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cies, and (c) reasonably assure comple- lu fale value could not the Government title may be sub Government. (See also § 1-30.524–3.) The the sentract, less the esti- will be relied on. If any arran standards set forth in paragraph (a) (1) bee costs of completion or conditions are found that we contribution costs from progress pay-penas payments, all fur payments, appropriate arc (a) and (b) for the exclusion of pensional than the amount of the of the property affected by th mination of delinquency in the ordinary data a manner as to hold the Government title. The

nohy on the contract will be should be made to establish lated progress payments any such encumbrance is a

helt value of the work done the contractor's obligation faith by the contractor, should not be Erroneous cost estimates.

pursuant to $1-30.510-2, it apply to normal spoil

set that actual costs and future loss as to property affe clauses set forth in $ 1-30.510-1(a) and stated costs used to establish tor, except to the ex (b) for the exclusion of pension contri- amates. In such cases (see par

(w) of the clause presented in that relating to aircputations will govern a determination of HQ) and paragraph (c)(iv) delinquency in the ordinary course of darse prescribed in $1-30.510

lor any under-liquidation that clause, the Defac are occurred, to bring the amount nation clause.

winddated progress payments within administering 81-30.524—5 Fair value of undelivered as of paragraph (a) (3) of these those connecte

ates, and to assure the adequacy of

se quldations. Increase of the loss on prope relation of the amount of unliquidated hallon percentage will also become

sary even though the provisions of 120512-2 have not been applied in thing the liquidation percentage, when Msgress payments are based on costs of risk of los treet labor and material only (8 1-30.- panying = 10-2) or any limited cost base (81-30.11-5), and actual costs forming the

base for progress payments are higher lost, ste 41_Public Contracts, Property Management hurenent Regulations ancial tract performance and involving proba- le cheming, tn. than the estimated eligible costs used

bility of loss to the Government. If such and series) will in establishing the liquidation persition,

delinquency is not connected with poor state degree of centage. gering

financial condition that is so unsatisface the pedomance, the ed in tory as to endanger contract performance at tak perlomed $1-30.525 Government title. pre

Since the clauses in $ 1-30.510 give the to the Government, further progress pay ailesi venalng to Government title to all of the materials 0.510ments

ments and other payments should not be und sets of com. work in process, and finished goods un mple

necessarily be denied to protect the untere end the amount der contracts after the making of pro ament

liquidated progress payments and mini-t that the contract. ress payments thereon, care should ch the

mize risks of additional losses, and pay. & det lods that the taken to assure, to the extent reasona

ments may be continued at the contract that bene under the necessary, that the title to the Gove ments ats so

rate, or in reduced amounts in connect and the contract, In ment will be free of all encumbran

tion with appropriate arrangements to pete, b les than the procedure in this respect will on liquithis

(a) cure the contractor's delinquencies
in payment of his costs of contract permaned by the prin stances of individual cases. Ordi

Mares payments, his sarily vary with the particular cin of the on of

formance, (b) avoid further delinquens 1052 and in the absence of reason to belie ments

prog, only tinent urther = prob

ment computations will govern a deterLe con

course of business with respect to these exceed

pension contribution costs, without reagraph gard to other provisions in § 1–30.524. $$ 1Amounts claimed by subcontractors, sup

contract. ne simpliers, and others, but disputed in good

§ 1-30.525–1 Loss, theft. rect or

damage. minate

considered delinquent until determined
due by a court (or by arbitration if ap-

Paragraph (e) of the y from

in $$ 1-30.510-1(a) are plicable). However, any such disputed format 0.529).

amounts shall be excluded from costs of nt in a performance so long as they are disputed.

are higher than The standards in paragraph (a) of the ions, to

ress Payments clause cection, rogress

special provision of t bution costs from progress payment comr payments.

Government shall y from

sumed the risk of quired.

business with respect to these pension
contribution costs, without regard to

sumption of risk requireother provisions of $ 1-30.524.

not made in to umulaassure

[40 FR 14917, Apr. 3, 1975, as amended at

40 FR 43732, Sept. 23, 1975) ayment work.

sibility and in connection with determining the in pay

ment holds t: rmance

ments must ess (see

same extent se pre

tractor hel ragraph

in 81tion of

ment the cion or

ress pay ng con

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Izing available audit, engineering, in than the estimated eligible costs used spection, and cost analysis services) will in establishing the liquidation pergive full consideration to the degree of centage. completion of contract performance, the

$ 1-30.525 Government title. quality and amount of work performed on the undelivered portion of the con Since the clauses in $ 1-30.510 give the tract, the amount of work remaining to Government title to all of the materials. be done and the estimated costs of com work in process, and finished goods unpletion of performance, and the amount der contracts after the making of progremaining unpaid under the contract. ress payments thereon, care should be If the contracting officer finds that the taken to assure, to the extent reasonably fair value of the work done under the necessary, that the title to the Govern. undelivered portion of the contract, in

ment will be free of all encumbrances. relation to the contract price, is less than The procedure in this respect will necesthe unliquidated progress payments, his sarily vary with the particular circumactions will be governed by the prin

stances of individual cases. Ordinarily, ciples stated in $$1–30.524–2 and

in the absence of reason to believe that 1-30.5244. This fair value could not the Government title may be subject to exceed the contract price of undelivered encumbrance, the contractor's certificate work under the contract, less the esti

will be relied on. If any arrangements mated total future costs of completion

or conditions are found that would imof the contract. When this fair value is pair the contractor's right of disposition found to be less than the amount of the of the property affected by the progress unliquidated progress payments, all fur payments, appropriate arrangements ther payments on the contract will be should be made to establish and protect controlled in such a manner as to hold the Government title. The existence of the unliquidated progress payments any such encumbrance is a violation of within the fair value of the work done the contractor's obligations under the on the undelivered portion of the con contract. tract. (See also $ 1-30.525_1.)

f 1-30.525–1 Loss, theft, destruction, or $ 1-30.524–6 Erroneous cost estimates. damage.

When liquidation percentages lower Paragraph (e) of the clauses presented than those called for by $ 1-30.512–1 are in $$ 1-30.510-1(a) are not intended to established pursuant to $ 1–30.510-2, it apply to normal spoilage. The risk of may occur that actual costs and future loss as to property affected by the Progcost of performance are higher than ress Payments clause is on the contracthe estimated costs used to establish tor, except to the extent that by some liquidation rates. In such cases (see par special provision of the contract (such as agraph (c)(vi) of the clause presented in that relating to aircraft in the open) the $ 1-30.510–1(a) and paragraph (c) (iv) Government shall have expressly asof the clause prescribed in § 1-30.510– sumed the risk of loss. Such express as2(a)) appropriate increase of the liqui. sumption of risk by the Government 18 dation percentage will be necessary to not made in the Progress Payments adjust for any under-liquidation that clause, the Default clause, or the Termi. may have occurred, to bring the amount nation clause. Because of problems of of unliquidated progress payments within administering the contract, especially the limits of paragraph (a) (3) of these those connected with property responclauses, and to assure the adequacy of sibility and inventory control, the risk of future liquidations. Increase of the loss on property to which the Governliquidation percentage will also become ment holds title because of progress paynecessary even though the provisions of ments must be on the contractor to the $ 1-30.512–2 have not been applied in same extent that it would be if the confixing the liquidation percentage, when tractor held title to the property. This progress payments are based on costs of risk of loss carries with it the accomdirect labor and material only (8 1–30. panying duty to repay to the Govern510-2) or any limited cost base (3 1-30. ment the amount of unliquidated prog511-5), and actual costs forming the ress payments based on cost allocable to base for progress payments are higher lost, stolen, or destroyed property or to

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acquire or dispose of materials, inven-bake reflected in one or
approved by him, contractors may also tedate to the contrac- lations at contract inception, if
tories, or work in process to which the desigotiated price that
Proceeds of scrap disposal will be credited tedal to the Government standards and procedures of
against the costs of contract perform with have been If provision unusual progress payments
ance. Costs allocable to property, other made for progress pay- vided by amendment.

leendments 10 provide
Sterild be ordinarily no occasion
here from the circumstances in the interest of the GC
Tada were issued or the con-
in which the actual lead time
rendery period between the be-
Nod tork and the first delivery provide this conside
seally exceeds the estimated leading circumstances o
din lact runs or will run over 6 consideration for PC
11-30.503), or (b) in which not necessarily E

Bircumstances bring about in. het en substantial accumulation of in such an amen

watery costs having material impact of and substantia or the Government-furnished property. These cases may arise from

de contractor's working funds (81- Government, m

specifications, (b) contract Teen notices, (c) Government delays cluded as an testing, inspection, furnishing of ma

al or equipment, furnishing of stock contract not wakyers, packaging or shipping instruc

na or shipping documents, or comple41—Public Contracts, Property Management del Patrement Regulations ty. II

clause, even though title to all or a por- t à Grenment tion of contract supplements, (d) sumed tion of such Inventory

is in the Govern- table teto stretchouts or stop-work orders, (e) per ne ex ment pursuant to the Progress Payments are ed a deal with formance difficulties of subcontractors f risk clause of the contract. ractor

suppliers, and (f) causes beyond the con8 1-30.525–5 Scrap-excess property. co the

trol and without the fault or negligenc progress

of the contractor of the kinds mentione dated (a) In the course of proper per

in paragraph (c) of the Default clau allo formance of contracts, contractors are a hitzats clause des provided in $ 1-8.707. In these kinds ed, or permitted to sell or otherwise dispose of their el contract

, cases, requests of contractors for amer paralauses course of business

, notwithstanding the statere, and there should be considered promptly, in ad 1 Government's title under the Progress Euture Payments clause. Permission of the con

light of the circumstances then exis such tracting officer for such disposal of scrap

If the circumstances then existing is not required. With the permission and the making one ress payments would have been pre

proximate conditions under which of the contracting officer and on terms on the forth on the provided in conformity with these nished or de

circumstances had been foreseen ished Government has acquired title pursuante sed price would have amendment. In this connection

ress payments should be prov -ty to

to the Progress Payments clause of the albut not been made for ticularly $$ 1-30.202, 1-30 204, ге ас contract, including transfer of such tar b) contract terms 1-30.206, 1-30.207, 1-30.210. 1 - pro property ' to other work of the contractori de ter than price,

that and 1-30.528. In conformity
Prog-
ed in

than scrap, so transferred from the con-
pecia)
tract will be eliminated from the costs

(29 FR 10356, July 24, 1964, 2

40 FR 43732, Sept. 23, 1975)
of contract performance, and the con-
Doling
pecial
tractor shall be required to repay to the

8 1-30.528 Consideration
Gov-
Government an amount equal to the un-

ments providing for
con-
liquidated progress payments allocable

ments.
on of
to the property so transferred from the

Contracts may not be cerned

contract.

(b) When (1) the contractor has come con.

tracts which do not pro pecial pleted all work called for by the contract,

payments may be am and (2) such work has been delivered to - pur

for progress payment use of and accepted by the Government, and

amendment provides (3) progress payments made under the

consideration movin contract have been fully liquidated, and

ment. Appropriate p onven

(4) the contractor has fully performed

all his obligations under the contract mina

(including the making of any payments Fermi to which the Government may be entitled vern under the contract, and including com

ments by the con vern

pliance with any other provisions of the
ogress

contract, such as the Termination clause
art of
quired clause), any excess property remaining

consideration fc
in the
is to be regarded as having not been al-

Ing for progres ise of located or properly chargeable to the

mated financi s and

contract under sound and generally ac-
dis-
cepted accounting principles and prac-

Identified) ir entory

tices, and this outside the scope of the
nation
Progress Payments clause which would

ments, it is
the applica

e'n interest or other

a suigress payments, se'n payments (other lagunt ior prompt

sa payments.

a betracts to provide for prog-
Sets unless there has been ma-

sed by the parties when invi.

be entered into without progress
provislon. However, cases do

cences such as (a) uncertainties or

have vested title in the Government. Accordingly, the contractor holds title to such excess property and may deal with it as he desires. $1_30.526 Consideration for progress

payments-awards. When a Progress Payments clause 18 included at the inception of a contract, no separate consideration is charged for the Progress Payments clause, and there shall be no provision for interest or other specific charge for progress payments, or for a reduction in payments (other than any agreed discount for prompt payment) by reason of the making of progress payments. The worth of the Progress Payments clause to the contractor is expected to be reflected in one or both of (a) a bid or negotiated price that will be lower than such price would have been if provision had not been made for progress payments, or (b) contract terms and conditions, other than price, that are more beneficial to the Government than they would have been if provision had not been made for progress payments. $ 1-30.527 Amendments provide

progress payments. There should be ordinarily no occasion to amend contracts to provide for progress payments unless there has been material change from the circumstances contemplated by the parties when invitations for bids were issued or the contract was entered into without progress payment provision. However, cases do occur (a) in which the actual lead time or preparatory period between the beginning of work and the first delivery substantially exceeds the estimated lead time and in fact runs or will run over 6 months ($ 1-30.503), or (b) in which unusual circumstances bring about unexpected substantial accumulation of predelivery costs having material impact on the contractor's working funds (f 130.505). These cases may arise from occurrences such as (a) uncertainties or errors in specifications, (b) contract change notices, (c) Government delays in testing, inspection, furnishing of material or equipment, furnishing of stock numbers, packaging or shipping instructions or shipping documents, or comple

to

tion of contract supplements, (d) stretchouts or stop-work orders, (e) performance difficulties of subcontractors suppliers, and (f) causes beyond the control and without the fault or negligence of the contractor of the kinds mentioned in paragraph (c) of the Default clause provided in § 1-8.707. In these kinds of cases, requests of contractors for amendments to provide progress payments should be considered promptly, in the light of the circumstances then existing. If the circumstances then existing approximate conditions under which progress payments would have been properly provided in conformity with these regulations at contract inception, if the new circumstances had been foreseen, progress payments should be provided by amendment. In this connection see particularly $$ 1-30.202, 1-30.204, 1-30.205, 1-30.206, 1-30.207, 1-30.210, 1-30.210-1, and 1-30.528. In conformity with the standards and procedures of $ 1-30.505, unusual progress payments may be provided by amendment. [29 FR 10356, July 24, 1964, as amended at 40 FR 43732, Sept. 23, 1975) 8 1-30.528 Consideration for amend

ments providing for progress pay.

ments. Contracts may not be mod'fied except in the interest of the Government. Contracts which do not provide for progress payments may be amended to provide for progress payments only when the amendment provides now and valuable consideration moving to the Government. Appropriate price reduction may provide this consideration. In the varying circumstances of individual cases, the consideration for progress payments need not necessarily be monetary. Agreements by the contractor, incorporated In such an amendment, for the benefit of and substantially advantageous to the Government, may constitute sufficient consideration for an amendment providing for progress payments. When estimated financing costs have been included as an element (whether or not Identified) in the contract price of a contract not providing for progress payments, it is fair to expect elimination of the applicable portion of that element

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STARCI UM MITRUCTIONS ON REVERSE SDE

OVUTO MOTION

avand Regulations iments are by a contract price reduction, other e fair and concessions or agreement by the con- lienear's request for progress payment. esideration tractor, advantageous to the Governhould ap

ment and incorporated in the amendas practi ment, may be fairly evaluated and act by which

cepted as being of value reasonably have beep

equivalent to a price reduction. This nts clause

consideration should be such as is fair. ontract in

equitable and reasonable in the light of bsence of

the circumstances of each case. (See pint, perti

8 1-30.527.) This consideration should e fair and asideration

be for the progress payment amendment, Es of prog

and there shall be no provision for inoutstand

terest or other specific charge for proge time, (b)

ress payments, or for a reduction in payg funds to ments after the progress payment

estimated amendment (other than any agreed dised by con count for prompt payment) by reason of complished the making of progress payments.

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