(4) The subcontractor's current, complete, and accurate cost or pricing data and Certificate of Current Cost or Pricing Data when such data and certificate are required by other provisions of this contract to be obtained from the subcontractor;

(5) Identification of the type of subcontract to be used;

(6) A memorandum of negotiation which sets forth the principal elements of the subcontract price negotiations. A copy of this memorandum shall be retained in the Contractor's file for the use of Government reviewing authorities. The memorandum shall be in sufficient detail to reflect the most significant considerations controlling the establishment of initial or revised prices. The memorandum should include an explanation of why cost or pricing data was, or was not required, and, if it was not required in the case of any price negotiation in excess of $100,000, a statement of the basis for determining that the price resulted from or was based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation. If cost or pricing data was submitted and a certificate of cost or pricing data was required, the memorandum shall reflect the extent to which reliance was not placed upon the factual cost or pricing data submitted and the extent to which this data was not used by the Contractor in determining the total price objective and in negotiating the final price. The memorandum shall also reflect the extent to which it was recognized in the negotiation that any cost or pricing data submitted by the Contractor was not accurate, complete, or current; the action taken by the Contractor and the subcontractor as a result: and the effect, if any, of such defective data on the total price negotiated. Where the total price negotiated differs significantly from the Contractor's total price objective, the memorandum shall explain the difference; and

(7) When incentives are used, the memorandum of negotiation shall contain an explanation of the incentive fee/profit plan identifying each critical performance element, management decisions used to quantify each incentive element, reasons for incentives on particular performance characteristics, and a brief summary of trade-off possibilities considered as to cost, performance, and time.

(8) The Subcontractor's Disclosure Statement or Certificate relating to Cost Accounting Standards when such data are required by other provisions of this contract to be obtained from the subcontractor.

(c) The Contractor shall obtain the written consent of the Contracting Officer prior to placing any subcontract for which advance notification is required under (a), above. The Contracting Officer may, in his discretion, ratify in writing any such subcontract; such action shall constitute the consent of the

Contracting Officer as required by this paragraph (c).

(d) The Contractor agrees that no subcontract placed under this contract shall provide for payment on a cost-plus-a-percentage-of

cost basis.

(e) The Contracting Officer may, in his discretion, specifically approve in writing any of the provisions of a subcontract. However, such approval or the consent of the Contracting Officer obtained as required by this clause shall not be construed to constitute a determination of the allowability of any cost under this contract, unless such approval specifically provides that it constitutes a determination of the allowability of such costs. (f) The Contractor shall give the Contracting Officer immediate notice in writing of any action or suit filed, and prompt notice of any claim made against the Contractor by any subcontractor or vendor which, in the opinion of the Contractor, may result in litigation related in any way to this contract with respect to which the Contractor may be entitled to reimbursement from the Government.

(g) Notwithstanding paragraph (c), above, the Contractor may enter into subcontracts within (1) and (2) of paragraph (a), above, without the consent of the Contracting Officer, if the Contracting Officer has approved in writing the Contractor's procurement system and the subcontract is within the scope of such approval.

(h) To facilitate small business participation in subcontracting under this contract, the Contractor agrees to provide progress payments on the fixed-price subcontracts of those subcontractors which are small business concerns, in conformity with the standards for customary progress payments specifiled in Subpart 1-30.5, of the Federal Procurement Regulations (41 CFR 1–30.5), as in effect on the date of this contract. The Contractor further agrees that the need for such progress payments will not be considered as a handicap or adverse factor in the award of subcontracts.

[39 FR 1756, Jan. 14, 1974, as amended at 40 FR 11581, Mar. 12, 1975]

§ 1-7.202-9 [Reserved]

§ 1-7.202-10 Termination for default or convenience of the Government. Insert the clause set forth in § 1-8.702 in accordance with the conditions prescribed in §§ 1-8.700-2(a) (3) and 1-8.700-2(b) (2).

§ 1-7.202-11 Excusable delays.

Insert the clause set forth in § 1-8.708 under the conditions prescribed in § 1-8.700-2(c).

§ 1-7.202-12 Disputes.

12.

Insert the clause set forth in § 1-7.102

Insert the following clause when payment for overtime premiums is to be made in accordance with § 1-12.102:

PAYMENT FOR OVERTIME PREMIUMS

(a) Allowable cost shall not include any amount on account of overtime premiums except when (1) specified in (d), below, or (2) paid for work:

(1) Necessary to cope with emergencies such as those resulting from accidents, nattural disasters, breakdowns of production equipment, or occasional production bottlenecks of a sporadic nature;

(11) By indirect labor employees such as those performing duties in connection with administration, protection, transportation, maintenance, standby plant protection, operation of utilities, or accounting:

(111) In the performance of tests, industrial processes, laboratory procedures, loading or unloading of transportation media, and operations in flight or afloat, which are continuous in nature and cannot reasonably be interrupted or otherwise completed;

or

(iv) Which will result in lower cost to the Government.

(b) The cost of overtime premiums otherwise allowable under (a), above, shall be allowed only to the extent the amount thereof is reasonable and properly allocable to the work under the contract.

(c) Any request for overtime, in addition to any amount specified in (d), below, will be for all overtime which can be estimated with reasonable certainty shall be used for the remainder of the contract, and shall contain the following:

(1) Identification of the work unit, such es the department or section in which the requested overtime will be used, together with present workload, manning and other data of the affected unit, sufficient to permit an evaluation by the Contracting Officer of the necessity for the overtime;

(2) The effect that denial of the request will have on the delivery or performance schedule of the contract;

(3) Reasons why the required work cannot be performed on the basis of utilizing multishift operations or by the employment of additional personnel; and

(4) The extent to which approval of overtime would affect the performance or payments in connection with any other Government contracts, together with any identification of such affected contracts.

Insert the following clause in cost reimbursement type supply contracts.

COMPETITION IN SUBCONTRACTING

The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practicable extent consistent with the objectives and requirements of the contract.

§ 1-7.202-31 Price reduction for defective cost or pricing data.

Insert the clause set forth in § 1-3.814-1 under the conditions prescribed therein.

§ 1-7.202-32 Audit and records.

See 1-3.814-2 (c) for audit and records requirements for cost-reimbursement type contracts. Agencies may use the clause set forth in § 1-3.814-2(a) to satisfy these requirements. However, agency audit and records clauses may be used provided that they give the contracting agency, as a minimum, substantially the same rights as provided by the clause set forth in § 1-3.814-2(a). Subcontractor cost and

§ 1-7.202-33

pricing data. Insert the appropriate clause set forth in § 1-3.814-3 under the conditions prescribed therein.

§ 1-7.202-34 Payment of interest on contractors' claims.

Insert the clause set forth in § 1-1.322 under the conditions prescribed therein.

§ 1-7.202-35 Listing of employment openings.

Insert the clause set forth in § 1-12.1102-2 under the conditions and in the manner prescribed therein.

§ 1-7.202-36 Late offers and modifications or withdrawals.

(a) The provision set forth in § 13.802-1(b) shall be used in all negotiated solicitations except as provided by § 1-3.802-2(a).

(b) The provision set forth in § 13.802-2(b) may be used in negotiated solicitations under the conditions prescribed in § 1-3.802-2(a).

§ 1-7.203-1

Clauses to be used when appli

Clauses for cost-reimbursement type supply contracts involving construction.

(a) Insert the clauses set forth in § 1-18.703-1 in cost-reimbursement type supply contracts under the conditions contained in § 1-18.701-1. The clauses set forth in § 1-12.403-1 are listed as follows:

Davis-Bacon Act (40 U.S.C. 2768-276a-7). Contract Work Hours and Safety Standards Act Overtime Compensation (40 U.S.C. 327-333).

Apprentices and Trainees.

Payrolls and Payroll Records.
Compliance with Copeland Regulations.
Withholding of Funds.
Subcontracts.

Contract Termination-Debarment.

except that each such subcontract shall provide that in the event its timely performance is delayed or threatened by delay by any actual or potential labor dispute, the subcontractor shall immediately notify his next higher tier subcontractor, or the Prime Contractor, as the case may be, of all relevant information with respect to such disputes. §§ 1-7.203-4-1-7.203-8 [Reserved] § 1-7.203-9 Negotiated overhead rates. Insert the clause set forth in § 1-3.704 under the conditions prescribed therein. § 1-7.203-10 Make-or-buy program.

Insert the clause set forth in § 13.902-3 under the conditions prescribed therein.

§ 1-7.203-13

General Services Adminis

tration supply sources.

Insert the following clause under the conditions set forth in Subpart 1-5.9: GENERAL SERVICES ADMINISTRATION SUPPLY SOURCES

The Contracting Officer may issue the Contractor an authorization to utilize General Services Administration supply sources for property to be used in the performance of this contract. Title to all property acquired under such an authorization shall vest in the Government. All property acquired under such an authorization shall be subject to the provisions of the clause of this contract entitled "Government Property," except paragraphs (a) and (b) thereof.

service and maintenance, and the use of related services by the Contractor shall be in accordance with 41 CFR Part 101-39.

§ 1-7.203-15 Interest.

Insert the following clause if, in accordance with agency procedures, amounts due the Government are to bear interest:

INTEREST

Notwithstanding any other provision of this contract, unless paid within 30 days, all amounts that become payable by the Contractor to the Government under this contract (net of any applicable tax credit under the Internal Revenue Code) shall bear interest at the rate determined by the Secretary of the Treasury pursuant to Public Law 92-41, 85 Stat. 97. Amounts shall be due upon the earliest of (a) the date fixed pursuant to this contract; (b) the date of the first written demand for payment, consistent with this contract, including demand consequent upon default termination; (c) the date of transmittal by the Government to the Contractor of a proposed supplemental agreement to confirm completed negotiations fixing the amount; or (d) if this contract provides for revision of prices, the date of written notice to the Contractor stating the amount of refund payable in connection with a pricing proposal or in connection with a negotiated pricing agreement not confirmed by contract supplement.

§ 1-7.203-16 § 1-7.203-17

§ 1-7.203-18

[Reserved] [Reserved]

Small business subcontracting program.

Insert the clause set forth in § 11.710-3(b) under the conditions and in the manner prescribed therein.

§ 1-7.203-19 Labor surplus area subcontracting program.

Insert the clause set forth in § 11.805-3(b) under the conditions and in the manner prescribed therein.

§ 1-7.203-20 Minority business enterprises subcontracting program.

Insert the clause set forth in § 11.1310-2(b) under the conditions and in the manner prescribed therein.

§ 1-7.203-21 Government property.

(a) Insert the following clause when the Government is to furnish, or the contractor is to acquire, Government property:

GOVERNMENT PROPERTY

(a) The Government shall deliver to the Contractor, for use in connection with and

under the terms of this contract, the property described as Government-furnished property in the Schedule or specifications, together with such related data and information as the Contractor may request and as may reasonably be required for the intended use of such property (hereinafter referred to as "Government-furnished Property"). The delivery or performance dates for the supplies or services to be furnished by the Contractor under this contract are based upon the expectation that Government-furnished property suitable for use will be delivered to the Contractor at the times stated in the Schedule or, if not so stated, in sufficient time to enable the Contractor to meet such delivery or performance dates. In the event that Government-furnished property is not delivered to the Contractor by such time or times, the Contracting Officer shall, upon timely written request made by the Contractor make a determination of the delay, if any, occasioned the Contractor and shall equitably adjust the estimated cost, fixed fee, or delivery or performance dates, or all of them, and any other contractual provisions affected by any such delay, in accordance with the procedures provided for in the clause of this contract entitled "Changes." In the event that Government-furnished property is received by the Contractor in a condition not suitable for the intended use, the Contractor shall, upon receipt thereof notify the Contracting Officer of such fact and, as directed by the Contracting Officer, either (1) return such property at the Government's expense or otherwise dispose of the property, or (2) effect repairs or modifications. Upon completion of (1) or (2), above, the Contracting Officer upon written request of the Contractor shall equitably adjust the estimated cost, fixed fee, or delivery or performance dates, or all of them, and any other contractual provision affected by the return or disposition, or the repair or modification in accordance with the procedures provided for in the clause of this contract entitled "Changes." The foregoing provisions for adjustment are exclusive and the Government shall not be liable to suit for breach of contract by reason of any delay in delivery of Government-furnished property or delivery of such property in a condition not suitable for its intended use.

(b) (1) By notice in writing, the Contracting Officer may (1) decrease the property furnished or to be furnished by the Government under this contract, or (ii) substitute other Government-owned property for property to be furnished by the Government, or to be acquired by the Contractor for the Government, under this contract. The Contractor shall promptly take such action as the Contracting Officer may direct with respect to the removal and shipping of property covered by such notice.

(2) In the event of any decrease in or substitution of property pursuant to paragraph (1), above, or any withdrawal of authority to use property provided under

any contract or lease, which property the Government had agreed in the Schedule to make available for the performance of this contract, the Contracting Officer, upon the written request of the Contractor (or, if the substitution of property causes a decrease in the cost of performance, on his own initiative), shall equitably adjust such contractual provisions as may be affected by the decrease, substitution, or withdrawal, in accordance with the procedures provided for in the "Changes" clause of this contract.

(c) Title to all property furnished by the Government shall remain in the Government. Title to all property purchased by the Contractor, for the cost of which the Contractor is entitled to be reimbursed as a direct item of cost under this contract, shall pass to and vest in the Government upon delivery of such property by the vendor. Title to other property, the cost of which is reimbursable to the Contractor under the contract, shall pass to and vest in the Government upon (1) issuance for use of such property in the performance of this contract, or (2) commencement of processing or use of such property in the performance of this contract, or (3) reimbursement of the cost thereof by the Government in whole or in part, whichever first occurs. All Governmentfurnished property, together with all property acquired by the Contractor title to which vests in the Government under this paragraph, are subject to the provisions of this clause and are hereinafter collectively referred to as "Government property." Title to the Government property shall not be affected by the incorporation or attachment thereof to any property not owned by the Government, nor shall such Government property, or any part thereof, be or become a fixture or lose its identity as personality by reason of affixation to any realty.

(d) The Contractor shall be directly responsible for and accountable for all Government property provided under this contract. The contractor shall establish and maintain a system to control, protect, preserve, and maintain all Government property. This system shall, upon request by the Contracting Officer, be submitted for review and, if satisfactory, approved in writing by the Contracting Officer. The Contractor shall maintain and make available such records as are required by the approved system and must account for all Government property until relieved of responsibility therefor in accordance with the written instructions of the Contracting Officer. To the extent directed by the Contracting Officer, the Contractor shall identify Government property by marking, tagging, or segregating in such manner as to clearly indicate its ownership by the Government.

(e) The Government property shall, unless otherwise provided herein or approved by the Contracting Officer, be used only for the performance of this contract.

(f) The Contractor shall maintain and administer, in accordance with sound in