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7:447

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

7-1903.12 Examination of Records by Comptroller General. Pursuant to 10 U.S.C. 2313(b), the clause in 7-104.15 shall be inserted in all negotiated contracts in excess of $10,000 including contracts awarded under a total (Small Business Restricted Advertising) or partial set aside, except (i) as provided in 6-704 and 6–1001; and (ii) in contracts or purchase orders for public utility services at rates not in excess of those established for uniform applicability to the general public or at such rates plus reasonable connection charges incident to such services.

7-1903.13 Gratuities. Insert the clause in 7-104.16 except in contracts and purchase orders with foreign governments obligating solely funds other than those contained in Department of Defense Appropriation Acts.

7-1903.14 Convict Labor. In accordance with 7-104.17, insert the clause therein.

7-1903.15 Ocean Transport of Government Owned Supplies. In accordance with 7-104.19(a), insert the clause therein.

7-1903.16 Utilization of Labor Surplus Area Concerns. In accordance with 7-104.20, insert the appropriate clause or clauses therein.

7-1903.17 Limitation on Withholding of Payments. In accordance with 7-104.21, insert the clause therein.

7-1903.18 Subcontracts. In accordance with 23–201.1, insert the appropriate clause in 7-104.23.

7-1903.19 Government Property. In accordance with 7-104.24, insert the appropriate clause therein.

7-1903.20 Special Tooling. In accordance with 7-104.25, insert the clause therein.

7-1903.21 Special Test Equipment. In accordance with 7-104.26, insert the clause therein.

7-1903.22 Options. When it is intended to extend the services described in the schedule, insert a clause substantially as follows: OPTION TO EXTEND SERVICES

The Government may require the Contractor to continue to perform any or all items of services under this contract within the limits stated in the Schedule. The Contracting Officer may exercise this option, at any time within the period specified in the Schedule, by giving written notice to the Contractor. The rates set forth in the Schedule shall apply to any extension made pursuant to this option provision unless provision for appropriate price adjustment has been made elsewhere in

this contract.

(End of clause)

Other examples of option clauses appear in 7-104.27. See Section 1, Part 15, for specific instructions, prohibitions and procedures.

7-1903.23 Quality Program. In accordance with 7-104.28, insert the clause therein.

7-1903.24 Price Reduction for Defective Cost or Pricing Data. In accordance with 7-104.29, insert the appropriate clause therein.

7-1903.25 Advance Payments. in accordance with Appendix E, Part 4, insert the appropriate clause in 7-104.34.

7-1903.26 Progress Payments. In accordance with E-510.1, insert the appropriate clause in 7-104.35.

7-1903.27 Interest. In accordance with E-620, insert the clause in 7-104.39.

7-1903.27
ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

7-1903.28 Competition in Subcontracting. In accordance with 7-104.40, insert the clause therein.

7-1903.29 Audit by Department of Defense. In accordance with 7-104.41, insert the clause therein.

7-1903.30 Subcontractor Cost and Pricing Data. In accordance with 7-104.42, insert the appropriate clause therein.

7-1903.31 Reserved.

7-1903.32 Communist Areas. In accordance with 7-103.15, insert the clause therein.

7-1903.33 Multi-Year Procurement. In accordance with 1-322.7(m), 1-322.8(c), or 1-322.9(c), insert the appropriate clause set forth below.

(a) Limitation of Price and Contractor Obligations. (See 7-104.47(a)).
(b) Cancellation of Items-Service Contracts. Insert the following clause.

CANCELLATION OF ITEMS–SERVICE CONTRACTS (1974 APR)

(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) As used herein, the term “cancellation" means that the Government is canceling, pursuant to this clause, its Program Year requirements for items as set forth in the Schedule for all Program Years subsequent to that in which notice of cancellation is provided. Such cancellation shall occur only if, by the date or within the time period specified in the Schedule, or such further time as may be agreed to, the Contracting Officer (i) notifies the Contractor that funds will not be available for contract performance for any subsequent Program Year, or (ii) fails to notify the Contractor that funds have been made available for performance of the Program Year requirement for the succeeding Program Year.

(c) Except for cancellation pursuant to this clause or for termination pursuant to the “Default" clause, any reduction by the Contracting Officer in the quantities called for under this contract shall be considered a termination in accordance with the “Termination for Convenience of the Government" clause of this contract.

(d) In the event of cancellation pursuant to this clause, the Contractor will be paid, as consideration therefor, a cancellation charge not to exceed the cancellation ceiling described and separately set forth in the Schedule as being applicable at the time of cancellation.

(e) The cancellation charge is intended to cover only expenses incurred by the Prime Contractor or his subcontractor which would have been equitably amortized in the unit prices for the entire multi-year contract period, but which, because of the cancellation are not so amortized. The cancellation charge shall be computed and the claim therefor made as would be applicable under the “Termination for Convenience of the Government" clause of this contract. The Contractor shall submit the claim promptly but in no event later than one year (i) from the date of notification of the nonavailability of funds, if issued pursuant to paragraph (b)(i), or (ii) from the date specified in the schedule by which notification of the availability of additional funds for the next succeeding program year is required to be issued, whichever is earlier, unless one or more extensions in writing are granted by the Contracting Officer, upon request of the Contractor made in writing within such one year period or authorized extension thereof. The claim may include reasonable start-up and other nonrecurring costs such as plant or equipment relocation costs; the costs of special tooling and special equipment; allocable portions of the costs of facilities acquired or established for the conduct of the work, provided such costs have not been charged to the contract through overhead, or otherwise depreciated, and to the extent that it is impracticable for the Contractor to utilize such facilities in the conduct of his commercial work; costs incurred for the assembly training and transportation of a specialized work force to and from the job site; and costs not amortized by the level contract unit price solely because the cancellation had precluded anticipated benefits of Contractor or subcontractor learning. The claim shall not include any amount for:

(i) labor, material, or other expenses incurred by the Contractor or its subcontractor for

performance of the canceled work;

7-1903.33

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(ii) any item of cost for which payment has already been made to the Contractor;
(iii) anticipated profit on the canceled work;
(iv) the remaining useful commercial life of facilities. Useful commercial life, for this pur-

pose, means the commercial utility of the facilities rather than the physical life
thereof, with due consideration given to such factors as location of facilities, special-

ized nature thereof, and obsolescence. (f) If this contract includes an option to increase quantities in which the period for exercise of the option is limited to the date set forth in the contract for notifying the Contractor that funds are available for the requirement of the next succeeding program year, the Contractor agrees not to include in the price for option quantities any costs of a startup or nonrecurring nature, which costs have been fully provided for in the unit prices of the firm quantities of the Program Years, and further agrees that the prices offered for option quantities will reflect only those recurring costs, and a reasonable profit thereon, which are necessary to furnish the additional option quantites. Therefore, any quantities added to the original contract quantities through exercise of the Government option in the "Option to Increase Quantities" clause of this contract shall not be subtracted from what would otherwise be considered the quantity canceled for the purpose of computing allowable cancellation charges.

(End of clause)

(c) Limitation of Price and Contractor Obligations-Service Contracts Under Public Law 90-378 or 91-142. In accordance with 1-322.8, insert the following clause.

LIMITATION OF PRICE AND CONTRACTOR OBLIGATIONS-SERVICE CONTRACTS UNDER PUBLIC LAW 90-378 OR 91-142 (1976 JUL)

(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 funds so described at the time of award are not available for contract performance required by and described in the Schedule for any fiscal year (1 October - 30 September) other than the first fiscal year. Upon availability to the Contracting Officer of funds for performance of requirements in the next succeeding fiscal year, the Contracting Officer shall notify the Contractor in writing of the amount of funds available for contract performance in the next succeeding fiscal year and the contract shall be modified accordingly. This procedure shall apply for each successive fiscal 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 in the applicable fiscal year.

(d) The Contractor is not obligated to incur costs for the performance required for any fiscal year after the first unless and until he has been notified in writing by the Contracting Officer of the 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 fiscal 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 for the current fiscal year including 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 fiscal year 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.

(f) Notification to the Contractor of an increase or decrease in the funds available for performance of this contract as a result of a clause other than this clause (e.8., exercise of an option for increased quantities or the “Changes" clause) shall not constitute the notification contemplated by paragraph (b) of this clause.

(End of clause)

7-1903.33.
ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(d) Cancellation of Items-Service Contracts under Public Law 90-378 or 91-142. In accordance with 1-322.8 insert the following clause.

CANCELLATION OF ITEMS–SERVICE CONTRACTS UNDER PUBLIC LAW 90-378 OR 91-142 (1976 JUL)

(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) As used herein, the term "cancellation" means that the Government is canceling, pursuant to this clause, its requirements for items as set forth in the Schedule for all fiscal years (1 October - 30 September) subsequent to that in which notice of cancellation is provided. Such cancellation shall occur only if the Contracting Officer (i) notifies the Contractor that funds will not be available for contract performance for the next succeeding fiscal year and any subsequent fiscal year; or (i) fails to notify the Contractor prior to beginning of the next succeeding fiscal year that funds have been made available for performance in the succeeding fiscal year.

(c) Except for cancellation pursuant to this clause or for termination pursuant to the “Default" clause, any reduction by the Contracting Officer in the quantities called for under this contract shall be considered a termination in accordance with the “Termination for Convenience of the Government" clause of this contract.

(d) In the event of cancellation pursuant to this clause, the Contractor will be paid, as consideration therefor, a cancellation charge not to exceed the cancellation ceiling described and separately set forth in the Schedule as being applicable at the time of cancellation.

(e) The cancellation charge is intended to cover only expenses incurred by the Prime Contractor or his subcontractor which would have been equitably amortized in the unit prices for the entire multi-year contract period, but which, because of the cancellation are not so amortized. The cancellation charge shall be computed and the claim therefor made as would be applicable under the “Termination for Convenience of the Government" clause of this contract. The claim may include reasonable startup and other nonrecurring costs such as plant or equipment relocation costs; the costs of special tooling and special equipment, allocable portions of the costs of facilities acquired or established for the conduct of the work, provided such costs have not been charged to the contract through overhead, or otherwise depreciated, and to the extent that it is impracticable for the Contractor to utilize such facilities in the conduct of his commercial work; costs incurred for the assembly, training, and transportation of a specialized work force to and from the job site; and costs not amortized by the level contract unit price solely because the cancellation had precluded anticipated benefits of Contractor or subcontractor learning. The claim shall not include any amount for:

(i) labor, material, or other expenses incurred by the Contractor or its subcontractor for

performance of the canceled work; (ii) any item of cost for which payment has already been made to the Contractor; (iii) anticipated profit on the canceled work; (iv) the remaining useful commercial life of facilities. Useful commercial life, for this pur

pose, means the commercial utility of the facilities rather than the physical life thereof, with due consideration given to such factors as location of facilities, specialized nature thereof, and obsolescence.

(End of clause)

7-1903.34 Order of Precedence. In accordance with 3–501(b)Sec.C(xxxi), insert the clause in 7-2003.41.

7-1903.35 United States Products and Services (Balance of Payments Program). In accordance with 6-806.4, insert the clause in 7-2003.53.

7-1903.36 Identification of Expenditures in the United States. In accordance with 7-104.58, insert the clause therein.

7-1903.37 Frequency Authorization. In accordance with 7-104.61, insert the clause therein.

7-1903.37

ARMED SERVICES PROCUREMENT REGULATION

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CONTRACT CLAUSES AND SOLICITATION PROVISIONS

7-1903.38 Protection of Government Buildings, Equipment and Vegetation. In accordance with 7-104.63, insert the clause therein.

7-1903.39 Insurance. In accordance with 10-405, insert the clause in 7-104.65.

7-1903.40 Acquisition and Use of Excess and Near Excess Currency. In accordance with 6-1110, insert the clause in 7-104.66.

7-1903.41 Service Contract Act of 1965.

(a) Service Contracts in Excess of $2,500. The following clause shall be included in each contract in excess of $2,500 the principal purpose of which is to furnish services in the United States through the use of service employees and which is not otherwise exempted by the provisions of Part 10 of Section XII.

SERVICE CONTRACT ACT OF 1965 (1977 OCT) This contract, to the extent that it is of the character to which the Service Contract Act of 1965 (P.L. 89-286) applies, is subject to the following provisions and to at other applicable provisions of the Act and the regulations of the Secretary of Labor thereunder (29 CFR Parts 4 and 1516).

(a) Compensation. Each service employee employed in the performance of this contract by the Contractor or any subcontractor shall be paid not less than the minimum monetary wage and shall be furnished fringe benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor or his authorized representative, as specified in any attachment to this contract. If there is such an attachment, any class of service employees which is not listed therein, but which is to be employed under this contract, shall be classified by the Contractor so as to provide a reasonable relationship between such classifications and those listed in the attachment, and shall be paid such monetary wages and furnished such fringe benefits as are determined by agreement of the interested parties, who shall be deemed to be the contracting agency, the Contractor, and the employees who will perform on the contract or their representatives. If the interested parties do not agree on a classification or reclassification which is, in fact, comformable, the Contracting Officer shall submit the question, together with his recommendation, to the Administra. tor of the Wage and Hour and Public Contracts Divisions, Department of Labor, or his authorized representative for final determination. Failure to pay such employees the compensation agreed upon by the interested parties or finally determined by the Administrator or his authorized representative shall be a violation of this contract. No employee engaged in performing work on this contract shall in any event be paid less than the minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended (current minimum wage).

(b) Obligation 10 furnish fringe benefits. The Contractor or subcontractor may discharge the obligation to furnish fringe benefits specified in the attachment or determined conformably thereto by furnishing any equivalent combinations of fringe benefits, or by making equivalent or differential payments in cash, pursuant to applicable rules of the Administrator of the Wage and Hour and Public Contracts Divisions, Department of Labor (Subpart B of Part 4 (29 CFR)).

(c) Minimum wage. In the absence of a minimum wage attachment for this contract, neither the Contractor nor any subcontractor under this contract shall pay any of his employees performing work under the contract (regardless of whether they are service employees) less than the minimum wage specified by section 6(a)(1) of the Fair Labor Standards Act of 1938 (current minimum wage). However, in cases where section 6(e)(2) of the Fair Labor Standards Act of 1938 is applicable, the rates specified therein will apply. Nothing in this provision shall relieve the Contractor or any subcontractor of any other obligation under law or contract for the payment of a higher wage to any employee.

(d) Notification to employees. The Contractor and any subcontractor under this contract shall notify each service employee commencing work on this contract of the minimum monetary wage and any fringe benefits required to be paid pursuant to this contract, or shall post a notice of such wages and benefits in a prominent and accessible place at the worksite, using such poster as may be provided by the Department of Labor.

(e) Safe and sanitary working conditions. The Contractor or subcontractor shall not permit any part of the services called for by this contract to be performed in buildings or surroundings or

7-1903.41

ARMED SERVICES PROCUREMENT REGULATION

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