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 2 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.7

[(j)] (d)-At any time or times prior to final paymcat under this contract, the Contracting Officer
may have the invoices or vouchers and statements of cost audited. Bach payment theretafore
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

[(k) ]]

invoices or vouchers.

-fe✈ 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 tf [(1)] below), the Government shall promptly pay to the Contractor may balance of
allowable cost, and any part of the fee, which has been withheld para to (c) shows or allibe
wise not paid to the Contractor. The completion invoice of 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 misy in his discretion approve
in writing) from the date of such completion.

[(1)]-The Contractor agrees that any refunds, rebates, credit, or other amounts (imeluding any
interest thereon) accruing to or received by the Contractor or any auigate under this odustalkot
shall be paid by the Contractor to the Government to the extent that they are property 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 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 reimbment of costs (other than expenses of the Contractor by
reason of his indication of the Government against patent liability), includ-
ing reasonable expenses incidental thereto, incurred by the Contractor under the
provisions of this obstract relating to priests.

Except as provided in tj) [(p)] below, payments under the assignment and claims excepted from the release shall be subject to adjustment by reason of the adjustment of fee in accordance with (+ [(0)]

below.

(m)] Any cost incurred by the Contractor under the terms of this contract which would constitate 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)] (h-When the work under this contract (including any supplies or services which are ordered separately under, or otherwise added to, this contract) is increased or decreased by contract modification or when any equitable adjustment in the target cost is authorized under any other clause of this contract, equitable adjustments in the target cost, target fee, minimum fee, maximum fee, or any or all of them, as appropriate, shall be set forth in an amendment or supplemental agreement to this contract.

[(0)] -(i)-The fee payable hereunder shall be the target fee increased by (insert contractor's participation) cents for every dollar by which the total allowable cost is less than the target cost or decreased by (insert contractor's participation) cents for every dollar by which the total allowable percent ner less than cost exceeds the target cost. In no event shall the fee be greater than

percent, of the target cost; and, except as provided in [(p)] below, within these limits such fee shall be subject to adjustment, by reason of increase or decrease of total allowable cost, on account of payments under the assignment required by [(1)](i) above, and claims excepted from the release required by (F)[(1)] (ii) above. If this contract is terminated in its entirety, the portion of the target fee payable shall not be subject to an increase or decrease as provided in this paragraph. The terminations shall be otherwise accomplished pursuant to other applicable provisions of this

contract.

[(p)]-For the purpose of the adjustment of the fee in accordance with ++){[(0)}

term "total allowable cost" shall not include allowable costs arising out of:

ove, the

(i) any of the causes covered by the clause hereof entitled "Excusable Delays" to the ex-
tent they are beyond the control and without the fault or negligence of the Contrac-
tor or any subcontractor;

(ii) the taking effect, after the negotiation of the target cost of this contract, of a statute,
court decision, written ruling or regulation which results in the Contractor's being
required to pay or bear the burden of any tax or duty, or increase in the rate thereof;
(iii) any direct cost attributed to the Contractor's assistance or participation in litigation
as required by the Contracting Officer pursuant to a provision of this contract, in-
cluding the furnishing of evidence and information requested pursuant to the clause
hereof entitled "Notice and Assistance Regarding Patent and Copyright Infringe-
ment";

(iv) the procurement and maintenance of additional insurance not included in the target
cost and required by the Contracting Officer or claims for reimbursement for liabili
ties to third persons pursuant to the clause hereof entitled "Insurance-Liability to
Third Persons";

(v) any claim, loss or damage resulting from a risk for which the Contractor has been re-
lieved of liability pursuant to the clause hereof entitled "Government Property."
Except as otherwise specifically provided in this contract, all other allowable costs shall be in-
cluded in the term "total allowable cost" for the purpose of the adjustment of the fee in ac-
cordance with [(0)] above.

[(q)]--The total allowable cost and the adjusted les determined as provided in this clause shall be
evidenced by a modification to this contract signed by the Contractor and the Contracting Of

(7-203.4 cont.)

ficer.

In the event the contracts call for spare parts or other supplies and services which are to be ordered
under a provisioning document or Government option, the following provision (1) shall be included:
(1) Compensation for supplies (including spare parts) and services which are to be furnished
under this contract pursuant to a provisioning document or Government option shall be deter-
mined in accordance with the provisions of this clause notwithstanding any inconsistent prevision
in such provisioning document or Government option.

[(r) 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 Contracting Officer within the meaning of the "Disputes" clause of this contract.]

(c) (1) For approvals with regard to fixed-price type subcontracts providing
for progress payments, pursuant to paragraph (c) of the forngoing clauses, the
standards shall be the same as thon governing progress payments on fixed-price
type prime contracts, as provided by B-514 of Appendix B

(2) In paragraph (19[(1)] (ki) (B) of the foregoing clauses, the period of years
may be increased to correspond with any statutory period of limitation applicable
to claims of third parties against the contractor; provided, that a corresponding in-
crease is made in the period of retention of records required in paragraph (d) of
the clause set forth in 7-104.15.

(3) In respect to paragraph (c) of the clause set forth in (b) above,
generally, the payment of fes provisions in the Schedule should be based on tar-
get fee.

(4) In the case of cost-sharing contracts and supply contracts without fee:

mnt-reimbursement type

(i) insert the following sentence in lieu of the second sentence of para-
graph (c) of the clause set forth above, except that, if the contract
does not provide for cost-sharing, delete the parenthetical references
to the Government's share:

After payment of an amount equal to eighty percent (80%) of (the Government's share of) the total estimated cost of performance of this contract set forth in the Schedule, the Contracting Officer may withhold further payment or account of allowable cost until a reserve shall have been set aside in an amount which he considers nécessary to protect the interests of the Government, but such reserve shall not exceed one percent (1%) of (the Government's share of) such total estimated cost or one hundred thousand dollars ($100,000), whichever is less. (1968 SEP)

(ii) delete the words "and any part of the fixed fee" from paragraph te✈ [ (k)]
of the clause set forth in (a) above;

(iii) in contracts which provide for cost-sharing, change paragraph (a) of
the clause set forth in (a) above as follows:

(a) the allowability of costs incurred in the performance of this contract shall be determined by the Contracting Officer in accordance with:

(i) Part 2 of Section XV of the Armed Services Procurement Regulation as in effect on
the date of this contract; and

(ii) the terms of this contract.

and

(iv) change the title of the clause set forth in (a) above to "Allowable
Cost and Payment".

(5) The contracting officer shall determine to his mtisfaction that the eștimated cost of the contrast initially magotiated does not, innhade amounts for contingencies identified in paragraph (1)(p) of the clause set forth in (b) above.

(6) The following shall be added to paragraph _[(P)] of the clause det forth in (b) above if the contract contains an "Indemnification" clause in accordance with 10-701(b)(1) and 10–702(b)1):

(vi) any claim, loss, or damage remshing from its vink defined in the apntract as
unusually hazardous or as a nuclear risk, against which the Government has
expressly agreed to indemnify the Contractor. (1966 APR)

(7) The amount to be withheld under paragraph (c) of the clauses shall normally be the maximum authorized by the clause except that the administrative contracting officer may, if he believes that such amount exceeds the amount necessary to protect the interests of the Government, review the status of all funds being withheld from the contractor under the particular contract concerned and under any other contracts with the contractor which he is administering and make appropriate recommendations to the procuring contracting officer. The procuring contracting officer shall decide whether to reduce the rate of withholding or whether to release a portion of the amount already reserved under the contract, as appropriate, and shall promptly advise the administrative contracting officer.