be so high as to price the product out of the market and the royalties cease when the Government gets its money back.

(b) This development cost recovery program is based, first, on the established Government policy, that, where a direct beneficiary of a Government action can be identified, that beneficiary, and not the general taxpayer, should pay the cost or providing the benefit conferred. When a product developed with Government funds is sold, there are two identifiable beneficiaries-the user and the company that makes the sale. The royalty program gets the cost back to the general taxpayer from these beneficiaries.

(c) A second justification for the program is the need to protect the developing company's competitors. When the Government provides support to the development of a commercial product, the company that gets the development contract is given an advantage over its competitors who might have to develop a competing product with their own funds. These competitors have to spread their development costs over the sales of their product. With the Government paying his development costs, the original development contractor generally has very little development costs to recover. This could put the company helped by the Government in a position to make an unconscionable high profit, to undersell his competitors, or prevent them from entering the market. None of these results seems a fair or reasonable by product of a Government-financed development effort.

§ 12-9.702 Recovery of developmental costs.

Instructions for use of clause. The clause set forth in § 12-7.151-7 of this chapter shall be included in all contracts exceeding $50,000 for design, research, development, test or experimental work where a product (e.g., equipment or other items of hardware) is to be furnished as an end item. It may be included in other types of contracts and in contracts of $50,000 or less if appropriate. The contracting officer may alter the clause to suit a particular situation (e.g., when

(b) Administration. When a contractor is performing his contract in such a manner as to lead to default, timely notification to the surety may result in action by the surety that will avoid a default. Therefore, on all such contracts, the surety shall be promptly notified of any failure by the Contractor to perform (see FPR 1-8.602-4(a)).

(c) Certificate as to Corporate Principal. When a Certificate as to Corporate Principal is to be furnished, the following format shall be used:

CERTIFICATE AS TO CORPORATE PRINCIPAL

--(Capacity in which bond was executed) of said corporation; that I know his signature and that his signature thereto is genuine; and that said bond(s) was (were) duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body.

(Affix Corporate Seal)

(d) Name of principal. When a partnership is a principal on a bond, the names of all the members of the firm shall be listed in the bond following the name of the firm and the phrase "a partnership composed of." If a principal is a corporation, the state of incorporation must appear.

(e) Date of bond. A performance or payment bond other than an annual bond shall not antedate the contract to which it pertains.

(f) Continuation sheet. The Standard Form 25-B (Continuation Sheet) is prescribed for use when there are more than seven sureties on a bid, performance, or payment bond. It shall also be used when there are cosureties on an annual bid or performance bond.

(g) Recording and filing. Bonds shall be filed with the related original contract or the contract file shall be crossreferenced to the file containing the applicable bonds.

The surety (co-sureties) hereby consents (consent) to the foregoing contract modification and agrees (agree) that its (their) bond or bonds shall apply and extend to the contract as thereby modified or amended. The principal and the surety (co-sureties) further agree that on and after the execution of this consent, the penalty of the aforementioned performance bond or bonds is hereby increased by dollars ($-—)

and the penalty of the aforementioned payment bond or bonds is hereby increased by dollars ($———): Provided, however, That the increase of the liability of each cosurety resulting from this consent shall not exceed the sums set forth below:

'This consent of surety and increase of penalty shall be executed by the principal or his authorized representative concurrent with the execution of the attached modification to which it pertains. If the individual who signs the consent is signing in a representative capacity (e.g., attorney in fact), but is not a member of the firm, partnership, or joint venture, or an officer of the corporation involved a Power of Attorney or Certificate as to Corporate Principal, as appropriate, shall be submitted with the consent.

§ 12-10.305

Procedures to be followed in the event of loss or damage to Government property.

Upon the happening of loss of or damage to any Government property, concerning which the contractor is relieved of responsibility by contract provision, the procedure shall be as prescribed in the applicable "Government Property” clause of the contract.

Subpart 12-10.4-Insurance Under Fixed-Price Contracts

§ 12-10.400 Scope of subpart.

This subpart is applicable only to the Federal Aviation Administration.

§ 12-10.450 Contracts for lease of aircraft. The clauses set forth in this § 1210.450 shall, unless otherwise indicated by the specific instructions for their use, be inserted in any contract for the lease of aircraft (including air'See footnote 1 on page 166.

craft used in outservice flight training).

§ 12-10.450-1 Loss or damage to leased aircraft clause.

Use of clause. Insert the clause in § 12-7.151-16(a) of this chapter except that the clause need not be inserted in the contract:

(a) When the hourly rental rate does not exceed $250 and the total rental cost for any single transaction is not in excess of $2,500, or

(b) Where the cost of hull insurance does not exceed 10 percent of the contract rate, or

(c) When the lessor's insurer does not grant a credit for uninsured hours, thereby preventing the lessor from granting the same to the Government. § 12-10.450-2 Fair market value of aircraft clause.

When the fair market value of the aircraft can be determined, insert the clause in § 12-7.151-16(b) of this chapter.

§ 12-10.450-3 Risks and indemnities.

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(a) Background. Section 504 of the Federal Aviation Act of 1958 provides "-no lessor of any such aircraft *** under a bona fide lease of 30 days or more, shall be liable * * * by reason of his interest as lessor or owner of the aircraft *** for any injury to or death of persons, or damage to or loss of property * unless such aircraft

is in the actual possession or control of such person at the time of such injury, death, damage or loss." On short-term or intermittent-use leases, however, the owner may be liable for damage caused by operation of the aircraft. It is usual for the aircraft owner to retain insurance covering this liability during the term of such lease. Such insurance can, often for little or no increase in premium, be made to cover the Government's exposure to liability as well. In order to take advantage of this coverage, the Risks and Indemnities clause prescribed in paragraph (b) of this section is used.

(b) Risks and indemnities clause. Insert the following clause in any contract for out-service flight training, or the lease of aircraft where the Gov

Subpart 12-16.4-Forms for Advertised Construction Contracts

§ 12-16.401 Forms prescribed.

In addition to the standard forms prescribed for use in FPR 1-16.401, Standard Form 30 shall be used to amend a construction solicitation or modify a construction contract.

§ 12-16.450 Other forms.

DOT forms prescribed for use in connection with construction contracts are prescribed or referenced in DOTPR Subpart 12-16.8.

Subpart 12-16.8-Miscellaneous Forms

§ 12-16.800 Scope of subpart.

This subpart prescribes miscellaneous forms for use in procurement. The forms are illustrated in DOTPR Subpart 12-16.9.

§ 12-16.804-3 Standard Form 37, Report on Procurement by Civilian Executive Agencies.

The semiannual SF-37 required by FPR 1-16.804-3(f) shall be submitted to the Office of Installations and Logistics, TAD-60, by May 1 and November 1, for consolidation and submission to the General Services Administration.

§ 12-16.850 Small purchase summary.

DOT Form F 4230.1 titled "Small Purchase Summary" is an optional form which may be used to satisfy the small purchase documentation requirements set forth in FPR 1-3.603-2.

§ 12-16.851 Procurement request forms.

(a) General. The procurement request forms listed in paragraph (c) of this section shall be used to request the procurement of supplies, services, or construction, and may be used, if appropriate, to request items obtained through FEDSTRIP, MILSTRIP, or similar single- or multi-line requisitioning methods.

(b) Description of forms. The forms are issued in units of "PAD”. Each pad contains 100 sheets of "no carbon required" type paper.

§ 12-16.856-2 Employee claim for wage restitution.

DOT Form F 4220.7 shall be used by contractor employees to file claim for unpaid wages when contract funds have been transferred to the General Accounting Office to cover such underpayment. (Even though contract funds have been transferred to GAO to cover the underpayment, GAO requires that a claim be submitted before it will make payment directly to the employee. See Comptroller General Decision B-3368 of 3-19-57.)

§ 12-16.856-3 Summary of labor standards investigation report.

DOT Form F 4220.6 shall be used as the first page of reports on special labor standards investigations to summarize the findings of the investigation.

§ 12-16.856-4 Summary of underpayments.

DOT Form F 4220.8 shall be used to summarize the findings of wage underpayment and liquidated damages and shall be included in the investigation report when a special labor standards investigation is made.

§ 12-16.856-5 Establishment of additional wage rates.

(a) Except as provided in paragraph (b) of this section, DOT Form F 4220.10 shall be used by the contractor to obtain the contracting officer's approval or disapproval of the contractor's proposed classification and wage rate for any category of laborers or mechanics not listed in the contract wage determination but needed in performance of the contract work. Procedures shall be established to assure contracting officer approval of additional classifications and rates prior to their use by the contractor.

(b) FHWA Form PR-1140 may be used by the Federal Highway Administration for direct Federal contracts and Federal-aid contracts in lieu of DOT Form F 4220.10.

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