the event the contractor fails to remove any employee from the contract work whom ERDA deems incompetent, careless, or insubordinate, or whose continued employment on the work is deemed by ERDA to be contrary to the public interest, the Government reserves the right to require the contractor to remove the employee.

NOTE: In contracts identified in §9-50.1213-2(b), the following paragraph shall be substituted for (c) above:

(c) The contractor shall be responsible for maintaining satisfactory standards of employee competency, conduct, and integrity and shall be responsible for taking such disciplinary action with respect to his employees as may be necessary. The contractor shall establish such standards and procedures as are necessary to implement effectively the provisions set forth in ERDA Procurement Regulations 9-50.12, and such standards and procedures shall be subject to the approval of the Contracting officer.

$9-50.704-13 Allowable costs and fixed fee

(CPFF operating and construction contracts).

(a) Compensation for contractor's services. Payment for the allowable cost as hereinafter defined, and of the fixed fee, if any, as hereinafter provided, shall constitute full and complete compensation for the performance of the work under this contract.

(b) Fixed-fee. The fixed fee payable to the contractor for the performance of the work under this contract is $ There shall be no adjustment in the amount of the contractor's fixed fee by reason of differences between any estimate of cost for performance of the work under this contract and the actual cost for performance of that work. Note: This provision may be appropriately changed to cover situations where the fee is for a period of time or different fees are allowed for various phases of the work.

(c) Allowable cost. The allowable cost of performing the work under this contract shall be the costs and expenses that are actually incurred by the contractor in the performance of the contract work in accordance with its terms, that are necessary or incident thereto, and are determined to be allowable pursuant to this paragraph (c). The determination of the allowability of cost hereunder shall be based on: (1) Reasonableness, including the exercise of prudent business judgment, (2) consistent application of generally accepted accounting principles and practices that result in equitable charges to the contract work, and (3) recognition of all exclusions and limitations set forth in this clause or elsewhere in this contract as to types or amounts of items of cost. Allowable cost shall not include cost of any item described as unallowable in paragraph (e) of this clause

except as indicated therein. Failure to mention an item of cost specifically in paragraph (d) or paragraph (e) shall not imply either that it is allowable or that it is unallowable.

(d) Examples of items of allowable cost. Subject to the other provisions of this clause, the following examples of items of cost of work done under this contract shall be allowable to the extent indicated:

(1) Bonds and insurance,

including self-insurance,

as pro

vided in the clause entitled "Required bonds and insurance--exclusive of Government property."

(2) Communication costs, including telephone services, local and long-distance calls, telegrams, cablegrams, radiograms, postage, and similar items.

(3) Consulting services (including legal and accounting), and related expenses, as approved by the Contracting Officer, except as

made unallowable by paragraph (e) (26).

(4) Litigation expenses, including reasonable counsel fees, incurred in accordance with the clause of this contract entitled "Litigation and claims."

(5) Losses and expenses (including settlements made with the consent of the Contracting Officer) sustained by the contractor in the performance of this contract and certified in writing by the Contracting officer to be just and reasonable, except the losses and expenses expressly made unallowable under other provisions of this contract.

(6) Materials, supplies, and equipment, including freight transportation, material handling, inspection, storage, salvage, and other usual expenses incident to the procurement, use and disposition thereof, subject to approvals required under other provisions of this contract.

(7) Patents, purchased design, and royalty payments to the extent expressly provided for under other provisions in this contract or as approved by the Contracting Officer, and preparation of invention disclosures, reports and related documents, and searching the art to the extent necessary to make such invention disclosures in accordance with the Patent clause of this contract.

(8) Personnel costs and related expenses incurred in accordance with Appendix A, or amendments thereto, such as:

(i) Salaries and wages; bonuses and incentive compensation; overtime, shift differential, holiday, and other premium pay

for time worked; nonwork time, including vacations, holidays, sick, funeral, military, jury, witness, and voting leave; salaries and wages to employees in their capacity as union stewards and committeemen for time spent in handling grievances, or serving on labor management (contractor) committees: Provided, however, That the Contracting Officer's approval is required in each instance of total compensation to an individual employee at an annual rate of $_

or more, when it is proposed that a total of 50 percent or more of such compensation be reimbursed under ERDA cost-type contracts. Total compensation, as used here, included only the employee's base salary and bonus and incentive compensation payments.

(ii) Legally required contributions to old-age and survivors' insurance, unemployment compensation plans, and workmen's compensation plans, (whether or not covered by insurance); voluntary or agreed-upon plans providing benefits for retirement, separation, life insurance, hospitalization, medical-surgical and unemployment (whether or not such plans are covered by insurance);

(iii) Travel (except foreign travel, which requires specific approval by the contracting officer on a case-by-case basis); incidental subsistence and other allowances of contractor employees, in connection with performance of work under this contract (including new employees reporting for work and transfer of employees, the transfer of their household goods and effects and the travel and subsistence of their dependents);

(iv) Employee relations, welfare, morale, etc., programs including incentive or suggestion awards, employee counseling services, health or first-aid clinics, and house or employee publications;

(v) Personnel training (except special education and training courses and research assignments calling for attendance at educational institutions which require specific approval by the Contracting officer on a case-by-case basis); including apprenticeship training programs designed to improve efficiency and productivity of contract operations, to develop needed skills, and to develop scientific and technical personnel in specialized fields required in the contract work;

1The specific dollar amount to be inserted here is subject to determination by the contracting officer, taking into account the cost principles and procedures set forth in Part 9-15, with specific reference to 9-15.5010-14(d). In no event should the dollar amount be more than $35,000.

(vi) Recruitment of personnel (including help-wanted advertisement), including services of employment agencies at rates not in excess of standard commercial rates, employment office, travel of prospective employees at the request of the contractor for employment interviews; and

(vii) Net cost of operating plant site cafeteria, dining rooms, and canteens attributable to the performance of the contract.

Appendix A may be modified from time to time, in writing, without execution of an amendment to this contract, for the purposes of effecting any changes in or additions to Appendix A as may be agreed upon by the parties.

NOTE: In appropriate circumstances, the lead sentence in subparagraph (8) may be changed to read as follows: Personnel costs and related expenses incurred in accordance with established policies, programs, and schedules, and any changes there to during the contract term, applicable to the contractor's private operations and consistently followed throughout his organization, as approved by the Contracting Officer, such as:

Also, delete last paragraph of text which refers to modifying Appendix A.

(9) Repairs, maintenance, inspection, replacement and disposal of Government-owned property and the restoration or clean-up of site and facilities to the extent directed or approved by the Contracting Officer.

(10)

Subcontracts and purchase orders, including procurements from contractor-controlled sources, subject to approvals required by other provisions of this contract.

(11) Subscriptions to trade, business, technical, and professional periodicals, as approved by the Contracting Officer.

(12) Taxes, fees, and charges levied by public agencies which the contractor is required by law to pay, except those which are expressly made unallowable under other provisions of this contract.

(13) Utility services, including electricity, gas, water, and sewerage.

(14) Indemnification of the Pension Benefit Guaranty Corporation pursuant to the Employee Retirement Income Sec ity Act of 1974, in accordance with $9-15.205-6.

90-136 O 7736

The following additional example of items is for use in contracts for the operation of ERDA-owned facilities.

(15) Establishment and maintenance of bank accounts in connection with the work hereunder, including, but not limited to, service charges, the cost of disbursing cash, necessary guards, cashiers, and paymasters. If payments to employees are made by check, facilities and arrangements for cashing checks may be provided without expense to the employees, subject to the approval of the contracting officer. The following additional examples of items are for use in construction contracts;

(16) Camp operations, to the extent approved by the contracting officer.

(17) Maintenance, inspection, repair, replacement, and transportation of construction plant and equipment to the extent not covered by rentals or insurance and as provided in rental agreements approved by the Contracting Officer or in Appendix B.

(18) Rental for (i) construction plant and equipment rented by the contractor from others at rates and under written agreements approved by the Contracting Officer, and (ii) construction plant and equipment owned and furnished by the contractor under Appendix B to this contract.

(e) Examples of items of unallowable costs. The following examples of items of costs are unallowable under this contract to the extent indicated:

(1) Advertising, except (i) help-wanted advertising, and (ii) other advertising (such as costs of participation in exhibits) approved by the Contracting Officer as clearly in furtherance of work performed under the contract.

(2) Bad debts (including expenses of collection) and provisions for bad debts arising out of other business of the contractor.

(3) Bidding expenses and costs of proposals.

(4) Bonuses and similar compensation under any other name, which (i) are not pursuant to an agreement between the contractor and employee prior to the rendering of the services or an established plan consistently followed by the contractor, (ii) are in excess of those costs which are allowable by the Internal Revenue Code and regulations thereunder, or (iii) provide total compensation to an employee in excess of reasonable compensation for the services rendered.