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CONTRACT CLAUSES AND SOLICITATION PROVISIONS

provided in paragraph (c) below, the allowability of the cost of any such replacement or correction shall be determined as provided in the clause of this contract entitled “Allowable Cost, Fixed Fee, and Payment," but no additional fee shall be payable with respect thereto. Corrected articles shall not be tendered again for acceptance unless the former tender and the requirement of correction is disclosed. If the Contractor fails to proceed with reasonable promptness to perform such replacement or correction, the Government (i) may by contract or otherwise perform such replacement or correction and charge to the Contractor any increased cost occasioned the Government thereby, or may reduce any fixed fee payable under the contract (or require repayment of any fixed fee theretofore paid) in such amount as may be equitable under the circumstances, or (ii) in the case of articles not delivered, may require the delivery of such articles, and shall have the right to reduce any fixed fee payable under this contract (or to require repayment of any fixed fee theretofore paid) in such amount as may be equitable under the circumstances, or (iii) may terminate this contract for default. Failure to agree to the amount of any such increased cost to be charged to the Contractor or to such reduction in, or repayment of, the fixed fee shall be deemed to be a dispute concerning a question of fact within the meaning of the clause of this contract entitled “Disputes."

(c) Notwithstanding the provisions of paragraph (b) above, the Government may at any time require the Contractor to remedy by correction or replacement, without cost to the Government, any failure by the Contractor to comply with the requirements of this contract, if such failure is due to fraud, lack of good faith or willful misconduct 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 (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 performance of this contract. The Government may at any time also require the Contractor to remedy by correction or replacement, without cost to the Government, any such failure caused by one or more individual employees selected or retained by the Contractor after any such supervisory personnel has reasonable grounds to believe that any such employee is habitually careless or otherwise unqualified.

(d) The provisions of paragraph (b) above shall apply to any corrected or replacement end item or component until six months after its acceptance.

(e) The Contractor shall make his records of all inspection work available to the Government during the performance of this contract and for such longer period as may be specified in this contract.

(f) Except as provided in this clause and as may be provided in the Schedule, the Contractor shall have no obligation or liability to correct or replace articles which at the time of delivery are defective in material or workmanship or otherwise not in conformity with the requirements of this contract.

(g) Except as otherwise provided in the Schedule, the Contractor's obligation to correct or replace Government-furnished property (which is property in the possession of or acquired directly by the Government and delivered or otherwise made available to the Contractor) shall be governed by the provisions of the clause of this contract entitled “Government Property."

(End of clause)

(2) In the foregoing clause, the words “Task Order" or other appropriate designation may be substituted for the word “Schedule," as appropriate.

(3) In contracts not providing for payment of a fee, insert the following in lieu of paragraph (b) of the clause set forth in (1) above.

(b) At any time during performance of this contract, but not later than six (6) months (or such other period as may be provided in the Schedule) after acceptance of all of the end items (other than designs, drawings, or reports) to be delivered under this contract, the Government may require the Contractor to remedy by correction or replacement, as directed by the Contracting Officer, any failure by the Contractor to comply with the requirements of this contract. Any time devoted to such correction or replacement shall not be included in the computation of the period

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CONTRACT CLAUSES AND SOLICITATION PROVISIONS

of time specified in the preceding sentence except as provided in (d) below. Except as provided in paragraph (c) below, the allowability of the cost of any such replacement or correction shall be us provided in the clause of this contracı entitled “Allowable Cost and Payment." Corrected articles shall not be tendered again for acceptance unless the former tender and the requirement of correction is disclosed. If the Contractor fails to proceed with reasonable promptness to perform such replacement or correction, the Government (i) may by contract or otherwise perform such replacement or correction and charge to the Contractor any increased cost occasioned the Government thereby, or (ii) in the case of articles not delivered, may require the delivery of such articles, or (iii) may terminate this contract for default. Failure to agree to the amount of any such increased cost to be charged to the Contractor shall be deemed to be a dispute concering a question of fact within the meaning of the clause of this contract entitled “Disputes."

(b) The following clause shall be inserted in all contracts subject to this part when the clause in (a)(1) above is not used.

INSPECTION (1959 FEB)

The Government, through any authorized representatives, has the right at all reasonable times, to inspect, or otherwise evaluate the work performed or being performed hereunder and the premises in which it is being performed. If any inspection, or evaluation is made by the Government on the premises of tbe Contractor or a subcontractor, the Contractor shall provide and shall require his subcontractors to provide all reasonable facilities and assistance for the safety and convenience of the Government representatives in the performance of their duties. All inspections and evaluations shall be performed in such a manner as will not unduly delay the work.

(End of coure)

(c) When it is desired to require contractors to maintain an inspection system in accordance with Military Specification MIL-L-45208 (see 14_303), the clause set forth in (a) above shall be included in the contract except that the following shall be added as the third sentence of paragraph (a):

The inspection system shall be in accordance with the edition of Military Specification MILHS208 in effect on the date of this contract. (1967 AUG)

7-402.6 Assignment of Claims. In accordance with 7-103.8, insert the clause therein.

7-402.7 Examination of Records. In accordance with 7-104.15, insert the clause therein. In the case of research and development contracts with nonprofit institutions and subcontracts thereunder, and pursuant to procedures approved by the Comptroller General, original documentary evidence in support of costs of the transportation of things will not be required pursuant to said clause.

7-402.8 Subcontracts.

(a) In accordance with the requirements in 23–201.2, and subject to the instructions in (b) and (c) below, insert the following clause. SUBCONTRACTS (1979 MAR)

(a) The Contractor shall notify the Contracting Officer reasonably in advance of entering into any subcontract (as used in this clause, the term "subcontract" includes, but is not limited to, purchase orders, changes, and/or modifications thereto) which (i) is cost-reimbursement type, time and materials or labor-hour, or (ii) is fixed-price

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CONTRACT CLAUSES AND SOLICITATION PROVISIONS

type and exceeds in dollar amount either $25,000 or five percent (5%) of the total estimated cost of this contract, (iii) provides for the fabrication, purchase, rental, installation, or other acquisition of special test equipment having a value in excess of $1,000 or of any items of industrial facilities; or (iv) has experimental, developmental, or research work as one of its purposes.

(b) In the case of a proposed subcontract, including but not limited to purchase orders, changes and/or modifications thereto which (i) is cost-reimbursement, time and materials, or labor-hour which would involve an estimated amount in excess of $25,000, including any fee, (ii) is proposed to exceed $100,000, or (iii) is one of a number of subcontracts under this contract with a single subcontractor for the same or related supplies or services which, in the aggregate are expected to exceed $100,000, the advance notification required by (a) aboce shall include:

(1) a description of the supplies or services to be called for by the subcontract;
(2) identification of the proposed subcontractor and an explanation of why and how the

proposed subcontractor was selected, including the degree of competition obtained;
(3) the proposed subcontract price, together with the Contractor's cost or price analysis

thereof; (4) the subcontractor's current, complete, and accurate cost or pricing data and Cer

tificate of Current Cost or Pricing Data when such data and certificate are required

by other provisions of this contract to be obtained from the subcontractor; (5) identification of the type of subcontract to be used; (6) a memorandum of negotiation which sets forth the principal elements of the subcon

tract price negotiations. A copy of this memorandum shall be retained in the Contractor's file for the use of Government reviewing authorities. The memorandum

sufficient detail to reflect the most significant considerations controlling the establishment of initial or revised prices. The memorandum should include an ex. planation of why cost or pricing data was, or was not required, and, if it was not required in the case of any price negotiation in excess of $100.000, a statement of the basis for determining that the price resulted from or was 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. If cost or pricing data was submitted and a certificate of cost or pricing data was required, the memorandum shall reflect the extent to which reliance was not placed upon the factual cost or pricing data submitted and the extent to which this data was not used by the Contractor is determining the total price objective and in negotiating the final price. The memorandum shall also reflect the extent to which it was recognized in the negotiation that any cost or pricing data submitted by the subcontractor was not accurate, complete, or current; the action taken by the Contractor and the subcontractor as a result, and the effect, if any, of such defective data on the total price negotiated. Where the total price negotiated differs significantly from the Contrac

tor's total price objective, the memorandum shall explain this difference; (7) when incentives are used, the memorandum of negotiation shall contain an explana

tion of the incentive fee/profit plan identifying cach critical performance element, management decisions used to quantify each incentive element, reasons for incentives on particular performance characteristics, and a brief summary of trade-off pos

sibilities considered as to cost, performance, and time; and (8) the subcontractor's Disclosure Statement or Cerificate relating to Con Accounting

Standards when such data are required by other provisions of this contract to be ob tained from the subcontractor.

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CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(c) The Contractor shall obtain the written consent of the Contracting Officer prior to placing any subcontract for which advance notification is required under (a) above. The Contracting Of ficer may, in his discretion, ratify in writing any such subcontract; such action shall constitute the consent of the Contracting Officer as required by this paragraph (C).

(d) The Contractor agrees that no subcontract placed under this contract shall provide for pay. ment on a cost-plus-a-percentage of-cost basis.

(e) Neither consent by the Contracting Officer to any subcontract or any provisions thereof nor approval of the Contractor's procurement system shall be construed to be a determination; (i) of the acceptability of any subcontract terms or condition, (ii) of the acceptability of any subcontract price or of any amount paid under any subcontract, or (iii) to relieve the Contractor of any responsibility for performing this contract; unless such approval or consent specifically provides otherwise.

() The Contractor shall give the Contracting Officer immediate notice in writing of any action or wit filed, and prompt notice of any claim made against the Contractor by any subcontractor or vendor which in the opinion of the Contractor, may result in litigation, related in any way to this

contract, with respect to which the Contractor may be entitled to reimbursement from the Governmeni.

(8) Notwithstanding (c) above, the Contractor may enter into subcontracts within (i) and (ii) of (a) above, without the consent of the Contracting Officer, if the Contracting Officer has approved in writing the Contractor's procurement system and the subcontract is within the scope of such approval (This subparagraph (8) however, shall not be applicable to those subcontracts subject to subparagraph subject to subparagraph (k) below, if any.)

(h) The Contractor shall (i) insert in each incentive price revision or price redetermination subcontract hereunder the substance of the "Limitation on Payments" paragraph set forth in the appropriate clause prescribed by paragraph 7-108 or 7-109 of the Armed Services Procurement Regulation, including subparagraph (4) thereof, 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 the portion of subparagraph (3) thereof relating to tax credits, and (ii) include in each costreimbursement type subcontract hereunder a requirement that each price redetermination and incentive price revision subcontract thereunder will contain the substance of the "Limitation on Payments" provision, including subparagraph (4) thereof, modified as outlined in (i) of this paragraph.

(i) To facilitate small business participation in subcontracting under this contracı, the Contractor agrees to provide progress payments on the fixed-price types of subcontracts of those subcon. tractors which are small business concerns, in conformity with the standards for customary progress payments stated in paragraphs 503 and 514 of Appendix E of the Armed Services Procurement Regulation, as in effect on the date of this contract The Contractor further agrees that the need for such progress payments will not be considered as a handicap or adverse factor in the award of subcontracts

(j) The Government reserves the right to perform contractor procurement system reviews as set forth in ASPR Section XXIII

(End of clauk)

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(b) Insert the following additional subparagraph to the clause in (a) above, in accordance with 23-201.2(d).

(k) Notwithstanding approval of the Contractor's procurement system, the Contractor shall not enter into certain subcontracts or classes of subcontracts set forth elsewhere in this contract without the prior written consent of the Contracting Officer. With respect to subcontracts so identified, the advance notification requirements of paragraph (a) above shall be fully applicable even though the Contractor's procurement system has been approved and those subcontracts are within the scope of the approval.

(c) In contracts with educational institutions, change “(iii)" in paragraph (a) of the clause in (a) above to read:

(iii) provides for the fabrication, purchase, rental, installation, or other acquisition of

equipment or of industrial facilities. (1975 OCT). (d) In accordance with 23–201.4, insert the Equal Opportunity Pre-Award Clearance of Subcontracts clause in 7-104.22.

7-402.9 Utilization of Small Business Concerns. In accordance with 1-707.3 (a) and (b), insert one or both of the clauses in 7-104.14.

7-402.10 Termination. In accordance with 8-702 and 8,704, insert the appropriate clause set forth in either 7-203.10 or 7-302.10.

7-402.11 Disputes. In accordance with 7-103.12, insert the clause therein.

7-402.12 Renegotiation. In accordance with 7-103.13, insert the clause therein.

7-402.13 Buy American Ace. In accordance with 7-104.3, insert the clause therein.

7-402.14 Convici Labor. In accordance with 12–201, insert the clause in 7-104.17.

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