§ 14H-30.414 Agreement for special bank account and contract provisions.

§ 14H-30.414-1 Form of agreement for special bank account.

For all advance payments made to Indian tribal contractors and other Indians who operate a totally owned and controlled non-profit business, the form of agreement and modification given in paragraphs (a)–(d) of this section should be used.

(a) The following is the form of agreement for a special bank account for advance payments:

AGREEMENT FOR SPECIAL BANK ACCOUNT FOR ADVANCE PAYMENT(S)

(1) This agreement entered into between the United States of America, hereinafter called the "Government," Contractor, and Bank, each represented by the officials executing this agreement.

(2) The Government and the Contractor entered into the Contract(s) or Supplemental Agreement(s) thereto, providing for the making of advance payment(s) to the Contractor. Copy of the advance payment clause included in the contract is attached to and made a part of this agreement.

(i) The advance payment clause requires that amounts advanced to the Contractor be deposited in a Special Bank Account at a member bank or banks of the Federal Reserve System or any "insured" bank within the meaning of the Act creating the Federal Deposit Insurance Corporation (Act of August 23, 1935; 49 Stat. 684, as amended; 12 U.S.C. 264), separate from the Contractor's general or other funds; and, the Bank being such a bank, the parties are agreeable to so depositing said amounts with the Bank.

(ii) This Special Bank Account shall be designated as indicated in paragraph (7) of this agreement.

(3) In consideration of the foregoing, and for other good and valuable considerations, it is agreed that:

(i) The Government shall have a lien upon the credit balance in said account to secure the repayment of all advance payments made to the Contractor, which lien shall be superior to any lien or claim of the bank with respect to such account.

(ii) The Bank will be bound by the provisions of the advance payment clause relating to the deposit in and withdrawal of funds from the Special Bank Account, but shall not be responsible for the use of funds withdrawn from said account. Upon receipt by the Bank of written directions of any kind from the Contracting Officer, or from the duly authorized representative of the Contracting Office, pertaining to the use of the funds in the Special Bank Account upon Department of the Interior, Bureau of Indian Affairs stationery and purporting to be signed by the Contracting Officer or the Contracting Officer's authorized representative, the Bank shall act thereon and insofar as the rights, duties, and liabilities of the Bank are concerned, the written directions shall be conclusively deemed to have been properly issued and filed with the Bank by the Department of the Interior, Bureau of Indian Affairs.

(iii) The Government, or its authorized representatives, shall have access to the books and records maintained by the Bank with respect to the Special Bank Account at all reasonable times and for all reasonable purposes, including (but without limiting the generality thereof) the inspection or copying of such books and records and any and all memoranda, checks, correspondence or documents appertaining thereto. Such books and records shall be preserved by the Bank for a period of six (6) years after the closing of the Special Bank Account.

(4) In the event of the service of any writ of attachment, levy of execution, or commencement of garnishment proceedings with respect to the Special Bank Account, the Bank will promptly notify the Contracting Officer.

(5) The Bank, Contractor, and Government, by executing this agreement, are bound by all of the provisions contained in the advance payment clause attached, which is made a part of the contract.

contract(s)

(6) The contract number and purpose of the or supplemental agreement(s) referred to above are as follows:

(7) The Special Bank Account shall be designated as "SPECIAL BANK ACCOUNT NUMBER Bureau of Indian Affairs.

(2) Insert, in the blank space in paragraph (7) of the agreement, the number assigned by the Bank as the Account Number for the "Special Bank Account."

(3) The agreement should be dated on the date it is signed by the Contracting Officer.

(4) The complete mailing address of the bank is necessary as the advance payment check and all progress payment checks will be mailed to the bank. The zip code is required.

(5) The Contracting Officer should not sign the agreement until authority to make the advance payment has been obtained.

(c) The following is the form of modification of an agreement for a special bank account for advance payments:

AGREEMENT FOR SPECIAL BANK ACCOUNT

Modification Number

(1) The Agreement for Special Bank Account dated 19 is modified as fol

lows:

(2) The contract number and the purpose of the contract is as follows:

33-139 0-84--19

agreement shown in paragraph (c) of this section:

(1) The date of the original Agreement for Special Bank Account should be indicated in the first line of paragraph (1) of the modification.

(2) Under paragraph (2) of the modification, state the contract number and describe the purpose of the contract. If the purpose given in paragraph (6) of the original agreement is changed, describe it. Otherwise repeat the original description.

(3) Under paragraph (3) of the modification, indicate the Special Bank Account Number if a new one is being issued. If the original number is being used, repeat it.

(4) If a change is not made under either paragraphs (2) or (3) of the modification, then no modification of the original agreement is necessary.

(5) If a modification is required, it should be dated when signed by the Contracting Officer.

§ 14H-30.414-2 Contract provisions for advance payments.

The contract clause for use when an advance payment is made or to be made on a contract with an Indian tribal contractor and other Indians who operate a totally Indian owned and controlled business follows:

ADVANCE PAYMENT

(a) Amount of advance. At the request of the Contractor, and subject to the conditions hereinafter set forth, the Government shall make an advance payment(s) to the Contractor. No advance payment(s) shall be made (1) without the Contracting Officer's approval as to the financial necessity therefor; and (2) in an amount in excess of that stated in paragraph (n)(1) hereof.

(b) Special bank account. Until the advance payment(s) made hereunder is liquidated and the Contracting Officer approves in writing the release of any funds due and payable to the Contractor, the advance payment(s) and all other payments (progress, partial, and final) made under the contract shall be made by check payable to the Contractor but mailed to the bank, where the special bank account is maintained as stated in the Agreement for Special Bank Account. The check must be marked for "Deposit in Special Bank Account Number--Bureau of Indian Affairs." The Agreement for Special Bank Account shall designate the account number. No part of the funds deposited in the Special Bank Account shall be mingled with other funds of the Contractor prior to withdrawal thereof from the Special Bank Account as hereinafter provided. Except as

hereinafter provided, each withdrawal shall be only by check of the Contractor, unless countersigning on behalf of the Government by the Contracting Officer or such other person as he may designate in writing is determined to be in the best interest of the Government and the Contracting Officer notifies the Contractor and bank in writing that countersigning will be required.

(c) Use of funds. The funds in the Special Bank Account may be withdrawn by the Contractor solely for the purposes of making payments for materials, labor, administrative and overhead expenses, and other purposes required for this contract (including, without limitation, payments incident to termination for the convenience of the Government) and properly allocable thereto in accordance with generally accepted accounting principles (subject to any applicable provision of contract cost principles and procedures in 41 CFR Part 1-15 or other agency cost principles and procedures, if any, which are made part of this contract), or for the purposes of reimbursing the Contractor for such payments, and for such other purposes as the Contracting Officer may approve in writing. If this is a cost reimbursement contract, the funds in the Special Bank Account may be withdrawn by the Contractor solely for the purpose of making payments for items of allowable costs as defined in clause titled "ALLOWABLE COST, FIXED-FEE AND PAYMENT" of this contract. Any interpretation required as to the proper use of funds shall be made in writing by the Contracting Offi

cer.

(d) Return of funds. The Contractor may at any time repay all or any part of the funds advanced hereunder. Whenever so requested in writing by the Contracting Officer, the Contractor shall repay to the Government such part of the unliquidated balance of the advance payment as shall in the opinion of the Contracting Officer be in excess of the Contractor's current requirements or when added to total advances previously made and liquidated are in excess of the amount specified in paragraph (n)(1) hereof or are no longer to be made available to the Contractor because of default, or abuse in their use, or for such other reasons as the Contracting Officer may specify. In the event the Contractor fails to repay such part of the unliquidated balance of the advance payment when so requested by the Contracting Officer, all or any part thereof may be withdrawn from the Special Bank Account by check(s) made payable to the Bureau of Indian Affairs signed by the Contracting Officer or by an official of the Bureau of Indian Affairs authorized in writing by the Contracting Officer to take such action. Such withdrawals shall be applied in reduction of the advance payment(s) then

outstanding hereunder. The Contracting Officer shall notify the contractor and the bank of the action taken.

(e) Liquidation. If not otherwise liquidated, the advance payment(s) made hereunder shall be liquidated as herein provided. When the sum of all the estimated payments remaining due on the contract approximate the unliquidated amount of the advance payment(s), the Contracting Officer shall thereafter withhold further payments due on the Contract represented by proper invoiced amount(s) submitted by the Contractor, and apply the amount(s) withheld against the liquidation of the advance payment until the advance payment has been fully liquidated. If, upon completion or termination of the contract or for other reasons, the entire advance payment(s) is not fully liquidated by the process indicated above and the Contractor does not repay the balance due upon request, then the balance thereof shall be offset against any sums otherwise due or which may become due to the Contractor from the Government on any other contracts or from any source. (f) Interest charge. No interest will be charged on the amount of the advance payment(s), but any interest earned on the advance payment(s) including sub-advances or contract earnings deposited in the Special Bank Account shall be used in the performance of the contract and to liquidate the advance payment(s) made.

(g) Bank agreement. Before an advance payment(s) is made hereunder, the Contractor shall submit to the Contracting Officer,

the form prescribed, an Agreement for Special Bank Account, in triplicate, signed by the contractor and an official of the bank in which the Special Bank Account is established as the depository for the advance payment(s) and other payments. The agreement shall clearly set forth the character of the Special Bank Account and the responsibilities of the Contractor, the bank and the Contracting Officer thereunder. Wherever possible, such bank shall be a member of the Federal Reserve System, or an "insured" bank within the meaning of the Act creating the Federal Deposit Insurance Corporation (Act of August 23, 1935, 49 Stat. 684, as amended; 12 U.S.C. 264).

(h) Lien on Special Bank Account. The Government shall have a lien upon any balance in the Special Bank Account paramount to all other liens, which lien shall secure the repayment of any advance payment(s) made hereunder.

(i) Lien on property under contract. Any advance payment(s) made under this contract shall be secured, when made, by a lien in favor of the Government, paramount to all other liens, upon the supplies or other things covered by this contract. The Government's lien shall apply to all material and other property acquired for or allocated

to the performances of this contract, except to the extent that the Government by virtue of any other provisions of this contract, or otherwise, shall have valid title to such supplies, materials, or other property as against other creditors of the Contractor. The Contractor shall identify, by marking or segregation, all property which is subject to a lien in favor of the Government by virtue of this contract in such a way as to indicate that it is subject to such lien and that it has been acquired for or allocated to the performance of this contract. If for any reason such supplies, materials, or other property are not identified by marking or segregation, the Government shall be deemed to have a lien to the extent of the Government's interest under this contract on any mass of property with which such supplies, materials, or other property are commingled. The Contractor shall maintain adequate accounting control over such property on his books and records. If at any time during the progress of the work on the contract it becomes necessary to deliver any item or items and materials upon which the Government has a lien as aforesaid to a third person, the Contractor shall notify such third person of the lien herein provided and shall obtain from such third person a receipt, in duplicate, acknowledging, inter alia, the existence of such lien. A copy of each receipt shall be delivered by the Contractor to the Contracting Officer. If this contract is terminated in whole or in part and the Contractor is authorized to sell or retain termination inventory acquired for or allocated to this contract, such sale or retention shall be made only if approved by the Contracting Officer, which approval shall constitute a release of the Government's lien hereunder to the extent that such termination inventory is sold or retained, and to the extent that the proceeds of the sale, or the credit allowed for such retention on the Contractor's termination claim, is applied in reduction of advance payment(s) then outstanding hereunder.

(j) Insurance. The Contractor represents and warrants that he is now maintaining with responsible insurance carriers, (1) insurance upon his own plant and equipment against fire and other hazards to the extent that like properties are usually insured by others operating plants and properties of similar character in the same general locality; (2) adequate insurance against liability on account of damage to persons or property; and (3) adequate insurance under all applicable workmen compensation laws. The Contractor agrees that, until work under this contract has been completed and the advance payment(s) made hereunder has been liquidated, he will (i) maintain such insurance; (ii) maintain adequate insurance upon any materials, parts, assemblies, sub

assemblies, supplies, equipment, and other property acquired for or allocable to this contract and subject to the Government lien hereunder; and (iii) furnish such certificate with respect to his insurance as the Contracting Officer may from time to time require.

(k) Default provisions. Upon the happening of any of the following events of default, (1) termination of this contract by reason of fault of the Contractor; (2) a finding by the Contracting Officer that the Contractor: (i) has failed to observe any of the covenants, conditions, or warranties of these provisions or has failed to comply with any material provision of this contract; or (ii) has so failed to make progress or is in such unsatisfactory financial condition as to endanger performance of this contract; or (iii) has allocated inventory to this contract substantially exceeding reasonable requirements, or (iv) is delinquent in payment of taxes, or of the costs of performance of this contract in the ordinary course of business; (3) appointment of a trustee, receiver or liquidator for all or a substantial part of the Contractor's property or institution of bankruptcy, reorganization, arrangement, or liquidation proceedings by or against the Contractor; (4) service of any writ of attachment, levy of execution, or commencement of garnishment proceedings with respect to the Special Bank Account; or (5) the commission of an act of bankruptcy; the Government, without limiting any rights which it may otherwise have, may in its discretion and upon written notice to the Contractor and Bank, withhold further withdrawals from the Special Bank Account and withhold further payments on this contract. Upon the continuance of any such events of default for a period of thirty (30) days after such written notice to the Contractor and Bank, the Government may, in its discretion, and without limiting any other rights which the Government may have, take the following additional actions as it may deem appropriate in the circumstances;

(A) Withdraw all or any part of the balance in the Special Bank Account by checks made payable to the Bureau of Indian Affairs signed solely by an official of the Bureau of Indian Affairs, authorized in writing by the Contracting Officer to take such action, and apply such amounts in reduction of the advance payment(s) then outstanding hereunder and in reduction of any other claims of the Government against the Contractor;

(B) Demand immediate repayment of the unliquidated balance of the advance payment(s) hereunder; or

(C) Take possession of and, with or without advertisement, sell at public sale at which the Government may be the purchaser, or at a private sale, all or any part of the property on which the Government has a

lien under this contract and, after deducting any expenses incident to such sale, apply the net proceeds of such sale in reduction of the unliquidated balance of the advance payment(s) hereunder and in reduction of any other claims of the Government against the Contractor.

(1) Prohibition against assignment. Notwithstanding any other provision of this contract, the Contractor shall not, while any part of the advance payment(s) is unliquidated, pledge, or otherwise assign any monies due under this contract, or any claim arising thereunder, to any party or parties, bank, trust company, or other financing institution. (See clause titled ASSIGNMENT OF CLAIMS).

(m) Information-access to records. The Contractor shall furnish to the Contracting Officer signed or certified balance sheets and profit and loss statements monthly, if required by the Contracting Officer, together with a monthly bank statement for the Special Bank Account and such other information concerning the operation of the Contractor's business as may be requested. The Contractor shall afford to authorized representatives of the Government proper facilities for inspection of the Contractor's books, records, and accounts.

(n) Designations and determinations. (1) Amount. The amount of the advance payment(s) at any time outstanding hereunder shall not exceed the amount authorized in the Findings, Determinations, and Authorization for the advance payment(s) prepared pursuant to 41 CFR 14H-30.410.

(2) Depository. The advance payment(s) shall be deposited in the bank with which the Agreement for Special Account is established pursuant to 41 CFR 14H-30.414-1.

(0) Other security. The terms of this contract shall be considered adequate security for advance payment(s) hereunder.

(p) Representations and warranties. To induce the making of the advance payment(s), the Contractor represents and warrants that;

(1) No litigation or proceedings are presently pending or threatened against the Contractor.

(2) None of the provisions herein contravenes or is in conflict with the authority under which the Contractor is doing business or with the provision of any existing agreement of the Contractor.

(3) The Contractor has the power to enter into this contract and accept an advance payment(s) hereunder, and has taken all necessary action to authorize such acceptance under the terms and conditions of this contract.

(4) None of the assets of the Contractor is subject to any lien or encumbrance of any character except for current taxes not delinquent. There has been no assignment of