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CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(a)(6)(i)(A) Change clause paragraph (e)(1)(ii) to provide substantially as follows:

(ii) If the cost reduction proposal submitted pursuant to this clause involves an an

ticipated decrease in the cost of performance of this contract and is accepted by the Government, the parties agree that neither the target cost, target profit, nor ceiling price of the instant contract shall be adjusted by reason of the acceptance of such proposal. The new requirement will be incorporated into the contract by a contract modification which will state that it is made pursuant to this Value Engineering clause. When the cost of performance of this contract is increased as a result of the changes, the equitable adjustment increasing the contract price shall be in accordance with the Changes clause rather than under this clause, but the resulting contract modification will state that it is made pursuant to this clause. (1976 FEB)

(End of clause paragraph)

(a)(6)(i)(B) Change clause paragraph (e)(2)(ii)(B) to provide substantially as follows:

(B) Subtract from the total amount in (A) any government costs not yet offset and any

increase in the instant contract price. If the resulting number is positive, multiply it by 35% (20% if VEPRC). Add this amount to the instant contract as a separate line item independent of the incentive sharing arrangement and without adjustment to any of the contract incentive parameters. (1976 FEB)

(End of clause paragraph)

(a)(6)(i)(C) Substitute the definition in (a)(5) above for the definition in clause paragraph (e)(3(i).

(a)(6)(i)(D) Change clause paragraph (e)(3)(iii)(B) to provide substantially as follows:

(B) Subtract from the total amount in (A) any government costs or instant contract in

creases not yet offset. If the resulting number is positive, multiply it by 35% (20% if VEPRC). Add this amount to the instant contract as a separate line item independent of the incentive sharing arrangement and without adjustment to any of the contract incentive parameters. (1976 FEB)

End of clause paragraph)

(a)(6)(ii) Modifications to clause paragraph (e) of (a)(3) above:

(a)(6)(ii)(A) Change clause paragraph (e)(1)(ii)(A) to provide substantially as follows:

(A) If the cost reduction proposal submitted pursuant to this clause involves an an

ticipated decrease in the cost of performance of this contract and is accepted by the Government, the parties agree that neither the target cost, target profit, nor ceiling price of the instant contract shall be adjusted by reason of the acceptance of such proposal. The new requirement will be incorporated into the contract by a modification which will state that it is made pursuant to this Value Engineering clause. When the cost of performance of this contract is increased as a result of the changes, the equitable adjustment increasing the contract price shall be in accordance with the Changes clause rather than under this clause, but the resulting contract modification will state that it is made pursuant to this clause. (1976 FEB)

(End of clause paragraph)

7-104.44

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(a)(6)(ii)(B) Change clause paragraph (e)(2)(ii)(B) to provide substantially as follows:

(B) Subtract from the total amount in (A) any government costs not yet offset and any

increase in the then instant contract target cost. If the resulting number is positive, and the VECP was accepted before establishment of a firm fixed price under the instant contract, multiply it by 35% (20% if this is a VEPRC). Add this amount to the instant contract as a separate line item independent of the incentive sharing arrangement and without adjustment to any of the contract incentive parameters. If the resulting number is positive, but the VECP was accepted after establishment of the firm fixed price under the instant contract, multiply it by 50% (25% if this is a VEPRC), and add this amount to the instant contract price. (1976 FEB)

(End of clause paragraph)

(a)(6)(ii)(C) Substitute the definition in (a)(5) above for the definition in clause paragraph (e)(3)(i).

(a)(6)(ii)(D) Change clause paragraph (e)(3)(iii)(B) to provide substantially as follows:

(B) Subtract from the total amount in (A) any government costs or instant contract in

creascs not yet offset. If the resulting number is positive, and the VECP was accepted before establishment of the firm fixed price under the instant contract, multiply it by 35% (20% if this was a VEPRC). If the resulting number is positive, but the VECP was accepted after establishment of the firm fixed price under the instant contract, multiply it by 50% (25% if this was a VEPRC). In either case, add the amount to the instant contract as a separate line item independent of the incentive sharing arrangement and without adjustment to any of the contract incentive parameters. (1976 FEB)

(End of clause paragraph)

7–104.44(b) (b) Value Engineering Program Requirement. In accordance with 1-1702.3 insert the following revised contract clause title and paragraph (a) of the clause in (a)(1) above:

VALUE ENGINEERING PROGRAM REQUIREMENT (1974 APR)

(a) The Contractor shall engage in a value engineering program in accordance with MILV-38352 or other requirements as specified by the Contracting Officer, shall submit progress reports thercon as specified in the contract and shall submit to the Contracting Officer any value enginccring change proposals (VECPs) resulting from the required program. This clause applies to all VECPs devcloped by the Contractor unless the Contracting Officer determines the proposal to be rewardable under the 'Valuc Engineering Incentive'clause (if any) of this contract, which:

(i) require a change to this contract to implement the VECP, and
(ii) reduce the overall costs to the cognizant Military Department, without impairing es-

sential functions or characteristics, provided that they are not based:
(A) solely on a change in deliverable end itcm quantities; or
(B) a change in R&D end item or test quantities due solely to results of previous

testing under this contract; or
(C) solely on a change to the contract type.

(End of clause paragraph)

7-104.44

ARMED SERVICES PROCUREMENT REGULATION

40-0800 - 80 - 12

CONTRACT CLAUSES AND SOLICITATION PROVISIONS Paragraphs (b) through (j) of the clause set forth in (a)(1) above shall be included as part of the VE Program Requirements clause except that, the guidelines in (a)(2) through (a)(5) above shall also be applicable.

7-104.45 Limitation of Liability.
(a) In accordance with 1-330, insert the following clause.

LIMITATION OF LIABILITY (1974 APR)

(a) Except for remedies expressly provided elsewhere in this contract, the Contractor shall not be liable for loss of or damage to property of the Government (excluding the supplies delivered under this contract) occurring after acceptance of the supplies delivered under this contract and resulting from any defects or deficiencies in such supplies.

(b) The foregoing limitations shall not apply when the defects or deficiencies in such supplies or the Government acceptance of such supplies resulted from willful misconduct or lack of good faith on the part of any of the Contractor's directors or officers, or on the part of any of his managers, superintendents, or other equivalent representatives, who have 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 per-

formance of this contract. (c) Notwithstanding paragraph (a) above, if the Contractor carries insurance or has established a reserve for self-insurance covering liability for damages or losses suffered by the Government through purchase or use of the contract supplies required to be delivered to the Government under this contract, the Contractor shall be liable to the Government to the extent of such insurance or reserve for self-insurance for damages or losses to property of the Government occurring after acceptance of the supplies delivered to the Government under this contract and resulting from any defects or deficiencies in such supplies.

(d) The substance of this clause, including this paragraph (d) suitably altered to reflect the relationship of the contracting parties, shall be included in all subcontracts hereunder.

(End of clause)

(b) In accordance with 1-330, in procurements of major items, insert the following clause.

LIMITATION OF LIABILITY – MAJOR ITEMS (1974 APR)

(a) Except as provided below, and notwithstanding any other provision of this contract, the Contractor shall not be liable for loss of or damage to property of the Government (including the supplies delivered under this contract) occurring after acceptance of the supplies delivered under this contract and resulting from any defects or deficiencies in such supplies.

(b) The foregoing limitations shall not apply when the defects or deficiencies in such supplies or the Government acceptance of such supplies resulted from willful misconduct or lack of good faith on the part of any of the Contractor's directors or officers, or on the part of any of his

ers, superintendents, or other equivalent representatives, who have 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 per-

formance of this contract. (c) Notwithstanding paragraph (a) above, if the Contractor carries insurance or has established a reserve for self-insurance covering liability for damages or losses suffered by the Government through purchase or use of the contract supplies required to be delivered to the Government

7-104.45

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

under this contract, the Contractor shall be liable to the Government for damages or losses to property of the Government occurring after acceptance of the supplies delivered to the Government under this contract and resulting from any defects or deficiencies in such supplies to the extent of such insurance or reserve for self-insurance.

(d) This clause does not diminish the Contractor's obligation, to the extent otherwise arising under this contract, relating to correction, repair, replacement or other relief for any defect or deficiency in supplies delivered under this contract. If loss or damage has occurred and correction, repair, or replacement is no longer feasible or desired by the Government, the Contractor shall, as determined by the Contracting Officer:

(i) pay to the Government the amount which it would have cost the Contractor to make

such correction, repair or replacement before the loss or damage occurred, or (ii) provide other equitable relief. (e) The provisions of this clause shall not limit or otherwise affect the Government's rights pursuant to the following listed clauses, if included in this contract:

GROUND AND FLIGHT RISKS,
GOVERNMENT PROPERTY, and

WARRANTY OF TECHNICAL DATA. (f) In all subcontracts hereunder, except those covered by (8) below, the Contractor shall either:

(i) insert, with the advance written consent of the Contracting Officer, the substance of

this clause, including this paragraph (1), suitably altered to reflect the relationship of

the contracting parties; or (ii) insert the substance of the clause in 7-104.45(a) suitably altered to reflect the rela

tionship of the contracting parties. (g) In subcontracts for both major items for which this clause is appropriate, and other end items for which the clause in 7-104.45(a) is appropriate, the substance of both clauses shall be included, with the advance written consent of the Contracting Officer. The Contractor shall identify high unit cost items by line item and include the following preamble to this clause:

(The provisions of this clause shall apply only to those items identified in this contract as being subject to this clause.)

(End of clause)

(c) In contracts for the purchase of both major items (see 1-330) for which the clause in (b) above is appropriate, and other contract end items for which the clause in (a) above is appropriate, the clauses in both (a) and (b) above shall be included. The contracting Officer shall identify high unit cost items by line item and include the following preamble to the Limitation of Liability - Major Items clause:

(The provisions of this clause shall apply only to those items identified in this contract as being subject to this clause.)

7-104.46 Required Sources for Precision Components for Mechanical Time Devices. In accordance with 1-2207.4, insert the following clause:

REQUIRED SOURCES FOR PRECISION COMPONENTS FOR MECHANICAL TIME DEVICES (1971 AUG)

(a) For the purposc of this clausc:

7-104.46

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(i) precision components for mechanical time devices are parts which closely relate so that

precise control and selection of working production tolerances can be maintained to accomplish the desired function and reliability. In terms of accuracy, such precision components have total tolerances under 0.003 inches, eccentricities less than 0.0015 inches, and surface finishes better than 65 rms. Examples of such precision com

ponents include: gears, pinions, posts, and plates. (ii) "domestic manufacture" means manufacture in the United States or Canada, and,

when mechanical timing assembly is involved, all precision components of the as

sembly must also have been manufactured in the United States or Canada. (b) The Contractor agrees that end items and components thereof delivered under this contract shall contain precision components for mechanical time devices that are of domestic manufacture only.

(c) The requirement for delivery in (b) above may be waived in whole or in part by the Contracting Officer when such waiver is determined to be in the Government's interest. In the event a waiver is granted, the Contractor agrees to acquire, for non-Government use, domestically manufactured precision components for mechanical time devices of a like quantity and type.

(d) The Contractor agrees to retain until the expiration of three years from the date of final payment under this contract and to make available during such period, upon request of the Contracting Officer, records showing compliance with this clause.

(e) The Contractor agrees to insert this clause, including this paragraph (e), in every subcontract and purchase order issued in performance of this contract unless he knows that the it being purchased contains no precision components for mechanical time devices.

(End of clause)

7-104.47 Multi-Year Procurement. In accordance with 1-322.5, insert the following clauses.

(a)

LIMITATION OF PRICE AND CONTRACTOR OBLIGATIONS (1966 OCT)

(a) This clause applies only in the event this contract is awarded on the alternative basis for award described in the Schedule as "Multi-Year Procurement".

(b) Funds are available for performance of this contract in the amount specifically described in the Schedule, as available for contract performance. The amount of funds so described at the time of award is not considered sufficient for the contract performance required by and described in the Schedule for any Program Year other than the First Program Year. Upon availability to the Contracting Officer of additional funds sufficient for performance of the full requirements for the next succeeding Program Year, the Contracting Officer shall, not later than the date specified in the Schedule, unless a later date is agreed to by the parties, so notify the Contractor in writing and the amount of funds described in the Schedule as available for contract performance shall be modified accordingly. This procedure shall apply for each successive Program Year.

(c) The Government is not obligated to the Contractor for contract performance in any monetary amount in excess of that described in the Schedule or modifications thereto, as available for contract performance.

(d) The Contractor is not obligated to incur costs for the performance required for any Program Year after the first unless and until he has been notified in writing by the Contracting Officer of an increase in availability of funds in accordance with paragraph (b) of this clause. If so notified, the Contractor's obligation shall be increased only to the extent contract performance is required for the additional Program Year for which funds have been made available.

(e) In the event of termination pursuant to the "Termination for Convenience of the Government" clause of this contract, the terms “total contract price" as used in that clause refers to the amount available for performance of this contract, as provided for in this clause, plus the applicable amount established as the cancellation ceiling, and the term “work under the contract" as used in that clause refers to the work under Program Ycar requirements for which funds have been made available. In the event of termination for default, the Government's rights under this contract shall apply to the entire multi-year requirements.

7-104.47

ARMED SERVICES PROCUREMENT REGULATION

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