7-203.4 Allowable Cost, Fee, and Payment.

(a) Except as provided in (b) below, insert the following clause in all costreimbursement type supply contracts. Additional instructions for use are in (c) below.

ALLOWABLE COST, FIXED FEE, AND PAYMENT(1974-APR) [

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(a) For the performance of this contract, the Government shall pay to the Contractor:
(i) the cost thereof (hereinafter referred to as "allowable cost") determined by the Con-
tracting Officer to be allowable in accordance with.

(A) Part 2 of Section XV of the Armed Services Procurement Regulation as in effect
on the date of this contract [, provided that the allowable
indirect costs under this contract shall be obtained
by applying overhead rates established under (e)
below to bases agreed upon under (f) below;] and

(B) the terms of this contract; and

(ii) such fixed fee, if any, as may be provided for in the Schedule.

(b) Payments shall be made to the Contractor when requested as work progresses, but not more frequently than bi-weekly, in amounts approved by the Contracting Officer. The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as such representative may require, an invoice or public voucher supported by a statement of cost for the performance of this contract and claimed to constitute allowable cost. For this purpose, except as provided herein with respect to pension contributions, the term "costs" shall include only those recorded costs which result, at the time of the request for reimbursement, from payment by cash, check, or other form of actual payment for items or services purchased directly for the contract, together with (when the Contractor is not delinquent in payment of costs of contract performance in the ordinary course of business) costs incurred, but not necessarily paid, for materials which have been issued from the Contractor's stores inventory and placed in the production process for use on the contract, for direct labor, for direct travel, for other direct inhouse costs, and for properly allocable and allowable indirect costs, as is shown by records maintained by the Contractor for purposes of obtaining reimbursement under Government contracts plus the amount of progress payments which have been paid to Contractor's subcontractors under similar cost standards. In addition, when pension contributions are paid by the Contractor to the retirement fund less frequently than quarterly, accrued costs therefor shall be excluded from indirect costs for payment purposes until such costs are paid. If pension contributions are paid on a quarterly or more frequent basis, accruals therefor may be included in indirect costs for payment purposes provided that they are paid to the fund within thirty (30) days after the close of the period covered. If payments are not made to the fund within such thirty-day period, pension contribution costs shall be excluded from indirect cost for payment purposes until payment has been made. The restriction on payment more frequently than bi-weekly and the requirement of prior payment for items or services purchased directly for the contract shall not apply where the Contractor is a small business concern.

(c) Promptly after receipt of each invoice or voucher and statement of cost, the Government shall, except as otherwise provided in this contract, subject to the provisions of (d) below, make payment thereon as approved by the Contracting Officer. Payment of the fixed fee, if any, shall be made to the Contractor as specified in the Schedule; provided, however, that after payment of eighty-five percent (85%) of the fixed fee set forth in the Schedule, the Contracting Officer may withhold further payment of fee until a reserve shall have been set aside in an amount which he considers necessary to protect the interests of the Government, but such reserve shall not exceed fifteen percent (15%) of the total fixed fee or one hundred thousand dollars ($100,000), whichever is less.

[(a) Final annual overhead rates and the appropriate bases shall be established by procurement or audit determination in accordance with the procedures of Section 3-700 of the Armed Services Procurement Regulation in effect for the period covered by the proposal for final overhead rates.

(e) The contractor, as soon as possible but not later than ninety (90) days after the expiration of each of its fiscal years for estimating accumulating, and reporting contract costs, shall submit to the Contracting Officer with a copy to the cognizant audit activity a proposed final overhead rate (s) for that period based on the Contractor's actual cost experience during that period, together with supporting costs data, including a list of contracts and applicable base costs to which the proposed rates apply as well as identification of costs voluntarily deleted by the Establishment of final annual overhead rate (s) shall be undertaken as promptly as practicable after

contractor.

receipt of the Contractor's proposal. The Contractor shall submit an executed Certificate of Current Cost or Pricing Data applicable to data furnished in connection with establishment of any final overhead rate(s).

(f) Allowability of costs and acceptability of cost allocation methods relevant to establishment of final overhead rate (s) shall be established in accordance with Part of Section XV of the Armed Services Procurement Regulation in effect on the date of this contract.

Such

(g) Final annual overhead rate (s) which are established shall be set forth in a written overhead rate understanding executed by either the Contractor and the Contracting Officer or the Contractor and the Auditor-In-Charge. understanding is automatically incorporated in this contract upon execution and shall specify (i) the agreed final annual rate(s), (ii) the base(s) to which the rate (s) apply, (iii) the periods for which the rate(s) apply, (iv) any specific overhead items treated as direct costs in the settlement, and (v) a list of affected contracts, identifying any with advance agreements or special provisions and the rates applicable thereto. The overhead rate understanding shall not change any monetary ceiling, contract obligation, or specific cost allowance or disallowance provided for in this

contract.

(h) Pending establishment of final annual overhead rate(s) for any period, the Contractor shall be reimbursed at billing rate (s) established by the Contracting Officer or the auditor, subject to appropriate adjustment when final rate (s) for that period are established. To prevent

substantial over or under payment billing rate(s) may, at the request of either party, be revised by mutual agreement, either retroactively or prospectively. However, billing rates will recognize the anticipated annual rates that will result rather than rate fluctuations during the year due to seasonal or monthly volume changes.

(i)

Notwithstanding any other provisions of this clause, the quick closeout procedures set forth in Section 3-700 of the Armed Services Procurement Regulation in effect on the date of this contract, may be used when mutually agreeable to the Contractor and the Contracting Officer.]

[(j)] +dAt any time or times prior to final payment under this contract, the Contracting Officer may have the invoices or vouchers and statements of cost audited. Each payment theretofore made shall be subject to reduction for amounts included in the related invoice or voucher which are found by the Contracting Officer, on the basis of such audit, not to constitute allowable cost. Any payment may be reduced for overpayments, or increased for underpayments, on preceding jnvoices or vouchers.

[(k)] + On receipt and approval of the invoice or voucher designated by the Contractor as the

"completion invoice" or "completion voucher" and upon compliance by the Contractor with all
the provisions of this contract (including, without limitation, the provisions relating to patents and
the provisions of [1] below), the Government shall promptly pay to the Contractor any balance of
allowable cost, and any part of the fixed fee, which has been withheld pursuant to (c) above or
otherwise not paid to the Contractor. The completion invoice or voucher shall be submitted by
the Contractor promptly following completion of the work under this contract but in no event
later than one (1) year (or such longer period as the Contracting Officer may in his discretion ap-
prove in writing) from the date of such completion.

[(1)]The Contractor agrees that any refunds, rebates, credits, or other amounts (including any

interest thereon) accruing to or received by the Contractor or any assignee under this contract
shall be paid by the Contractor to the Government, to the extent that they are properly allocable
to costs for which the Contractor has been reimbursed by the Government under this contract.
Reasonable expenses incurred by the Contractor for the purpose of securing such refunds,
rebates, credits, or other amounts shall be allowable costs hereunder when approved by the Con-
tracting Officer. Prior to final payment under this contract, the Contractor and each assignee
under this contract whose assignment is in effect at the time of final payment under this contract
shall execute and deliver:

(i) an assignment to the Government, in form and substance satisfactory to the Con-
tracting Officer, of refunds, rebates, credits, or other amounts (including any interest
thereon) properly allocable to costs for which the Contractor has been reimbursed
by the Government under this contract; and

(ii) a release discharging the Government, its officers, agents, and employees from all lia-
bilities, obligations, and claims arising out of or under this contract, subject only to
the following exceptions:

(A) specified claims in stated amounts or in estimated amounts where the amounts
are not susceptible of exact statement by the Contractor;

(B) claims, together with reasonable expenses incidental thereto, based upon liabili-
ties of the Contractor to third parties arising out of the performance of this con-
tract; provided, that such claims are not known to the Contractor on the date if-[Of]
the execution of the release; and provided further that the Contractor gives
notice of such claims in writing to the Contracting Officer not more than six (6)
years after the date of the release or the date of any notice to the Contractor
that the Government is prepared to make final payment, whichever is earlier;
and

(C) claims for reimbursement of costs (other than expenses of the Contractor by
reason of his indemnification of the Government against patent liability), includ-
ing reasonable expenses incidental thereto, incurred by the Contractor under the
provisions of this contract relating to patents.

.

[(m)] Any cost incurred by the Contractor under the terms of this contract which would constitute allowable cost under the provisions of this clause shall be included in determining the amount payable under this contract, notwithstanding any provisions contained in the specifications or other documents incorporated in this contract by reference, designating services to be performed or materials to be furnished by the Contractor at his expense or without cost to the Government.

[(n) Any failure by the parties to agree on a final overhead rate under this clause shall be considered a dispute concerning a question of fact for decision by the Contract

ing Officer within the meaning of the "Disputes" clause of this contract.]

(End of clause)