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CONTRACT CLAUSES AND SOLICITATION PROVISIONS

7-1904.4 Liquidated Damages. In accordance with 1-310, where a liquidated damages provision is to be used in a service contract, the provision in 7-105.5 shall be inserted as paragraph (f) of the Default clause (see 7–1902.8) and the present paragraph (f) of that clause shall be redesignated (g).

7-1904.5 Warranties.

(a) Use of Clauses. A decision on whether to include a warranty clause shall be made after careful consideration of the policy and guidelines in 1–324.

(b) In addition to the clauses in 7-105.7, the following is an example for use in fixed-price type services contracts:

WARRANTY OF SERVICES

Notwithstanding inspection and acceptance by the Government or any provision concerning the conclusiveness thereof, the Contractor warrants that all services performed under this contract will, at the time of acceptance, be free from defects in workmanship and conform to the requirements of this contract. The Contracting Officer shall give written notice of any such defect or nonconformance to the Contractor *.................. Such notice shall state either (i) that the Contractor shall correct or re-perform any defective or nonconforming services, or (ii) that the

quire correction or re-performance. If the Contractor is required to correct or re-perform, it shall be at no cost to the Government, and any services corrected or re-performed by the Contractor pursuant to this clause shall be subject to all provisions of this clause to the same extent as work initially performed. If the Contractor fails or refuses to correct or re-perform, the Contracting Officer may, by contract or otherwise, correct or replace with similar services and charge to the Contractor the cost occasioned to the Government thereby or obtain an equitable adjustment in the contract price. If the Government does not require correction or reperformance, the Contracting Officer shall make an equitable adjustment in the contract price.

(End of clause)

• Insert the specific period of time in which notice shall be given to the Contractor, e.g., "within .......(insert period of time) from the date of acceptance by the Government," "within ........(insert number of hours) of use by the Government," or other specified event whose occurrence will terminate the period of notice, or combination of any applicable events or periods of time.

7-1905 Price Adjustment Clauses.

(a) When fluctuations in costs not provided for in (b) and (c) below are likely to be included as contingencies in the contract price, the contracting officer may include a provision for economic price adjustment authorized by 3-404.3(c). The clauses set forth in (b) and (c) below provide coverage for situations in which revised minimum wage rates are applied to contracts by operation of law, or by revision of a wage determination prior either to exercise of a contract option, or to extension of a multi-year contract into a new program year. Care should be taken to insure that an economic price adjustment clause authorized by this paragraph (a) does not conflict with, or overlap, the clauses set forth in (b) or (c).

(b) The following clause shall be inserted in fixed price type multi-year service contracts (see 1-322) and fixed price type service contracts with options to renew which contain the clause in 7-1903.41(a). It is to be noted that the adjustments under (c)(ii) and (iii) of the clause may be applicable to the base period as well as to subsequent periods.

7-1905

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS FAIR LABOR STANDARDS ACT AND SERVICE CONTRACT ACT – PRICE ADJUSTMENT (MULTI-YEAR AND OPTION CONTRACTS) (1975 MAY)

(a) The Contractor warrants that the prices set forth in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause.

(b) The minimum prevailing wage determination, including fringe benefits, issued pursuant to the Service Contract Act of 1965 (Public Law 89-286, 79 Stat. 1034), by the Administrator, Wage and Hour Division, U. S. Department of Labor, current at the beginning of each renewal option period shall apply to any renewal of this contract. When no such determination has been made as applied to this contract, then the Federal minimum wage as established by Section 6(a)(1) of the Fair Labor Standards Act (29 U.S.C. Sec. 201-219) and amendments thereto current at the beginning of each renewal option period, shall apply to any renewal of this contract.

(c) When, as a result of (i) the Department of Labor determination of minimum prevailing wages and fringe benefits applicable at the beginning of the renewal option period, or (ii) an increased or decreased wage determination otherwise applied to the contract by operation of law, or (iii) an amendment to the Fair Labor Standards Act enacted subsequent to award of this contract, affecting the minimum wage, which becomes applicable to this contract under law, the Contractor increases or decreases wages or fringe benefits of employees working on this contract to comply therewith, the contract price or contract unit price labor rates will be adjusted to reflect such increases or decreases. Any such adjustment will be limited to increases or decreases in wages or fringe benefits as described above, and the concomitant increases or decreases in so cial security and unemployment taxes and workmen's compensation insurance, but shall not otherwise include any amount for general and administrative costs, overhead, or profits.

(d) The Contractor shall notify the Contracting Officer of any increases claimed under this clause within thirty (30) days after the effective date of the wage change, unless this period is extended by the Contracting Officer in writing. In the case of any decrease under this clause, the Contractor shall promptly notify the Contracting Officer of such decrease but nothing herein shall preclude the Government from asserting a claim within the period permitted by law. The notice shall contain a statement of the amount claimed and any other relevant data in support thereof, which may reasonably be required by the Contracting Officer. Upon agreement of the parties, the contract price or contract unit price labor rates shall be modified in writing. Pending agreement on or determination of, any such adjustment and its effective date, the Contractor shall continue performance.

(e) The Contracting Officer or his authorized representative shall, until the expiration of three (3) years after final payment under the contract, have access to and the right to examine any directly pertinent books, documents, papers and records of the Contractor

(End of clause)

(c) The following clause shall be inserted in Fixed Price Service Contracts, other than those covered by (b) above, which contain the clause in 7-1903.41(a).

FAIR LABOR STANDARDS ACT AND SERVICE CONTRACT ACT - PRICE ADJUSTMENT (1975 MAY)

(a) The Contractor warrants that the prices set forth in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause.

(b) When, as a result of an increased or decreased wage determination applied to this contract by operation of law or an amendment to the Fair Labor Standards Act enacted subsequent to award of this contract, affecting the minimum wage, which becomes applicable to this contract under law, the Contractor increases or decreases wages or fringe benefits of employees working on this contract to comply therewith the contract price or contract unit price labor rates will be adjusted to reflect such increases or decreases. Any such adjustment will be limited to increases or decreases in wages or fringe benefits as described above, and the concomitant increases or decreases in social security and unemployment taxes and workmen's compensation insurance, but shall not otherwise include any amount for general and administrative costs, overhead, or profits.

7-1905

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

(c) The Contractor shall notify the Contracting Officer of any increases claimed under this clause within thirty (30) days after the effective date of the wage change, unless this period is extended by the Contracting Officer in writing. In the case of any decrease under this clause, the Contractor shall promptly notify the Contracting Officer ofsuch decrease but nothing herein shall preclude the Government from asserting a claim within the period permitted by law. The notice shall contain a statement of the amount claimed and any other relevant data in support thereof, which may reasonably be required by the Contracting Officer. Upon agreement of the parties, the contract price or contract unit price labor rates shall be modified in writing. Pending agreement on or determination of, any such adjustment and its effective date, the Contractor shall continue performance.

(d) The Contracting Officer or his authorized representative shall, until the expiration of three (3) years after final payment under the contract, have access to and the right to examine any directly pertinent books, documents, papers and records of the Contractor.

(End of clause)

7-1906 Incentive Price Revision Clauses. When it is determined in accordance with Section III, Part 4, to provide for incentive price revision, the applicable clause in 7-108 may be included.

7-1907 Price Redetermination Clauses. 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 in 7-109 may be included.

7-1908 Clauses for Contracts Involving Furnishing of Supplies. In service contracts which involve the furnishing of supplies, the following clauses shall be included in addition to those prescribed in 7-1902. In addition, applicable clauses in 7-104, 7-105 and 7-106 shall be included. Any clause applicable only to services or only to supplies shall be so labeled.

Changes clause in 7-103.2;
Variation of Quantity clause in 7-103.4;
Inspection clause in 7-103.5;
Title and Risk of Loss clause in 7-103.6;
Discounts clause in 7-103.14;

Walsh-Healey Public Contracts Act clause in 7-103.17.

7-1909 Required Clauses for Cost Reimbursement Type Service Contracts. The following clauses shall be included in all cost reimbursement type service contracts unless otherwise provided elsewhere in this section for specific types of services.

7-1909.1 Definitions. In accordance with 7-103.1, insert the clause therein. 7-1909.2 Changes.

CHANGES (1971 NOV)

(a) The Contracting Officer may at any time, by a written order, and without notice to the sureties, if any, make changes, within the general scope of this contract, in the definition of services and tasks to be performed, and the time (i.e., hours of the day, days of the week, etc.) and place of performance thereof.

(b) If any such changes cause an increase or decrease in the estimated cost of, or the time required for, the performance of any part of the work under this contract, whether changed or not changed by any such order, or otherwise affects any other provision of this contract, an equitable adjustment shall be made:

(i) in the estimated cost or delivery schedule, or both;
(ii) in the amount of any fixed fee to be paid to the Contractor; and
(iii) in such other provisions of the contract as may be so affected, and the contract shall

be modified in writing accordingly.

7-1909.2

ARMED SERVICES PROCUREMENT REGULATION

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Any claim by the Contractor for adjustment under this clause must be asserted within thirty (30) days from the date of receipt by the Contractor of the notification of change; provided, however, that the Contracting Officer, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract. Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled “Disputes." However, except as provided in paragraph (c) below, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed.

(c) Notwithstanding the provisions of paragraphs (a) and (b) above, the estimated cost of this contract and, if this contract is incrementally funded, the funds allotted for the performance thereof, shall not be increased or deemed to be increased except by specific written modification of the contract indicating the new contract estimated cost and, if this contract is incrementally funded, the new amount allotted to the contract. Until such modification is made, the Contractor shall not be obligated to continue performance or incur costs beyond the point established in the clause of this contract entitled “Limitation of Cost" or "Limitation of Funds."

(End of clause)

In the foregoing clause, the period of “thirty (30) days" within which any claim for adjustment must be asserted may be varied in accordance with Departmental procedures. In accordance with 10 U.S.C. 2306(f), prior to the pricing of any change order that is expected to exceed $100,000, except when the price is 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, the contracting officer shall require the contractor to furnish a Certificate of Current Cost or Pricing Data (see 3-807.6) and shall assure that the contract includes or is modified to include a defective pricing data clause (see 7-104.29).

7-1909.3 Limitation of Cost or Funds. In accordance with 7-203.3, insert the appropriate clause therein.

7-1909.4 Allowable Cost, Fee and Payment.

(a) Except as provided in (b) below, insert the clause in 7–203.4(a). See additional instructions in 7-203.4(c).

(b) When, pursuant to 3-405.4, incentive revision of the fee in a cost reimbursement service contract is to be provided, insert the clause in 7-203.4(b). See additional instructions in 7–203.4(c).

7-1909.5 Inspection of Services (Cost Reimbursement).

INSPECTION OF SERVICES-COST REIMBURSEMENT (1971 NOV)

(a) All services (which term throughout this clause includes services performed, material furnished or utilized in the performance of services, and workmanship in the performance of services) shall be subject to inspection and test by the Government, to the extent practicable at all times and places during the term of the contract. All inspections by the Government shall be made in such a manner as not to unduly delay the work.

(b) If any services performed hereunder are not in conformity with the requirements of this contract, the Government shall have the right to require the Contractor to perform the services again, in conformity with the requirements of the contract, without payment of additional fee. When the services to be performed are of such a nature that the defect cannot be corrected by reperformance of the services, the Government shall have the right to (i) require the Contractor to immediately take all necessary steps to ensure future performance of the services in conformity with the requirements of the contract, and (ii) reduce any fee payable under the contract to reflect the reduced value of the services performed. In the event the Contractor fails promptly to perform the services again or to take the necessary steps to ensure future performance of the ser. vices in conformity with the requirements of the contract, the Government shall have the right

7-1909.5

ARMED SERVICES PROCUREMENT REGULATION

CONTRACT CLAUSES AND SOLICITATION PROVISIONS

either to (i) by contract or otherwise have the services reperformed in a manner in conformity with the contract requirements and reduce any fee payable under the contract by an amount which is equitable under the circumstances or (ii) terminate this contract for default as provided in the clause of this contract entitled “Termination."

(c) The Contractor shall provide and maintain an inspection system acceptable to the Goverment covering the services to be performed hereunder. Records of all inspection work by the Contractor shall be kept complete and available to the Government during the performance of this contract and for such longer period as may be specified elsewhere in this contract.

(End of clause)

7–1909.6 Assignment of Claims. In accordance with 7-103.8, insert the clause therein.

7-1909.7 Subcontracts. In accordance with 7-203.8, insert the clause therein.

7-1909.8 Utilization of Small Business Concerns. In accordance with 1-707.3(a) and (b) and 7-104.14, insert one or both of the clauses in 7-104.14.

7-1909.9 Termination. Insert the clause in 7-203.10.
7-1909.10 Excusable Delays. Insert the clause in 7–203.11.
7-1909.11 Disputes. Insert the clause in 7-103.12.

7-1909.12 Renegotiation. In accordance with 7-103.13, insert the appropriate clause therein.

7-1909.13 Contract Work Hours and Safety Standards Act-Overtime Compensation. In accordance with 12–301, 12–302, and 12–306, insert the clauses in 7-103.16.

7-1909.14 Equal Opportunity. In accordance with 12-807.1, insert the appropriate clause in 7-103.18.

7-1909.15 Officials Not To Benefit. Insert the clause in 7-103.19. 7-1909.16 Covenant Against Contingent Fees. Insert the clause in 7-103.20.

7-1909.17 Government Property (Cost Reimbursement). In accordance with 7-203.21, insert the clause therein.

7-1909.18 Insurance-Liability to Third Persons. Insert the clause in 7–203.22.

7-1909.19 Authorization and Consent. In accordance with 9–102.1, insert the clause in 7-103.22.

7-1909.20 Notice and Assistance Regarding Patent Infringement. In accordance with 9-104, insert the clause in 7-103.23.

7-1909.21 Utilization of Labor Surplus Area Concerns. In accordance with 1-805.3, insert one or both of the clauses in 7-104.20.

7-1909.22 Payment for Overtime Premiums. In accordance with 12–102.6, insert the clause in 7-203.27.

7-1909.23 Competition in Subcontracting. In accordance with 7-104.40, insert the clause therein.

7-1909.24 Audit by Department of Defense. In accordance with 7-104.41, insert the clause therein.

7-1909.25 Minority Business Enterprises. In accordance with 1-332, insert the appropriate clause or clauses in 7-104.36.

7-1909.26 Equal Opportunity Pre-Award Clearance of Subcontracts. In accordance with 23-201.4, insert the clause in 7-104.22.

7-1909.27 Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era. Insert the clause in 7-103.27.

7-1909.28 Affirmative Action for Handicapped Workers. Insert the clause in 7-103.28.

7-1909.28

ARMED SERVICES PROCUREMENT REGULATION

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