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under this contract will be substantially greater than target cost. Any adjustment of billing prices shall be reflected in a modification to this contract, and shall not affect the determination of any price under paragraph (d) or (f) above. After execution of the contract modification referred to in subparagraph (f)(3) above, the total amount paid or to be paid on all invoices or vouchers shall be adjusted to reflect the total final price and any additional payments, refunds, or credits resulting therefrom shall be promptly made. (i) Quarterly Limitation on Payments Statement.

(1) This paragraph (i) shall not apply after a firm fixed-price or a total final price is established pursuant to subparagraph (d)(3) or (f)(2).

(2) Within forty-five (45) days after the end of each quarter of the Contractor's fiscal year, beginning for the quarter in which a delivery is first made or services are first performed and accepted by the Government under this contract, and as of the end of each quarter, the Contractor shall submit to the Contract Administration Office, with a copy to the purchasing activity and the cognizant contract auditor, a cumulative statement setting forth:

(i) the total contract price of all supplies delivered (or services performed) and ac

cepted by the Government for which final prices have been established; (ii) the total costs (estimated to the extent necessary) reasonably incurred for and

properly allocable solely to the supplies delivered (or services performed) and ac

cepted by the Government for which final prices have not been established; (iii) that portion of the total firm target profit which is in direct proportion to the supplies

delivered (or services performed) and accepted by the Government for which final prices have not been established, increased or decreased in accordance with the in

forth in subparagraph (d)(4) above when the amount of costs stated under (ii) above differs from the aggregate firm target costs of such sup

plies or services; and; (iv) the total amount of all invoices or vouchers for supplies delivered (or services per

formed) and accepted by the Government (including amounts applied or to be ap

plied to liquidate progress payments). (3) Notwithstanding any provision of this contract authorizing greater payments, if on any quarterly statement the amount stated in (2)(iv) above exceeds the sum stated in (2)(i), (ii), and (iii) above, the Contractor shall immediately refund or credit to the Government against existing unpaid invoices or vouchers covered by such statement the amount of such excess less (i) the cumulative total of any previous refunds or credits under this clause (exclusive of any tax credits under Section 1481 of the Internal Revenue Code of 1954) and (ii) any applicable tax credits under Section 1481 of the Internal Revenue Code of 1954. If any portion of such excess has been applied to the liquidation of progress payments, such amount (less all tax credits under the Internal Revenue Code) may be added or restored to the unliquidated progress payment account, to the extent consistent with the "Progress Payments" clause of this contract instead of direct refund thereof,

(4) When the Contractor fails to submit the quarterly statement within forty-five (45) days after the end of each quarter, and it is later determined that the Government has overpaid the Contractor, the excess shall be repaid to the Government immediately. Unless repaid within thirty (30) days after the end of the statement submittal period, the amount of such excess shall bear interest at the rate established in accordance with the Interest clause in ASPR 7-104.39. Interest shall be computed for the period from the date the data was due to the date of repayment.

(5) The Contractor shall (i) insert in each price redetermination or incentive price revision subcontract hereunder the substance of this paragraph (i), including this subparagraph (5), 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) 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 this paragraph (i), including this subparagraph (5) modified as outlined in (i) above. (j) Disagreements. If the Contractor and the Contracting Officer fail to agree upon (i) total firm

tment formula, or (ii) a total final price, within sixty (60) days after the date for the submission of the data required by paragraphs (c) and (e) respectively, or within such further time as may be specified by the Contracting Officer, such failure to agree shall

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be deemed to be a dispute concerning a question of fact within the meaning of the “Disputes" clause of this contract, and the Contracting Officer shall promptly issue a decision thereunder.

(k) Termination. If this contract is terminated prior to establishment of the total final price, prices of supplies or services subject to price revision under this clause shall be established pursuant to this clause for (i) completed supplies accepted by the Government and services performed and accepted by the Government, and (ü) in the event of a partial termination, supplies and services which are not terminated. The termination shall be otherwise accomplished pursuant to other applicable provisions of this contract.

(1) Equitable Adjustments Under Other Clauses. If an equitable adjustment in the contract price is made under any other clause of this contract before the total final price is established, the adjustment shall be made in the total target cost and may be made in the maximum dollar limit on the total final price, the total target profit or both. If such an adjustment is made after the total final price is established, adjustment shall be made only in the total final price.

(m) Exclusion From Target Price and Total Final Price. Whenever any clause of this contract provides that the contract price does not or will not include an amount for a specific purpose, such provision shall mean that neither any target price nor the total final price includes or will include any amount for such purpose.

(n) Separate Reimbursement. The cost of performance of an obligation that any clause of this contract expressly provides is at Government expense shall not be included in any target price or in the total final price, but shall be reimbursed separately.

(o) Taxes. As used in the clause of this contract entitled “Federal, State, and Local Taxes" or any other clause of this contract that provides for certain taxes or duties to be included in, or excluded from, the contract price, the term "contract prices includes the total target price or if it has been established, the total final price. When a provision in such clause or clauses requires that the contract price be increased or decreased as a result of changes in the obligation of the Contractor to pay or bear the burden of certain taxes or duties, such increase or decrease shall be made in the total target price or, if it has been established in the total final price, so as not to affect the Contractor's profit or loss on this contract.

(End of clause)

In contracts of the Department of the Navy, add the words “and the office or offices designated in the contract to make payments thereunder" after the words “cognizant contract auditor" in paragraph (i)(2). In the event the contract calls for parts or other supplies or services which are to be ordered under a provisioning document or Government option and the prices of such supplies or services are to be made subject to incentive price revision in accordance with the above clause, the following provision (p) shall be included in such clause:

(p) Parts. Parts, other supplies, or services, which are to be furnished under this contract pursuant to a provisioning document or Government option, shall be subject to price revision in accordance with the provisions of this clause, and any prices established for such parts, other supplies, or services, pursuant to such provisioning document or Government option, shall be deemed to be initial target prices or target prices as agreed upon and stipulated in the pricing document supporting the provisioning or added items. Initial or firm target costs and profits and final prices covering such parts, other supplies, or services may be established either separately, in the aggregate, or in any combination thereof, as the parties may agree.

7-108.3 Special Termination Costs. In accordance with 8–712, insert the following clause.

SPECIAL TERMINATION COSTS (1975 FEB)

(a) Notwithstanding the Limitation of Cost/Limitation of Funds, clause of this contract, the Contractor shall not include in his estimate of costs incurred or to be incurred, any amount for

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special termination costs, as herein defined, to which the Contractor may be entitled in the event
this contract is terminated for the convenience of the Government. The Contractor agrees to per-
form this contract in such a manner that its claim for such special termination costs
ceed $........... The Government shall have no obligation to pay the Contractor any amount for the
special termination costs in excess of this amount. Special termination costs are defined as costs
only in the following categories:

(i) severance pay as provided in 15-205.39(b)(ii);
(ii) reasonable costs continuing after termination as provided in 15-205.42(b);
(iii) settlement expenses as provided in 15-205.42(f);
(iv) costs of return of field service personnel from sites as provided in 15-205.25, and

15–205.46(d); and
(v) costs in categories (i), (ii), (iii), and (iv) above to which subcontractors may be enti-

tled in the event of termination. (b) In the event of termination for the convenience of the Government, this clause shall not be construed as affecting the allowability of special termination costs in any manner other than limiting the maximum amount payable therefor by the Government. (c) This clause shall remain in full force and effect until this contract is fully funded.

(End of clause)

7-109 Price Redetermination Clauses.

7-109.1 General. When it is determined, in accordance with 3-404.5 or 3-404.6, to use a fixed-price contract providing for redetermination of price, the applicable clause of those set forth below shall be used.

7-109.2 Prospective Periodic Price Redetermination at Stated Intervals.
(a) Description, Applicability, and Limitations. See 3-404.5.
(b) Clause.

PRICE REDETERMINATION (TYPE A) (1978 SEP)

(a) General. The unit prices and the total price set forth in this contract shall be periodically redetermined in accordance with the provisions of this clause.* The prices for supplies delivered and services performed prior to the first effective date of price redetermination shall remain fixed. (See footnotes at end of clause)

(b) Price Redetermination Periods. For the purpose of price redetermination the performance of this contract is divided into successive periods. The first period shall extend from the date of the contract to ..........,** and the second and each succeeding period shall extend for ......... (-) months from the end of the last preceding period, except that the final period may be varied by agreement of the parties. The first day of the second and each succeeding period shall be the effective date of price redetermination for the period. (See footnotes at end of clause)

(c) Price Redetermination. Not more than ..........*** (See footnotes at end of clause) days nor less than ..........*** days before the end of each redetermination period, except the last, and as otherwise provided in (iii) below, the Contractor shall submit:

(i) proposed prices for supplies which may be delivered or services which may be per

formed in the next succeeding period under this contract, together with-
(A) an estimate and breakdown of the costs of such supplies or services on DD Form

633-6 or in any other form on which the parties may agree;
(B) sufficient data to support the accuracy and reliability of such estimate; and
(C) an explanation of the differences between such estimate and the original (or last

preceding) estimate for the same supplies or services;
(ii) a statement of all costs incurred in the performance of this contract through the end

of the .........**** (See Footnotes at end of clause) month prior to the date of the sub-
mission of proposed prices, on DD Form 633-6 or in any other form on which the
parties may agree, together with sufficient supporting data to disclose unit costs and
cost trends for-
(A) supplies delivered and services performed; and

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CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(B) inventories of work in process and undelivered contract supplies on hand

(estimated to the extent necessary);
(iii) supplemental statements of costs incurred subsequent to the date set forth in (ii)

above for-
(A) supplies delivered and services performed; and
(B) inventories of work in process and undelivered contract supplies on hand

(estimated to the extent necessary);
as and to the extent that such information becomes available prior to the conclusion

of negotiations on redetermined prices; and (iv) any other relevant data which may reasonably be required by the Contracting Of

ficer. For the purposes of the foregoing submission, “costs" means allowable costs in accordance with Section XV of the Armed Services Procurement Regulation as in effect on the date of this contract. Upon receipt of the data required by this paragraph (c), the Contractor and the Contracting Officer shall promptly negotiate to redetermine fair and reasonable contract prices for supplies which may be delivered and services which may be performed in the period following the effective date of price redetermination. Where the Contractor fails to submit the data as required above within the time specified, payments under this contract may be suspended by the Contracting Officer until the data are furnished and if it is later determined that the Government has overpaid the Contractor, the excess shall be repaid to the Government immediately. Unless repaid within thirty (30) days after the end of the data submittal period, the amount of such excess shall bear interest at the rate established in accordance with the Interest clause in ASPR 7-104.39. Interest shall be computed for the period from the date the data was due to the date of repayment.

(d) Subcontracts. No subcontract placed under this contract shall provide for payment on a cost-plus-a-percentage-of-cost basis.

(e) Contract Modifications. Each negotiated redetermination of prices shall be evidenced by a modification to this contract, signed by the Contractor and the Contracting Officer, setting forth the redetermined prices for supplies delivered and services performed hereunder during the applicable price redetermination period.

(f) Adjust ment or Payments. Pending execution of the contract modification referred to in paragraph (e) above, the Contractor shall submit invoices or vouchers in accordance with billing prices as provided in this paragraph. The billing prices shall be the prices set forth in this contract; provided that, if at any time it appears that the then current billing prices will be substantially greater than the estimated final price in light of information provided by the Contractor in accordance with the provisions of subparagraph (g)(3) below, a reduction in the billing prices shall be negotiated. Similarly, the parties may negotiate an increase in billing prices upon submission of factual data from the Contractor showing that the redetermined price will be substantially greater than the current billing price. Any adjustment of billing prices shall be reflected in a modification to this contract, and shall not affect the redetermination of prices under this clause. After execution of the contract modification referred to in paragraph (e) above, the total amount paid or to be paid on all invoices or vouchers shall be adjusted to reflect the agreed prices, and any additional payments, refunds, or credits, resulting therefrom shall be promptly made. (8) Quarterly Limitation on Payments Statement.

(1) This paragraph (g) shall apply only during a period for which firm prices have not been established.

(2) Within forty-five (45) days after the end of each quarter of the Contractor's fiscal year, beginning for the quarter in which a delivery is first made (or services are first performed) and accepted by the Government under this contract, and as of the end of each quarter, the Contractor shall submit to the Contract Administration Office, with a copy to the purchasing activity and the cognizant contract auditor, ***** (See Footnotes at end of clause) a statement cumulative from the inception of the contract, setting forth:

(i) the total contract price of all supplies delivered (or services performed) and ac

cepted by the Government for which final prices have been established; (ii) the total costs (estimated to the extent necessary) reasonably incurred for and

properly allocable solely to the supplies delivered (or services performed) and accepted by the Government for which final prices have not been established;

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(iii) that portion of the total interim profit (used in establishing the initial contract price

or agreed to for the purpose of this paragraph (8), Limitation on Payments), which is in direct proportion to the supplies delivered (or services performed) and accepted

by the Government for which final prices have not been established; and (iv) the total amount of all invoices or vouchers for supplies delivered (or services per

formed) and accepted by the Government (including amounts applied or to be ap

plied to liquidate progress payments); provided, that such statement need not be submitted for any quarter for which either no costs are to be reported under (ii) above or revised billing prices have been established in accordance with paragraph (g) above and do not exceed the existing contract price, the Contractor's priceredetermination offer, or a price based on the most recent quarterly statement, whichever is least.

(3) Notwithstanding any provision of this contract authorizing greater payments, if on any quarterly statement the amount of (2)(iv) above exceeds the sum of (2) (i), (ii), and (iii) above, the Contractor shall immediately refund or credit to the Government against existing unpaid invo ices or vouchers covered by such statement the amount of such excess less (i) the cumulative total of any previous refunds or credits under this clause (exclusive of any applicable tax credits under Section 1481 of the Internal Revenue Code of 1954) and (ii) any applicable tax credits under Section 1481 of the Internal Revenue Code of 1954. If any portion of such excess has been applied to the liquidation of progress payments, such amount (less all tax credits under the Internal Revenue Code) may be added or restored to the unliquidated progress payment account, to the extent consistent with the progress payments clause of this contract, instead of direct refund thereof.

(4) When the Contractor fails to submit the quarterly statement within forty-five (45) days after the end of each quarter and it is later determined that the Government has overpaid the Contractor, the excess shall be repaid to the Government immediately. Unless repaid within thirty (30) days after the end of the statement submittal period, the amount of such excess shall bear interest at the rate established in accordance with the Interest clause in ASPR 7-104.39. Interest shall be computed for the period from the date the quarterly statement was due to the date of repayment.

(5) The Contractor shall (i) insert in each price redetermination or incentive price revision subcontract hereunder the substance of this “Limitation on Payments" provision, including this subparagraph (5), modified to omit mention of the Government and reflect the position of the Contractor as purchaser and of the subcontractor as vendor, and to omi graph (3) 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 this “Limitation on Payments" provision, including this subparagraph (5), modified as outlined in (i) above.

(h) Disagreements. If the Contractor and the Contracting Officer fail to agree upon redetermined prices for any price redetermination period within sixty (60)****** days after the date on which the data required by (c) above is to be filed, or within such further time as may be agreed upon by the parties, the failure to agree upon redetermined prices shall be deemed to be a dispute concerning a question of fact within the meaning of the clause of this contract entitled “Disputes," and the Contracting Officer shall promptly issue a decision thereunder. For the purpose of (e), (f), and (g) above, and pending final settlement of the disagreement on appeal, or by failure to appeal, or by agreement, such a decision shall be treated as an executed contract modification. Pending such final settlement, price redetermination for subsequent periods, if any, shall continue to be negotiated as hereinbefore provided.

(i) Termination. If this contract is terminated, prices shall continue to be established pursuant to this clause (i) for completed supplies accepted by the Government and services performed and accepted by the Government, and (ii) in the event of a partial termination, for supplies and services which are not terminated. All other elements of the termination shall be resolved pursuant to other applicable provisions of this contract.

(End of clause)

•Where a ceiling is applicable, the following proviso shall be added: "provided, that in no event shall the total amount paid under this con

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