(a) All supplies (which term throughout this clause includes without limitation raw materials, components, intermediate assemblies, and end products) shall be subject to inspection and test by the Government, to the extent practicable at all times and places including the period of manufacture, and in any event prior to acceptance. (b) In case any supplies or lots of supplies are defective in material or workmanship or otherwise not in conformity with the requirements of this contract, the Government shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction. Supplies or lots of supplies which have been rejected or required to be corrected shall be removed, or, if permitted or required by the Contracting Officer, corrected in place by and at the expense of the Contractor promptly after notice, and shall not thereafter be tendered for acceptance unless the former rejection or requirement of correction is disclosed. If the Contractor fails promptly to remove such supplies or lots of supplies which are required to be removed, or promptly to replace or correct such supplies or lots of supplies, the Government either (1) may by contract or otherwise replace or correct such supplies and charge to the Contractor the cost occasioned the Government thereby, or (11) may terminate this contract for default as provided in the clause of this contract entitled "Default." Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contracting Officer may require the delivery of such supplies at a reduction in price which is equitable under the circumstances. Failure to agree to such reduction of price shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." (c) If any inspection or test is made by the Government on the premises of the Contractor or a subcontractor, the Contractor without additional charge shall provide all reasonable facilities and assistance for the safety and convenience of the Government inspectors in the performance of their duties. If Government inspection or test is made at a point other than the premises of the Contractor or a subcontractor, it shall be at the expense of the Government except as otherwise provided in this contract: Provided, That in case of rejection the Government shall not be liable for any reduction in value of samples used in connection with such inspection or test. All inspections and tests by the Government shall be performed in such a manner as not to unduly delay the work. The Government reserves the right to charge to the Contractor any additional cost of Government inspection and test when supplies are not ready at the time such inspection and test is requested by the Contractor or when reinspection or retest is ncessitated by prior rejection. Acceptance or rejection of supplies shall be made as promptly as practicable after delivery, except as otherwise provided in this contract; but failure to inspect and accept or reject the supplies shall neither relieve the Contractor from responsibility for such supplies as are not in accordance with the contract requirements nor impose liability on the Government therefor. (d) The inspection and test by the Government of any supplies or lots thereof does not relieve the Contractor from any responsibility regarding defects or other failures to meet the contract requirements which may be discovered prior to acceptance. Except as otherwise provided in this contract, acceptance shall be conclusive except as regards latent defects, fraud, or such gross mistakes as amount to fraud. (e) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the supplies 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. § 1-7.102-6 Responsibility for supplies. RESPONSIBILITY FOR SUPPLIES Except as otherwise provided in this contract, (i) the Contractor shall be responsible for the supplies covered by this contract until they are delivered at the designated delivery point, regardless of the point of inspection; (ii) after delivery to the Government at the designated point and prior to acceptance by the Government or rejection and giving notice thereof by the Government, the Government shall be responsible for the loss or destruction of or damage to the supplies only if such loss, destruction, or damage results from the negligence of officers, agents, or employees of the Government acting within the scope of their employment; and (111) the Contractor shall bear all risks as to rejected supplies after notice of rejection, except that the Government shall be responsible for the loss, or destruction of, or damage to the supplies only if such loss, destruction, or damage results from the gross negligence of officers, agents, or employees of the Government acting within the scope of their employment. § 1-7.102-7 Payments. PAYMENTS The Contractor shall be paid, upon the submission of proper Invoices or vouchers, the prices stipulated herein for supplies delivered and accepted or services rendered and accepted, less deductions, ir any, as herein provided. Unless otherwise specified, payment will be made on partial deliveries accepted by the Government when the amount due on such deliveries so warrants; or, when requested by the Contractor, payment for accepted partial deliveries shall be made whenever such payment would equal or exceed either $1,000 or 50 percent of the total amount of this contract. (a) Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting Officer shall be final and conclusive unless within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the Contracting Officer a written appeal addressed to the Secretary. The decision of the Secretary or his duly au thorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not sup ported by substantial evidence. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision. (b) This "Disputes" clause does not preclude consideration of law questions in connection with decisions provided for in paragraph (a), above: Provided, That nothing in this contract shall be construed as making final the decision of any administrative official, representative, or board on a question of law. § 1-7.102-15 Contract Work Hours and Safety Standards Act-overtime compensation. Insert the clause set forth in § 1-12.303 under the conditions contained in § 112.302. § 1-7.102-16 Equal opportunity. Insert the clause set forth in § 112.803-2 under the conditions contained in § 1-12.803-1. § 1-7.102-17 Officials not to benefit. OFFICIALS NOT TO BENEFIT No member of or delegate to Congress, or resident commissioner, shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be construed to extend to this contract if made with a corporation for its general benefit. 700-2(a) (2) for contracts not in excess of $100,000. § 1-7.102-20 Pricing of adjustments. The following clause shall be included in all formally advertised or negotiated contracts other than cost-type contracts: PRICING OF ADJUSTMENTS When costs are a factor in any determination of a contract price adjustment pursuant to the "Changes" cause or any other provision of this contract, such costs shall be in accordance with the contract cost principles and procedures in Part 1-15 of the Federal Procurement Regulations (41 CFR 1-15) or section XV of the Armied Services Procurement Regulation in effect on the date of this contract. § 1-7.103 cable. § 1-7.103-1 Clauses for fixed-price supply contracts involving construction. (a) Insert the clauses set forth in § 1-12.403-1 in fixed-price supply contracts under the conditions contained in § 1-12.402-2. The clauses set forth in § 1-12.403-1 are: Clauses to be used when appli Davis-Bacon Act. Contract Work Hours and Safety Payrolls and Basic Records. Compliance with Copeland Regulations. Withholding of Funds. Contract Termination-Debarment. (b) Insert the clause set forth in § 1-18.605 in fixed-price supply contracts under the conditions contained in Subpart 1-18.6. § 1-7.103-2 Additional bond security. ADDITIONAL BOND SECURITY If any surety upon any bond furnished in connection with this contract becomes unacceptable to the Government, or if any such surety fails to furnish reports as to his financial condition from time to time as requested by the Government, the Contractor shall promptly furnish such additional security as may be required from time to time to protect the interests of the Government and of persons supplying labor or materials in the prosecution of the work contemplated by this contract. § 1-7.103-3 Examination of records by Comptroller General. (a) The following clause shall be included in fixed-price negotiated con tracts and may be included in other than fixed-price negotiated contracts, as provided in § 1-3.814-2(c) of this chapter. When contracts involve the use of Standard Forms 2-A and 2-B, or 253, the forms may be amended to provide for the use of the term "lessor" or in "architect-engineer," respectively, lieu of the term "contractor." EXAMINATION OF RECORDS BY COMPTROLLER GENERAL (a) This clause is applicable if the amount of this contract exceeds $2,500 and was entered into by means of negotiation, including small business restricted advertising, but is not applicable if this contract was entered into by means of formal advertising. (b) The Contractor agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of 3 years after final payment under this contract or such lesser time specified in either Appendix M of the Armed Services Procurement Regulation or the Federal Procurement Regulations Part 1-20, as appropriate, have access to and the right to examine any directly pertinent books, documents, papers, and records of the Contractor involving transactions related to this contract. (c) The Contractor further agrees to include in all his subcontracts hereunder a provision to the effect that the subcontractor agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of 3 years after final payment under the subcontract or such lesser time specified in either Appendix M of the Armed Services Procurement Regulation or the Federal Procurement Regulations Part 1-20, as appropriate, have access to and the right to examine any directly pertinent books, documents, papers, and records of such subcontractor, involving transactions related to the subcontract. The term "subcontract" as used in this clause excludes (1) purchase orders not exceeding $2,500 and (2) subcontractors or purchase orders for public utility services at rates established for uniform applicability to the general public. (d) The periods of access and examination described in (b) and (c), above, for records which relate to (1) appeals under the "Disputes" clause of this contract, (2) litigation or the settlement of claims arising out of the performance of this contract, or (3) costs and expenses of this contract as to which exception has been taken by the Comptroller General or any of his duly authorized representatives, shall continue until such appeals, litigation, claims, or exceptions have been disposed of. § 1-7.103-4 Notice and assistance regarding patent and copyright infringement. The following clause shall be included in all contracts which exceed $10,000: NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (a) The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of any claim or suit against the Government, on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed hereunder, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim. Such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. Insert the clause set forth in § 1-4.605 or in § 1-4.606 under the procedures provided in § 1-4.604. § 1-7.103-14 Required source for jewel bearings. Insert the clause set forth in § 1-1.319 under the conditions and in the manner prescribed therein. § 1-7.103-15 Use of excess aluminum. Insert the clause set forth in § 1-5.1001-2 under the conditions contained in § 1-5.1001-1. § 1-7.103-16 Listing of employment openings. Insert the clause set forth in § 1-12.1102-2 under the conditions and in the manner prescribed therein. § 1-7.103-17 Price reduction for defective cost or pricing data. Insert the appropriate clause set forth in § 1-3.814-1 under the conditions described therein. § 1-7.103-18 Audit and records. § 1-7.103-22 Workmen's compensation insurance (Defense Base Act). Insert the clause set forth in § 1-10.402 under the conditions described therein. § 1-7.103-23 Late offers and modifications or withdrawals. (a) Insert the provision set forth in § 1-2.201(a) (31) in all formally advertised solicitations. (b) The provision set forth in § 1-3.802-1(b) shall be used in all negotiated solicitations except as provided by § 1-3.802-2(a). (c) The provision set forth in § 1-3.802-2(b) may be used in negotiated solicitations under the conditions prescribed in § 1-3.802-2(a). [38 FR 26916, Sept. 27, 1973] § 1-7.103-24 Contracts with the Small Business Administration. (a) Insert the clause set forth in § 1-1.713-3(d)(1) in contracts with the Small Business Administration awarded pursuant to section 8(a) of the Small Business Act (15 U.S.C. 637(a)). (b) Insert the clause set forth in § 1-1.713-3(e) in subcontracts which will be executed by the Small Business Administration and its subcontractors. § 1-7.103-25 Supplementary clauses. tax (a) Insert the supplementary clause set forth in § 1-11.401-3(a) under the conditions contained therein. (b) Insert the clause set forth in § 1-11.401-3(b) under the conditions contained therein. § 1-7.104 Additional clauses. The clauses set forth in this § 1-7.104 shall be inserted in fixed-price supply contracts if it is desired to cover the subject matter thereof. § 1-7.104-1 Liquidated damages provisions. Insert the provision set forth in § 1-1.315-3 under the conditions and in the manner prescribed in § 1-1.315. § 1-7.104-2 Changes to "make-or-buy” program. Insert the clause set forth in § 13.902-3 in all contracts containing a "make-or-buy" program. Subpart 1-7.2-Cost-Reimbursement Type Supply Contracts SOURCE: 39 FR 1756, Jan. 14, 1974, unless otherwise noted (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 any one or more of the following: (1) Drawings, designs, or specifications, where supplies to be furnished are to be specially manufactured for the Government in accordance therewith; (2) method of shipment or packing; and (3) place of delivery. (b) If any such change causes 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: (1) In the estimated cost or delivery schedule, or both; (2) in the amount of any fixed-fee to be paid to the contractor; and (3) in such other provisions of the contract as may be affected, and the contract shall be modified in writing accordingly. Any claim by the Contractor for adjustment under this clause must be asserted within 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 |