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mount of such tax or duty or rate
worace: Provided, That the Contractor 11

2 PR. 10254, July 24, 1964, as amended at

11 TR 6373, Apr. 27, 1966; 40 FR 44140, ersons munity or exemption from any State or United local tax, the matter shall be handled in porta accordance with $ 1-11.000(b). s obtation

Subpart 1-11.4Contract Clauses

§ 1-11.401 Fixed-price type contractu. led at

The clauses prescribed in this subpart are for use in fixed-price type contracts

except those to be performed entirely -cal outside the United States, its possessions,

and Puerto Rico.

8 1-11.401-) Advertised and certain State

negotiated contracts. - the

(a) Use of clause. Except as provided nbia, in § 1-11.401-4, the clause set forth in ates,

paragraph (c) of this $ 1-11.401–1 shall cions

be used in:

(1) All formally advertised contracts
except construction contracts;

(2) All formally advertised construc-
iade tion contracts when the contract price
mpt may reasonably be expected to exceed
Res; $10,000;
are (3) Negotiated fixed-price type con.
erty

tracts in excess of $10,000 where the con.
med tracting officer is satisfied, because of
ent.

competition or otherwise, that the con• of tract price does not include any con. v tingency for State and local taxes; and or

(4) At the discretion of the contracting
ses officer in negotiated fixed-price type con-
nt. tracts in excess of $2,500 but not in excess
ity of $10,000. However, this clause shall not

be used in purchases made pursuant to
es, Subpart 1-3.6.
an (b) Description. The clause provides

that the contract price includes all appli-
ot cable taxes. It provides for an increase
y or decrease in the contract price to com.
at pensate for changes in applicable Federal

excise taxes or duties. It does not pro.
е vide for any adjustment in the contract

price to compensate for changes in State
or local taxes (but see § 1-11.401-4(b)).
(c) Contract clause.

FEDERAL, STATE, AND LOCAL TAXES
(a) Except as may be otherwise provided
in this contract, the contract price includes
all applicable Federal, State, and local taxes
and duties.

(b) Nevertheless, with respect to any Fed-
eral excise tax or duty on the transactions of
property covered by this contract, 11 a statute,
court decision, written ruling, or regulation
takes effect after the contract date, and-

(1) Results in the Contractor being required to pay or bear the burden of any such Federal excise tax or duty or increase in the rate thereof which would not otherwise bave been payable on such transactions or propo

erty, the contract price shall be increased by 22

Hederal excise tax or duty.

be used in all negotiate

tracts in excess of $10, pested by the contracting officer, warrants tracting officer is not a riting that no amount for such newly

contract price excludes spoved Pederal excise tax or duty or rate

State and local taxes. arese ras included in the contract price as

(b) Description. Th i castlegency reserve or otherwise; or

that the contract price Results in the Contractor not being

cable Federal, State, mpared to pay or bear the burden of, or in u obtatnlng a refund or drawback of, any provides for an increa rah Pederal excise tax or duty which would the contract price to tertise bave been payable on such trans

changes in Federal exc urlone or property or which was the basis

and, with some excep du lacrease in the contract price, the con

in State and local taxe rect price shall be decreased by the amount

(c) Instruction. If 1 the rellel, refund, or drawback, or that mount shall be pald to Government, as

forth in paragraph (d dested by the Contracting Officer. The 2 is used and the cont uztract price shall be similarly decreased an estimated amour ! the Contractor, through his fault or taxes on completed s pigence or his fallure to follow instruc

the contract or on th teas of the Contracting Officer, 18 required o pay or bear the burden of, or does not

session of, interest in, halin a refund or drawback of, any such

title to which is in th

contracting officer si (c) No adjustment pursuant to paragraph

the contract file de labore will be made under this contract with regard thereto Els the aggregate amount thereof 18 or the contract price do My reasonably be expected to be over $100. (0) As used in paragraph (b) above, the

not allowable under am "contract date” means the date set for

(d) Contract claus te bid opening, or if this is a negotiated

FEDERAL, STATE, 4 matract, the date of this contract. As to

(a) As used throug term "contract date" r contract. As to additi ices procured by mod tract, the term "cont date of such modificati

(b) Except as may b this contract, the cont the extent allocable to eral, State, and local contract date:

(1) By Constitution are applicable to th: transactions covered property or interests i

(2) Pursuant to w tion, the authority ch Ing any such tax is &

ces

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kidonal supplies or services procured by
edification to this contract, the term
sentract date" means the date of such
nedication.

(e) Unless there does not exist any reason-
ble basls to sustain an exemption, the Gov-
cament, upon request of the Contractor,
Tithout further llability, agrees, except as
othertise provided in this contract, to fur-
tish evidence approprlate to establish exemp-
in from any tax which the Contractor war-
maats in writing was excluded from the
kuntract price. In addition, the Contract-
Officer may furnish evidence to establish
umption from any tax that may, pursuant
to this clause, give rise to elther an increase
* decrease in the contract price. Except as
otherwise provided in this contract, evidence and is not granting
uppropriate to establish exemption from

tion for, a contractor dutes will be furnished only at the discretion

tract, or the trans the Contracting Oficer.

contract, or property (1) The Contractor shall promptly notify

(c) Except as ma the Contracting Officer of matters which will In this contract, du result in elther an increase or decrease in the

tract date are includ contract price, and shall take action with

to the extent alloc respect thereto as directed by the Contract

(d) (1) If the C pay or bear the buro

(1) Of any tax not to be included

suant to the requii 11-11.401–2 Certain negotiated con.

and (c), or of a t cluded from the co

of this contract; o (a) Use of clause. Except as provided

(11) Or an incr 11-11.401-4, the clause set forth in

duty, whether or paragraph (d) of this $ 1-11.401-2 shall excluded from the

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the amount of such tax or duty or rate be used in all negotiated fixed-price conincrease: Provided, That the Contractor if

tracts in excess of $10,000 when the conrequested by the contracting officer, warrants

tracting officer is not satisfied that the in writing that no amount for such newly

contract price excludes contingencies for imposed Federal excise tax or duty or rate

State and local taxes. Eice po Increase was included in the contract price as

(b) Description. The clause provides A contingency reserve or otherwise; or

(2) Results in the Contractor not being that the contract price includes all appliEle tre required to pay or bear the burden of, or in cable Federal, State, and local taxes. It Derfor his obtaining a refund or drawback of, any provides for an increase or decrease in Etes , pe such Federal excise tax or duty which would the contract price to compensate for otherwise have been payable on such trans

changes in Federal excise taxes or duties, actions or property or which was the basis

and, with some exceptions, for changes sed end of an increase in the contract price, the con

in State and local taxes. tract price shall be decreased by the amount of the relief, refund, or drawback, or that

(c) Instruction. If the clause set amount shall be paid to Government, as

forth in paragraph (d) of this § 1-11.401directed by the Contracting Officer. The 2 is used and the contract price includes 1-Ile contract price shall be similarly decreased an estimated amount for anticipated

1 the Contractor, through his fault or taxes on completed supplies covered by enthede negligence or his fallure to follow instruc

the contract or on the contractor's posdons of the Contracting Officer, is required

session of, interest in, or use of property, rised at to pay or bear the burden of, or does not

title to which is in the Government, the obtain a refund or drawback of, any such Federal excise tax or duty.

contracting officer shall (1) include in (c) No adjustment pursuant to paragraph

the contract file detailed informattion (b) above will be made under this contract with regard thereto and (2) insure that unless the aggregate amount thereof is or the contract price does not include taxes may reasonably be expected to be over $100. not allowable under § 1-15.205-41(a),

(d) As used in paragraph (b) above, the (d) Contract clause.
term "contract date” means the date set for
the bid opening, or if this is a negotiated

FEDERAL, STATE, AND LOCAL TAXES
contract, the date of this contract. As to

(a) As used throughout this clause, the additional supplies or services procured by term "contract date” means the date of this be on

modification to this contract, the term contract. As to additional supplies or serv"contract date” means the date of such ices procured by modification of this conmodification.

tract, the term "contract date' means the (e) Unless there does not exist any reason date of such modification. able basis to sustain an exemption, the Gov (b) Except as may be otherwise provided in ernment, upon request of the Contractor, this contract, the contract price includes, to without further liability, agrees, except as the extent allocable to this contract, all Fedotherwise provided in this contract, to fur eral, State, and local taxes which, on the nish evidence appropriate to establish exemp contract date: tion from any tax which the Contractor war (1) By Constitution, statute, or ordinance, rants in writing was excluded from the are applicable to this contract, or to the contract price. In addition, the Contract transactions covered by his contract, or to Ing Officer may furnish evidence to establish property or interests in property; or exemption from any tax that may, pursuant (2) Pursuant to written ruling or regulato this clause, give rise to either an increase tion, the authority charged with administeror decrease in the contract price. Except as ing any such tax is assessing or applying to otherwise provided in this contract, evidence and is not granting or honoring an exempappropriate to establish exemption from tion for, a contractor under this kind of con. duties will be furnished only at the discretion tract, or the transactions covered by this of the Contracting Officer.

contract, or property or interests in property. (1) The Contractor shall promptly notity (c) Except as may be otherwise provided the Contracting Officer of matters which will in this contract, duties in effect on the conresult in either an increase or decrease in the tract date are included in the contract price, contract price, and shall take action with

to the extent allocable to this contract. respect thereto as directed by the Contract (d) (1) If the Contractor is required to Ing Oficer.

pay or bear the burden129 P.R. 10254, July 24, 1964. as amended at

(1) or any tax or duty which either was 31 FR 6373, Apr. 27, 1966; 40 FR 44140,

not to be included in the contract price purSept. 25, 1975)

suant to the requirements of paragraphs (b)

and (c), or of a tax or duty specifically ex§ 1-11.401--2 Certain negotiated con cluded from the contract price by a provision tracts,

of this contract; or (a) Use of clause. Except as provided (11) of an increase in rate of any tax or In § 1-11.401-4, the clause set forth in duty, whether or not such tax or duty was paragraph (d) of this $ 1-11.401-2 shall

excluded from the contract price; or

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on any above;

without further liability, agrees, except 38

Dit made exclusive of the amounts stated
store
6) Upon the timely request of the Con-

or penovided,

forth in paragraph (c) of this section

(e) (1) Whether St otherwise provided in this contract, to fur

are applicable to a pu® by the nish evidence appropriate to establish er.

by the Government r emption from any tax which the Contractors warrants in writing was excluded from the

mater, the Government will furnish such

the place and terms of by the contract price. In addition, the Contracting

pot d'esports as may be necessary to estab

ample, if the legal ing ig that Officer may furnish evidence appropriate to

ist un exemption from Federal excise taxes

tax is on the vendor, a ncrease establish exemption from any tax that may,

a to enable the Contractor to obtain any

the contract and deliv a con pursuant to this clause, give rise to elther

applicable refund or drawback for his own

ment are in that Stat pvided an increase or decrease in the contract price.

ply. If however, the duty, Except as otherwise provided in this contract,

The clause set forth above may be ap

delivery to the Gover LS not evidence appropriate to establish exemption

propriately amencied by deletion of

State, the tax may no nce of from duties will be furnished only at the

perences to drawbacks, if shipment to W in discretion of the Contracting Officer.

transaction is in int

s possession of the United States or to (f) (1) The Contractor shall promptly

The form of bill of lac ed to notify the Contracting Officer of all matters

Puerto Rico is contemplated.

ernment bill, comme efund pertaining to Federal, State, and local taxes,

PR. 10254, July 24, 1964, as amended at

cial bill convertible y tax, and duties, that reasonably may be expected

11 PR. 6373, Apr. 27, 1966)

at destination) may to result in either an increase or decrease in tract

{1-11,401-4 Matters requiring special ability of the transac para(2) Whenever an increase or decrease in

consideration.

(2) Where a contra the contract price may be required under this

stantial amount, av

(A) A contract may, in accordance ce; or clause, the Contractor shall take action as with paragraph (d) of this $ 1-11.401-4,

places and terms of the

directed by the Contracting Officer, and the 1 be

considered in the li contract price shall be equitably adjusted to

provide that the contract price include or
esclude a specific tax, or require that the

consequences. , re

cover the costs of such action, including any ract,

(f) When Goveri interest, penalty, and reasonable attorneys'

contractor take certain actions with rere fees.

and to nonpayment, payment, protest,

furnished under a fa ur other treatment of a specific tax.

contracting officer sh § 1-11.401–3 Supplementary clauses. dich special treatment may be required,

ties contract when (a) Contracts performed in posses.

for example, where the State or local tax

sequent supply cont sions of the United States of Puerto

It has been recently changed, where

the contractor is n Rico. When a contract will be performed

for the same taxes. in whole or in part in a possession of the

(31 F.R. 6373, Apr. 27, of United States or in Puerto Rico, and either the clause set forth in § 1-11.401

§ 1-11.402 Cost ci

contracts,
1 or that in § 1-11.401–2 is used, the con-
tract shall contain the following supple-

No specific tax
aat
mentary clause:

any cost-reimburse tor Ent

In all such contract TAXES

eral, State, and loc The term "local taxes" as used in the d.

clause of this contract entitled "Federal, to State, and local taxes" includes taxes im

costs in conection nt

posed by a possession of the United States, fy

of cost-reimburser and the Commonwealth of Puerto Rico.

is treated in Part (b) Contracts for supplies to be el

Subpart 1-11.5 d ported. When a contract containing

either the clause set forth in § 1-11.401-1 or that in § 1-11.401-2 will be for supplies to be exported to foreign destinations

provide evidence and it is determined that the amounts

exemptions from of Federal excise taxes or drawbacks of duties involved are substantial, a clause

used. substantially as follows should be included in invitations and solicitations:

§ 1-11.501 Fed FEDERAL EXCISE TAXES AND DUTIES

tion forms. (a) The items covered by this invitation

(a) Unless th for bids are being procured for export.

quires, evidence Bidders are requested to exclude from their bid prices all Federal excise taxes from which this transaction is exempt by virtue of exportation and also an amount equal to any

less. drawback or refund of import duties which may be obtained upon shipment of the

supplies. Bids will be evaluated and pago 24

the contract price.

the ting

be etor, Lure cing len,

Ehe

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there is doubt as to the applicability or
alocability of the tax, or where the ap-
plicability of the tax is being litigated.

(b) When the amount of any specific
state or local tax is substantial in re-
lation to the contract price (such as in
the case of gasoline taxes) and where
for this reason it is determined that pro-
curement without providing for tax

sents solely a quest scalation (upward or downward) is impracticable, the contract may permit such escalation, in accordance with paragraph (d) of this section.

C) Special consideration should be acorded taxes assessed on the contractoz's possession of, interest in, or use of

§ 1-11.500 Scope Government-owned real or personal

This subpart se
property. The following clause may be
inserted in any contract under which
the contractor has possession of property

local taxes, and
to which the Government has title on tax
assessment date, pursuant to progress
Dayment clauses or otherwise:
All property taxes assessed on the Con-
tractor's possession of, interest in, or use of
property, title to which is in the Government,
are excluded from the contract price.

be issued if the
(d) The specific provisions described

one invoice or
in paragraphs (a) and (b) of this
Section and the additional clause set

(b) With res

in 8$ 1-11.501shall be used in accordance with agency

ternal Revenue certificate cove

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procedures.

the amount of such tax or duty or rate be used in all negotiated fixed-price conincrease: Provided, that the Contractor 11

tracts in excess of $10,000 when the conrequested by the contracting officer, warrants

tracting officer is not satisfied that the in writing that no amount for such newly

contract price excludes contingencies for Imposed Federal excise tax or duty or rate

State and local taxes. Increase was included in the contract price as & contingency reserve or otherwise; or

(b) Description. The clause provides (2) Results in the Contractor not being that the contract price includes all applirequired to pay or bear the burden of, or in cable Federal, State, and local taxes. It bis obtaining a refund or drawback of, any provides for an increase or decrease in such Federal excise tax or duty which would the contract price to compensate for otherwise have been payable on such trans

changes in Federal excise taxes or duties, actions or property or which was the basis

and, with some exceptions, for changes of an increase in the contract price, the con

in State and local taxes. tract price shall be decreased by the amount of the relief, refund, or drawback, or that

(c) Instruction. If the clause set amount shall be paid to Government, as

forth in paragraph (d) of this $ 1-11.401directed by the Contracting Officer. The 2 is used and the contract price includes contract price shall be similarly decreased an estimated amount for anticipated

the Contractor, through his fault or taxes on completed supplies covered by negligence or his fallure to follow instruc

the contract or on the contractor's postons of the Contracting Officer, is required

session of, interest in, or use of property, to pay or bear the burden of, or does not

title to which is in the Government, the obtain a refund or drawback of, any such Federal excise tax or duty.

contracting officer shall (1) include in (c) No adjustment pursuant to paragraph

the contract file detailed informattion (b) above will be made under this contract with regard thereto and (2) insure that unless the aggregate amount thereof is or the contract price does not include taxes may reasonably be expected to be over $100. not allowable under § 1-15.205-41(a). (d) As used in paragraph (b) above, the

(d) Contract clause. term "contract date” means the date set for the bid opening, or if this is a negotiated

FEDERAL, STATE, AND LOCAL TAXES contract, the date of this contract. As to

(a) As used throughout this clause, the additional supplies or services procured by term "contract date” means the date of this modification to this contract, the term

contract. As to additional supplies or serv"contract date" means the date of such

ices procured by modification of this conmodification.

tract, the term "contract date” means the (e) Unless there does not exist any reason date of such modification. able basis to sustain an exemption, the Gov (b) Except as may be otherwise provided in ernment, upon request of the Contractor, this contract, the contract price includes, to without further liability, agrees, except as the extent allocable to this contract, all Fedotherwise provided in this contract, to fur eral, State, and local taxes which, on the nish evidence appropriate to establish exemp contract date: tion from any tax which the Contractor war (1) By Constitution, statute, or ordinance, rants in writing was excluded from the are applicable to this contract, or to the contract price. In addition, the Contract transactions covered by his contract, or to Ing Omcer may furnish evidence to establish property or interests in property; or exemption from any tax that may, pursuant (2) Pursuant to written ruling or regulato this clause, give rise to either an increase tion, the authority charged with administeror decrease in the contract price. Except as ing any such tax is assessing or applying to, otherwise provided in this contract, evidence and is not granting or honoring an exempappropriate to establish exemption from tion for, a contractor under this kind of con. duties will be furnished only at the discretion tract, or the transactions covered by this of the Contracting Officer.

contract, or property or interests in property. (1) The Contractor shall promptly notify (C) Except as may be otherwise provided the Contracting Officer of matters which will in this contract, duties in effect on the conresult in either an increase or decrease in the tract date are included in the contract price. contract price, and shall take action with to the extent allocable to this contract. respect thereto as directed by the Contract (d) (1) If the Contractor is required to ing Omcer.

pay or bear the burden129 P.R. 10254, July 24, 1964, as amended at (1) Of any tax or duty which either was 31 FR 6373, Apr. 27, 1966; 40 FR 44140, not to be included in the contract price purSept. 25, 1975)

suant to the requirements of paragraphs (b) § 1-11.401-2 Certain negotiated con.

and (c), or of a tax or duty specifically ex

cluded from the contract price by a provision tracts,

of this contract; or (a) Use of clause. Except as provided (II) of an increase in rate of any tax or In § 1-11.401-4, the clause set forth in duty, whether or not such tax or duty was paragraph (d) of this $ 1-11.401–2 shall excluded from the contract price; or

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d at

Anudulent use of this certificate for 2 pupice d purchasing all tax free, rather to retjest to bar at the rate of 6 cents a aby, til subject the guilty party to a ine i sut mae than $10,000, or imprisonment Ir at Dore than five (5) years, or both, nester Tith the costs of prosecution.

the contractor warrants tl tract price does not include he consents to a reductior tract price if the evidence is accepted by the taxing i

(b) In case of disagr whether there exists a re upon which to sustain exe transaction, the matter solved in accordance with

to a

(Signature)

ceruse port or

or ith

specified below or on the reverse side hereof, will be used only for fuel supplies, ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or of a foreign nation, including aircraft owned by the United States or by a foreign nation and constituting a part of the armed forces thereof.

The undersigned understands that if the article or articles are used for any purpose other than as stated in this certificate, or are resold or otherwise disposed of, the purchaser must report such fact to the manufacturer; or, in the case of special motor fuel, that if the fuel is sold or used otherwise than as stated in this certificate and for a taxable purpose specified in section 4041(b) of the Internal Revenue Code, liability for the tax upon such sale or use will attach. The undersigned also understands that the pur. chaser must be prepared to establish by satisfactory evidence the purpose for which the article was used.

The fraudulent use of this certificate for the purpose of securing exemption from the payment or adjustment of taxes will subject the guilty party to a fine or not more than $10,000 or imprisnment for not more than five (5) years, or both, together with costs of prosecution.

ex

der

ve

Lat

Por

bereal;

tem commerce;

(Signature) y, ed

(Title) e ag

(Address) le n

§ 1-11.501–3 Cutting oil certificate.

The following form of certificate will be acceptable for purposes of exemption, in accordance with § 1-11.102-4(c) and must be adhered to in substance.

CUTTING OIL CERTIFICATE
(For use by purchaser of lubricating oll
subject to tax under section 4091 of the In.
ternal Revenue Code of 1954, for use by
purchaser in cutting and machining opera-
tions on metals.)

19..
Contract:
Contract period:
Contractor:
Product:
End use:

The undersigned certifies that he is an authorized agent of the United States of America and that the oil covered by the contract identified above is purchased for the use indicated as a lubricant in cutting and machining operations on metals.

The undesigned understands that the purchaser must be prepared to establish by satisfactory evidence the actual use or dispo. sition made of such oil, and that its use of the oil for a lubricating purpose other than in cutting and machining operations on

metals, or upon its sale or other disposition 26

(Title)

PART 1-12-1 (Address)

Sec. ? ?873. Apr. 27, 1966. Redesignated,

1-12.000 Scope of part. L!A8378, Apr. 27, 1966)

Subpart 1-12.1-Basic 11-11502 State and local tax exemp

1-12.100 General tion forms.

1-12.101 Labor relatior | {1-11.502-1 Types of evidence of ex. 1-12.101-1 General. emption.

1-12.101-2 Contract pric

tration. itdence appropriate to establish ex

1-12.102 Overtime, ex aption or immunity from State or local

multi-shit his will vary depending upon the 1-12.102–1 Definitions. sounds of exemption or immunity 1-12.102–2 Policy. risbed

, the parties to the transaction, 1-12.102-3 Procedures. cd the requirements of the taxing juris

1-12.1024 Approvals. beton . Such evidence includes but is

1-12.102-5 Other auth et limited to the following:

1-12.103 Federal and 1) U.S. Government Tax Exemption

quiremer Certificate (Standard Form 1094);

Subpart 1-12.2b) A copy of the contract or a portion 1-12.200 Scope.

1-12.201 General. (C) Shipping documents indicating

1-12.202 Basic requires that shipments are in Interstate or for

1-12.203 Applicability.

1-12.204 Contract clau (d) A State or local form indicating

Subpart 1-12.3—Contro that supplies or services are for the ex

Safety Standards Act ( clusive use of the United States; or

Contracts) (e) Any other State or locally required

1-12.300

Scope of

1-12.301 larm, certificate, or document to estab

Statutor 1-12.302 Applicab 1-12.303 Contract 1-12.304 Variatic

Subpart 1

Subpart 1-1 Subpart 1-12.6–

Con 1-12.601 Statut 1-12.602 Applic 1-12.602-1 Gener 1-12.602-2 Statu 1-12.602-3 Depa

tic 1-12.603 Dete

as

de 1-12.603-1 1-12.603–2 1-12.603-3 1-12.6034 1-12.604

ish general or specific exemption.
{1-11.502–2 When evidence of exemp-

tion is to be furnished. (8) Unless there does not exist any reasonable basis to sustain & claimed exemption, a contractor or vendor will be furnished evidence of exemption

under &:

(1) Contract which contains the clause prescribed in elther $8 1-11.401-1 of 1-11.401–2 in accordance with the terms of those clauses; (2) Cost-relmbursement type contract at the request of the contractor or at the discretion of the contracting officer; or (3) Contract or purchase order which contains no provision regarding taxes, at the request of the contractor or at the discretion of the contracting officer, if

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