7-705.6 Management Systems Requirements. In accordance with 16-827.1, insert the clause in 7-104.50.

7-705.7 Improvements to Buildings or Land Owned by the Government. When necessary to assure that Government buildings or land will not be modified in a manner detrimental to the interests of the Government, the following clause shall be inserted.

IMPROVEMENTS TO BUILDING OR LAND OWNED BY THE GOVERNMENT (1964 SEP) (a) The Contractor shall not construct or make, at its expense, any fixed improvement to, or structural alteration in the nature of, buildings or land owned or leased by the Government, without prior written approval of the Contracting Officer.

(b) For the purposes of paragraph (a), the terms “fixed improvement” and “structural alteration" mean any improvement to or alteration in the nature of the buildings or land which, after completion, cannot be removed without substantial loss of value or damage to the premises. Such terms do not include foundations for production equipment.

7-705.8 Patent Rights. In accordance with 9-107.5 and 9-107.6, insert the clause in 7-302.23(a) or (b), with modifications as appropriate. The percentage amount specified to be withheld under paragraph (g) of the Title clause and in paragraph (f) of the License clause may be changed from "five percent (5%)" to "one percent (1%)." When the contractor is an educational or nonprofit institution, paragraphs (g) and (f) of those clauses may be omitted because no withholding of funds provision is required. See Section IX, Part 1.

7-705.9 Required Source for Jewel Bearings. In accordance with 1-2207.2 insert the clause in 7-104.37.

7-705.10 Changes to Make-or-Buy Program. In accordance with 3-902.4, insert the clause in 7-204.20(a).

7-705.11 Interest. In accordance with E-620, insert the clause in 7-104.39. 7-705.12 Negotiated Overhead Rates. When negotiated overhead rates are to be used in contracts with concerns other than educational institutions pursuant to Section III, Part 7, insert the clause in 7-204.16(a) changing "Part 2 of Section XV" in paragraph (c) of the clause to "Part 5 of Section XV." When negotiated overhead rates (postdetermined or predetermined) are to be used in contracts with educational institutions, pursuant to that Part, insert the appropriate clause in 7-204.16(b) or 7-403.9 changing "Section XV, Part 3” in paragraph (c) of the clause to "Section XV, Part 5." See 3-704.1 and 3-704.2.

7-705.13 Advance Payments. In accordance with Appendix E, Part 4, insert the clause in 7-104.34 but substitute paragraphs (3) and (5) from the clause in 7-204.25 for paragraph (3) and (5) of the clause in 7-104.34.

7-705.14 General Services Administration Supply Sources. In accordance with 7-204.28, insert the clause therein, deleting the last sentence.

7-705.15 Order of Precedence. In accordance with 3-501(b)Sec.C(xxxi), insert the clause in 7-2003.41.

7-705.16 Duty-Free Entry. In accordance with 6–603.2 and 6–603.3, insert either or both of the clauses in 7-104.31.

7-705.17 United States Products and Services (Balance of Payments Program). In accordance with 6–806.4, insert the clause in 7-2003.53.

7-705.18 Identification of Expenditures in the United States. In accordance with 6-807, insert the clause in 7-104.58.

7-705.19 Reserved.

7-705.20 Insurance. In accordance with 10-405 and 10-501, insert the clause in 7-104.65.

7-705.21 Use of Excess and Near-Excess Currency. In accordance with 6-1110, insert the clause in 7-104.66.

7-705.22 Facilities Equipment Modernization. Insert the following clause in any bilateral modification of an existing facilities contract, and in any new facilities contract, under which the Government provides modernized or replacement facilities.

FACILITIES EQUIPMENT MODERNIZATION (1968 APR)

(a) In consideration of the Government providing, as set forth in this contract, for modernization or replacement of Government-owned equipment being used or to be used by the Contractor in the performance of Government firm-fixed-price contracts or subcontracts, or fixed-price contracts or subcontracts with escalation, the Contractor agrees to return to the Government the net cost savings actually realized from the use of the modernized or replacement equipment on all such contracts or subcontracts entered into prior to the expiration of the three-year period following the date such equipment is placed in production, except (i) formally advertised contracts entered into subsequent to the date such equipment is placed in production, and (ii) contracts or subcontracts which specifically provide that they have been priced on the basis of anticipated use of such equipment.

(b)(1) The Contractor shall maintain adequate records for the implementation of this clause. The Contractor shall make such records available at its office for inspection, audit or reproduction by any authorized representative of the Contracting Officer. Within fourteen (14) months after the modernized or replacement equipment has been placed in production, the Contractor shall file with the Administrative Contracting Officer cognizant of the Government production and research property four (4) completed copies of DD Form 1651 (Industrial Equipment Modernization Program-Post Analysis Report).

(2) When the Contractor authorizes a subcontractor to use the modernized or replacement equipment, he shall require the subcontractor to maintain records, to make thein and additional information available to the Contracting Officer, and to file four (4) copies of DD Form 1651, in the manner prescribed in (1) above.

(c) Records shall generally be acceptable if they are maintained for the equipment under established accounting practices and permit a fair estimation of the net cost savings realized. Net cost savings realized shall be determined by a comparison of the Contractor's cost experience in the operation of the equipment before and after modernization.

(d) Amounts due the Government under this clause shall be returned by the Contractor, as directed by the Administrative Contracting Officer by:

(i) credits to, or adjustment of the prices of, the related contracts, subcontracts, or purchase orders benefiting from the use of the modernized or replacement equipment; or

(ii) payment to the Government through the Contracting Officer having cognizance of the Government production and research property; or

(iii) such other means as may be mutually agreed to.

7-705.23 Aircraft, Missile, and Space Vehicle Accident Reporting and Investigation. In accordance with 7-104.81, insert the clause therein.

7-705.24 Safety Precautions for Ammunition and Explosives. In accordance with 7-104.79, insert the clause therein.

7-705.25 Notice of Radioactive Materials. In accordance with 7-104.80, insert the clause therein.

7-705.26 Procurement of Miniature and Instrument Ball Bearings. In accordance with 1-2207.3, insert the clause in 7-104.38.

7-705.27 Payment of Interest on Contractors' Claims. In accordance with 1-333, insert the clause in 7-104.82.

7-705.28 Cost Accounting Standards. In accordance with 3-1204, insert the clause in 7-104.83.

7-705.29 Term of Performance or Delivery Date. When applicable, a clause in accordance with 7–104.92 may be used.

7-705.30 Preference for United States Flag Air Carriers. In accordance with 1-336.1(b), insert the clause in 7-104.95.

7-706 Facilities Use Contracts With Nonprofit Educational Institutions. As an alternative to the clauses in 7-704, the following clauses, in their entirety, may be used in any facilities use contract with nonprofit educational institutions.

7-706.1 Purpose.

PURPOSE (1968 SEP)

This Facilities Use Contract is designed specifically for nonprofit educational institutions to set forth provisions for the use and accountability of Government facilities furnished or acquired under related procurement contracts identified elsewhere herein. There are no funds provided under this contract. Costs incurred for acquisition, maintenance, repair or replacement, disposition or for other purposes in connection with the facilities accountable hereunder will be subject to the reimbursement provisions of related procurement contracts; provided, however, that should no procurement contract be available for reimbursement of such costs, this contract may be appropriately modified to provide for such reimbursement.

7-706.2 Accountable Facilities.

ACCOUNTABLE FACILITIES (1968 SEP)

The facilities accountable under this contract are identified in the Contractor's property control system and include those facilities furnished or acquired under related procurement contracts issued by the purchasing offices which are specifically named in the Schedule hereto.

7-706.3 Definitions. Insert the clause in 7-103.1, omitting paragraph (c) thereof, and adding the following:

(c) "Related procurement contract" means any Government contract or subcontract thereunder, for the furnishing of supplies or services of any description for the performance of which the use of the facilities is or may be authorized.

(d) "Facilities" means Government property having an acquisition cost of $200 or more. It excludes material and non-severable structures but includes special tooling and special test equipment expected to remain of substantial value for more than one year in its original form, without being expended and without appreciable modification or incorporation into another item of Government property.

Additional definitions may be included in such clause provided they are not inconsistent with such clause or this Regulation.

7-706.4 Use of Government Facilities.

USE OF GOVERNMENT FACILITIES (1968 SEP)

The Contractor may use the Facilities without charge in the performance of:

(i) prime contracts with the Government which specifically authorize use without charge,

(ii) subcontracts held by the Contractor under Government prime contracts or subcontracts of any tier thereunder if the Contracting Officer having cognizance of the prime contract concerned has authorized use without charge by approving a subcontract specifically authorizing such use or has otherwise authorized such use in writing,

(iii) any Department of Defense contract providing such use does not interfere with the work of the contract for which such facilities are provided, and

(iv) other work with respect to which the Contracting Officer has authorized use without charge in writing.

7-706.5 Allowable Costs and Payments.

ALLOWABLE COSTS AND PAYMENTS (1968 SEP)

Except as otherwise specifically provided in this contract or any related procurement contract, the failure of this contract to provide for reimbursement shall not preclude the Contractor from including, as part of the price or cost under any other Government contract or subcontract, an allocable portion of the costs incurred in the performance of any work, duty, or obligation under this contract which are not reimbursable hereunder.

7-706.6 Examination of Records by Comptroller General. Insert the clause in 7-104.15.

7-706.7 Location of the Facilities.

LOCATION OF THE FACILITIES (1968 SEP)

The Contractor may use the Facilities at any of the locations approved by the Contracting Officer. In granting this approval, the Contracting Officer may prescribe such terms and conditions as he may deem necessary for the protection of the Government's interest in the Facilities involved. Notwithstanding any inconsistency with the provisions of this contract, such terms and conditions shall prevail.

7-706.8 Maintenance. Insert the clause in 7-702.14. 7-706.9 Inspection. Insert the clause in 7-702.6.

7-706.10 Title.

TITLE (1969 DEC)

(a) Title to all Facilities furnished by the Government shall remain in the Government. Title to all Facilities purchased by the Contractor, for the cost of which the Contractor is to be reimbursed as a direct item of cost under a related procurement contract, shall pass to and vest in the Government upon delivery of such Facilities by the vendor; provided, however, that whenever the Contractor shall have obtained the prior approval of the Contracting Officer for the acquisition of any item of equipment having a unit cost of less than $1,000, title to such equipment shall vest in the Contractor. Title to other Facilities, the cost of which is to be reimbursed to the Contractor under a related procurement contract, shall pass to and vest in the Government upon (i) issuance

for use of such Facilities in the performance of a related procurement contract, or (ii) commencement or processing or use of such Facilities in the performance of a related procurement contract, or (iii) reimbursement of the cost thereof by the Government, whichever first occurs. All Government-furnished Facilities, together with all Facilities acquired by the Contractor, title to which vests in the Government under this paragraph, are subject to the provisions of this clause and are hereinafter collectively referred to as "Government Facilities."

(b) Title to the Government Facilities shall not be affected by the incorporation or attachment thereof to any Facilities not owned by the Government, nor shall such Government Facilities, or any part thereof, be or become a fixture or lose its identity as personalty by reason of affixation to any realty.

(c) Notwithstanding the provisions of subparagraph (a) above relative to title, and in accordance with the criteria set forth in ASPR 4-116.4, the Contracting Officer may at any time during the term of this contract, or upon completion or termination, transfer title to equipment to the Contractor upon such terms and conditions as may be agreed upon; provided, that the Contractor shall not under any Government contract, or subcontract thereunder, charge for any depreciation, amortization or use of such equipment as is donated under this paragraph. Upon the transfer of title to equipment under this paragraph, such equipment shall cease to be Government property. The Contractor shall furnish the Contracting Officer a list of all such equipment where title is vested in the Contractor within ten (10) days following the end of the calendar quarter in which the transfer of title occurs.

7-706.11 Access. Insert the clause in 7-702.16.

7-706.12 Property Control. Insert the clause in 7–702.17.

7-706.13 Representations and Warranties. Insert the clause in 7-702.5. 7-706.14 Liability for the Facilities. Insert the clause in 7-702.18. 7-706.15 Termination of the Use of the Facilities.

TERMINATION OF THE USE OF THE FACILITIES (1968 SEP)

(a) Subject to the provisions of the clause of this contract entitled, "Disposition of the Facilities", the Contractor may at any time, upon written notice to the Contracting Officer, terminate his authority to use any or all of the Facilities. Termination under this paragraph (a) shall not relieve the Contractor of any of his obligations or liabilities under any related procurement contract or subcontract affected thereby.

(b) The Contracting Officer may at any time, upon written notice, terminate or limit the Contractor's authority to use any or all of the Facilities. Except as may otherwise be provided in this contract or any related procurement contract, appropriate equitable adjustment may be made in any related procurement contract of the Contractor which so provides and which is affected by any such notice.

(c) Upon completion of the related procurement contract, or at any time during the life of the related procurement contract when the facilities are no longer required, it is the responsibility of the Contractor to notify the Contracting Officer in order that appropriate disposal may be made.

7-706.16 Period of This Contract. Insert the clause in 7-702.25. 7-706.17 Disposition of the Facilities. Insert the clause in 7-702.26.

7-706.18 Disputes. Insert the clause in 7-103.12.

7-706.19 Officials Not To Benefit. Insert the clause in 7-103.19.

7-706.20 Gratuities. In accordance with 7-104.16 insert the clause therein. 7-706.21 Covenant Against Contingent Fees. Insert the clause in 7-103.20. 7-706.22 Convict Labor. In accordance with 12-202 and 12-203, insert the clause in 7-104.17.