letters at least three-fourths inch high. All other information shall be in letters at least three-eighths inch high.

On the other end of each case there shall be fastened a label of the same type as is on the cans in the case, or, in lieu of the label, there shall be printed or stenciled the name of the product and the following: "PURCHASED BY THE U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.,”—“A SECTION 6 COMMODITY FOR USE ONLY BY SCHOOLS PARTICIPATING IN THE NATIONAL SCHOOL LUNCH PROGRAM”—“NOT TO BE SOLD OR EXCHANGED"-"STORE IN DRY PLACE AT TEMPERATURE BETWEEN 32° AND 70° F."-and month and year in which contract was awarded. If printed or stenciled, the name of the product shall be on a separate line in letters at least three-fourths inch high and all other information shall be in letters at least three-eighths inch high.

ARTICLE 18. FILL OF CONTAINER

If the product is canned, the cans shall be filled with the product as full as practicable without impairment of quality, and in addition shall also comply with any fill, drained, or net weight requirements which may be specified in the announcement.

ARTICLE 19. COMPLIANCE WITH PRODUCT SPECIFICATIONS

Each lot offered must comply with the requirements of the specifications, and shall conform to the applicable provisions of the Federal Food, Drug and Cosmetic Act, as amended, and regulations issued thereunder. "Lot" as used in this Form means any quantity offered for inspection at one time, except that in determining compliance with the specifications any portion of the product that bears a distinctive mark which will identify it from other portions in the lot may be deemed a separate lot if such portion is of a lower grade or deficient in other factors.

A product not meeting all of the specifications (including those with respect to packages and containers) shall not be delivered in the absence of a written express amendment to the contract authorizing such delivery and prescribing a price adjustment where appropriate. If delivery is made without such amendment, USDA may accept the product at a price discount determined by USDA or may, without liability on its part, reject such product and hold Contractor for all costs incurred by USDA in connection with such delivery. Issuance of inspection certificates, notice to deliver, or bills of lading, or the making of payment by USDA, shall not constitute a waiver of the requirements for such express amendment covering shipment of products not meeting specifications.

ARTICLE 20. INSPECTION AND CHECKLOADING

The product shall be inspected and checkloaded by representatives of the Processed Products Standardization and Inspection Branch, Fruit and Vegetable Division, AMS, USDA, and the cost of such services and issuing certificates shall be borne by Contractor.

(a) Inspection shall be performed not more than 90 days prior to shipment unless otherwise provided in the contract. Samples for inspection purposes shall be furnished by Contractor without cost to USDA.

(b) Checkloading, as used in this form, refers to identifying the product which was previously inspected and found to meet quality requirements of the contract, examining the lot at time of loading for condition of containers and for compliance with labeling and case marking requirements, counting of the number of cases per car or truck, sealing loaded cars or trucks, and making any other examination necessary to determine compliance with the specifications of the contract.

ARTICLE 21. LOADING SPLIT SHIPMENTS

If shipping instructions require partial unloading en route at a stopoff, Contractor should order cars equipped with bracing devices and the load should be properly braced with such equipment. Contractor shall not delay shipment if the carrier is unable to furnish such equipment promptly. If the carrier is unable to furnish such equipment, Contractor shall load and brace in accordance with good commercial practice. The cost of any necessary bracing for split shipment shall be for the account of Contractor.

ARTICLE 22. SHIPMENT AND DELIVERY

USDA shall issue shipping instructions calling for shipment in a specified period which shall be within the shipping period specified in the announcement in quantities not in excess of the weekly shipping rate specified in the offer to sell. Delivery shall be made at Contractor's plant, or at local facilities, or by rail or truck (USDA option) at destinations named in shipping instructions issued by the ASCS Commodity Office. Contractor, when he deems it necessary, shall issue protective service instructions to carrier to protect the product from freezing while in transit and until unloaded at destination. Contractor shall make arrangements to obtain inspection certificates and checkloading at shipping point in time to make shipment within the dates specified. Notwithstanding any date or dates in the shipping instructions, or any other provisions in the contract, Contractor shall not be required to commence shipping prior to 10 days after receipt of such instructions or to effect shipment at a faster weekly rate than specified in the offer to sell, but USDA and Contractor may agree to an increase in such weekly shipping rate or to shipment earlier than the first day of the shipping period specified in the announcement. Title and risk of loss, except for loss due to deterioration or spoilage as set forth in Article 32 in this Form, shall pass to USDA upon delivery at destination named in shipping instructions.

ARTICLE 23. NOTICE OF SHIPMENT

On date of shipment, Contractor shall transmit the notice of shipment furnished by the ASCS Commodity Office and shall follow the instructions for transmittal and distribution of copies of such notice.

ARTICLE 24. REIMBURSEMENT FOR TRANSPORTATION COSTS

USDA will reimburse Contractor for the cost of transportation and protective services, if any, incurred in making delivery at destinations named by USDA, but in no event shall such reimbursement for transportation exceed the published common carrier rate by the most economical route. If Contractor uses his own truck or contract carrier to make delivery where truck delivery is permitted, USDA will pay Contractor for such transportation services at rates not in excess of the published common carrier rates for similar services by the most economical route.

ARTICLE 25. CONSIGNEES' RECEIPTS

Contractor shall obtain consignees' receipts on forms furnished by USDA when the product is delivered at Contractor's plant, or at local facilities, or by Contractor's truck or contract carrier. When Contractor makes delivery in his own truck or by contract carrier, he shall arrange for the driver to obtain the consignee's receipt for the product delivered. Contractor will not be required to obtain consignees' receipts on shipments by common carrier.

ARTICLE 26. SHORTAGE, LOSS, OR DAMAGE

Contractor shall be responsible for proper loading to assure arrival of the product at destination in good condition. Contractor shall be liable for all shortage. loss, or damage found and reported by consignees upon delivery of shipments at destinations, except for "normal loss" due to deterioration or spoilage as covered under Article 32 in this Form. Contractor may be relieved of liability for shortage, reported by a consignee, only upon presentation to the ASCS Commodity Office of evidence satisfactory to USDA that the carrier or other agent of Contractor is not liable for such shortage and that error was not made in loading count.

Consignees receiving shipments by common carrier showing shortage, loss, or damage are required to notify carrier's agent immediately upon discovery of any such condition and to prepare a shortage, loss, or damage report. Contractor will be furnished copies of such reports. Damaged product found by consignee in any shipment made by Contractor's own truck or by contract carrier will not be accepted by the consignee. Contractors shall, therefore, arrange for drivers to return any of the product rejected by the consignee.

ARTICLE 27. DISPOSITION OF DAMAGED PRODUCT FOUND IN SHIPMENTS
BY COMMON CARRIER

(a) Extensive Damage.-Shipment by common carrier showing extensive damage, as determined by USDA or its authorized representative, will be rejected to Contractor by the ASCS Commodity Office which issued the shipping instructions. Upon notification of rejection, Contractor shall immediately assume custody of the damaged shipment and arrange for replacement of such shipment at the delivery point named in the related shipping instructions.

(b) Partial Damage.-Where a shipment by common carrier shows only partial damage, that portion which is suitable for human consumption after segregation and recasing, if necessary, may be accepted by the consignee, subject to any claim by USDA for damages for failure to meet contract requirements. That portion of any such shipment found unfit for any use will be destroyed or disposed of in accordance with applicable health and sanitation laws or regulations. In receiving shipments, consignees do not have authority to modify or waive any of USDA's rights under the contract.

ARTICLE 28. PRODUCT REJECTED TO CONTRACTOR

Contractor agrees to take such action as may be necessary with respect to any product rejected to him to prevent such product from entering food trade channels with any markings on the inner or outer containers identifying the product with a USDA program.

ARTICLE 29. ADJUSTMENT FOR DAMAGED PRODUCT

The contract price of the quantity of the product rejected to Contractor or found unfit for use and destroyed, plus any transportation or other charges on such quantity, will be deducted by USDA from any amounts due Contractor if the quantity rejected or destroyed is included on Contractor's invoice for the shipment, or, if paid, such sum shall be refunded to USDA promptly upon demand. In addition, all expenses incurred by the consignee in segregating, recasing, and salvaging of damaged product and disposing of unfit product will be deducted from any amount due Contractor, or, if paid, such sum shall be refunded to USDA promptly upon demand. USDA will furnish Contractor with a copy of the invoices covering such expenses.

ARTICLE 30. FAILURE TO PERFORM

If Contractor refuses or fails to perform the contract within the time or times specified, or any extension thereof, USDA may, by written notice, terminate the right of Contractor to proceed with delivery or with such part or parts thereof as to which there has been delay, and, whether or not such notice of termination is given, may hold Contractor for the amount of any damages provided for in the announcement or, if provision for damages is not made in the announcement, for any actual damages suffered as the result of delay or failure to deliver and any excess costs incurred in procuring elsewhere the product or any part thereof; Provided, however, That Contractor shall not be charged with any such damages or costs if he gives USDA prompt written notice of such delay and the cause thereof, and if the contracting officer or other designee of USDA determines in writing that the delay is due solely to causes beyond the control and without the fault or negligence of Contractor or a subcontractor. Such causes may include, but are not restricted to, acts of God or of the public enemy, acts of Government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, unusually severe weather, and defaults of subcontractors due to any of such causes unless USDA shall determine that the supplies or services to be furnished by the subcontractor were obtainable from other sources in sufficient time to permit Contractor to meet the required delivery schedule. Written notice of such determination shall be given to Contractor and shall be final and conclusive upon the parties, subject only to appeal by Contractor as provided in Article 43 in this Form.

ARTICLE 31. LIQUIDATED DAMAGES

Late shipment of the product by Contractor will cause serious and substantial damage to USDA because of its urgent need for shipment on schedule. Since it will be difficult to prove the amount of such damage, Contractor shall pay to USDA by way of compensation, and not as penalty, liquidated damages at the

rate specified in the announcement for each calendar day of delay in shipment after the expiration of the shipping period stated in the announcement. Contractor, in submitting an offer, and USDA, in accepting such offer, agree that such damages are a reasonable estimate of the probable actual damages. In any event, however, the exculpatory provisions of Article 30 in this Form shall apply to the assessment of liquidated damages hereunder; and, further, Contractor shall not be liable for such damages to the extent that he shall prove to the satisfaction of USDA that delay in shipment did not cause delay in delivery of the product at destination.

ARTICLE 32. WARRANTY

Any loss due to deterioration or spoilage for which Contractor is responsible, up to 1⁄2 of 1 percent of any carlot or trucklot delivered, shall be considered "normal loss" and USDA waives any claim for recovery for such normal loss. In consideration of such allowance, Contractor agrees to a discount of 14 of 1 percent from purchase price of the total quantity delivered. Contractor shall reimburse USDA for all losses, in excess of normal loss, due to deterioration or spoilage sustained by USDA, for which Contractor is responsible, but only if such losses are discovered within 6 months after date of shipment to USDA, and USDA has notified Contractor within 30 calendar days after such losses are discovered. The burden of proving that he is not responsible for loss due to deterioration or spoilage shall be on the Contractor. The 6-month period referred to herein shall begin on the date of shipment to USDA and shall end on the day preceding the same date, 6 calendar months thereafter. Reimbursement shall be made to USDA at the contract price plus transportation and other charges for which Contractor was reimbursed by USDA and for other charges incurred by USDA. Such other charges may include, but are not limited to, reinspection, labor charges, and materials in connection with segregation and recasing when required, and storage charges incurred on the product held for reinspection, segregation, or recasing. Contractor agrees to reimburse USDA for such losses within 10 days after date of billing by USDA. That part of the product as to which USDA makes a claim based on deterioration or spoilage will be held by USDA subject to disposition instructions of Contractor (unless the nature of such deterioration or spoilage is such as to require condemnation and destruction as determined by USDA or its authorized representative) but will not be held by USDA in excess of 30 days after USDA sends notice of such claim to Contractor.

ARTICLE 33. PAYMENT

USDA will make payment to Contractor as soon as practicable after receipt by the applicable ASCS Commodity Office of a properly prepared invoice with the required supporting documents.

ARTICLE 34. INVOICES

Invoices for payment for the product and for reimbursement of transportation and protective service charges shall be submitted separately by Contractor to the applicable ASCS Commodity Office designated as serving the shipping point named in the offer. Invoices for payment for the product shall be supported by inspection and checkloading certificates, a copy of shipping instructions, and either a copy of commercial bill of lading signed or initialed by carrier's agent or, in lieu of the bill of lading, a consignee's receipt if the product was delivered (1) locally to the consignee, (2) by Contractor's truck, or (3) by a truck under contract with Contractor. Invoices for reimbursement of transportation and protective service charges shall be supported by the original or a copy of carrier's receipted freight bill or invoice. If delivery is by contract carrier, Contractor's invoice shall also be supported by a copy of the contract between Contractor and the truck line showing the schedule of rates, or a copy of the truck line's published rates.

ARTICLE 35. SETOFF

If Contractor is indebted to USDA, USDA will set off such indebtedness against the portion of the proceeds of the purchase by USDA which remains after deduction of amounts due prior lienholders. If Contractor is indebted to any other agency of the United States, such indebtedness may also be set off against the proceeds of the purchase, as hereinbefore stated, if the appropriate official of USDA so directs. Indebtedness owing to USDA shall be given first considera

tion after claims of prior lienholders. Setting-off as provided herein shall not deprive Contractor of the right to contest the justness of the indebtedness involved, either by administrative appeal or by legal action.

ARTICLE 36. WAIVER OF LIENS

The product delivered by Contractor shall be free of all liens or encumbrances or, if any liens or encumbrances exist, a proper waiver shall be submitted with the Contractor's invoice. The holder of any lien or encumbrance may execute such waiver and be named by Contractor as joint payee on invoices. The holder of any lien or encumbrance may also execute such waiver in connection with an assignment as provided in Article 37 in this Form. In either case, the holder of such lien or encumbrance may execute the waiver upon the condition that in ease Contractor is indebted to the Government under any other transaction, setoff will be made against any amounts determined to be payable under the contract only to the extent that such amounts payable are in excess of the amount of his lien or encumbrance.

ARTICLE 37. ASSIGNMENT

No assignment by Contractor shall be made of the contract or of any rights thereunder, except that Contractor may assign, in accordance with the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), the proceeds of the contract to a bank, trust company, Federal lending agency, or other recognized financing institution; Provided, That such assignment shall be recognized only if and when the assignee thereof files written notice of assignment together with a true copy of the instrument of assignment, in accordance with the instructions on Form AMS-66, "Notice of Assignment,' which form must be used in giving notice of assignment to USDA; Provided, further, That any such assignment shall cover all amounts payable and not already paid under the contract, shall not be made to more than one party, and shall not be subject to further assignment, except that any such assignment may be made to one party as agent or trustee for two or more parties participating in such financing. The instrument of assignment may be executed on Form AMS-347, or the assignee may use his own form of assignment. The AMS forms may be obtained from the contracting officer or any ASCS Commodity Office.

ARTICLE 38. BUY AMERICAN

Contractor warrants that the fruits and vegetables in the canned product delivered under the contract have been produced in the United States and that the cost of the components of the canned product which are mined, produced or manufactured in the United States exceeds 50 percent of the cost of all the components.

ARTICLE 39. COVENANT AGAINST CONTINGENT FEES

Contractor warrants that no person or selling agency has been employed or retained to solicit or secure the contract upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by Contractor for the purpose of securing business. For breach or violation of this warranty, USDA shall have the right to annul this contract without liability or in its discretion to deduct from the contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or contingent fee.

ARTICLE 40. TAXES

Contractor warrants that the price stated does not include any Federal, State or local taxes from which the United States is exempt or from which Contractor is exempt because the sale is to an agency of the United States. USDA will furnish any necessary tax exemption certificates when requested by Contractor.

ARTICLE 41. NONDISCRIMINATION

(a) In connection with the performance of work under the contract, Contractor agrees as follows:

(1) Contractor will not discriminate against any employee or applicant for employment because of race, creed, color, or national origin. Contractor will take affirmative action to insure that applicants are employed, and that employees are treated during employment, without regard to their