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order to permit resumption of business or the like, sell for the account of the Government any item of Government property which has been damaged beyond practicable repair, or which is so commingled or combined with property of others, including the Contractor, that separation is impracticable.

(5) Except to the extent of any loss or destruction of or damage to Government property for which the Contractor is relieved of liability under the foregoing provisions of this clause, and except for reasonable wear and tear or depreciation, or the utilization of the Government property in accordance with the provisions of this contract, the Contractor assumes the risk of, and shall be responsible for, any loss or destruction of or damage to the Government property, and such property (other than that which is permitted to be sold ) shall be returned to the Government in as good condition as when received by the Contractor in connection with this contract, or as repaired under paragraph (f) above.

(6) In the event the Contractor is reimbursed or compensated for any loss or destruction of or damage to the Government property, he shall equitably reimburse the Government. The Contractor shall do nothing to prejudice the Government's rights to recover against third parties for any such loss, destruction or damage and, upon the request of the Contracting Officer, shall at the Government's expense, furnish to the Government all reasonable assistance and cooperation (including assistance in the prosecution of suit and the execution of instruments of assignment in favor of the Government) in obtaining recovery.

*(7) If this contract is for the development, production, modification, maintenance or overhaul of aircraft, or otherwise involves the furnishing of aircraft by the Government, the “Ground and Flight Risk" clause of this contract shall control, to the extent it is applicable, in the case of loss or destruction of, or damage to, aircraft. (* This subparagraph may be omitted where it is clearly inapplicable and shall be deleted when the Ground and Flight Risk clause is omitted pursuant to 10-404(b)(2).)

(h) Access. The Government, and any persons designated by it, shall at all reasonable times have access to the premises wherein any Government property is located, for the purpose of inspecting the Government property.

(i) Disposition of Government Property. Upon completion or expiration of this contract, any Government property which has not been consumed in the performance of this contract, or which has not been disposed of as provided for elsewhere in this clause, or for which the Contractor has not otherwise been relieved of responsibility, shall be disposed of in the same manner, and subject to the same procedures, as is provided in paragraph (g) of the clause of this contract entitled "Termination for the Convenience of the Government" with respect to termination inventory. The proceeds of any such disposition shall be applied in reduction of any payments to be made by the Government to the Contractor under this contract, or shall otherwise be credited to the price or costs of the work covered by this contract, or shall be paid in such other manner as the Contracting Officer may direct. Pending final disposition of such property, the Contractor agrees to take such action as may be necessary, or as the Contracting Officer may direct, for the protection and preservation thereof.

(j) Removal of Government Property and Abandonment. If the Contractor determines any Government property to be in excess of his needs under this contract, such Government property shall be disposed of in the same manner as provided by paragraph (i) above, except that the Government may


any Government property in place and thereupon all obligations of the Government regarding such abandoned property shall cease. The Government has no obligation to the Contractor with regard to restoration or rehabilitation of the Contractor's premises, neither in case of abandonment, disposition pursuant to paragraph (i) above, nor otherwise, except for restoration or rehabilitation costs which are properly included in an equitable adjustment under paragraph (b) above.

(k) Communicutions. All communications issued pursuant to this clause shall be in writing or in accordance with the “Manual for Military Standard Requisitioning and Issue Procedure (MILSTRIP) for Defense Contractors" (Appendix H, Armed Services Procurement Regulation).

(End of clause)

7–303.8 Communist Areas. In accordance with 6-403 and 7-103.15, insert the clause in 7-103.15.




7–303.9 Notice to the Government of Labor Disputes. Insert the clause in 7-104.4 in all contracts involving the furnishing of production of any item on the Department of Defense Master Urgency List and in any other contract of a class or kind which the Head of the Procuring Activity concerned determines to be appropriate for the use of such a clause.

7–303.10 Limitation on Withholding of Payments. In accordance with 7-104.21, insert the clause therein.

7–303.11 Special Termination Costs. In accordance with 8-712, insert the clause in 7-108.3.

7–303.12 Subcontracts. In accordance with 23-201.1, insert the clause in 7-104.23.

7–303.13 Material Inspection and Receiving Report. Insert the clause in 7-104.62.

7–303.14 Frequency Authorization. In accordance with 7-104.61, insert the clause therein.

7–303.15 Quality Program. In accordance with 14–304, insert the clause in 7-104.28.

7–303.16 Price Reduction for Defective Cost or Pricing Data. In accordance with 7-104.29, insert the appropriate clause therein.

7–303.17 Ground and Flight Risk. In accordance with 10_404, insert the clause in 7-104.10.

7–303.18 Duty-Free Entry. In accordance with 6-603.3, insert the clauses in 7-104.31.

7–303.19 Duty-Free Entry of Listed Canadian Supplies. In accordance with 6-605.2, insert the clause in 7-104.32.

7–303.20 Safety Precautions for Ammunition and Explosives. In accordance with 7-104.79, insert the clause therein.

7–303.21 Advance Payments. When advance payments are to be made in accordance with Appendix E, Part 4, insert the clause in 7-104.34.

7–303.22 Workmen's Compensation and War Hazard Insurance Overseas. In accordance with 10-403, insert the clauses in 7-104.2(a) and/or 7-104.2(b) depending on whether all contract employees are subject to the Defense Base Act or whether the Act has been waived as to all or part of the contract employees. Also insert the clause Reimbursement for War Hazard Losses in 7-104.2(c) and the language at 10-502(b) and (c) according to the instructions stated in those paragraphs.

7–303.23 Progress Payments. In accordance with E-510, insert one of the clauses in 7-104.35.

7–303.24 Required Source for Jewel Bearings and Related Items. In accordance with 1-2207.2, insert the clause in 7-104.37.

7–303.25 Notice of Radioactive Materials. In accordance with 7-104.80, insert the clause therein.

7-303.26 Interest. In accordance with E-620, insert the clause in 7-104.39.

7–303.27 Competition in Subcontracting. In accordance with 7-104.40, insert the clause therein.

7–303.28 Audit by Department of Defense. In accordance with 7-104.41(a), insert the clause therein.




7–303.29 Subcontractor Cost and Pricing Data. In accordance with 7-104.42, insert the appropriate clause therein.

7–303.30 United States Products (Military Assistance Program). In accordance with 6–703.4, insert the clause in 7-2003.51.

7–303.31 Value Engineering. Subject to the limitations in 1–1702, insert the appropriate clause(s) in 7-104.44 as applicable.

7–303.32 Management Systems Requirements. In accordance with 16–827.1, insert the clause in 7-104.50.

7–303.33 Non-Use of Foreign Flag Vessels Engaged in Cuban and North Vietnam Trade. In accordance with 1-1404 and 1-1410, insert the appropriate clause in 7-104.19.

7–303.34 New Material. In accordance with 1-1208, insert the clause in 7-104.48.

7–303.35 Limitation of Liability. In accordance with 1-330(b), insert the appropriate clause in 7-104.45.

7–303.36 Bills of Lading Covering Shipments From Contractor's Plant. In accordance with the requirements of 19–217.1(a), insert the clause in 7-103.25.

7–303.37 Special Test Equipment. Insert the clause in 7-104.26 in negotiated contracts which provide that the contractor will acquire special test equipment for the Government but do not specify the items to be acquired (see 13-306.3(c)).

7–303.38 Contract Schedule Subline Items Not Separately Priced. In accordance with 20–304.2(c)(ii), insert the clause in 7-104.7.

7–303.39 First Article Approval. In accordance with 1-1904, insert the appropriate clause in 7-104.55.

7–303.40 Order of Precedence. In accordance with 3–501(b)Sec.C(xxxi), insert the clause in 7-2003.41.

7–303.41 United States Products and Services (Balance of Payments Program.) In accordance with 6-806.4, insert the clause in 7-2003.53.

7–303.42 Identification of Expenditures in the United States. In accordance with 6-807, insert the clause in 7-104.58.

7–303.43 Reserved.

7–303.44 Care of Laboratory Animals. In compliance with law and in furtherance of the Department of Defense policy that all aspects of investigative programs involving the use of experimental or laboratory animals be humanely conducted in accordance with recognized principles, the following clause shall be included in all contracts awarded in the United States, its possessions, and Puerto Rico, which may involve the use of such animals.


(a) Before undertaking performance of any contract involving the use of laboratory animals, the Contractor shall register with the Secretary of Agriculture of the United States in accordance with Section 6, P.L. 89-544, Laboratory Animal Welfare Act, 24 August 1966 as amended by P.L. 91-579, Animal Welfare Act of 1970, 24 December 1970. The Contractor shall furnish evidence of such registration to the contracting officer.

(b) The Contractor shall acquire animals used in research and development programs from a dealer licensed by the Secretary of Agriculture, or from exempted sources in accordance with the Public Laws enumerated in (a) above.




(c) In the care of any live animals used or intended for use in the performance of this contract, the Contractor shall adhere to the principles enunciated in the Guide for Care and Use of Laboratory Animals prepared by the Institute of Laboratory Animal Resources, National Academy of Sciences-National Research Council, and in the United States Department of Agriculture's regulations and standards issued under the Public Laws enumerated in (a) above. In case of conflict between standards, the higher standard shall be used. Contractor reports on portions of the contract in which animals were used shall contain a certificate stating that the animals were cared for in accordance with the principles enunciated in the Guide for Care and Use of Laboratory Animals prepared by the Institute of Laboratory Animal Resources, NAS-NRC, and/or in the regulations and standards as promulgated by the Agricultural Research Service, USDA, pursuant to the Laboratory Animal Welfare Act of 24 August 1966, as amended (P.L. 89-544 and P.L. 91-579). NOTE: The Contractor may request registration of his facility and a current listing of

licensed dealers from the Regional Office of the Animal and Plant Health Inspection Service (APHIS), USDA, for the region in which his research facility is located. The location of the appropriate APHIS Regional Office as well as information concerning this program may be obtained by contacting the Senior Staff Officer, Animal Care Staff, USDA/APHIS, Federal Center Building, Hyattsville, Maryland, 20782.

(End of clause)

7–303.45 Recovery of Nonrecurring Costs on Non-US Government Sales of Defense Equipment. In accordance with 4-110(d), insert the clauses in 7-104.64, as appropriate.

7-303.46 Insurance. In accordance with 10_405, insert the clause in 7-104.65.

7–303.47 Use of Excess and Near-Excess Currency. In accordance with 6-1110, insert the clause in 7-104.66.

7–303.48 Aircraft, Missile and Space Vehicle Accident Reporting and Investigation. In accordance with 7-104.81, insert the clause therein.

7–303.49 Procurement of Miniature and Instrument Ball Bearings. In accordance with 1-2207.3, insert the clause in 7-104.38.

7–303.50 Equal Opportunity Pre-Award Clearance of Subcontracts. In accordance with 23-201.4, insert the clause in 7-104.22.

7–303.51 Minority Business Enterprises. In accordance with 1-332, insert the appropriate clause or clauses in 7-104.36.

7–303.52 Procurement of Precision Components for Mechanical Time Devices. In accordance with 1-2207.4, insert the clause in 7-104.46.

7-303.53 Payment of Interest on Contractor's Claims. In accordance with 1-333, insert the clause in 7-104.82.

7–303.54 Rights in Data. In accordance with 7-104.9 insert the appropriate clause, or clauses, therein.

7–303.55 Cost Accounting Standards. In accordance with 3-1204, insert the clauses in 7-104.83.

7–303.56 Contractor's Identification of Changes. In accordance with 26-802, insert a clause as provided in 7-104.86.

7–303.57 Cost Schedule Control Systems. In accordance with 1-331(h) and 3-501(b) Section C (xlv), insert the clause in 7-104.87.

7–303.58 Engineering Change Proposals (ECP's). In accordance with 26-205, insert the clause in 7-104.89.

7–303.59 Change Order Accounting. In accordance with 26-205, insert the clauise in 7-104.90.




7–303.60 Capture and Detention. In accordance with 10_406, insert the clause in 7-104.94.

7–303.61 Indemnification Under 10 USC 2354. In accordance with 10–701, insert the following clause:


(a) Pursuant to the authority of 10 U.S.C. 2354, notwithstanding any other provision of this contract, but subject to the following paragraphs of this clause, the Government shall hold harmless and indemnify the Contractor against:

(i) claims (including reasonable expenses of litigation or settlement) by third persons

(including employees of the Contractor) for death, bodily injury (including sickness

or disease), or loss of, damage to, or loss of use of property; (ii) loss of or damage to property of the Contractor, and loss of use of such property, but

excluding loss of profit; and

(iii) loss of, damage to, or loss of use of property of the Government; to the extent that such a claim, loss or damage (A) arises out of the direct performance of this contract; (B) is not compensated by insurance or otherwise; and (C) results from a risk defined in this contract to be unusually hazardous. Any such claim, loss, or damage within deductible amounts of Contractor's insurance shall not be covered under this clause.

(b) The Government shall not be liable for any such claim, loss or damage that results 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 has supervision or direction of (i) all or substantially all of the Contractor's business, or (ü) 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 performance of this contract. The Contractor shall not be indemnified under this clause for liability assumed under any contract or agreement (except for subcontracts which are covered by paragraph (d) below) unless such assumption of liability has been specifically approved by the Contracting Officer; (or in contracts with the Department of the Navy, The Department.)

(c) No payment shall be made by the Government under this clause unless the amount thereof shall first have been certified to be just and reasonable by the Secretary or his representative designated for such purpose. Such payments shall be made from funds as stated in 10 U.S.C. 2354. The rights and obligations of the parties under this clause shall survive the termination, expiration, or completion of this contract.

(d) With the prior written approval of the Contracting Officer, the Contractor may include in any subcontract under this contract the same provisions as those in this clause, whereby the Contractor shall indemnify the subcontractor against any risk defined in this contract to be unusually hazardous. Such a subcontract shall provide the same rights and duties, and the same provisions for notice, furnishing of papers and the like, between the Contractor and the subcontractor as are established by this clause. The Contracting Officer may also approve similar indemnification of lower tier subcontractors upon the same terms and conditions. Subcontracts providing for indemnification within the purview of this clause shall entitle the Contractor or the Government, or both, to direct, participate in, and supervise the settlement or defense of relevant actions and claims. The Government shall indemnify the Contractor with respect to his obligations to subcontractors under subcontract provisions thus approved by the Contracting Officer. The Government may discharge its obligations under this paragraph by making payments directly to subcontractors or to persons to whom the subcontractors may be liable.

(e) If insurance coverage maintained by the Contractor on the date of the execution of this contract is reduced, the liability of the Government under this clause shall not, by reason of such reduction, be increased to cover risks theretofore insured, unless the Contracting Officer consents thereto in consideration of an equitable adjustment to the Government, if appropriate, of the price in a fixed-price contract, or the fee in a cost-reimbursement type contract, in such amount as the parties may agree.



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