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10 plies if the defects or failures are caused by

Fee, and Payment," but no additional fee tract and for such longer period as may be shall be payable with respect thereto. Such specified in this contract.

supplies or lots of supplies shall not be (1) Except as provided in this clause and 0tendered thereafter for acceptance unless as may be provided in the schedule, the

the former requirement of correction is dis Contractor shall have no obligation or 118

closed. If the Contractor falls to proceed with bility to correct or replace supplies or lots of ** reasonable promptness to replace or correct supplies which at the time of delivery are

such supplies or lots of supplies, the Govern defective in material or workmanship or ment (1) may by contract or otherwise re otherwise not in conformity with the require

place or correct such supplies and charge to ments of this contract. 90 the Contractor any increased cost occasioned (g) Except as otherwise provided in the o the Government thereby, or may reduce any Schedule, the Contractor's obligation to cor

fixed fee payable under this contract (or re rect or replace Government-furnished prop

quire repayment of any fixed fee theretofore erty (which is property in the possession of or iw pald) in such amount as may be equitable acquired directly by the Government and

under the circumstances, or (2) In the case dellvered or otherwise made available to the of supplies not delivered, may require the

Contractor) shall be governed by the prodelivery of such supplies, and shall have the visions of the clause of this contract entitled

right to reduce any fixed fee theretofore "Government Property." * pald) in such amount as may be equitable

under the circumstances, or (3) may terml § 1-7.202-6 Assignment of claims.

nate this contract for default as provided 2 In the clause of this contract entitled

Insert the clause set forth in § 1-30.703 CE "Termination for Default or Convenience of

under the conditions prescribed therein. 13 the Government." Failure to agree to the amount of any such increased cost to be

$ 1–7.202–7 Examination of records by I charged to the Contractor or to such reduc

Comptroller General. tion in, or repayment of, the fixed fee shall to be a dispute concerning a question of fact

Insert the clause set forth in $ 1within the meaning of the clause of this

7.103-3. contract entitled “Disputes." (c) Notwithstanding the provisions of para

§ 1-7.202–8 Subcontracts. De graph (b) hereof, the Government may at

Insert the following clause in all cost! 36 any time require the correction or replace

reimbursement type supply contracts: en ment by the Contractor, without cost to the * Government, of supplies or lots of supplies

SUBCONTRACTS ce which are defective in material or workmanthe ceship, or otherwise not in conformity with the

(a) The Contractor shall notify the Conrequirements of this contract, if such defects

tracting Officer reasonably in advance of encu or failures are due to fraud; lack of good

tering into any subcontract which (1) is atoni faith, or willful misconduct on the part of

cost-reimbursement type, time and materials, perito any of the Contractor's directors or officers,

or labor-hour, or (2) is fixed-price type and % or on the part of any of his managers, super

exceeds in dollar amount either $25,000 or 5% mozda intendents, or other equivalent representa

of the total estimated cost of this contract, *** tives, who has supervision or direction of (1)

or (3) provides for the fabrication, purchase, Dit all or substantially all of the Contractor's

rental, Installation, or other acquisition of is a business, or (2) all or substantially all of the

special test equipment having a value in expita Contractor's operations at any one plant or

cess of $1,000 or of any items of industrial

facilities. and si separate location in which this contract is stens being performed, or (3) a separate and com

(b) In the case of a proposed subcontract line plete major industrial operation in connec

which (1) Is cost-reimbursement type, time tion with the performance of this contract.

and materials, or labor-hour, and would inThe Government may at any time also re

volve an estimated amount in excess of forenses quire correction or replacement by the con

$10,000, including any fee, or (2) Is proposed tractor, without cost to the Government, of

to exceed $100,000, or (3) is one of a number

of subcontracts under this contract with a any such defective supplies or lots of sup

single subcontractor for the same or related one or more individual employees selected or

supplies or services which, in the aggregate retained by the Contractor after any such

are expected to exceed $100,000, the advance supervisory personnel has reasonable grounds

notification required by (a), above, shall

include: to belleve that such employee is habitually careless or otherwise unqualified.

(1) A description of the supplies or services (d) Corrected supplies or replaced supplies

to be called for by the subcontract; shall be subject to the provisions of this

(2) Identification of the proposed subclause in the same manner and to the same

contractor and an explanation of why and extent as supplies originally dellvered under how the proposed subcontractor was selected, this contract.

Including the degree of competition obtained; (e) The Contractor shall make his records (3) The proposed subcontract price, toof all Inspection work avallable to the Gov gether with the Contractor's cost or price ernment during the performance of this con analysis thereof;

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Government, nor shall such Government change with sound industrial practice, the
property, or any part thereof, be or become eam for utilization, maintenance, repair,
a fixture or lose its identity as personality action, and preservation of Government
ment property provided under this contract. a Centracting Officer under paragraph (f)
The contractor shall establish and maintain
a system to control, protect, preserve, and

In accordance with paragraph (d)
tem shall, upon request by the Contracting
Officer, be submitted for review and, if sat-
tracting Officer. The Contractor shall mald. De responsible under the express terms of

a douse or clauses designated in the tain and make available such records as ere required by the approved system and must account for all Government property until relieved of responsibility therefor in accordContracting Officer. To the extent directed by

to be procured and maintained, the Contracting Officer, the Contractor shall identify Government property by marking, tagging, or segregating in such manner 88 to clearly indicate its ownership by the

Which results from a risk which is in screwed by Insurance or for which the

internet is otherwise reimbursed, but only ess otherwise provided herein or approved

utent of such Insurance or reimburse

lure of the Contractor to act, as (f) The Contractor shall maintain and

in subparagraph (11), above, shall dminister, in accordance with sound in

casinately presumed to be a fallure

any contract or lease, which property the stal practice, a program for the utiliza- resulting from willful , Ed Government had agreed in the Schedule to m, maintenance

, repair, protection, and of good faith on the pai s, make available for the performance of this preservation of Government property so as

officers, or other represe contract, the Contracting Officer, upon the asure its full availability and usefulness In subparagraph (1), ab US written request of the Contractor (or, if the the perlormance of this contract. The tor is notified by the d substitution of property causes a decrease in contractor shall take all reasonable steps by registered or certified

the cost of performance, on his own initle beamply with all appropriate directions or one of such directors, of ative), shall equitably adjust such contractuetions whlch the Contracting Officer resentatives, of the G tual provisions as may be affected by the prescribe as reasonably necessary for the proval, withdrawal of 8 decrease, substitution, or withdrawal, in ac-tection of Government property.

ceptance of the Contract cordance with the procedures provided for b(I

) The Contractor shall not be liable tem. In such event it In the "Changes" clause of this contract. tay loss of or damage to the Government that any loss or damage t (c) Title to all property furnished by the aperty

, or lor expenses incidental to such erty resulted from such Government shall remain in the Government or damage, except that the Contractor tractor shall be liable fo Title to all property purchased by the Com- dl be responsible for any such loss or age unless he can esta tractor, for the cost of which the Contractor mage (Including expenses incidental convincing evidence tha is entitled to be reimbursed as a direct Item seto): of cost under this contract, shall pass to

age did not result from

0) Which results from willful misconduct tain an approved prog and vest in the Government upon dellvery clk of good faith on the part of any one of such property by the vendor. Title to the Contractor's directors or officers, or

occurred during such ti other property, the cost of which is relmake part of any of his managers, super

program or system for bursable to the Contractor under the contents, or other equivalent representa

ment property was main

If more than one of t. tract, shall pass to and vest in the Govern Tho has supervision or direction of: ment upon (1) issuance for use of such 4 All or substantially all of the Con

shall be applicable in an

tor's liability under any property in the performance of this contract

, bez's business; or

not be limited by any or (2) commencement of processing or use B) All or substantially all of the Conof such property in the performance of this mater's operations at any one plant or

the Contractor transfers contract, or (3) reimbursement of the cost ante location in which this contract is

erty to the possession thereof by the Government in whole or in performed; or

subcontractor, the trans part, whichever first occurs. All Government

C) A separate and complete major in

the liability of the Cor furnished property, together with all prop sal operation in connection with the

destruction of or dama erty acquired by the Contractor title to which rmance of this contract.

as set forth above. Howe vests in the Government under this para: Which results from a fallure on the

shall require the subco graph, are subject to the provisions of this

un at the Contractor, due to the willful

the risk of, and be respo clause and are hereinafter collectively

induct or lack of good faith on the

or destruction of or dam ferred to as "Government property." Tited any of his directors, officers, or other

while in the latter's po to the Government property shall not be estatives mentioned in subparagraph

except to the extent th affected by the incorporation or attachment

with the prior approval thereof to any property not owned by the

Officer, provides for the contractor from such 11 sence of such approval, ti

contain appropriate prov by reason of affixation to any realty.

return of all Governme (a) The Contractor shall be directly re

good condition as when sponsible for and accountable for all Govern

any appropriate written direction of

reasonable wear and tear tion of the property in a provisions of the prime co

(2) The Contractors maintain all Government property. This 575

bursed for, and shall not of overhead, the cost of

provisions for a reserve, Isfactory, approved in writing by the Con:

loss of or damage to the erty, except to the exten ment may have required carry such insurance un

visions of this contract. ance with the written instructions of the

(3) Upon the happenin tion of or damage to the erty, the Contractor Contracting Officer there municate with the loss?

zation, if any, now or here Government.

the Contracting Officer, e (e) The Government property shall, un

ance of the loss and salve

designated (unless the ay the Contracting Officer, be used only for

has designated that no he performance of this contract.

be employed), shall take to protect the Governm further damage, separate

undamaged Government

t

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actor ti performance of this contract. On no (1), above:

lease, riti dustrial practice, a program for the utiliza resulting from willful misconduct, or lack cred ca tion, maintenance, repair, protection, and of good faith on the part of such directors.

the pera preservation of Government property so as officers, or other representatives mentioned Tactix it to assure its full availability and usefulness in subparagraph (1), above, if the Contracthe der for the performance of this contract. The tor is notified by the Contracting Officer per un Contractor shall take all reasonable steps by registered or certified mail addressed to nance, and to comply with all appropriate directions or one of such directors, officers, or other repbly oder instructions which the Contracting Officer resentatives of the Government's disapmaç ta en may prescribe as reasonably necessary for the proval, withdrawal of approval, or nonacn, ar tiko protection of Government property.

ceptance of the Contractor's program or sysPred (8) (1) The Contractor shall not be llable tem. In such event it shall be presumed ause det for any loss of or damage to the Government that any loss or damage to Government propperny tan property, or for expenses incidental to such

erty resulted from such failure. The Conmain in die loss or damage, except that the Contractor tractor shall be liable for such loss or dampurban shall be responsible for any such loss or age unless he can establish by clear and malet e damage (including expenses incidental

convincing evidence that such loss or damBurdais thereto):

age did not result from his failure to main(1) Which results from willful misconduct tain an approved program or system, or

or lack of good faith on the part of any one occurred during such time as an approved the rent of the Contractor's directors or officers, or program or system for control of Governost data on the part of any of his managers, super ment property was maintained. actor ex intendents, or other equivalent representa If more than one of the above exceptions rest to tives, who has supervision or direction of:

shall be applicable in any case, the Contrac(A) All or substantially all of the Con tor's liability under any one exception shall ape din tractor's business; or

not be limited by any other exception. If (B) All or substantially all of the Con the Contractor transfers Government proptractor's operations at any one plant or

erty to the possession and control of a separate location in which this contract is subcontractor, the transfer shall not affect Bent ide being performed; or

the liability of the Contractor for loss or (C) A separate and complete major in destruction of or damage to the property the ti dustrial operation in connection with the

as set forth above. However, the Contractor

shall require the subcontractor to assume (11) Which results from a failure on the

the risk of, and be responsible for, any loss part of the Contractor, due to the willful

or destruction of or damage to the property misconduct or lack of good faith on the while in the latter's possession or control, part of any of his directors, officers, or other

except to the extent that the subcontract, representatives mentioned in subparagraph

with the prior approval of the Contracting

Officer, provides for the relief of the sub(A) To maintain and administer, in accordance with sound industrial practice, the

contractor from such liability. In the ab

sence of such approval, the subcontract shall o, o program for utilization, maintenance, repair, contain appropriate provisions requiring the protection, and preservation of Government

return of all Government property in as property as required by paragraph (1) hereof, or to take all reasonable steps to comply

good condition as when received, except for

reasonable wear and tear or for the utilizawith any appropriate written direction of the Contracting Officer under paragraph (f)

tion of the property in accordance with the hereof; or

provisions of the prime contract.

(2) The Contractor shall not be reim(B) To establish, maintain, and adminIster in accordance with paragraph (d)

bursed for, and shall not include as an item

of overhead, the cost of insurance, or any hereof a system for control of Government

provisions for a reserve, covering the risk of

loss of or damage to the Government prop(111) For which the Contractor is other

erty, except to the extent that the Governwise responsible under the express terms of the clause or clauses designated in the

ment may have required the Contractor to Schedule;

carry such Insurance under any other pro

visions of this contract. (iv) which results from a risk expressly required to be insured under this contract,

(3) Upon the happening of loss or destruc

tion of or damage to the Government propbut only to the extent of the insurance so

erty, the

Contractor shall notify the required to be procured and maintained, or to the extent of insurance actually pro

Contracting Officer thereof, and shall comcured and maintained, whichever is greater;

municate with the loss and salvage organi.

zation, if any, now or hereafter designated by or (v) Which results from a risk which is in

the Contracting Officer, and with the assistfact covered by insurance or for which the

ance of the loss and salvage organizations so Contractor is otherwise reimbursed, but only

designated (unless the Contracting Officer to the extent of such insurance or reimburse

has designated that no such organization ment.

be employed), shall take all reasonable steps Any failure of the Contractor to act, as to protect the Government property from provided in subparagraph (11), above, shall further damage, separate the damaged and be conclusively presumed to be a failure undamaged Government property, put all

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(a) Insert the three notices for solici-Chery: Provided, however, That this data abilities saceat leo.

remedies provided by law or under tant
11-7.204-5 Insurance-liability is this

Insert the following clange 616 intensients, ou | neat to the general pililaetiti - tes) ALOE கப் kabursement type supply connes par saties en las biopart 1-10.5. The classe

energies

plemented to provide these are 1.327-5 under the conditions set forth

trage required by a sua $ 1-7.203-25 Use of U.S. flag commer

Insert the clause prescribed by

$ 1-19.108—2 under the conditions set

to omit from such inventory schedules ang 4 Lifamal classes.
scrap consisting of faulty castings or forg- alte disse may be inserted
ings, or cutting and processing waste, such
as chips, cuttings, borings, turnings, short

1s-museet type supply conends, circles, trimmings, clippings, and rem

att ta sith agency PIDEEnants, and to dispose of such scrap in accordinis ired to cover the subance with the Contractor's normal practice se and account therefor as a part of general overhead or other reimbursable cost in ac

HALI Destions in contract. cordance with the Contractor's established

CONTRACT accounting procedures. (1) Unless otherwise provided herein, the

tinggizations have been made Government:

de pense this contract. (1) May abandon any Government prop-142143 Suproval of contract. erty in place, and thereupon all obligations of the Government regarding such abandoned

AL CONTRACT

approved by the Contracting property shall cease; and

D) The Contractor agree

zat ball be subject to the wrti(2) Has no obligation to the Contractor pomidor nis duly su

and m the manner required with regard to restoration or rehabilitation of

tng Ofreer, to submit for th

relative and shall not be Contracting omeer any the Contractor's premises, neither In case with proved. of abandonment (paragraph (1) (1), above),

maintained by the Contracı disposition on completion of need or of the 1914.3 Date of incurrence of costs.

with the performance of contract (paragraph (1), above), nor other

for which the Contractor wise, except for restoration or rehablitation

Din c IXCURRENCE OF COSTS

mentinereunder

(C) The Contractor shi costs caused by removal of Government prop e Contractar shall be entitled to reimerty pursuant to paragraph (b), above. rezat fer costs incurred in an amount

(1) for the portion allows (k) All communications issued pursuant to suced on or after

of the reasonable cost of this clause shall be in writing.

I incurred after this contract had

quired or approved pussu

sions of this clsuse,

e entered into, would have been reim(b) Paragraph (d) of the clause set

to add as an exception

mable under the provisions of this forth in § 1-7.203–21(a) may be modified

of Cost" or the "Limitatio to provide that the Government will

of this contract, for liadi maintain the property records of Govern- 1994 Notice regarding late deliv

sons for loss of or damage

than property (1) owned ment property furnished to the contrac

by the Contractor or ren tor.

Notice REGARDING LATE DELIVERY

tor, or (11) in the care, $ 1–7.203-22 Preference for U.S. flag

of the Contractor), or

- the event the Contractor encounters dilair carriers.

sit in meeting performance requirements,

injury, not competisste

otherwise, arising out of Insert the clause set forth in $1–1.323-2 sipates dificulty in complying with the

Bret delivery schedule or date, the Conunder the conditions prescribed therein.

ster shall immediately notify the Con(39 FR 34665, Sept. 27, 1974)

atting Oficer thereof in writing, giving per

servants, or singloyees § 1-7.203–23 Cost accounting standards.

at details, including the date by which

spects to complete performance or make tations set forth in § 1-3.1203 (a) (3).

u be informational only in character and (h) (2), and (i) (2) in negotiated solici

receipt thereof shall not be construed

weer tee Expres

Walter by the Government of any cov tations under the conditions contained

sur dellvery schedule or date, or any riets in Subpart 1-3.12.

B with respect to (b) Insert the two clauses set forth in $8 1–3.1204–1 and 1-3.1204-2 in negotiated contracts under the conditions contained in Subpart 1-3.12. [40 FR 60030, Dec. 31, 1975] § 1–7.203–24 Privacy Act.

Insert the clause prescribed by $1therein. [40 FR 44504, Sept. 26, 1975)

cial vessels. forth therein.

[41 FR 52457, Nov. 30, 1976)

this contract, whether negligence of Son

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le 1-7.204 Additional clauses.

The following clauses may be inserted in cost-reimbursement type supply contracts in accordance with agency proce

dures when it is desired to cover the sub-
z ject matter thereof:
§ 1-7.204–1 Alterations in contract.

ALTERATIONS IN CONTRACT
The following alterations have been made

in the provisions of this contract.
* § 1-7.204—2 Approval of contract.

APPROVAL OF CONTRACT
This contract shall be subject to the writ-
Beloton approval of.--

--or his duly au-
Este thorized representative and shall not be
liber : binding until approved.
7 8 1-7.204_3 Date of incurrence of costs.

DATE OF INCURRENCE OF COSTS
The Contractor shall be entitled to reim-
, abne bursement for costs incurred in an amount

not to exceed $-------- on or after..
which, 1 incurred after this contract had

been entered into, would have been reimedo bursable under

the provisions of this -bes contract. self $ 1-7.2044 Notice regarding late deliv

ery.

NOTICE REGARDING LATE DELIVERY In the event the Contractor encounters dilficulty in meeting performance requirements,

or anticipates difficulty in complying with the H contract delivery schedule or date, the Conmed de tractor shall immediately notify the Con

tracting Officer thereof in writing, giving per tinent details, including the date by which It expects to complete performance or make dellvery: Provided, however, that this data shall be informational only in character and that receipt thereof shall not be construed as & walver by the Government of any contract delivery schedule or date, or any rights

or remedles provided by law or under th 18 set to contract. § 1-7.204–5 Insurance liability to third

persons. Insert the following clause in cost-reImbursement type supply contracts pursuant to the general policies set forth in Subpart 1-10.5. The clause may be supplemented to provide other types of coverage required by agency procedures.

INSURANCE LIABILITY TO THIRD PERSONE

(a) The Contractor shall procure Ar thereafter maintain workmen's comme tion, employer's llability, comprehen eral llability (bodily injury), and con slvo automobile Habuity (bodily 11

performance under this contract, and such Other Insurance as the Contracting Omcer may from time to time require with respect to performance under this contract: Provided, That the Contractor may with the approval of the Contracting Officer maintain a self-insurance program:

And

provided further, That with respect to workmen's compensation the Contractor is qualified pursuant to statutory authority. All Insurance required pursuant to the provisions of this paragraph shall be in such form, in such amounts, and for such periods of time as the Contracting Officer may from time to time require or approve, and with insurers approved by the Contracting Officer.

(b) The Contractor agrees, to the extent and in the manner required by the Contracting Officer, to submit for the approval of the Contracting Officer any other insurance maintained by the Contractor in connection with the performance of this contract and for which the Contractor seeks reimbursement hereunder.

(c) The Contractor shall be relmbursed (1) for the portion allocable to this contract of the reasonable cost of insurance as required or approved pursuant to the provisions of this clause, and (2) without regard to and as an exception to the “Limitation of Cost" or the "Limitation of Funds" clause of this contract, for liabilities to third persons for loss of or damage to property (other than property (1) owned, occupied, or used by the Contractor or rented to the Contractor, or (11) in the care, custody, or control of the Contractor), or for death or bodily injury, not compensated by insurance or otherwise, arising out of the performance of this contract, whether or not caused by the negligence of the Contractor his agente, servants, or employees: Provider, Biten la bilities are represented by anal judgments or by settlemente approved in ordine laste Government, and expenses ledenimi i anir labilities, except liability All Hair the Contractor * H**** imati under the expropia fou H h ribhai HA clausen, if any, eine*** the data * (B) with repeat * w **** **** has falled to intito a um HA H6144 Insurance na 4******** Hy hou (444646 Omcer, or (0) * Halil 4444444 Will misconduct or farm 14*** hap 16 of any of the Chan H.46 the full cera, or on the part of any Al Ha 114114, superintendenta, o al miont repe sentatives, who ha *** ab He of (na) all *** HII HI

A4 tractor'a bueluene, ** W HHH auton ally all of the tone ************ one piante tootmie which the

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cop in connection with this contract, other than

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