modification involving an amount in excess of $100,000. was accurate, complete, and current, the Contracting Officer, or his authorized representatives, shall, until the expiration of 3 years from the date of final payment under this contract, or of the time periods for the particular records specified in Part 1-20 of the Federal Procurement Regulations (41 CFR Part 12-0). whichever expires earlier, have the right to examine those books, records, documents, papers, and other supporting data which involve transactions related to this contract or which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein.

(c) The Contractor shall preserve and make available his records (1) until the expiration of 3 years from the date of final payment under this contract, or of the time periods for the particular records specified in 41 CFR Part 1-20, whichever expires earlier, and (2) for such longer period, if any, as is required by applicable statute, or by other clauses of this contract, or by (i) or (ii) below.

(i) If this contract is completely or partially terminated, the records relating to the work terminated shall be preserved and made available for a period of 3 years from the date of any resulting final settlement.

(ii) Records which relate to (A) appeals under the "Disputes" clause of this contract, (B) litigation or the settlement of claims arising out of the performance of this contract, or (C) costs and expenses of this contract as to which exception has been taken by the Contracting Officer or any of his duly authorized representatives, shall be retained until such appeals, litigation, claims, or exceptions have been disposed of.

(d) (1) The Contractor shall insert the substance of this clause, including the whole of this paragraph (d), in each subcontract hereunder that is not firm fixed-price of fixed-price with escalation. When so inserted, changes shall be made to designate the higher-tier subcontractor at the level involved in place of the Contractor; to add "of the Government prime contract" in place of "this contract" in (B) of paragraph (c) above.

(2) The Contractor shall insert the substance of the following clause in each firm fixed-price or fixed-price with escalation subcontract hereunder which when entered into exceeds $100,000, except those subcontracts covered by subparagraph (3) below:

AUDIT

(a) For purposes of verifying that certified cost or pricing data submitted in conjunction with the negotiation of this contract or any contract change or other modification involving an amount in excess of $100,000 was accurate, complete, and current, the Contracting Officer of the Government prime contract, or his authorized representatives, shall, until the expiration of 3 years from the date of final payment under this contract, or of the time periods for the particular records specified in Part 1-20 of the Federal Procurement Regulations (41 CFR Part 1-20), whichever expires earlier, have the right to examine those books, records, documents, papers, and other supporting data which involve transactions related to this contract or which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein.

(b) The subcontractor agrees to insert this clause, including this paragraph (b), in all subcontracts hereunder which when entered into exceed $100,000 unless 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.

(3) The Contractor shall insert the following clause in each firm fixedprice or fixed-price with escalation subcontract hereunder which when entered into exceeds $100,000 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.

AUDIT-PRICE ADJUSTMENTS

(a) This clause shall become operative only with respect to any change or other modification of this contract, which involves a price adjustment in excess of $100,000 unless the price adjustment 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: PROVIDED. That such change or other modification to this contract must result from a change or other modification (1) to the Government prime contract, or (2) authorized under the provisions of the Government prime contract.

(b) For purposes of verifying that any certified cost or pricing data submitted in conjunction with a contract change or other modification were accurate, complete, and current, the Contracting Officer of the Government prime contract, or his authorized representatives, shall, until the expiration of 3 years from the date of final payment under this contract, or of the time periods for the particular records specified in Part 1-20 of the Federal Procurement Regulations (41 CFR Part 1-20),whichever expires earlier, have the right to examine those books, records, documents, papers, and other supporting data which involve transactions related to this contract or which will permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein.

(c) The subcontractor agrees to insert the substance of this clause including this paragraph (c) in all subcontracts hereunder which when entered into exceed $100,000.

Preparation Instructions

(Due in the office of the addressee in 2 copies not later than the 15th of the following month.)

1. For Month Ended. Delete month and insert "quarter" if contractor is reporting quarterly. Enter the ending date of the contractor's accounting month, e.g., July 31, July 25, etc.

2. No. of Work Days. Enter the number of work days included in the accounting period (month or quarter) being reported, e.g., 20 days, 61 days, etc.

3. Contract No. Enter the complete letter symbol or contract symbol, number, and number of the latest modification or amendment.

4. To. Enter the full name and address of the appropriate Federal Agency and organizational component or other designated recipient to whom the report is to be submitted.

5. From. Enter the full name and address of the contractor and, if applicable, the contractor's division performing the contract.

6. Contract Value. Enter the total definitized cost plus fee of all work to be performed under the contract as of the preparation date of the report. Include the most recent executed modification or amendment and indicate its number. For all incentive contracts, enter the total of the negotiated target cost and the target fee. For firm fixed-price contracts enter the total amount of the contract.

7. Contract Type. Enter the type of contract, e.g., Cost-Plus-Fixed-Fee, CostPlus-Incentive-Fee, Firm Fixed-Price, etc.

8. Funded Contract Amount. Enter, as of the preparation date of the report, the amount of contract funds made available for the work to be performed under the contract, including the most recent executed modification amendment.

or

9. Amounts Billed. Enter the total amount of invoices billed by the contractor against this contract as of the preparation date of the report and the latest invoice number.

10. Program/Scope of Work. Enter a brief description of the program, contract scope of work, item or items purchased, or type of service being performed. 11. Signature and Title of Authorized Representative. The report should be signed by the authorized representative.

12. Preparation Date. Enter the preparation date of the report.

13. Payments Received. Enter the total amount of payments received by the contractor for this contract as of the preparation date of the report, excluding loans and advances outstanding.

14. Appropriation (or Fund Citation) and/or Reporting Category. Enter all appropriations or fund citations and/or the captions of the reporting categories where required under the terms of the contract. Where two or more appropriation sources are used for funding a single contract or line item and the contract specifies instructions for such reporting or segregation, data should be segregated by appropriation accounting reference. Line items or categories of additional information may be defined according to the needs of the Department or Agency, e.g., deliverable end-items, hardware systems, functional categories, elements of costs, performing organizations.

15. Costs Incurred/Contract Earnings. Enter in appropriate columns as defined below, the amounts of costs incurred or contract earnings on a line item basis as identified under the reporting category in column 14. The prime contractor is responsible for including the costs incurred or earnings of its subcontractors. The contractor should include all appropriate fees earned. Contractors reporting quarterly will delete the "monthly" references in columns 15a and b heading and insert "quarter".

a. Cumulative Actual End of Prior Month or Quarter. Enter the cumulative actual costs incurred or contractor earnings through the end of the prior accounting period (including fees earned on an equitable basis for all work performed under the contract) for all goods and services either delivered or undelivered, inplace or not in-place.

Reports which are prepared on a cash basis will be so identified by inserting the word "cash" in the columnar heading. The amounts reported in the column would be, for each reporting category, the cumulative disbursements incurred through the prior period.

b. Actual/Estimated Current Month or Quarter. Enter the actual or estimated costs incurred (including fees) or contractor earnings for the current period. All available pertinent actual cost data for the period will be used in developing the estimated figure.

Contractors preparing reports on a cash basis will provide the sum of the disbursements and the unpaid liabilities for each reporting category for the current period. If unpaid liabilities cannot be identified by reporting category, provide the aggregate amount as a single line item.

c. Cumulative Actual/Estimated to Date. Enter the actual or estimated total costs incurred (including fees) or contractor earnings through the end of the current accounting month or quarter (total of Columns 15a and 15b).

16. Planning Data (for Agency use only). These columns are provided for optional use by the Federal Agency to provide planning or other data considered desirable for management purposes. (The contractors should leave this blank.) 17. Total. Enter the totals of the respective columns.

Note.-Any comments necessary to clarify the information contained in this report should be entered on the reverse of the form.

CLAUSE NO. 1-DEFINITIONS

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

(a) The term "Secretary" means the Secretary, the Under Secretary, or any Assistant Secretary of the Department of Health, Education, and Welfare; and the term "his duly authorized representative" means any person, persons, or board (other than the Contracting Officer) authorized to act for the Secretary.

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

(c) The term "Project Officer" means the person representing the Government for the purpose of technical direction of contract performance. The Project Officer is not authorized to issue any instructions or directions which effect any increase or decrease in the cost of this contract or which change the period of performance of this contract.

(d) The term "Department" means the Department of Health, Education, and Welfare.

(c) Except as otherwise provided in this contract the term 'sub'contract” includes purchase orders under this contract.

CLAUSE NO. 2-DISPUTES

(c) Except as otherwise provided in this contract, the term "subcontract” question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contactor. The decision of the Contracting Officer shall be final and conclusive unless within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the Contracting Officer a written appeal addressed to the Secretary. The decision of the Secretary or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause. the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision.

(b) This "Disputes" clause does not preclude consideration of law questions in connection with decisions provided for in paragraph (a) above; Provided, That nothing in this contract shall be construed as making final the decision of any administrative officer, representative, or board on a question of law.

CLAUSE NO. 3-LIMITATION OF COST

(a) It is estimated that the total cost to the Government, exclusive of any fixed fee, for the performance of this contract will not exceed the estimated