tional Defense Projects Rating Plan, upon termination or completion of the contract, when the Government has assumed the payment of the contractor's obligation for further premium payment under such policies:

ASSIGNMENT-ASSUMPTION OF PREMIUM

OBLIGATION

It is agreed that 100 percent* of the return premiums and premium refunds (and dividends) due or to become due the prime contractor under the policies to which the National Defense Projects Rating Plan Endorsement made a part of policy

applies are hereby assigned to and shall be paid to the United States of America, and the prime contractor directs the Company to make such payments to the Treasurer of the United States acting for and on account of the United States of America.

The United States of America hereby assumes and agrees to fulfill all present and future obligations of the prime contractor with respect to the payment of 100 percent* of the premiums under said policies.

This agreement, upon acceptance by the prime contractor, the United States of America and the Company shall be effective

In the event the Government has less than a 100 percent interest in premium refunds or dividends, the assignment shall be appropriately modified to reflect the percentage of interest and of the extent of the Government's assumption of additional premium obligation.

[30 F.R. 14901, Dec. 2, 1965, as amended at 36 F.R. 7948, Apr. 28, 1971]

§ 10.605 Limitation of coverage on automobile liability.

Since the Federal Tort Claims Act provides protection for employees of the Government while driving governmentowned vehicles within the scope of their employment, the National Defense Projects Rating Plan shall exclude coverage for such employees. The following en

dorsement shall be attached to automobile liability coverage provided under the plan.

It is agreed that such insurance as is afforded by the policy with respect to the ownership, maintenance or use of automobiles, including loading and unloading thereof, does not The apply to the following as insureds: United States of America, any of its agencies, or any of its officers or employees. [29 F.R. 9761, July 21, 1964]

Subpart G-Indemnification of Contractors and Subcontractors

SOURCE: The provisions of this Subpart G appear at 29 F.R. 9761, July 21, 1964, unless otherwise noted.

§ 10.701

re

Indemnification under search and development contracts against unusually hazardous risks. (a) Use of clause. Pursuant to the authority of 10 U.S.C. 2354 and when authorized by the Secretary concerned (or his designee under 10 U.S.C. 2356), a contract for research or development, or both, may provide for indemnification of the contractor and subcontractors against (1) claims by third persons (including employees) for death, bodily injury, or loss of or damage to property; and (2) loss of or damage to the contractor's property, to the extent that such liability, loss or damage (i) results from a risk that the contract defines as "unusually hazardous”, (ii) arises out of the direct performance of the contract and (iii) is not compensated by insurance or authorization otherwise. Where has been obtained, the appropriate clause set forth in paragraph (b) of this section shall be used.

(b) Clause (1) Clause for cost-reimbursement type contracts.

INDEMNIFICATION UNDER 10 U.S.C. 2354
(SEPTEMBER 1968)

(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 (1) 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 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.

(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 Office, 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 costreimbursement type contract, in such amount as the parties may agree.

(f) In addition to the Contractor's responsibilities under the "Insurance-Liability to Third Persons" clause of this contract, which are hereby made applicable to claims under this clause, the Contractor shall (1) promptly notify the Contracting Officer of any occurrence he learns of that reasonably may be expected to involve indemnification under this clause, (ii) furnish evidence or proof of any claim, loss or damage covered by this clause in the manner and form required by the Government, and (iii) to the extent required by the Government, permit and authorize the Government to direct, participate in, and supervise the settlement or defense of any such claim or action. The cost of insurance (including self insurance), covering a risk defined in this contract as unusually hazardous, shall not be reimbursed either as a direct or indirect cost except to the extent that such insurance has been required or approved under the "Insurance Liability to Third Persons" clause hereof.

(g) The "Limitation of Cost" clause of this contract does not apply to the Government's obligations under this clause. Such obligations shall be excepted from the under release required "Allowable Cost, 1 Fee, and Payment" clause

of this contract.

the

1 Insert "Fixed" or "Incentive", as appropriate.

(2) Clause for fixed-price type contracts. In fixed-price type contracts, the clause in subparagraph (1) of this paragraph shall be used except that the following paragraphs shall be substituted for paragraphs (f) and (g):

(f) The Contractor shall (1) promptly notify the Contracting Officer of any occurrence, action or claim he learns of that reasonably may be expected to involve indemnification under this clause, (ii) furnish evidence or proof of any claim, loss or damage in the manner and form required by the Government, and (iii) immediately furnish to the Government copies of all pertinent papers

received by the Contractor. The Government may direct, participate in, and supervise the settlement or defense of any such claim or action. The Contractor shall comply with the Government's directions, and execute any authorizations required, in regard to such settlement or defense.

(g) The Contractor shall procure and maintain to the extent available, such insurance against unusually hazardous risks as the Contracting Officer may from time to time require or approve. All such insurance shall be in such form, in the amounts, for the periods of time, at such rates, and with such insurers, as the Contracting Officer may from time to time require or approve. The obligations of the Government under this clause shall not apply to claims, loss or damage to the extent that insurance is available and is either required or approved pursuant to this paragraph. The Contractor shall be reimbursed the cost of any such insurance in excess of that maintained by the Contractor as of the date of this contract, to the extent the cost thereof is properly allocable to this contract and is not included in the contract price. (May 1964)

(c) In contracts of the Department of the Navy, insert the word "Department” for the words "Contracting Officer" wherever they appear in paragraph (b) and alternate paragraph (g) of the foregoing clause.

(d) Each contract containing the clause in paragraph (b) of this section shall clearly define the specific unusually hazardous risks to which the clause applies. This definition shall be submitted for approval with the request for authorization to grant indemnification. The definition may be included as an additional paragraph of the clause or inserted elsewhere in the contract. The fact that one or more risks under a contract may appropriately be defined as unusually hazardous does not justify so defining other risks of contract performance which are not in themselves usually hazardous; neither does it preclude indemnification of such other risks under other appropriate authority.

(e) In contracts containing the clause in paragraph (b) of this section, there shall be added to the "Definitions" clause of the contract (see § 7.302-1 or § 7.402-1 of this chapter) the following:

( ) For purposes of the clause of this contract entitled "Indemnification Under 10 U.S.C. 2354", a claim, loss or damage shall be considered to have arisen out of the direct performance of this contract if the cause for such claim, loss or damage occurred during the period of performance of this contract or

as a result of the performance of this contract. (May 1964)

[29 F.R. 9761, July 21, 1964, as amended at 33 F.R. 19923, Dec. 28, 1968]

§ 10.702 Indemnification under other than research and development contracts against unusually hazardous risks and nuclear risks not considered unusually hazardous.

(a) Use of clause. Pursuant to Public Law 85-804 (see § 17.501 of this chapter) and Executive Order 10789 (see § 17.502 of this chapter) and subject to compliance with the provisions of Subpart C, Part 17 of this chapter, the clause set forth in paragraph (b) of this section may be used in other than research and development contracts to provide for the indemnification of contractors and subcontractors against unusually hazardous risks. When modified in accordance with instructions set forth in paragraph (d) of this section, this clause may also be used in such contracts to provide corresponding indemnification against nuclear risks not considered unusually hazardous.

(b) Clause-—(1) Clause for costreimbursement type contracts.

INDEMNIFICATION UNDER PUBLIC LAW 85-804 (SEPTEMBER 1968)

(a) Pursuant to Public Law 85-804 (50 U.S.C. 1431) and Executive Order 10789, and 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

(1) 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 (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 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.

(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. The Government's obligation hereunder is expressly conditioned upon and subject to the availability of appropriated funds from which payment can be made. 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 subcontractor 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.

(f) In addition to the Contractor's responsibilities under the "Insurance-Liability to Third Persons" clause of this contract, which are hereby made applicable to claims under this clause, the Contractor shall (1) promptly notify the Contracting Officer of any occurrence he learns of that reasonably may be expected to involve indemnification under this clause, (ii) furnish evidence or proof of any claim, loss or damage in the manner and form required by the Government, and (iii) to the extent required by the Government, permit and authorize the Government to direct, participate in, or supervise the settlement or defense of any such claim or action. The cost of insurance (including self insurance), covering a risk defined in this contract to be unusually hazardous, shall not be reimbursed either as a direct or indirect cost except to the extent that such insurance has been required or approved under the "Insurance Liability to Third Persons" clause hereof.

(g) The "Limitation of Cost" clause of this contract does not apply to the Government's obligations under this clause. Such obligations shall be excepted from the release required under the "Allowable Cost, 1 Fee, and Payment" clause of

this contract.

1 Insert "Fixed" or "Incentive", as appropriate.

(2) Clause for fixed-price type contracts. In fixed-price type contracts, the clause in subparagraph (1) of this paragraph shall be used except that the following paragraphs shall be substituted for paragraphs (f) and (g):

(f) The Contractor shall (1) promptly notify the Contracting Officer of any occurrence, action or claim he learns of that reasonably may be expected to involve indemnification under this clause, (ii) furnish evidence or proof of any claim, loss or damage in the manner and form required by the Government, and (iii) immediately furnish to the Government copies of all pertinent papers received by the Contractor. The Government may direct, participate in, and supervise the settlement or defense of any such claim or action. The Contractor shall comply with the Government's directions, and execute any authorizations required in regard to such settlement or defense.

(g) The Contractor shall procure and maintain, to the extent available, such insurance against unusually hazardous risks as the Contracting Officer may from time to time require or approve. All such insurance shall be in such form, in the amounts, for the periods of time, at such rates, and with such insurers, as the Contracting Officer may from time to time require or approve. The obligations of the Government under this clause shall not apply to claims, loss or damage to the extent that insurance is available

and is either required or approved pursuant to this paragraph. The Contractor shall be reimbursed the cost of any such insurance in excess of that maintained by the Contractor as of the date of this contract, to the extent the cost thereof is properly allocable to this contract and is not included in the contract price. (May 1964)

(c) In contracts of the Department of the Navy, substitute the word "Department" for the words "Contracting Officer" wherever they appear in paragraph (b) and alternate paragraph (g) of the foregoing clause.

(d) Where indemnification against nuclear risks not considered unusually hazardous is to be provided, the clause paragraphs shall be modified as follows:

(1) Clause for cost-reimbursement type contracts covered by paragraph (b) (1) of this section. In paragraph (a) (iii) (C), in paragraph (d), and in paragraph (f), delete the words "unusually hazardous" and substitute the words "a nuclear risk”.

(2) Substitute clause paragraph for fixed-price type contracts covered by paragraph (b) (2) of this section. In paragraph (g), delete the words "unusually hazardous risks" and substitute the words "nuclear risks".

(e) Each contract containing the clause in paragraph (b) of this section shall clearly define the specific risks to which the clause applies. This definition shall be submitted for approval with the request for authorization to grant indemnification. The definition may be included as an additional paragraph of the clause or inserted elsewhere in the contract. The fact that one or more risks under a contract may appropriately be defined either as unusually hazardous or as nuclear risks does not justify so defining other risks; neither does it preclude indemnification of such other risks under appropriate authority.

(f) In contracts containing the clause in paragraph (b) of this section, there shall be added to the "Definitions" clause of the contract (see § 7.103–1 or § 7.203-1 of this chapter) the following:

( ) For purposes of the clause of this contract entitled "Indemnification Under Public Law 85-804", a claim, loss or damage shall be considered to have arisen out of the direct performance of this contract if the cause of such claim, loss or damage occurred during the period of performance of this contract or as a result of the performance of this contract. (May 1964)

§ 10.703 Indemnification under contracts involving both research and development and work that cannot be so classified.

Certain contracts require a substantial amount of research and development work as well as a substantial amount of work that cannot be so classified. When indemnification is to be provided for such contracts, an appropriate clause, utilizing the authority of both 10 U.S.C. 2354 and Public Law 85-804 may be used. In such cases, the use of Public Law 85-804 to provide indemnification is limited to work which cannot be indemnified pursuant to 10 U.S.C. 2354 and is subject to compliance with the provisions of Subpart C, Part 17 of this chapter.

Fixed-price type contracts.

Advertised and certain negotiated contracts.

Noncompetitive negotiated contracts.

Supplementary clause for pos

sessions of the United States and Puerto Rico.

Matters requiring special consideration.