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as chargeable in accordance with Part 2 of Section XV of the

Armed Services Procurement Regulation revised 2 November 1959.

(1) The cost of material including (1) the net cost after

deducting all discounts, of material, foodstuffs and parts

purchased directly for performance of this contract, whether

or not such materials, foodstuffs and parts are purchased through

commercial channels or through the Navy Supply System; (II) the

cost of materials and parts withdrawn from the Contractor's

Stores or stock; and (111) the cost of transporting material

purchased by the Contractor for the performance of this con

tract.

(2) The salaries and wages of all personnel employed in the

performance of this contract except those personnel permanently

located in the Contractor's Corpus Christi, Texas and Honolulu,

Hawaii Offices, but excluding corporate officers.

The salary

of any employee permanently assigned to said Corpus Christi,

Texas or Honolulu, Hawaii Office except corporate officers of

the contractor, shall be an allowable cost hereunder for such

temporary period of time as he is assigned solely to the perform

ance of this contract away from Corpus Christi, Texas or

Honolulu, Hawaii including necessary travel time.

Such tem

porary assignments shall be made for business purposes only in

connection with the performance of this contract, and shall be

made in the sole discretion of the Contractor.

The salary

scales and fringe benefits allowable as costs hereunder shall

be those set forth in Exhibit C and/or D to the contract, how

ever, employees assigned temporarily to the performance of this

contract, the salary allowable as costs shall be that salary

normally paid by the Contractor for the performance of such

duties.

In the event any individual employed under this contract

is discharged because of inability to secure a security clear

ance from the United States Government, the salary and trans

portation of such individual during the time he was in the

employ of the Contractor shall be an allowable cost hereunder.

(3) The cost which the Government has agreed to assume under

the clauses hereof entitled "Government Property" and "Insurance

Liability to Third Persons", including the cost of such extra

hazardous insurance as may be approved by the Contracting

Officer under the provisions of subparagraph (9) of this section.

(4) Transportation and reasonable subsistence of personnel

employed in the performance of this contract while in travel

status.

Transportation and subsistence costs of Corporate

Officers of the Contractor while in travel status in connection

with this contract.

(5) Charges for the use of equipment,

other than Government

furnished equipment, utilized in the performance of the con

tract, provided, however that such charges shall not exceed the

cost of the services accomplished by the use of such equipment

if such services were procured commercially.

(6) The cost of maintaining offices in Oakland, California

and any other place or places as may be directed by the Contract

Administrator, in connection with the performance of this con

tract.

(7) For those employees required to wear specialized clothing in the performance of their duties under this contract, the

cost of providing each such employee with an initial outfit

of three (3) sets.

(8) The costs of physical examination for new employees

where required by law to be paid by the employer.

(9) Such other items, not excluded by other provisions of

this contract or considered unallowable under Section XV,

Part 2, of the Armed Services Procurement Regulation, as

should, in the opinion of the Contracting Officer, be

included in the cost of the work called for by this contract.

Any such item allowed by the Contracting Officer shall be

specifically certified by the Contracting Officer as being

allowed under this subparagraph (9).

(b) The parties to this contract have mutually agreed that the

below listed costs shall be specifically unallowable under this

contract;

(1) Corpus Christi, Texas and Honolulu, Hawaii office

expense.

(2) Contributions, gifts and donations.

(3) Premiums for insurance on the lives of any

persons where the Contractor is the beneficiary

directly or indirectly.

(4) Cost of any action with respect to which the

contractor fails to secure prior or advance

approval or authorization is expressly required

by any provision of this contract, unless such action

is subsequently ratified by the Contracting Officer.

SECTION I - OPERATION OF MERCHANDISING FACILITIES

(a) Merchandising facilities are defined as those facilities

selling consumer-type merchandise and foodstuffs or providing per

sonal services to civilian and government personnel such as

barber and beautician services, short-order and restaurant type

meals (excluding regular messing facilities), laundry and dry

cleaning services and club or bar facilities.

(b) The costs which the Contractor shall recover in the price

charged in the merchandising facilities shall be all costs

except those provided in Paragraph 035851 NAVCOMP Manual as

allowable charges to appropriated funds.

(c) Cash derived from the operation of the merchandising

facilities shall be credited against amounts otherwise due

the Contractor under this Contract.

(a) Upon completion of this contract, or upon termination of

the contractor's operation of the merchandising facilities,

overall profits accruing, if any, from these operations of such

facilities shall be credited to the Government and losses, if

any, will be absorbed by the Government.

SECTION L - GENERAL PURPOSE EQUIPMENT

The Contractor shall not acquire any general purpose equipment,

the acquisition of which is to be charged directly to the per

formance of this contract unless prior written approval to do

so is obtained from the Contract Administrator.

SECTION V

DEFINITIONS

(a) The term "Secretary" means the Secretary, the Under Secretary, 728 or any Assistant Secretary of the Department, and the head or any

assistant head of the Federal agency; and the term "his duly author

ized representative" means any person or persons or board (other

than the Contracting Officer) authorized to act for the Secretary.

(b) The term "Contracting Officer" means the person executing

this contract on behalf of the Government, and any other officer

or civilian employee who is a properly designated Contracting

Officer; and the term includes, except as otherwise provided in

this contract, the authorized representative of a Contracting

officer acting within the limits of his authority.

(c) Except as otherwise provided in this contract, the term

"sub-contracts" includes purchase orders under this contract

except purchase orders for the procurement of materials and

supplies.

(a) As used throughout this contract, the term "Department"

means the Department of the Navy.

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