**FAA Acquisition Management System Clauses**

**Change 3 - October 3, 1996**

This document transmits revisions, additions, and deletions to FAA
Acquisition Management System clauses and provisions. Unless otherwise
specified, these changes are effective October 3, 1996 and apply to all
screening information requests and contracts issued after October 3,
1996.

Revised or added clauses and provisions are denoted by OCTOBER 3, 1996
in the title of the clause or provision.

**A. [CLAUSES REVISED]{.underline}**

The following summarizes clause revisions:

1\. [Clause 3.2.2.3-5, Descriptive Literature,]{.underline} is revised
to substitute the "screening information request" for "solicitation,"
and to make minor format changes.

2\. [Clause 3.2.2.3-14, Late Submissions, Modifications, and Withdrawals
of Submittals,]{.underline} is revised to change the conditions for late
submittals under electronic commerce methods.

3\. [Clause 3.2.2.3-17, Preparation of Offers,]{.underline} is revised
to substitute "offer" for "submittal," to add "End of provision" after
the last paragraph, and to make minor format changes.

4\. [Clause 3.2.2.3-63, Site Visit (Construction),]{.underline} is
revised to add "Construction" to the clause title, to redesignate the
clause as a provision, and to make minor format changes.

5\. [Clause 3.2.2.8-1, Material,]{.underline} is revised to change the
title to "New Material," to add definitions, to rephrase the clause
language for clarity, and to make minor format changes.

6\. [Clause 3.2.4-5, Allowable Cost and Payment,]{.underline} is revised
to add a statement the Contracting Officer will provide a copy of FAA
Contract Cost Principles, to add language pertaining to quick close-out
procedures, to change language relating to "disputes," to substitute
"Government" for FAA, and to make minor editorial and format changes.

7\. [Clause 3.2.4-11, Allowable Cost and
Payment-Facilities,]{.underline} is revised to add a statement the
Contracting Officer will provide a copy of FAA Contract Cost Principles,
to add language pertaining to quick close-out procedures, to change
language relating to "disputes," to substitute "Government" for FAA, and
to make minor editorial and format changes.

8\. [Clause 3.2.4-15, Incentive Price Revision-Successive
Targets,]{.underline} is revised to substitute "Government" for "FAA,"
and to make minor editorial and format changes.

9\. [Clause 3.2.4-16, Ordering,]{.underline} is revised to substitute
"Government" for "FAA," and to make minor editorial and format changes.

10\. [Clause 3.2.4-17, Order Limitations,]{.underline} is revised to
delete the last sentence of paragraph (a) pertaining to the contractor
not being entitled to equitable adjustments, to substitute "Government"
for "FAA," and to make minor editorial and format changes.

11\. [Clause 3.2.4-19, Requirements,]{.underline} is revised to
substitute "Government" for "FAA," and to make minor editorial and
format changes.

12\. [Clause 3.2.5-2, Independent Price Determination,]{.underline} is
revised to redesignate the clause as a provision and to make minor
format changes.

13\. [Clause 3.2.5-4, Contingent Fees,]{.underline} is revised to add
definitions, to substitute "Government" for "FAA," and to make minor
format changes.

14\. [Clause 3.2.5-5, Anti-Kickback Procedures,]{.underline} is revised
to delete "FAA" from paragraph (c)(2), and to make minor editorial and
format changes.

15\. [Clause 3.2.5-7, Disclosure Regarding Payments to Influence Certain
Federal Transactions,]{.underline} is revised to redesignate paragraph
numbering, to add a definition of the "Act," to correct U.S. Code
citations for members of uniformed services, to add language to the
definition of "agency," to add language regarding submission of lobbying
disclosure forms, to add language regarding penalties for failure to
disclose lobbying, and to make minor editorial and format changes.

16\. [Clause 3.3.1-5, Payments under Time-and-Materials and Labor-Hour
Contracts,]{.underline} is revised to substitute "Government" for "FAA,"
to add language in (b)(1) pertaining to a contractor's accounting
practices, to revise the prescription for Alternate I, and to make minor
format changes.

17\. [Clause 3.3.1-17, Prompt Payment,]{.underline} is revised to
substitute "Government" for "FAA," to delete a duplicate sentence in
paragraph (a)(4), and to make minor format changes.

18\. [Clause 3.3.1-21, Financing Payment Terms for Purchases of
Commercial Items,]{.underline} is revised to substitute "Government" for
"FAA," to delete language in paragraph (b) regarding the clause
"contract terms and conditions for commercial items," and to make minor
editorial and format changes.

19\. [Clause 3.3.2-1, FAA Cost Principles,]{.underline} is revised to
add a statement that the Contracting Officer will provide a copy of FAA
Contract Cost Principles, and to make minor editorial and format
changes.

20\. [Clause 3.4.1-8, Patent Infringement Bond
Requirements,]{.underline} is revised to substitute "Government" for
"FAA," and to make minor editorial changes.

21\. [Clause 3.4.1-11, Insurance\--Liability to Third
Persons,]{.underline} is revised to substitute "Government" for "FAA,"
to delete Alternates I and II, and to make minor editorial and format
changes.

22\. [Clause 3.4.2-6, Taxes\--Contracts Performed in U.S. Possessions or
Puerto Rico,]{.underline} is revised to make a minor editorial change.

23\. [Clause 3.5-10, Patent Rights-Retention by the Contractor (Short
Form),]{.underline} is revised to change the definition of "small
business firm," to correct U.S. Code citations for in the definitions of
"invention" and "subject invention," to correct the Code of Federal
Regulations citation for licensing and appeals, march-in rights, and
royalties, to substitute "Government" for "FAA," to delete language in
paragraph (l) regarding agency procedures, and to make minor editorial
and format changes.

24\. [Clause 3.5-11, Patent Rights-Retention by the Contractor (Long
Form),]{.underline} is revised to change the definition of "small
business firm," to correct U.S.Code citations for in the definitions of
"invention" and "subject invention," to correct the Code of Federal
Regulations citation for licensing appeals, to delete language in
paragraph (l) regarding agency procedures, and to make minor editorial
and format changes.

25\. [Clause 3.5-12, Patent Rights-Acquisition by the
Government,]{.underline} is revised to correct the U.S. Code citation in
the definitions for "invention" and "subject invention," to correct the
Code of Federal Regulations citation for licensing appeals, and to make
minor editorial and format changes.

26\. [Clause 3.5-13, Rights in Data-General,]{.underline} is revised to
make minor editorial and format changes.

27\. [Clause 3.5-14, Representation of Limited Rights Data and
Restricted Computer Software,]{.underline} is revised to add a reference
for the definition of "data," and to make minor editorial changes.

28\. [Clause 3.5-18, Commercial Computer Software-Restricted
Rights,]{.underline} is revised to make minor editorial and format
changes.

29\. [Clause 3.6.1-2, Notice of Very Small Business
Set-Aside,]{.underline} is revised to make minor editorial and format
changes.

30\. [Clause 3.6.3-4, Recovered Material Certification,]{.underline} is
revised to add definitions.

31\. [Clause 3.7-1, Privacy Act Notification,]{.underline} is revised to
add Code of Federal Regulations citation for agency regulations.

32\. [Clause 3.7-2, Privacy Act,]{.underline} is revised to add Code of
Federal Regulations citation for agency regulations.

33\. [Clause 3.10.1-3, Penalties for Unallowable Costs,]{.underline} is
revised to restate language in paragraphs (f) regarding disputes, to add
language in paragraph (g) regarding waivers, and to make minor editorial
and format changes.

34\. [Clause 3.10.1-9, Stop-Work Order,]{.underline} is revised add
language in the prescription for Alternate I, and to make minor
editorial and format changes.

35\. [Clause 3.10.2-2, Subcontracts (Cost-Reimbursement and Ceiling
Priced Contracts),]{.underline} is revised to change the dollar amounts
in paragraphs (a)(4) and (b)(1) for subcontract approval, to delete
language in paragraph 9i)(1) regarding types of contracts, and to make
minor editorial and format changes.

36\. [Clause 3.10.6-1, Termination for Convenience of the
FAA,]{.underline} is revised to change the clause title, to substitute
"Government" for "FAA," to change language in paragraph (i) regarding
"disputes," and to make minor editorial and format changes.

37\. [Clause 3.10-6-2, Termination for Convenience of the Government
(Educational and Other, Nonprofit Institutions)]{.underline} is revised
to substitute "Government" for "FAA," to change language in paragraph
(g) regarding "disputes," and to make minor editorial and format
changes.

38\. [Clause 3.10.6-3, Termination (Cost-Reimbursement),]{.underline} is
revised to substitute "Government" for "FAA," to change language in
paragraph (i) regarding "disputes," and to make minor editorial and
format changes.

39\. [Clause 3.10.6-4, Default (Fixed-Price Supply and
Service),]{.underline} is revised to substitute "Government" for "FAA,"
and to make minor format changes.

40\. [Clause 3.10.6-5, Default (Fixed-Price Research and
Development),]{.underline} is revised to substitute "Government" for
"FAA," to add language in new paragraph (b) regarding a show cause
notice, and to make minor format changes.

41\. [Clause 3.10.6-6, Default (Fixed Price Construction),]{.underline}
is revised to substitute "Government" for "FAA," to change language in
paragraph (b)(2) regarding "disputes," and to make minor format changes.

42\. [Clause 3.10.6-7, Excusable Delays,]{.underline} is revised to
substitute "Government" for "FAA," to delete after the end of the clause
the paragraph beginning with "communication service contracts," and to
make minor format changes.

43\. [Clause 3.10.7-1, Indemnification under Public Law
85-804,]{.underline} is revised to substitute "Government" for "FAA,"
and to make minor format changes.

**B. [CLAUSES ADDED]{.underline}**

The following clauses are added:

1\. [Clause 3.2.5-12, Notice of Employment of Former United States
Government Employees (Service Contracts),]{.underline} is added to
comply with the Federal employee "buy-out" legislation.

2\. [Clause 3.3.1-24, Fast Payment Procedures,]{.underline} is added
when the contractor may be permitted to invoice upon shipment of
supplies.

3\. [Clause 3.3.1-24, Mandatory Information for Electronic Funds
Transfer Payment,]{.underline} is added to comply with the Debt
Collection Improvement Act of 1996, which requires that beginning July
26, 1996, payments to vendors must be made by electronic funds transfer
(EFT). The clause requires contractors to submit certain EFT information
to the payment office, as a condition for payment. Use of this clause is
mandatory, except for credit card purchases and for certain classes of
exempted contracts (exempted classes of contracts are contracts awarded
outside the United States and Puerto Rico; contracts denominated and
paid in other than United States dollars; classified contracts; or
contracts executed by deployed Contracting Officers in the course of
military operations).

4\. [Clause 3.3.1-25, Optional Information for Electronic Funds Transfer
Payment,]{.underline} is added to comply with the Debt Collection
Improvement Act of 1996, and allows optional EFT payments for certain
classes of contracts that are exempt from mandatory compliance prior to
January 1, 1999 as provided in 31 CFR 208.3(c). The clause applies to
contracts awarded outside the United States and Puerto Rico; contracts
denominated and paid in other than United States dollars; classified
contracts; or contracts executed by deployed Contracting Officers in the
course of military operations. The clause does not apply to credit card
purchases.

5\. [Clause 3.5-20, Technical Data Certification, Revision, and
Withholding of Payment\--Major Systems,]{.underline} is added for when
data may be delivered under a major systems acquisition.

6\. [Clause 3.8.2-18, Certification of Data,]{.underline} is added to
require training contractors to certify to the accuracy of
qualifications or other data submitted with offers.

7\. [Clause 3.8.2-19, Prohibition on Advertising,]{.underline} is added
to prohibit training contractors from advertising or soliciting business
during contracted training classes.

**C. [CLAUSES REMOVED]{.underline}**

The following clause is removed and reserved:

1\. [Clause 3.3.1-20, "Electronic Funds Transfer Payment
Methods,"]{.underline} is removed and reserved. The requirements of the
Debt Collection Improvement Act supersede the requirements of this
clause.

2\. [Clause 3.4.1-3 Immunity from Tort Liability,]{.underline} is
removed and reserved. This clause included obsolete requirements
pertaining to liability.

**D. [DISPOSITION OF THIS CHANGE]{.underline}**

The following clauses are deleted in its entirety and the attached
revised or added clauses are substituted:

**Delete** **Replace with**

[Clause]{.underline} [Dated]{.underline} [Clause]{.underline}
[Dated]{.underline}

3.2.2.3-5 April 1996 3.2.2.3-5 October 3, 1996

3.2.2.3-14 April 1996 3.2.2.3-14 October 3, 1996

3.2.2.3-17 April 1996 3.2.2.3-17 October 3, 1996

3.2.2.3-63 April 1996 3.2.2.3-63 October 3, 1996

3.2.2.8-1 April 1996 3.2.2.8-1 October 3, 1996

3.2.4-5 April 1996 3.2.4-5 October 3, 1996

3.2.4-11 April 1996 3.2.4-11 October 3, 1996

3.2.4-15 April 1996 3.2.4-15 October 3, 1996

3.2.4-16 April 1996 3.2.4-16 October 3, 1996

3.2.4-17 April 1996 3.2.4-17 October 3, 1996

3.2.4-19 April 1996 3.2.4-19 October 3, 1996

3.2.5-2 April 1996 3.2.5-2 October 3, 1996

3.2.5-4 April 1996 3.2.5-4 October 3, 1996

3.2.5-7 April 1996 3.2.5-7 October 3, 1996

\-\-- \-\-- 3.2.5-12 October 3, 1996

3.3.1-5 April 1996 3.3.1-5 October 3, 1996

3.3.1-17 April 1996 3.3.1-17 October 3, 1996

3.3.1-20 April 1996 \-\-- \-\--

3.3.1-21 April 1996 3.3.1-21 October 3, 1996

\-\-- \-\-- 3.3.1-24 October 3, 1996

\-\-- \-\-- 3.3.1-25 October 3, 1996

\-\-- \-\-- 3.3.1-26 October 3, 1996

3.3.2-1 April 1996 3.3.2-1 October 3, 1996

3.4.1-3 April 1996 \-\-- \-\--

3.4.1-8 April 1996 3.4.1-8 October 3, 1996

3.4.1-11 April 1996 3.4.1-11 October 3, 1996

3.4.2-6 April 1996 3.4.2-6 October 3, 1996

3.5-10 April 1996 3.5-10 October 3, 1996

3.5-11 April 1996 3.5-11 October 3, 1996

3.5-12 April 1996 3.5-12 October 3, 1996

3.5-13 April 1996 3.5-13 October 3, 1996

3.5-14 April 1996 3.5-14 October 3, 1996

3.5-18 April 1996 3.5-18 October 3, 1996

3.6.1-2 April 1996 3.6.1-2 October 3, 1996

3.6.3-4 April 1996 3.6.3-4 October 3, 1996

3.7-1 April 1996 3.7-1 October 3, 1996

3.7-2 April 1996 3.7-2 October 3, 1996

\-\-- \-\-- 3.8.2-18 October 3, 1996

\-\-- \-\-- 3.8.2-19 October 3, 1996

3.10.1-3 April 1996 3.10.1-3 October 3, 1996

3.10.1-9 April 1996 3.10.1-9 October 3, 1996

3.10.1-3 April 1996 3.10.1-3 October 3, 1996

3.10.2-2 April 1996 3.10.2-2 October 3, 1996

3.10.6-1 April 1996 3.10.6-1 October 3, 1996

3.10.6-2 April 1996 3.10.6-2 October 3, 1996

3.10.6-3 April 1996 3.10.6-3 October 3, 1996

3.10.6-4 April 1996 3.10.6-4 October 3, 1996

3.10.6-5 April 1996 3.10.6-5 October 3, 1996

3.10.6-6 April 1996 3.10.6-6 October 3, 1996

3.10.6-7 April 1996 3.10.6-7 October 3, 1996

3.10.7-1 April 1996 3.10.7-1 October 3, 1996

**D. [ATTACHMENT]{.underline}**

The added clauses are attached to this change.

**Attachment**

**[Revised/Added Clauses]{.underline}**

3.2.2.3-5, Descriptive Literature

3.2.2.3-14, Late Submissions, Modifications, and Withdrawals of
Submittals

3.2.2.3-17, Preparation of Offers

3.2.2.3-63, Site Visit (Construction)

3.2.2.8-1, New Material

3.2.4-5, Allowable Cost and Payment

3.2.4-11, Allowable Cost and Payment-Facilities

3.2.4-15, Incentive Price Revision-Successive Targets

3.2.4-16, Ordering

3.2.4-17, Order Limitations

3.2.4-19, Requirements

3.2.5-2, Independent Price Determination

3.2.5-4, Contingent Fees

3.2.5-5, Anti-Kickback Procedures

3.2.5-7, Disclosure Regarding Payments to Influence Certain Federal
Transactions

3.2.5-12, Notice of Employment of Former United States Government
Employees (Service Contracts)

3.3.1-5, Payments under Time-and-Materials and Labor-Hour Contracts

3.3.1-17, Prompt Payment

3.3.1-21, Financing Payment Terms for Purchases of Commercial Items

3.3.1-24, Fast Payment Procedures

3.3.1-25, Mandatory Information for Electronic Funds Transfer Payment

3.3.1-26, Optional Information for Electronic Funds Transfer Payment

3.3.2-1, FAA Cost Principles

3.4.1-8, Patent Infringement Bond Requirements

3.4.1-11, Insurance\--Liability to Third Persons

3.4.2-6, Taxes\--Contracts Performed in U.S. Possessions or Puerto Rico

3.5-10, Patent Rights\--Retention by the Contractor (Short Form)

3.5-11, Patent Rights\--Retention by the Contractor (Long Form)

3.5-12, Patent Rights\--Acquisition by the Government

3.5-13, Rights in Data\--General

3.5-14, Representation of Limited Rights Data and Restricted Computer
Software

3.5-18, Commercial Computer Software\--Restricted Rights

3.5-20, Technical Data Certification, Revision, and Withholding of
Payment\--Major Systems

3.6.1-2, Notice of Very Small Business Set-Aside

3.6.3-4, Recovered Material Certification

3.7-1, Privacy Act Notification

3.7-2, Privacy Act

3.8.2-18, Certification of Data

3.8.2-19, Prohibition on Advertising

3.10.1-3, Penalties for Unallowable Costs

3.10.1-9, Stop-Work Order

3.10.2-2, Subcontracts (Cost-Reimbursement and Ceiling Priced Contracts)

3.10.6-1, Termination for Convenience of the Government

3.10-6-2, Termination for Convenience of the Government (Educational and
Other Nonprofit

Institutions)

3.10.6-3, Termination (Cost-Reimbursement)

3.10.6-4, Default (Fixed-Price Supply and Service)

3.10.6-5, Default (Fixed-Price Research and Development)

3.10.6-6, Default (Fixed Price Construction)

3.10.6-7, Excusable Delays

3.10.7-1, Indemnification under Public Law 85-804

3.2.2.3-5 Descriptive Literature

DESCRIPTIVE LITERATURE (OCTOBER 3, 1996)

\(a\) \'Descriptive literature\' means information (e.g., cuts,
illustrations, drawings, and brochures) that is submitted as part of an
offer. Descriptive literature is required to establish, for the purpose
of evaluation and award, details of the product offered that are
specified elsewhere in the Screening Information Request (SIR) and
pertain to significant elements such as (1) design; (2) materials; (3)
components; (4) performance characteristics; and (5) methods of
manufacture, assembly, construction, or operation. The term includes
only information required to determine the technical acceptability of
the offered product. It does not include other information such as that
used in determining the responsibility of a prospective Contractor or
for operating or maintaining equipment.

\(b\) Descriptive literature, required elsewhere in this SIR, must be
(1) identified to show the item(s) of the offer to which it applies and
(2) received by the time specified in this SIR for receipt of
submittals. Failure to submit descriptive literature on time may require
rejection of the offer (see the "Late Submissions, Modifications, and
Withdrawals of Submittals" provision of this SIR).

\(c\) The failure of descriptive literature to show that the product
offered conforms to the requirements of this SIR may require rejection
of the submittal.

\(d\) At the discretion of the Contracting Officer, the requirement for
furnishing descriptive literature under this (SIR) may be waived for any
offeror that makes an affirmative representation in subparagraph (d)(1)
below, if the Contracting Officer determines that the product supplied
by the offeror under a prior contract meets the requirements of this
SIR.

\(1\) The offeror represents that it \[ \] has, \[ \] has not \[check
applicable box\] supplied a product to the \_\_\_\_\_\_\_\_\_\_\_\_\_\_
\[as appropriate, the Contracting Officer shall designate the
contracting office or an alternate activity or office\] under a prior
contract that is the same as the product offered under this SIR for
which literature is required.

\(2\) If the offeror checked \'has\' in paragraph (d)(1) above, and
seeks a waiver of the requirement for submitting descriptive literature,
the offeror must fill in the following information:

Prior contract number
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date of prior contract
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Contract line item number of product supplied
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name and address of government activity

to which delivery was made
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date of final delivery of product supplied
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\(e\) Offerors must submit offers on the basis of required descriptive
literature or on the basis of a previously supplied product under
paragraph (d) above. An offeror submitting an offer on one of these two
bases may not elect to have its offer considered on the alternative
basis after the time specified for receipt of submittals. An offeror\'s
request for a waiver under paragraph (d) above will be disregarded if
that offeror has submitted the descriptive literature required under
this SIR.

*(End of provision)*

3.2.2.3-14 Late Submissions, Modifications, and Withdrawals of
Submittals

LATE SUBMISSIONS, MODIFICATIONS, AND WITHDRAWALS OF SUBMITTALS (OCTOBER
3, 1996)

\(a\) Any submittals received at the office designated in the SIR after
the exact time specified for receipt will not be considered unless it is
received before award is made and it\--

\(1\) Was sent by registered or certified mail not later than the fifth
calendar day before the date specified for receipt of submittals (e.g.,
an offer submitted in response to a SIR requiring receipt of offers by
the 20th of the month must have been mailed by the 15th);

\(2\) Was sent by mail or, if authorized by the SIR, was sent by
telegram or via facsimile and it is determined by the Government that
the late receipt was due solely to mishandling by the Government after
receipt at the Government installation;

\(3\) Was sent by U.S. Postal Service Express Mail Next Day Service-Post
Office to Addressee, not later than 5:00 p.m. at the place of mailing
two working days prior to the date specified for receipt of submittals.
The term \'working days\' excludes weekends and U.S. Federal holidays;

\(4\) Was transmitted through an electronic commerce method authorized
by the SIR and was received by the Contracting Officer not later than
5:00 p.m. on the date specified for receipt of submittals; or

\(5\) Is the only submittal received.

\(b\) Any modification of submittals, except a modification resulting
from the Contracting Officer\'s request, is subject to the same
conditions as in subparagraphs (a)(1), (2), and (3) of this provision.

\(c\) A modification resulting from the Contracting Officer\'s request
received after the time and date specified in the request will not be
considered unless received before award and the late receipt is due
solely to mishandling by the Government after receipt at the Government
installation.

\(d\) The only acceptable evidence to establish the date of mailing of a
late proposal or modification sent either by U.S. Postal Service
registered or certified mail is the U.S. or Canadian Postal Service
postmark both on the envelope or wrapper and on the original receipt
from the U.S. or Canadian Postal Service. Both postmarks must show a
legible date or the proposal, quotation, or modification shall be
processed as if mailed late. \'Postmark\' means a printed, stamped, or
otherwise placed impression (exclusive of a postage meter machine
impression) that is readily identifiable without further action as
having been supplied and affixed by employees of the U.S. or Canadian
Postal Service on the date of mailing. Therefore, offerors should
request the postal clerk to place a legible hand cancellation bull\'s
eye postmark on both the receipt and the envelope or wrapper.

\(e\) The only acceptable evidence to establish the time of receipt at
the Government installation is the time/date stamp of that installation
on the submittal wrapper or other documentary evidence of receipt
maintained by the installation.

\(f\) The only acceptable evidence to establish the date of mailing of a
late offer, modification, or withdrawal sent by Express Mail Next Day
Service-Post Office to Addressee is the date entered by the post office
receiving clerk on the \'Express Mail Next Day Service-Post Office to
Addressee\' label and the postmark on both the envelope or wrapper and
on the original receipt from the U.S. Postal Service. \'Postmark\' has
the same meaning as defined in paragraph (d) of this provision,
excluding postmarks of the Canadian Postal Service. Therefore, offerors
should request the postal clerk to place a legible hand cancellation
bull\'s eye postmark on both the receipt and the envelope or wrapper.

\(g\) Notwithstanding paragraph (a) of this provision, a late
modification of an otherwise acceptable submittal makes its terms more
favorable to the Government will be considered at any time it is
received and may be accepted.

\(h\) Submittals may be withdrawn by written notice or telegram
(including mailgram) received at any time before award. If the SIR
authorizes facsimile submittals, submittals may be withdrawn via
facsimile received at any time before award, subject to the conditions
specified in the provision entitled \'Facsimile Submittals.\' Submittals
may be withdrawn in person by an offeror or an authorized
representative, if the representative\'s identity is made known and the
representative signs a receipt for the submittal before award.

*(End of provision)*

3.2.2.3-17 Preparation of Offers

PREPARATION OF OFFERS (OCTOBER 3, 1996)

\(a\) Offerors are expected to examine any drawings, specifications,
Schedule, and all instructions. Failure to do so will be at the
offeror\'s risk.

\(b\) Each offeror shall furnish the information required by the
Screening Information Request (SIR). The offeror shall print or type its
name and sign the offer. Erasures or other changes must be initialed by
the person signing the offer. Offers signed by an agent shall be
accompanied by evidence of that agent\'s authority, unless that evidence
has been previously furnished to the issuing office.

\(c\) For each item offered, offerors shall (1) show the unit
price/cost, including, unless otherwise specified, packaging, packing,
and preservation and (2) enter the extended price/cost for the quantity
of each item offered in the \'Amount\' column of the Schedule. In case
of discrepancy between a unit price/cost and an extended price/cost, the
unit price/cost will be presumed to be correct, subject, however, to
correction to the same extent and in the same manner as any other
mistake.

\(d\) Offers for supplies or services other than those specified will
not be considered unless authorized by the SIR.

*(End of provision)*

3.2.2.3-63 Site Visit (Construction)

SITE VISIT (CONSTRUCTION) (OCTOBER 3, 1996)

\(a\) The clauses titled Differing Site Conditions, and Site
Investigations and Conditions Affecting the Work, will be included in
any contract awarded as a result of this screening information request.
Accordingly, offerors are urged and expected to inspect the site where
the work will be performed.

\(b\) Site visits may be arranged during normal duty hours by
contacting:

Name: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Address: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Telephone:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

*(End of provision)*

3.2.2.8-1 New Material

NEW MATERIAL (OCTOBER 3, 1996)

\(a\) Definitions.

\(1\) "Material" as used in this clause, includes, but is not limited
to, raw materials, parts, items, components, and end products.

\(2\) "New," as used in this clause, means previously unused or composed
of previously unused materials and may, if authorized, include unused
residual property or unused former Government surplus property.

\(3\) "Other than new," as used in this clause, includes, but is not
limited to, recycled, recovered, remanufactured, used and reconditioned.

\(b\) Unless this contract specifies otherwise, the Contractor
represents that the supplies, including, if authorized by the
Contracting Officer, any residual inventory and former Government
surplus property included in its offer, are new and are not of such age
or so deteriorated as to impair their usefulness or safety.

\(c\) If the Contractor proposes to furnish other than new material,
residual inventory resulting from terminated Government contracts, or
former Government surplus, the Contractor shall provide the following
information in its offer: (1) a complete description of the materials;
(2) quantity; (3) name of Government agency from which acquired; (4)
date of acquisition, if applicable.

\(d\) The Contractor shall not furnish any other than new material,
residual inventory, or former Government surplus unless authorized in
writing by the Contracting Officer.

\(e\) All material to be furnished under the contract shall comply with
the terms and specifications contained in the contract.

\(f\) If during contract performance the Contractor believes use of
other than new material, residual inventory, or former Government
surplus property will be in the Government's interest, the Contractor
shall so notify the Contracting Officer in writing and request authority
to use such material. The Contractor's notice shall include the reasons
for the request along with a proposal for any consideration due the
Government if the Contracting Officer authorizes the use of such
material.

*(End of clause)*

3.2.4-5 Allowable Cost and Payment

ALLOWABLE COST AND PAYMENT (OCTOBER 3, 1996)

\(a\) Invoicing. The Government shall make payments to the Contractor
when requested as work progresses, but (except for small business
concerns) not more often than once every 2 weeks, in amounts determined
to be allowable by the Contracting Officer in accordance with the
Federal Aviation Administration's (FAA) "Contract Cost Principles" in
effect on the date of this contract and the terms of this contract (upon
request, the Contracting Officer will provide a copy of the FAA Contract
Cost Principles). The Contractor may submit to an authorized
representative of the Contracting Officer, in such form and reasonable
detail as the representative may require, an invoice or voucher
supported by a statement of the claimed allowable cost for performing
this contract. Any payments for costs under this contract, particularly
for costs of Indirect Rates under paragraph (d), shall be subject to the
provisions of the \"Limitation of Costs\" clause, or the \"Limitation of
Funds\" clause, if applicable. The Contractor shall be responsible to
manage and control the allowable cost of performance of the contract,
such that payments for any allowable costs, including Indirect Rates
under paragraph (d), shall not exceed the estimated cost set forth in
the schedule, or the funded amount, less an allowance for fee, if the
contract is incrementally funded.

\(b\) Reimbursing costs.

\(1\) For the purpose of reimbursing allowable costs (except as provided
in subparagraph (2) below, with respect to pension, deferred profit
sharing, and employee stock ownership plan contributions), the term
costs includes only:

\(i\) Those recorded costs that, at the time of the request for
reimbursement, the Contractor has paid by cash, check, or other form of
actual payment for items or services purchased directly for the
contract;

\(ii\) When the Contractor is not delinquent in paying costs of contract
performance in the ordinary course of business, costs incurred, but not
necessarily paid, for-

\(A\) Materials issued from the Contractor\'s inventory and placed in
the production process for use on the contract;

\(B\) Direct labor;

\(C\) Direct travel;

\(D\) Other direct in-house costs; and

\(E\) Properly allocable and allowable indirect costs, as shown in the
records maintained by the Contractor for purposes of obtaining
reimbursement under Government contracts; and

\(iii\) The amount of payments that have been paid to the Contractor\'s
subcontractors under similar cost standards.

\(2\) Contractor contributions to any pension or other post retirement
benefit, profit-sharing or employee stock ownership plan funds that are
paid quarterly or more often may be included in indirect costs for
payment purposes: Provided, that the Contractor pays the contribution to
the fund within 30 days after the close of the period covered. Payments
made 30 days or more after the close of a period shall not be included
until the Contractor actually makes the payment. Accrued costs for such
contributions that are paid less often than quarterly shall be excluded
from indirect costs for payment purposes until the Contractor actually
makes the payment.

\(3\) Notwithstanding the audit and adjustment of invoices or vouchers
under paragraph (g) below, allowable indirect costs under this contract
shall be obtained by applying indirect cost rates established in
accordance with paragraph (d) below.

\(4\) Any statements in specifications or other documents incorporated
in this contract by reference designating performance of services or
furnishing of materials at the Contractor\'s expense or at no cost to
the Government shall be disregarded for purposes of cost-reimbursement
under this clause.

\(c\) Small business concerns. A small business concern may be paid more
often than every 2 weeks and may invoice and be paid for recorded costs
for items or services purchased directly for the contract, even though
the concern has not yet paid for those items or services.

\(d\) Final indirect cost rates.

\(1\) Final annual indirect cost rates and the appropriate bases shall
be established for the period covered by the indirect cost rate
proposal.

\(2\) The Contractor shall, within 90 days after the expiration of each
of its fiscal years, or by a later date approved by the Contracting
Officer, submit to the cognizant Contracting Officer responsible for
negotiating its final indirect cost rates and, if required by agency
procedures, to the cognizant audit activity proposed final indirect cost
rates for that period and supporting cost data specifying the contract
and/or subcontract to which the rates apply. The proposed rates shall be
based on the Contractor\'s actual cost experience for that period. The
appropriate Government representative and Contractor shall establish the
final indirect cost rates as promptly as practical after receipt of the
Contractor\'s proposal.

\(3\) The Contractor and the appropriate Government representative shall
execute a written understanding setting forth the final indirect cost
rates. The understanding shall specify (i) the agreed-upon final annual
indirect cost rates, (ii) the bases to which the rates apply, (iii) the
periods for which the rates apply, (iv) any specific indirect cost items
treated as direct costs in the settlement, and (v) the affected contract
and/or subcontract, identifying any with advance agreements or special
terms and the applicable rates. The understanding shall not change any
monetary ceiling, contract obligation, or specific cost allowance or
disallowance provided for in this contract. The understanding is
incorporated into this contract upon execution.

\(4\) Failure by the parties to agree on a final annual indirect cost
rate may be the basis of a claim under the "Contract Disputes" clause.

\(e\) Billing rates. Until final annual indirect cost rates are
established for any period, the Government shall reimburse the
Contractor at billing rates established by the Contracting Officer or by
an authorized representative (the cognizant auditor), subject to
adjustment when the final rates are established. These billing rates-

\(1\) Shall be the anticipated final rates; and

\(2\) May be prospectively or retroactively revised by mutual agreement,
at either party\'s request, to prevent substantial overpayment or
underpayment.

\(f\) Quick-close-out procedures. When the Contractor and Contracting
Officer agree, the quick-close-out procedures may be used.

\(1\) Procedures. Settlement of indirect cost rates shall apply to this
contract, in advance of the determination of final indirect cost rates,
if:

\(i\) The contract is physically complete;

\(ii\) The amount of unsettled indirect cost to be allocated to this
contract is not more than \$500,000 and the cumulative unsettled
indirect costs to be allocated to one or more contracts in a single
fiscal year do not exceed 15 percent of the estimated, total unsettled
indirect costs allocable to cost-type contracts for that fiscal year;
and

\(iii\) Agreement can be reached on a reasonable estimate of allocable
dollars.

\(2\) The settlement shall be final for this contract and no adjustment
shall be made to other contracts for over- or under-recoveries of costs
allocated or allocable to this contract.

\(3\) The settlement shall not be considered a binding precedent when
establishing the final indirect costs for other contracts.

\(g\) Audit. At any time or times before final payment, the Contracting
Officer may have the Contractor\'s invoices or vouchers and statements
of cost audited. Any payment may be (1) reduced by amounts found by the
Contracting Officer not to constitute allowable costs or (2) adjusted
for prior overpayments or underpayments.

\(h\) Final payment.

\(1\) The Contractor shall submit a completion invoice or voucher,
designated as such, promptly upon completion of the work, but no later
than one year (or longer, as the Contracting Officer may approve in
writing) from the completion date. Upon approval of that invoice or
voucher, and upon the Contractor\'s compliance with all terms of this
contract, the Government shall promptly pay any balance of allowable
costs and that part of the fee (if any) not previously paid.

\(2\) The Contractor shall pay to the Government any refunds, rebates,
credits, or other amounts (including interest, if any) accruing to or
received by the Contractor or any assignee under this contract, to the
extent that those amounts are properly allocable to costs for which the
Contractor has been reimbursed by the Government. Reasonable expenses
incurred by the Contractor for securing refunds, rebates, credits, or
other amounts shall be allowable costs if approved by the Contracting
Officer. Before final payment under this contract, the Contractor and
each assignee whose assignment is in effect at the time of final payment
shall execute and deliver-

\(i\) An assignment to the Government, in form and substance
satisfactory to the Contracting Officer, of refunds, rebates, credits,
or other amounts (including interest, if any) properly allocable to
costs for which the Contractor has been reimbursed by the Government
under this contract; and

\(ii\) A release discharging the Government, its officers, agents, and
employees from all liabilities, obligations, and claims arising out of
or under this contract, except-

\(A\) Specified claims stated in exact amounts, or in estimated amounts
when the exact amounts are not known;

\(B\) Claims (including reasonable incidental expenses) based upon
liabilities of the Contractor to third parties arising out of the
performance of this contract; provided, that the claims are not known to
the Contractor on the date of the execution of the release, and that the
Contractor gives notice of the claims in writing to the Contracting
Officer within 6 years following the release date or notice of final
payment date, whichever is earlier; and

\(C\) Claims for reimbursement of costs, including reasonable incidental
expenses, incurred by the Contractor under the patent clauses of this
contract, excluding, however, any expenses arising from the
Contractor\'s indemnification of the Government against patent
liability.

(*End of clause*)

3.2.4-11 Allowable Cost and Payment-Facilities

ALLOWABLE COST AND PAYMENT-FACILITIES (OCTOBER 3, 1996)

\(a\) General.

\(1\) For the performance of any work, duty, or obligation specified in
this contract to be at Government expense, the Government shall pay the
Contractor all allowable costs as determined by the Contracting Officer
in accordance with the contract terms and the Federal Aviation
Administration's (FAA) "Contract Cost Principles" in effect on the
contract date (upon request the Contracting Officer will provide a copy
of the FAA Contract Cost Principles).

\(2\) Except as otherwise specifically provided in this contract, the
failure of this contract to provide for reimbursement does not preclude
the Contractor from including, as part of the price for cost under any
other Government contract or subcontract, an allocable portion of the
costs incurred for any work, duty, for obligation performed under this
contract, but not reimbursable under it.

\(b\) Invoicing. The Government shall make payments to the Contractor
when requested once each month. The Contractor may submit to an
authorized representative of the Contracting Officer, in such form and
reasonable detail as the representative may require, an invoice or
voucher supported by a statement of the claimed allowable cost for the
performance of this contract.

\(c\) Negotiated indirect costs. Notwithstanding the audit and
adjustment of invoices or vouchers under paragraph (f) below, allowable
indirect costs under this contract shall be obtained by applying final
indirect cost rates established as follows:

\(1\) Final annual indirect cost rates and the appropriate bases shall
be established for the period covered by the indirect cost rate
proposal.

\(2\) The Contractor shall, within 90 days after the expiration of each
of its fiscal years, or by a later date approved by the Contracting
Officer, submit to the Contracting Officer and to the cognizant audit
activity proposed final indirect cost rates for that period and
supporting cost and data specifying the contract and/or subcontract to
which the rates apply. The proposed rates shall be based on the
Contractor\'s actual cost experience for that period. The appropriate
Government representative and the Contractor shall establish the final
indirect cost rates as promptly as practical after receipt of the
contractor\'s proposal.

\(3\) The Contractor and the appropriate Government representative shall
execute a written understanding setting forth the final indirect cost
rates. The understanding shall specify (i) the agreed-upon final annual
indirect cost rates, (ii) the bases to which the rates apply, (iii) the
periods for which the rates apply, (iv) any specific indirect cost items
treated as direct costs in the settlement, and (v) the affected contract
and/or subcontract, identifying any with advance agreements or special
terms and the applicable rates. The understanding shall not change any
monetary ceiling, contract obligation, or specific cost allowance or
disallowance provided for in this contract. The understanding is
incorporated into this contract upon execution.

\(4\) Failure by the parties to agree on a final annual indirect cost
rate may be the basis of a claim under the "Contract Disputes" clause.

\(d\) Billing rates. Until final annual indirect cost rates are
established for any period, the Government shall reimburse the
Contractor at billing rates established by the Contracting Officer by an
authorized representative (the cognizant auditor), subject to adjustment
when the final rates are established. These billing rates\--

\(1\) Shall be the anticipated final rates; and

\(2\) May be prospectively or retroactively revised by mutual agreement,
at either party\'s request, to prevent substantial overpayment or
underpayment.

\(e\) Quick-close-out procedures. When the Contractor and Contracting
Officer agree, quick-close-out procedures may be used.

\(1\) Procedures. Settlement of indirect cost rates shall apply to this
contract, in advance of the determination of final indirect cost rates,
if:

\(i\) The contract is physically complete;

\(ii\) The amount of unsettled indirect cost to be allocated to this
contract is not more than \$500,000 and the cumulative unsettled
indirect costs to be allocated to one or more contracts in a single
fiscal year do not exceed 15 percent of the estimated, total unsettled
indirect costs allocable to cost-type contracts for that fiscal year;
and

\(iii\) Agreement can be reached on a reasonable estimate of allocable
dollars.

\(2\) The settlement shall be final for this contract and no adjustment
shall be made to other contracts for over- or under-recoveries of costs
allocated or allocable to this contract.

\(3\) The settlement shall not be considered a binding precedent when
establishing the final indirect costs for other contracts.

\(f\) Audit. At any time or times before final payment, the Contracting
Officer may have the Contractor\'s invoices or vouchers and statements
of cost audited. Any payment may be (1) reduced by amounts found by the
Contracting Officer not to constitute allowable costs for (2) adjusted
for prior overpayments or underpayments.

\(g\) Assignments and releases. The Contractor shall pay to the
Government any refunds, rebates, credits, or other amounts (including
interest, if any) accruing to or received by the Contractor for any
assignee under this contract, to the extent that those amounts are
properly allocable to costs for which the Contractor has been reimbursed
by the Government. Reasonable expenses incurred by the Contractor for
securing refunds, rebates, credits, or other amounts shall be allowable
costs if approved by the Contracting Officer. Before final payment under
this contract, the Contractor and each assignee shall execute and
deliver-

\(1\) An assignment to the Government, in form and substance
satisfactory to the Contracting Officer, of refunds, rebates, credits,
or other amounts (including interest, if any) properly allocable to
costs for which the Contractor has been reimbursed by the Government
under this contract; and

\(2\) A release discharging the Government, its officers, agents, and
employees from all liabilities, obligations, and claims arising out of
or under this contract, except-

\(i\) Specified claims stated in exact amounts, or in estimated amounts
when the exact amounts are not known;

\(ii\) Claims (including reasonable incidental expenses) based upon
liabilities of the Contractor to third parties arising out of
performance of this contract; provided that the claims are not known to
the Contractor on the date of the execution of the release, and that the
Contractor gives notice of the claims in writing to the Contracting
Officer within 6 years following the release date or notice of final
payment date, whichever is earlier; and

\(iii\) Claims for reimbursement of costs, including related expenses,
incurred by the Contractor under the patent clauses of this contract,
excluding, however, any expenses arising from the Contractor\'s
indemnification of the Government against patent liability.

*(End of clause*)

ALTERNATE I

Note: If the contract is for facilities acquisition, and the Contracting
Officer considers it appropriate, add the following paragraphs (g) and
(h) to the basic clause, and redesignate paragraph (g) of the basic
clause as paragraph (i):

\(g\) Withholding. After payment of 80 percent of the total estimated
cost shown in the Schedule, the Contracting Officer may withhold payment
of allowable costs until a reserve is set aside in an amount that the
Contracting Officer considers necessary to protect the Government\'s
interest. This reserve shall not exceed one percent of the total
estimated cost shown in the "Schedule" or \$100,000, whichever is less.

\(h\) Final Payment. The Contractor shall submit a completion invoice or
voucher, designated as such, no later than one year (or longer, as the
Contracting Officer may approve in writing) from the completion date.
Upon approval of the invoice or voucher, and upon the Contractor\'s
compliance with all terms of this contract, the Government shall
promptly pay any balance of allowable costs not previously paid.

3.2.4-15 Incentive Price Revision-Successive Targets

INCENTIVE PRICE REVISION-SUCCESSIVE TARGETS (OCTOBER 3, 1996)

\(a\) General. The supplies or services identified in the "Schedule" as
Items \_\_\_\_\_\_\_\_\_\_\_ \[Contracting Officer insert line item
numbers\] are subject to price revision in accordance with this clause;
provided, that in no event shall the total final price of these items
exceed the ceiling price of \_\_\_\_\_\_\_\_\_\_\_ dollars
(\$\_\_\_\_\_\_\_\_). The prices of these items shown in the "Schedule"
are the initial target prices, which include an initial target profit of
\_\_\_\_\_\_\_\_\_\_\_ \[Contracting Officer insert percent\] percent of
the initial target cost. Any supplies or services that are to be (1)
ordered separately under, or otherwise added to, this contract and (2)
subject to price revision in accordance with this clause shall be
identified as such in a modification to this contract.

\(b\) Definition. Costs, as used in this clause, means allowable costs
in accordance with the FAA\'s contract cost principles in effect on the
date of this contract.

\(c\) Submitting data for establishing the firm fixed price or a final
profit adjustment formula. (1) Within \_\_\_\_\_ \[Contracting Officer
insert number of days\] days after the end of the month in which the
Contractor has completed \_\_\_\_\_ \[see Note 1\], the Contractor shall
submit the following data:

\(i\) A proposed firm fixed price or total firm target price for
supplies delivered and to be delivered and services performed and to be
performed.

\(ii\) A detailed statement of all costs incurred in the performance of
this contract through the end of the month specified above with
sufficient supporting data to disclose unit costs and cost trends for-

\(A\) Supplies delivered and services performed; and

\(B\) Inventories of work in process and undelivered contract supplies
on hand (estimated to the extent necessary).

\(iii\) An estimate of costs of all supplies delivered and to be
delivered and all services performed and to be performed under this
contract, using the statement of costs incurred plus an estimate of
costs to complete performance, together with-

\(A\) Sufficient data to support the accuracy and reliability of the
estimate; and

\(B\) An explanation of the differences between this estimate and the
original estimate used to establish the initial target prices.

\(2\) The Contractor shall also submit, to the extent that it becomes
available before negotiations establishing the total firm price are
concluded-

\(i\) Supplemental statements of costs incurred after the end of the
month specified in subparagraph (1) above for-

\(A\) Supplies delivered and services performed; and

\(B\) Inventories of work in process and undelivered contract supplies
on hand (estimated to the extent necessary); and

\(ii\) Any other relevant data that the Contracting Officer may
reasonably require.

\(3\) If the Contractor fails to submit the data required by
subparagraphs (1) and (2) above within the time specified and it is
later determined that the Government has overpaid the Contractor, the
Contractor shall repay the excess to the Government immediately. Unless
repaid within 30 days after the end of the data submittal period, the
amount of the excess shall bear interest, computed from the date the
data were due to the date of repayment, at the rate established in
accordance with the "Interest" clause.

\(d\) Establishing firm fixed price or final profit adjustment formula.
Upon the Contracting Officer\'s receipt of the data required by
paragraph (c) above the Contracting Officer and the Contractor shall
promptly establish either a firm fixed price or a profit adjustment
formula for determining final profit, as follows:

\(1\) The parties shall negotiate a total firm target cost, based upon
the data submitted under paragraph (c) above.

\(2\) If the total firm target cost is more than the total initial
target cost, the total initial target profit shall be decreased. If the
total firm target cost is less than the total initial target cost, the
total initial target profit shall be increased. The initial target
profit shall be increased or decreased by \-\-\-- percent \[see Note 2\]
of the difference between the total initial target cost and the total
firm target cost. The resulting amount shall be the total firm target
profit; provided, that in no event shall the total firm target profit be
less than \_\_\_\_\_ percent or more than \_\_\_\_\_ percent
\[Contracting Officer insert percents\] of the total initial target
cost.

\(3\) If the total firm target cost plus the total firm target profit
represent a reasonable price for performing that part of the contract
subject to price revision under this clause, the parties may agree on a
firm fixed price, which shall be evidenced by a contract modification
signed by the Contractor and the Contracting Officer.

\(4\) Failure of the parties to agree to a firm fixed price shall not
constitute a dispute under the "Disputes" clause. If agreement is not
reached, or if establishment of a firm fixed price is inappropriate, the
Contractor and the Contracting Officer shall establish a profit
adjustment formula under which the total final price shall be
established by applying to the total final negotiated cost an adjustment
for profit or loss, determined as follows:

\(i\) If the total final negotiated cost is equal to the total firm
target cost, the adjustment is the total firm target profit.

\(ii\) If the total final negotiated cost is greater than the total firm
target cost, the adjustment is the total firm target profit, less \--
percent of the amount by which the total final negotiated cost exceeds
the total firm target cost.

\(iii\) If the total final negotiated cost is less than the total firm
target cost, the adjustment is the total firm target profit, plus \--
percent of the amount by which the total final negotiated cost is less
than the total firm target cost.

\(iv\) The total firm target cost, total firm target profit, and the
profit adjustment

formula for determining final profit shall be evidenced by a
modification to this contract signed by the Contractor and the
Contracting Officer.

\(e\) Submitting data for final price revision. Unless a firm fixed
price has been established in accordance with paragraph (d) above within
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[Contracting Officer insert number of
days\] days after the end of the month in which the Contractor has
delivered the last unit of supplies and completed the services specified
by item number in paragraph (a) above, the Contractor shall submit -

\(1\) A detailed statement of all costs incurred up to the end of that
month in performing all work under the items;

\(2\) An estimate of costs of further performance, if any, that may be
necessary to complete performance of all work under the items;

\(3\) A list of all residual inventory and an estimate of its value; and

\(4\) Any other relevant data that the Contracting Officer may
reasonably require.

\(f\) Final price revision. Unless a firm fixed price has been agreed to
in accordance with paragraph (d) above, the Contractor and the
Contracting Officer shall, promptly after submission of the data
required by paragraph (e) above, establish the total final price, as
follows:

\(1\) On the basis of the information required by paragraph (e) above,
together with any other pertinent information, the parties shall
negotiate the total final cost incurred or to be incurred for the
supplies delivered (or services performed) and accepted by the
Government and which are subject to price revision under this clause.

\(2\) The total final price shall be established by applying to the
total final negotiated cost an adjustment for final profit or loss
determined as agreed upon under subparagraph (d)(4) above.

\(g\) Contract modification. The total final price of the items
specified in paragraph (a) above shall be evidenced by a modification to
this contract, signed by the Contractor and the Contracting Officer.
This price shall not be subject to revision, notwithstanding any changes
in the cost of performing the contract, except to the extent that-

\(1\) The parties may agree in writing, before the determination of
total final price, to exclude specific elements of cost from this price
and to a procedure for subsequent disposition of these elements; and

\(2\) Adjustments or credits are explicitly permitted or required by
this or any other clause in this contract.

\(h\) Adjustment of billing prices. (1) Pending execution of the
contract modification (see paragraph (e) above), the Contractor shall
submit invoices or vouchers in accordance with billing prices as
provided in this paragraph. The billing prices shall be the initial
target prices shown in this contract until firm target prices are
established under paragraph (d) above. When established, the firm target
prices shall be used as the billing prices.

\(2\) If at any time it appears from information provided by the
contractor under subparagraph (i)(1) below that the then-current billing
prices will be substantially greater than the estimated final prices,
the parties shall negotiate a reduction in the billing prices.
Similarly, the parties may negotiate an increase in billing prices by
any or all of the difference between the target prices and the ceiling
price, upon the Contractor\'s submission of factual data showing that
the final cost under this contract will be substantially greater than
the target cost.

\(3\) Any adjustment of billing prices shall be reflected in a contract
modification and shall not affect the determination of any price under
paragraph (d) or (f) above. After the contract modification establishing
the total final price is executed, the total amount paid or to be paid
on all invoices or vouchers shall be adjusted to reflect the total final
price, and any resulting additional payments, refunds, or credits shall
be made promptly.

\(i\) Quarterly limitation on payments statement. This paragraph (i)
shall apply until a firm fixed price or a total final price is
established under subparagraph (d)(3) or (f)(2).

\(1\) Within 45 days after the end of each quarter of the Contractor\'s
fiscal year in which a delivery is first made (or services are first
performed) and accepted by the Government under this contract, and for
each quarter thereafter, the Contractor shall submit to the contract
administration office (with a copy to the contracting office and the
cognizant contract auditor) a statement, cumulative from the beginning
of the contract, showing-

\(i\) The total contract price of all supplies delivered (or services
performed) and accepted by the Government and for which final prices
have been established;

\(ii\) The total cost (estimated to the extent necessary) reasonably
incurred for, and properly allocable solely to, the supplies delivered
(or services performed) and accepted by the Government and for which
final prices have not been established;

\(iii\) The portion of the total interim profit (used in establishing
the initial contract price or agreed to for the purpose of this
paragraph (i)) that is in direct proportion to the supplies delivered
(or services performed) and accepted by the Government and for which
final prices have not been established-increased or decreased in
accordance with subparagraph (d)(4) above when the amount stated under
subdivision (ii), immediately above, differs from the aggregate firm
target costs of the supplies or services; and

\(iv\) The total amount of all invoices or vouchers for supplies
delivered (or services performed) and accepted by the Government
(including amounts applied or to be applied to liquidate payments).

\(2\) Notwithstanding any provision of this contract authorizing greater
payments, if on any quarterly statement the amount under subdivision
(1)(iv) above exceeds the sum due the Contractor, as computed in
accordance with subdivisions (1)(i), (ii), and (iii) above, the
Contractor shall immediately refund or credit to the Government the
amount of this excess. The Contractor may, when appropriate, reduce this
refund or credit by the amount of any applicable tax credits due the
Contractor under 26 U.S.C. 1481 and by the amount of previous refunds or
credits effected under this clause. If any portion of the excess has
been applied to the liquidation of payments, then that portion may,
instead of being refunded, be added to the unliquidated payment account
consistent with the payments clause. The Contractor shall provide
complete details to support any claimed reductions in refunds.

\(3\) If the Contractor fails to submit the quarterly statement within
45 days after the end of each quarter and it is later determined that
the Government has overpaid the Contractor, the Contractor shall repay
the excess to the Government immediately. Unless repaid within 30 days
after the end of the statement submittal period, the amount of the
excess shall bear interest, computed from the date the quarterly
statement was due to the date of repayment, at the rate established in
accordance with the "Interest" clause.

\(j\) Subcontracts. No subcontract placed under this contract may
provide for payment on a cost-plus-a-percentage-of-cost basis. The
Contractor shall-

\(1\) Insert in each price redetermination or incentive price revision
subcontract the substance of paragraph (i) above, and of this paragraph
(j), modified to omit mention of the Government and to reflect the
position of the Contractor as purchaser and of the subcontractor as
vendor, and to omit that part of subparagraph (i)(2) above relating to
tax credits; and

\(2\) Include in each cost-reimbursement subcontract a requirement that
each lower-tier price redetermination or incentive price revision
subcontract contain the substance of paragraph (i) above, and of this
paragraph (j), modified as required by subparagraph (j)(1), immediately
above.

\(k\) Disagreements. If the Contractor and the Contracting Officer fail
to agree upon (1) a total firm target cost and a final profit adjustment
formula or (2) a total final price, within 60 days (or within such other
period as the Contracting Officer may specify) after the date on which
the data required in paragraphs (c) and (e) above are to be submitted,
the Contracting Officer shall promptly issue a decision in accordance
with the "Contract Disputes" clause.

\(l\) Termination. If this contract is terminated before the total final
price is established, prices of supplies or services subject to price
revision shall be established in accordance with this clause for (1)
completed supplies and services accepted by the Government and (2) those
supplies or services not terminated under a partial termination. All
other elements of the termination shall be resolved in accordance with
other applicable clauses of this contract.

\(m\) Equitable adjustments under other clauses. If an equitable
adjustment in the contract price is made under any other clause of this
contract before the total final price is established, the adjustment
shall be made in the total target cost and may be made in the maximum
dollar limit on the total final price, the total target profit, or both.
If the adjustment is made after the total final price is established,
only the total final price shall be adjusted.

\(n\) Exclusion from target price and total final price. If any clause
of this contract provides that the contract price does not or will not
include an amount for a specific purpose, then neither any target price
nor the total final price includes or will include any amount for that
purpose.

\(o\) Separate reimbursement. If any clause of this contract expressly
provides that the cost of performance of an obligation shall be at
Government expense, that expense shall not be included in any target
price or in the total final price, but shall be reimbursed separately.

\(p\) Taxes. As used in the "Federal, State, and Local Taxes-Fixed Price
Contract" clause or in any other clause that provides for certain taxes
or duties to be included in, or excluded from, the contract price, the
term contract price includes the total target price or, if it has been
established, the total final price. When any of these clauses requires
that the contract price be increased or decreased as a result of changes
in the obligation of the Contractor to pay or bear the burden of certain
taxes or duties, the increase or decrease shall be made in the total
target price or, if it has been established, in the total final price,
so that it will not affect the Contractor\'s profit or loss on this
contract.

(*End of clause*)

NOTES: (1) The degree of completion may be based on a percentage of
contract performance or any other reasonable basis.

\(2\) The language may be changed to describe a negotiated adjustment
pattern under which the extent of adjustment is not the same for all
levels of cost variation.

ALTERNATE I

If the contract calls for supplies or services to be ordered under a
provisioning document or Government option and the prices are to be
subject to the incentive price revision described in the basic clause,
add the following paragraph (q) to the basic clause:

\(q\) Provisioning and options. Parts, other supplies, or services that
are to be furnished under this contract on the basis of a provisioning
document or Government option shall be subject to price revision in
accordance with this clause. Any prices established for these parts,
other supplies, or services under a provisioning document or Government
option shall be treated as initial target prices, or target prices as
agreed upon and stipulated in the pricing document supporting the
provisioning or added items. Initial or firm target costs and profits
and final prices covering these parts, other supplies, or services may
be established separately, in the aggregate, or in any combination, as
the parties may agree.

3.2.4-16 Ordering

ORDERING (OCTOBER 3, 1996)

\(a\) Any supplies and services to be furnished under this contract
shall be ordered by issuance of delivery orders or task orders by the
individuals or activities designated in the Schedule. Such orders may be
issued from \_\_\_\_\_ through \_\_\_\_\_ \[insert dates\].

\(b\) All delivery orders or task orders are subject to the terms and
conditions of this contract. In the event of conflict between a delivery
order or task order and this contract, the contract shall control.

\(c\) If mailed, a delivery order or task order is considered "issued"
when the Government deposits the order in the mail. Orders may be issued
orally, by facsimile, or by electronic commerce methods only if
authorized in the Schedule.

(*End of clause*)

ALTERNATE I

Include the following paragraph (d) in cost reimbursement indefinite
quantity contracts:

\(d\) The provisions of the clauses entitled \"Limitation of Costs\",
\"Limitation of Funds\", and \"Allowable Cost and Payment\" shall apply
to individual delivery orders or task orders.

*(End of clause)*

3.2.4-17 Order Limitations

ORDER LIMITATIONS (SEPTEMBER 6, 1996)

\(a\) Minimum order. When the Government requires supplies or services
covered by this contract in an amount of less than \_\_\_\_\_\_ \[insert
dollar figure or quantity\], the Government is not obligated to
purchase, nor is the Contractor obligated to furnish, those supplies or
services under the contract.

\(b\) Maximum order. The Contractor is not obligated to honor-

\(1\) Any order for a single item in excess of \_\_\_\_\_\_ \[insert
dollar figure or quantity\];

\(2\) Any order for a combination of items in excess of \_\_\_\_\_\_
\[insert dollar figure or quantity\]; or

\(3\) A series of orders from the same ordering office within \_\_\_\_\_
days that together call for quantities exceeding the limitation in
subparagraph (1) or (2) above.

\(c\) If this is a requirements contract, the Government is not required
to order a part of any one requirement from the Contractor if that
requirement exceeds the maximum-order limitations in paragraph (b)
above.

\(d\) Notwithstanding paragraphs (b) and (c) above, the Contractor shall
honor any order exceeding the maximum order limitations in paragraph
(b), unless that order (or orders) is returned to the ordering office
within \_\_\_\_\_ days after issuance, with written notice stating the
Contractor\'s intent not to ship the item (or items) called for and the
reasons. Upon receiving this notice, the Government may acquire the
supplies or services from another source.

(*End of clause*)

3.2.4-19 Requirements

REQUIREMENTS (OCTOBER 3, 1996)

\(a\) This is a requirements contract for the supplies or services
specified, and effective for the period stated, in the Schedule. The
quantities of supplies or services specified in the "Schedule" are
estimates only and are not purchased by this contract. Except as this
contract may otherwise provide, if the Government\'s requirements do not
result in orders in the quantities described as "estimated" or "maximum"
in the Schedule, that fact shall not constitute the basis for an
equitable price adjustment.

\(b\) Delivery or performance shall be made only as authorized by orders
issued in accordance with the Ordering clause. Subject to any
limitations in the Order Limitations clause or elsewhere in this
contract, the Contractor shall furnish to the Government all supplies or
services specified in the "Schedule" and called for by orders issued in
accordance with the Ordering clause. The Government may issue orders
requiring delivery to multiple destinations or performance at multiple
locations.

\(c\) Except as this contract otherwise provides, the Government shall
order from the Contractor all the supplies or services specified in the
"Schedule" that are required to be purchased by the Government activity
or activities specified in the "Schedule."

\(d\) The Government is not required to purchase from the Contractor
requirements in excess of any limit on total orders under this contract.

\(e\) If the Government urgently requires delivery of any quantity of an
item before the earliest date that delivery may be specified under this
contract, and if the Contractor will not accept an order providing for
the accelerated delivery, the Government may acquire the urgently
required goods or services from another source.

\(f\) Any order issued during the effective period of this contract and
not completed within that period shall be completed by the Contractor
within the time specified in the order. The contract shall govern the
Contractor\'s and Government\'s rights and obligations with respect to
that order to the same extent as if the order were completed during the
contract\'s effective period; provided, that the Contractor shall not be
required to make any deliveries under this contract after
\_\_\_\_\_\_\_\_\_\_\_\_\_ \[insert date\].

(*End of clause*)

ALTERNATE I

If the requirements contract is for nonpersonal services and related
supplies and covers estimated requirements that exceed a specific
Government activity\'s internal capability to produce or perform,
substitute the following paragraph (c) for paragraph (c) of the basic
clause:

\(c\) The estimated quantities are not the total requirements of the
Government activity specified in the Schedule, but are estimates of
requirements in excess of the quantities that the activity may itself
furnish within its own capabilities. Except as this contract otherwise
provides, the Government shall order from the Contractor all of that
activity\'s requirements for supplies and services specified in the
"Schedule" that exceed the quantities that the activity may itself
furnish within its own capabilities.

ALTERNATE II

If the requirements contract includes subsistence for both Government
use and resale in the same Schedule, and similar products may be
acquired on a brand-name basis, add the following paragraph (g) to the
basic clause:

\(g\) The requirements referred to in this contract are for items to be
manufactured according to FAA specifications. Notwithstanding anything
to the contrary stated in the contract, the Government may acquire
similar products by brand name from other sources for resale.

ALTERNATE III

If the requirements contract involves a partial small business
set-aside, substitute the following paragraph (c) for paragraph (c) of
the basic clause:

\(c\) The Government\'s requirements for each item or subitem of
supplies or services described in the "Schedule" are being purchased
through one non-set-aside contract and one set-aside contract.
Therefore, the Government shall order from each Contractor approximately
one-half of the total supplies or services specified in the "Schedule"
that are required to be purchased by the specified FAA activity or
activities. The Government may choose between the set-aside Contractor
and the non-set-aside Contractor in placing any particular order.
However, the Government shall allocate successive orders, in accordance
with its delivery requirements, to maintain as close a ratio as is
reasonably practicable between the total quantities ordered from the two
Contractors.

ALTERNATE IV

If the contract includes subsistence for both Government use and resale
in the same "Schedule" and similar products may be acquired on a
brand-name basis and the contract also involves a partial small business
set-aside, substitute the following paragraph (c) for paragraph (c) of
the basic clause and add the following paragraph (g) to the basic
clause:

\(c\) The Government's requirements for each item or subitem of supplies
or services described in the "Schedule" are being purchased through one
non-set-aside contract and one set-aside contract. Therefore, the
Government shall order from each Contractor approximately one-half of
the total supplies or services specified in the "Schedule" that are
required to be purchased by the specified FAA activity or activities.
The Government may choose between the set-aside Contractor and the
non-set-aside Contractor in placing any particular order. However, the
Government shall allocate successive orders, in accordance with its
delivery requirements, to maintain as close a ratio as is reasonably
practicable between the total quantities ordered from the two
Contractors.

\(g\) The requirements referred to in this contract are for items to be
manufactured according to the Government specifications. Notwithstanding
anything to the contrary stated in the contract, the Government may
acquire similar products by brand name from other sources for resale.

3.2.5-2 Independent Price Determination

INDEPENDENT PRICE DETERMINATION (OCTOBER 3, 1996)

The offeror warrants that:

\(1\) The prices in this offer have been arrived at independently,
without, for the purpose of restricting competition, any consultation,
communication, or agreement with any other competitor relating to (i)
those prices, (ii) the intention to submit an offer, or (iii) the
methods or factors used to calculate the prices offered;

\(2\) The prices in this offer have not been knowingly disclosed by the
contractor, directly or indirectly, to any other competitor before
receipt of offers unless otherwise required by law; and

\(3\) No attempt has been made by the contractor to induce any other
concern to submit or not to submit an offer for the purpose of
restricting competition.

(*End of provision*)

3.2.5-4 Contingent Fees

CONTINGENT FEES (OCTOBER 3, 1996)

\(a\) The Contractor warrants that no person or selling agency has been
employed or retained to solicit or obtain this contract for a
commission, percentage, brokerage, or contingent fee, except bona fide
employees or bonafide, established commercial or selling agencies
employed by the contractor for the purpose of obtaining business.

\(b\) For breach or violation of this warranty, the Government has the
right to annul this contract without liability or to deduct from the
contract price or otherwise recover, the full amount of the contingent
fee.

\(c\) Definitions. (1) "Bona fide agency," as used in this clause, means
an established commercial or selling agency, maintained by a contractor
for the purpose of securing business, that neither exerts nor proposes
to exert improper influence to solicit or obtain Government contracts
nor holds itself out as being able to obtain any Government contract or
contracts through improper influence.

\(2\) "Bona fide employee," as used in this clause, means a person,
employed by a contractor and subject to the contractor's supervision and
control as to time, place, and manner of performance, who neither exerts
nor proposes to exert improper influence to solicit or obtain Government
contracts nor holds out as being able to obtain any Government contract
or contracts through improper influence.

\(3\) "Contingent fee," as used in this clause, means any commission,
percentage brokerage, or other fee that is contingent upon the success
that a person or concern has in securing a Government contract.

\(4\) "Improper influence," as used in this clause, means any influence
that induces or tends to induce a Government employee or officer to give
consideration or to act regarding a Government contract on any basis
other than the merits of the matter.

(*End of clause*)

3.2.5-5 Anti-Kickback Procedures

ANTI-KICKBACK PROCEDURES (OCTOBER 3, 1996)

\(a\) Definitions.

\(1\) \'Kickback,\' as used in this clause, means any money, fee,
commission, credit, gift, gratuity, thing of value, or compensation of
any kind which is provided, directly or indirectly, to any prime
Contractor, prime Contractor employee, subcontractor, or subcontractor
employee for the purpose of improperly obtaining or rewarding favorable
treatment in connection with a prime contract or in connection with a
subcontract relating to a prime contract.

\(2\) \'Person,\' as used in this clause, means a corporation,
partnership, business association of any kind, trust, joint-stock
company, or individual.

\(3\) \'Prime contract,\' as used in this clause, means a contract or
contractual action entered into by the United States for the purpose of
obtaining supplies, materials, equipment, or services of any kind.

\(4\) \'Prime Contractor,\' as used in this clause, means a person who
has entered into a prime contract with the United States.

\(5\) \'Prime Contractor employee,\' as used in this clause, means any
officer, partner, employee, or agent of a prime Contractor.

\(6\) \'Subcontract,\' as used in this clause, means a contract or
contractual action entered into by a prime Contractor or subcontractor
for the purpose of obtaining supplies, materials, equipment, or services
of any kind under a prime contract.

\(7\) \'Subcontractor,\' as used in this clause, (1) means any person,
other than the prime Contractor, who offers to furnish or furnishes any
supplies, materials, equipment, or services of any kind under a prime
contract or a subcontract entered into in connection with such prime
contract and (2) includes any person who offers to furnish or furnishes
general supplies to the prime Contractor or a higher tier subcontractor.

\(8\) \'Subcontractor employee,\' as used in this clause, means any
officer, partner, employee, or agent of a subcontractor.

\(b\) The contractor warrants that it has not and will not be:

\(1\) Providing or attempting to provide or offering to provide any
kickback;

\(2\) Soliciting, accepting, or attempting to accept any kickback; or

\(3\) Including, directly or indirectly, the amount of any kickback in
the contract price charged by a prime Contractor to the United States or
in the contract price charged by a subcontractor to a prime Contractor
or higher tier subcontractor.

(c)(1) The Contractor shall have in place and follow reasonable
procedures designed to prevent and detect possible violations described
in paragraph (b) of this clause in its own operations and direct
business relationships.

\(2\) When the Contractor has reasonable grounds to believe that a
violation described in paragraph (b) of this clause may have occurred,
the Contractor shall promptly report in writing the possible violation.
Such reports shall be made to the Inspector General of the Department of
Transportation or the Department of Justice.

\(3\) The Contractor shall cooperate fully with any Federal agency
investigating a possible violation described in paragraph (b) of this
clause.

\(4\) The Contracting Officer may (i) offset the amount of the kickback
against any moneys owed by the United States under the prime contract
and/or (ii) direct that the Prime Contractor withhold from sums owed a
subcontractor under the prime contract the amount of the kickback. The
Contracting Officer may order that moneys withheld under subdivision
(c)(4)(ii) of this clause be paid over to the Government unless the
Government has already offset those moneys under subdivision (c)(4)(i)
of this clause. In either case, the Prime Contractor shall notify the
Contracting Officer when the moneys are withheld.

\(5\) The Contractor agrees to incorporate the substance of this clause,
including subparagraph (c)(5) but excepting subparagraph (c)(1), in all
subcontracts under this contract.

(*End of clause*)

3.2.5-7 Disclosure Regarding Payments to Influence Certain Federal
Transactions

DISCLOSURE REGARDING PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS
(OCTOBER 3, 1996)

\(a\) Definitions.

\(1\) "The Act," as used in this clause, means section 1352, title 31,
United States Code.

\(2\) "Agency," as used in this clause, means executive agency, within
the meaning of 5 U.S.C. 101, 102, and 104(I), and any wholly owned
Government corporation within the meaning of 31 U.S.C. 9101..

\(3\) "Covered Federal action*,*" as used in this clause, means any of
the following Federal actions:

\(i\) The awarding of any Federal contract.

\(ii\) The making of any Federal grant.

\(iii\) The making of any Federal loan.

\(iv\) The entering into of any cooperative agreement.

\(v\) The extension, continuation, renewal, amendment, or modification
of any Federal contract, grant, loan, or cooperative agreement.

\(4\) "Indian tribe" and "tribal organization," as used in this clause,
have the meaning provided in section 4 of the Indian Self-Determination
and Education Assistance Act (25 U.S.C. 450B) and include Alaskan
Natives.

\(5\) "Influencing or attempting to influence," as used in this clause,
means making, with the intent to influence, any communication to or
appearance before an officer or employee of any agency, a Member of
Congress, an officer or employee of Congress, or an employee of a Member
of Congress in connection with any covered Federal action.

\(6\) "Local government," as used in this clause, means a unit of
government in a State and, if chartered, established, or otherwise
recognized by a State for the performance of a governmental duty,
including a local public authority, a special district, an intrastate
district, a council of governments, a sponsor group representative
organization, and any other instrumentality of a local government.

\(7\) "Officer or employee of an agency," as used in this clause,
includes the following individuals who are employed by an agency:

\(i\) An individual who is appointed to a position in the Government
under title 5, United States Code, including a position under a
temporary appointment.

\(ii\) A member of the uniformed services, as defined in subsection
101(3), title 37, United States Code.

\(iii\) A special Government employee, as defined in section 202, title
18, United States Code.

\(iv\) An individual who is a member of a Federal advisory committee, as
defined by the Federal Advisory Committee Act, title 5, United States
Code, appendix 2.

\(8\) \'Person*,*\' as used in this clause, means an individual,
corporation, company, association, authority, firm, partnership,
society, State, and local government, regardless of whether such entity
is operated for profit, or not for profit. This term excludes an Indian
tribe, tribal organization, or any other Indian organization with
respect to expenditures specifically permitted by other Federal law.

\(9\) \'Reasonable compensation*,\'* as used in this clause, means, with
respect to a regularly employed officer or employee of any person,
compensation that is consistent with the normal compensation for such
officer or employee for work that is not furnished to, not funded by, or
not furnished in cooperation with the Federal Government.

\(10\) \'Reasonable payment,\' as used in this clause, means, with
respect to professional and other technical services, a payment in an
amount that is consistent with the amount normally paid for such
services in the private sector.

\(11\) \'Recipient,\' as used in this clause, includes the Contractor
and all subcontractors. This term excludes an Indian tribe, tribal
organization, or any other Indian organization with respect to
expenditures specifically permitted by other Federal law.

\(12\) \'Regularly employed,\' as used in this clause, means, with
respect to an officer or employee of a person requesting or receiving a
Federal contract, an officer or employee who is employed by such person
for at least 130 working days within 1 year immediately preceding the
date of the submission that initiates agency consideration of such
person for receipt of such contract. An officer or employee who is
employed by such person for less than 130 working days within 1 year
immediately preceding the date of the submission that initiates agency
consideration of such person shall be considered to be regularly
employed as soon as he or she is employed by such person for 130 working
days.

\(13\) \'State,\' as used in this clause, means a State of the United
States, the District of Columbia, the Commonwealth of Puerto Rico, a
territory or possession of the United States, an agency or
instrumentality of a State, and multi-State, regional, or interstate
entity having governmental duties and powers.

\(b\) Prohibitions. The offeror, by signing its offer, hereby certifies
to the best of his or her knowledge and belief that:

\(1\) No Federal appropriated funds have been paid or will be paid to
any person for influencing or attempting to influence an officer or
employee of any agency, a Member of Congress, an officer or employee of
Congress, or an employee of a Member of Congress on his or her behalf in
connection with the awarding of any Federal contract, the making of any
Federal grant, the making of any Federal loan, the entering into of any
cooperative agreement, and the extension, continuation, renewal,
amendment or modification of any Federal contract, grant, loan, or
cooperative agreement;

\(2\) If any funds other than Federal appropriated funds (including
profit or fee received under a covered Federal action) have been paid,
or will be paid, to any person for influencing or attempting to
influence an officer or employee of any agency, a Member of Congress, an
officer or employee of Congress, or an employee of a Member of Congress
on his or her behalf in connection with the screening information
request (SIR), the offeror shall complete and submit, with its offer,
OMB Standard Form LLL, Disclosure of Lobbying Activities, to the
Contracting Officer; and

\(3\) He or she will include the language of this clause in all
subcontract awards at any tier and require that all recipients of
subcontract awards in excess of \$100,000 shall disclose accordingly.

\(4\) This certification and disclosure is a prerequisite for making or
entering into this contract imposed by the Act. Any person who makes a
prohibited expenditure or fails to file or amend a disclosure form,
shall be subject to a civil penalty of not less than \$10,000 and not
more than \$100,000, for each such failure.

\(c\) The prohibitions of the Act do not apply under the following
conditions:

\(1\) Agency and legislative liaison by own employees.

\(i\) The prohibition on the use of appropriated funds, in subparagraph
(b)(1) of this clause, does not apply in the case of a payment of
reasonable compensation made to an officer or employee of a person
requesting or receiving a covered Federal action if the payment is for
agency and legislative liaison activities not directly related to a
covered Federal action.

\(ii\) For purposes of subdivision (c)(1)(i) of this clause, providing
any information specifically requested by an agency or Congress is
permitted at any time.

\(iii\) The following agency and legislative liaison activities are
permitted at any time where they are not related to a specific
solicitation for any covered Federal action:

\(A\) Discussing with an agency the qualities and characteristics
(including individual demonstrations) of the person\'s products or
services, conditions or terms of sale, and service capabilities.

\(B\) Technical discussions and other activities regarding the
application or adaptation of the person\'s products or services for an
agency\'s use.

\(iv\) The following agency and legislative liaison activities are
permitted where they are prior to Screening Information Request (SIR) of
any covered Federal action:

\(A\) Providing any information not specifically requested but necessary
for an agency to make an informed decision about initiation of a covered
Federal action;

\(B\) Technical discussions regarding the preparation of an unsolicited
proposal prior to its official submission; and

\(C\) Capability presentations by persons seeking awards from an agency
pursuant to the provisions of a law authorizing such actions;

\(v\) Only those services expressly authorized by subdivision (c)(1)(i)
of this clause are permitted under this clause.

\(2\) Professional and technical services.

\(i\) The prohibition on the use of appropriated funds, in subparagraph
(b)(1) of this clause, does not apply in the case of:

\(A\) A payment of reasonable compensation made to an officer or
employee of a person requesting or receiving a covered Federal action or
an extension, continuation, renewal, amendment, or modification of a
covered Federal action, if payment is for professional or technical
services rendered directly in the preparation, submission, or
negotiation of submittal/offer or application for that Federal action or
for meeting requirements imposed by or pursuant to law as a condition
for receiving that Federal action.

\(B\) Any reasonable payment to a person, other than an officer or
employee of a person requesting or receiving a covered Federal action or
an extension, continuation, renewal, amendment, or modification of a
covered Federal action if the payment is for professional or technical
services rendered directly in the preparation, submission, or
negotiation of any submittal/offer or application for that Federal
action or for meeting requirements imposed by or pursuant to law as a
condition for receiving that Federal action. Persons other than officers
or employees of a person requesting or receiving a covered Federal
action include consultants and trade associations.

\(ii\) For purposes of subdivision (c)(2)(i) of this clause,
\'professional and technical services\' shall be limited to advice and
analysis directly applying any professional or technical discipline. For
example, drafting of a legal document accompanying a submittal/offer by
a lawyer is allowable. Similarly, technical advice provided by an
engineer on the performance or operational capability of a piece of
equipment rendered directly in the negotiation of a contract is
allowable. However, communications with the intent to influence made by
a professional (such as a licensed lawyer) or a technical person (such
as a licensed accountant) are not allowable under this section unless
they provide advice and analysis directly applying their professional or
technical expertise and unless the advice or analysis is rendered
directly and solely in the preparation, submission or negotiation of a
covered Federal action. Thus, for example, communications with the
intent to influence made by a lawyer that do not provide legal advice or
analysis directly and solely related to the legal aspects of his or her
client's submittal/offer, but generally advocate one proposal over
another are not allowable under this section because the lawyer is not
providing professional legal services. Similarly, communications with
the intent to influence made by an engineer providing an engineering
analysis prior to the preparation or submission of a submittal/offer are
not allowable under this section since the engineer is providing
technical services but not directly in the preparation, submission or
negotiation of a covered Federal action.

\(iii\) Requirements imposed by or pursuant to law as a condition for
receiving a covered Federal award include those required by law or
regulation and any other requirements in the actual award documents.

\(iv\) Only those services expressly authorized by subdivisions
(c)(2)(i) and (ii) of this clause are permitted under this clause.

\(v\) The reporting requirements herein shall not apply with respect to
payments of reasonable compensation made to regularly employed officers
or employees of a person.

\(e\) Disclosure. (1) The Contractor who requests or receives from an
agency a Federal contract shall file with that agency a disclosure form,
OMB Standard Form LLL, Disclosure of Lobbying Activities, if such person
has made or has agreed to make any payment using nonappropriated funds
(to include profits from any covered Federal action), which would be
prohibited under subparagraph (b)(1) of this clause, if paid for with
appropriated funds.

\(2\) The Contractor shall file a disclosure form at the end of each
calendar quarter in which there occurs any event that materially affects
the accuracy of the information contained in any disclosure form
previously filed by such person under subparagraph (e)(1) of this
clause. An event that materially affects the accuracy of the information
reported includes:

\(i\) A cumulative increase of \$25,000 or more in the amount paid or
expected to be paid for influencing or attempting to influence a covered
Federal action; or

\(ii\) A change in the person(s) or individual(s) influencing or
attempting to influence a covered Federal action; or

\(iii\) A change in the officer(s), employee(s), or Member(s) contacted
to influence or attempt to influence a covered Federal action.

\(3\) The Contractor shall require the certification, and if required, a
disclosure form by any person who requests or receives any subcontractor
exceeding \$100,000 under the Federal contract.

\(4\) All subcontractor disclosure forms shall be forwarded from tier to
tier until received by the prime Contractor. The prime Contractor shall
submit all disclosures to the Contracting Officer at the end of the
calendar quarter in which the disclosure form is submitted by the
subcontractor.

\(f\) Agreement. The Contractor agrees not to make any payment
prohibited by this clause.

\(g\) Penalties.

\(1\) Any person who makes an expenditure prohibited under paragraph (b)
of this clause or fails to file or amend the disclosure form to be filed
or amended by paragraph (b) shall be subject to civil penalties as
provided for by 31 U.S.C. 1352. An imposition of a civil penalty does
not prevent the Government from seeking any other remedy that may be
applicable.

\(2\) Contractors may rely without liability on the representations made
by their subcontractors in the certification and in the disclosure form.

\(h\) Cost allowability. Nothing in this clause makes allowable or
reasonable any costs which would otherwise be unallowable or
unreasonable. Conversely, costs made specifically unallowable by the
requirements in this clause will not be made allowable under any other
provision.

(*End of clause*)

3.2.5-12 Notice of Employment of Former United States Government
Employees (Service Contracts)

NOTICE OF EMPLOYMENT OF FORMER UNITED STATES GOVERNMENT

EMPLOYEES (SERVICE CONTRACTS) (OCTOBER 1996)

\(a\) This clause implements the Federal Workforce Restructuring Act of
1994 ("Buyout"), P.L. 103-226. The following requirements apply to any
contract, task order, or other arrangement for service contracts entered
into after March 30, 1994 and immediately upon knowledge of such
arrangements.

\(b\) The offeror shall provide, along with the submittal, the following
notice and certification of employment of employee(s) who were
previously employed by the United States Government and received the
voluntary separation incentive payment ("buyout"). This notice is
required immediately upon the Contractor's knowledge at any time during
the contract period. The Contractor shall provide notice to employees
that in accordance with the buyout legislation, the buyout employee
performing on a personal service contract for the Untied States
Government is required to repay the buyout incentive..

NOTICE OF EMPLOYMENT OF FORMER UNITED STATES GOVERNMENT

EMPLOYEES (SERVICE CONTRACTS)

The following individuals are former United States Government employees
who are presently employed
by\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[company
name\].

Former Date of

Agency of Description of Separation

Employee's Name Employment Contract Task Subcontractor from Agency

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_ This company has not hired and does not intend to hire any
former United States Government employees who took the buyout.

[Contractor's Certification]{.underline}

On behalf of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[company's name\] I
certify that the above information is accurate and complete to the best
of my knowledge.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\[Name of Company Representative\]

[Contracting Officer's Certification]{.underline}

I have reviewed the above information and have determined that:

\_\_\_\_ The buyout legislation has not been violated

\_\_\_\_ The employment is in violation of the buyout legislation and
the employee is required to repay the incentive payment. The contractor
shall remind the employee of his/her obligation to pay.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\[Contracting Officer's Name\]

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date

*(End of clause)*

3.3.1-5 Payments under Time-and-Materials and Labor-Hour Contracts

PAYMENTS UNDER TIME-AND-MATERIALS AND

LABOR-HOUR CONTRACTS (OCTOBER 3, 1996)

The Government shall pay the Contractor as follows upon the submission
of invoices or vouchers approved by the Contracting Officer:

\(a\) Hourly rate.

\(1\) The amounts shall be computed by multiplying the appropriate
hourly rates prescribed in the "Schedule" by the number of direct labor
hours performed. The rates shall include wages, indirect costs, general
and administrative expense, and profit. Fractional parts of an hour
shall be payable on a prorated basis. Vouchers may be submitted once
each month (or at more frequent intervals, if approved by the
Contracting Officer), to the Contracting Officer or designee. The
Contractor shall substantiate vouchers by evidence of actual payment and
by individual daily job timecards, or other substantiation approved by
the Contracting Officer. Promptly after receipt of each substantiated
voucher, the Government shall, except as otherwise provided in this
contract, and subject to the terms of (e) below, pay the voucher as
approved by the Contracting Officer.

\(2\) Unless otherwise prescribed in the "Schedule", the Contracting
Officer shall withhold 5 percent of the amounts due under this paragraph
(a), but the total amount withheld shall not exceed \$50,000. The
amounts withheld shall be retained until the execution and delivery of a
release by the Contractor as provided in paragraph (f) below.

\(3\) Unless the "Schedule" prescribes otherwise, the hourly rates in
the "Schedule" shall not be varied by virtue of the Contractor having
performed work on an overtime basis. If no overtime rates are provided
in the "Schedule" and they are required for overtime work that is
approved in advance by the Contracting Officer, overtime rates shall be
negotiated. Failure to agree upon these overtime rates shall be treated
as a dispute. If the "Schedule" provides rates for overtime, the premium
portion of those rates will be reimbursable only to the extent the
overtime is approved by the Contracting Officer.

\(b\) Materials and subcontracts.

\(1\) Allowable costs of direct materials shall be determined by the
Contracting Officer in accordance with the Federal Aviation
Administration's (FAA) "Contract Cost Principles" in effect on the date
of this contract. Reasonable and allocable material handling costs may
be included in the charge for material to the extent they are clearly
excluded from the hourly rate. Material handling costs are comprised of
indirect costs, including, when appropriate, general and administrative
expense allocated to direct materials in accordance with the
Contractor\'s usual accounting practices consistent with FAA "Contract
Cost Principles." The Contractor shall be reimbursed for items and
services purchased directly for the contract only when cash, checks, or
other forms of actual payment have been made for such purchased items or
services. Direct materials, as used in this clause, are those materials
which enter directly into the end product, or which are used or consumed
directly in connection with the furnishing of the end product.

\(2\) The cost of subcontracts that are authorized under the
subcontracts clause of this contract shall be reimbursable costs under
this clause; provided, that the costs are consistent with subparagraph
(3) below. Reimbursable costs in connection with subcontracts shall be
limited to the amounts paid to the subcontractor in the same manner as
for items and services purchased directly for the contract under
subparagraph (1) above; however, this requirement shall not apply to a
Contractor that is a small business concern. Reimbursable costs shall
not include any costs arising from the letting, administration or
supervision of performance of the subcontract, if the costs are included
in the hourly rates payable under (a)(1) above.

\(3\) To the extent able, the Contractor shall-

\(i\) Obtain materials at the most advantageous prices available with
due regard to securing prompt delivery of satisfactory materials; and

\(ii\) Take all cash and trade discounts, rebates, allowances, credits,
salvage, commissions, and other benefits. When unable to take advantage
of the benefits, the Contractor shall promptly notify the Contracting
Officer and give the reasons. Credit shall be given to the Government
for cash and trade discounts, rebates, allowances, credits, salvage, the
value of any appreciable scrap, commissions, and other amounts that have
accrued to the benefit of the Contractor, or would have accrued except
for the fault or neglect of the Contractor. The benefits lost without
fault or neglect on the part of the Contractor, or lost through fault of
the Government, shall not be deducted from gross costs.

\(c\) Total cost. It is estimated that the total cost to the Government
for the performance of this contract shall not exceed the ceiling price
set forth in the "Schedule" and the Contractor agrees to use its best
efforts to perform the work specified in the "Schedule" and all
obligations under this contract within such ceiling price. If at any
time the Contractor has reason to believe that the hourly rate payments
and material costs that will accrue in performing this contract in the
next succeeding 30 days, if added to all other payments and costs
previously accrued, will exceed 85 percent of the ceiling price in the
"Schedule", the Contractor shall notify the Contracting Officer giving a
revised estimate of the total price to the Government for performing
this contract with supporting reasons and documentation. If at any time
during performing this contract, the Contractor has reason to believe
that the total price to the Government for performing this contract will
be substantially greater or less than the then stated ceiling price, the
Contractor shall so notify the Contracting Officer, giving a revised
estimate of the total price for performing this contract, with
supporting reasons and documentation. If at any time during performing
this contract, the Government has reason to believe that the work to be
required in performing this contract will be substantially greater or
less than the stated ceiling price, the Contracting Officer will so
advise the Contractor, giving the then revised estimate of the total
amount of effort to be required under the contract.

\(d\) Ceiling price. The Government shall not be obligated to pay the
Contractor any amount in excess of the ceiling price in the "Schedule",
and the Contractor shall not be obligated to continue performance if to
do so would exceed the ceiling price set forth in the "Schedule", unless
and until the Contracting Officer shall have notified the Contractor in
writing that the ceiling price has been increased and shall have
specified in the notice a revised ceiling that shall constitute the
ceiling price for performance under this contract. When and to the
extent that the ceiling price set forth in the "Schedule" has been
increased, any hours expended and material costs incurred by the
Contractor in excess of the ceiling price before the increase shall be
allowable to the same extent as if the hours expended and material costs
had been incurred after the increase in the ceiling price.

\(e\) Audit. At any time before final payment under this contract the
Contracting Officer may request audit of the invoices or vouchers and
substantiating material. Each payment previously made shall be subject
to reduction to the extent of amounts, on preceding invoices or
vouchers, that are found by the Contracting Officer not to have been
properly payable and shall also be subject to reduction for overpayments
or to increase for underpayments. Upon receipt and approval of the
voucher or invoice designated by the Contractor as the completion
voucher or completion invoice and substantiating material, and upon
compliance by the Contractor with all terms of this contract (including,
without limitation, terms relating to patents and the terms of (f) and
(g) below), the Government shall promptly pay any balance due the
Contractor. The completion invoice or voucher, and substantiating
material, shall be submitted by the Contractor as promptly as
practicable following completion of the work under this contract, but in
no event later than 1 year (or such longer period as the Contracting
Officer may approve in writing) from the date of completion.

\(f\) Assignment. The Contractor, and each assignee under an assignment
entered into under this contract and in effect at the time of final
payment under this contract, shall execute and deliver, at the time of
and as a condition precedent to final payment under this contract, a
release discharging the Government, its officers, agents, and employees
of and from all liabilities, obligations, and claims arising out of or
under this contract, subject only to the following exceptions:

\(1\) Specified claims in stated amounts, or in estimated amounts if the
amounts are not susceptible of exact statement by the Contractor.

\(2\) Claims, together with reasonable incidental expenses, based upon
the liabilities of the Contractor to third parties arising out of
performing this contract, that are not known to the Contractor on the
date of the execution of the release, and of which the Contractor gives
notice in writing to the Contracting Officer not more than 6 years after
the date of the release or the date of any notice to the Contractor that
the Government is prepared to make final payment, whichever is earlier.

\(3\) Claims for reimbursement of costs (other than expenses of the
Contractor by reason of its indemnification of the Government against
patent liability), including reasonable incidental expenses, incurred by
the Contractor under the terms of this contract relating to patents.

\(g\) Refunds. The Contractor agrees that any refunds, rebates, or
credits (including any related interest) accruing to or received by the
Contractor or any assignee, that arise under the materials portion of
this contract and for which the Contractor has received reimbursement,
shall be paid by the Contractor to the Government. The Contractor and
each assignee, under an assignment entered into under this contract and
in effect at the time of final payment under this contract, shall
execute and deliver, at the time of and as a condition precedent to
final payment under this contract, an assignment to the Government of
such refunds, rebates, or credits (including any interest) in form and
substance satisfactory to the Contracting Officer.

(*End of clause*)

ALTERNATE I

If the nature of the work to be performed requires the contractor to
furnish material that is regularly sold to the general public in the
normal course of business by the contractor, and the material will be
charged at other than cost (and material to be charged is identified in
the contract and no element of profit on material is included as profit
in the fixed hourly labor rates) add the following subparagraph (4) to
paragraph (b) of the basic clause:

\(4\) If the nature of the work to be performed requires the Contractor
to furnish material which is regularly sold to the general public in the
normal course of business by the Contractor, the price to be paid for
such material, notwithstanding (b)(1) above, shall be on the basis of an
established catalog or list price, in effect when the material is
furnished, less all applicable discounts to the Government; provided,
that in no event shall such price be in excess of the Contractor\'s
sales price to its most favored customer for the same item in like
quantity, or the current market price, whichever is lower.

ALTERNATE II

If a labor-hour contract is contemplated, and if no specific
reimbursement for materials furnished is intended, the Contracting
Officer may add the following paragraph (h) to the basic clause:

\(h\) The terms of this clause that govern reimbursement for materials
furnished are considered to have been deleted.

3.3.1-17 Prompt Payment

PROMPT PAYMENT (OCTOBER 3, 1996)

Notwithstanding any other payment clause in this contract, the
Government will make invoice payments and contract financing payments
under the terms and conditions specified in this clause. Payment shall
be considered as being made on the day a check is dated or an electronic
funds transfer is made. All days referred to in this clause are calendar
days, unless otherwise specified.

\(a\) Invoice Payments

\(1\) For purposes of this clause, invoice payment means a Government
disbursement of monies to a Contractor under a contract or other
authorization for supplies or services accepted by the Government. This
includes payments for partial deliveries that have been accepted by the
Government, final payments under T&M and labor-hour contracts, and final
cost or fee payments where amounts owed have been settled between the
Government and the Contractor.

\(2\) Except as indicated in subparagraph (a)(3) and paragraph (c) of
this clause, the due date for making invoice payments by the designated
payment office shall be the later of the following two events:

\(i\) The 30th day after the designated billing office has received a
proper invoice from the Contractor.

\(ii\) The 30th day after Government acceptance of supplies delivered or
services performed by the Contractor. On a final invoice where the
payment amount is subject to contract settlement actions, acceptance
shall be deemed to have occurred on the effective date of the contract
settlement. However, if the designated billing office fails to annotate
the invoice with the actual date of receipt, the invoice payment due
date shall be deemed to be the 30th day after the date the Contractor\'s
invoice is dated, provided a proper invoice is received and there is no
disagreement over quantity, quality, or Contractor compliance with
contract requirements.

\(3\) An invoice is the Contractor\'s bill or written request for
payment under the contract for supplies delivered or services performed.
An invoice shall be prepared and submitted to the designated billing
officer specified in the contract. A proper invoice must include the
items listed in subdivisions (a)(3)(i) through (a)(3)(viii) of this
clause. If the invoice does not comply with these requirements, then the
Contractor will be notified of the defect within 7 days after receipt of
the invoice at the designated billing office. Untimely notification will
be taken into account in the computation of any interest penalty owed
the Contractor in the manner described in subparagraph (a)(6) of this
clause.

\(i\) Name and address of the Contractor.

\(ii\) Invoice date.

\(iii\) Contract number or other authorization for supplies delivered or
services performed (including order number and contract line item
number).

\(iv\) Description, quantity, unit of measure, unit price, and extended
price of supplies delivered or services performed.

\(v\) Shipping and payment terms (e.g., shipment number and date of
shipment, prompt payment discount terms). Bill of lading number and
weight of shipment will be shown for shipments on Government bills of
lading.

\(vi\) Name and address of Contractor official to whom payment is to be
sent (must be the same as that in the contract or in a proper notice of
assignment).

\(vii\) Name (where practicable), title, phone number and mailing
address of person to be notified in event of a defective invoice.

\(viii\) Any other information or documentation required by other
requirements of the contract (such as evidence of shipment).

\(4\) An interest penalty shall be paid automatically by the Government
, without request from the contractor, if payment is not made by the due
date and the conditions listed in subdivisions (a)(4)(i) through
(a)(4)(iii) of this clause are met, if applicable.

\(i\) A proper invoice was received by the designated billing office.

\(ii\) A receiving report or other Government documentation authorizing
payment was processed and there was no disagreement over quantity,
quality, or contractor compliance with any contract term or condition.

\(iii\) In the case of a final invoice for any balance of funds due the
Contractor for supplies delivered or services performed, the amount was
not subject to further contract settlement actions between the
Government and the Contractor.

\(5\) The interest penalty shall be as specified in the "Interest"
clause. The interest penalty amount, interest rate and the period for
which the interest penalty was computed, will be separately stated by
the designated payment office on the check, in accompanying remittance
advice, or, in the case of wire transfers, by an appropriate electronic
data message accompanying the wire transfer. If the designated billing
office failed to notify the Contractor of a defective invoice within the
periods prescribed in subparagraph (a)(3) of this clause, then the due
date on the corrected invoice will be adjusted by subtracting the number
of days taken beyond the prescribed notification of defects period. Any
interest penalty owed the Contractor will be based on this adjusted due
date. Adjustments will be made by the designated payment office for
errors in calculating interest penalties, if requested by the
Contractor.

\(i\) For the sole purpose of computing an interest penalty that might
be due the contractor, Government acceptance shall be deemed to have
occurred constructively on the 7th day (unless otherwise specified in
this contract) after the contractor delivered the supplies or performed
the services in accordance with the terms and conditions of the
contract, unless there is a disagreement over quantity, quality, or
contractor compliance with a contract provision. In the event that
actual acceptance occurs within the constructive acceptance period, the
determination of an interest penalty shall be based on the actual date
of acceptance. The constructive acceptance requirement does not,
however, compel Government officials to accept supplies or services,
perform contract administration functions, or make payment prior to
fulfilling their responsibilities.

\(ii\) The following periods of time will not be included in the
determination of an interest penalty:

\(A\) The period taken to notify the Contractor of defects in invoices
submitted to the Government, but this may not exceed 7 days.

\(B\) The period between the defects notice and resubmission of the
corrected invoice by the Contractor.

\(iii\) Interest penalties will not continue to accrue after the filing
of a claim for such penalties under Federal Aviation Administration
(FAA) contract disputes resolution procedures. Interest penalties of
less than \$1.00 need not be paid.

\(iv\) Interest penalties are not required on payment delays due to
disagreement between the Government and Contractor over the payment
amount or other issues involving contract compliance or on amounts
temporarily withheld or retained in accordance with the terms of the
contract. Contract disputes, and any interest that may be payable, will
be resolved in accordance with FAA contract disputes resolution
procedures.

\(6\) An interest penalty shall also be paid automatically by the
designated payment office, without request from the contractor, if a
discount for prompt payment is taken improperly. The interest penalty
will be calculated as described in subparagraph (a)(5) of this clause on
the amount of discount taken for the period beginning with the first day
after the end of the discount period through the date when the
contractor is paid.

\(b\) Contract Financing payments.

\(1\) For purposes of this clause, contract financing payments mean
Government disbursements of monies to a Contractor under a contract
clause or other authorization without regard to acceptance of supplies
or services by the Government. Contract financing payments include but
are not limited to payments made according to commercial terms and
installment payments. They also include interim vouchers under T&M,
labor-hour, and cost reimbursement contracts (regardless of whether
goods or services were delivered and received by the Government).

\(2\) For contracts that provide for contract financing payments,
requests for payment shall be submitted to the designated billing office
as specified in this contract or as directed by the Contracting Officer.
Payments shall be made on the 30th day after receipt of a proper payment
request by the designated billing office. In the event that an audit or
other review of a specific payment request is required to ensure
compliance with the terms and conditions of the contract, the designated
payment office is not compelled to make payment by the due date
specified.

\(3\) Contract financing payments shall not be assessed an interest
penalty for payment delays.

\(c\) If this contract contains the Fast Payment Procedures, payments
will be made within 15 days after the date of receipt of the invoice.

(*End of clause*)

3.3.1-20 RESERVED

3.3.1-21 Financing Payment Terms for Purchases of Commercial Items

FINANCING PAYMENT TERMS FOR

PURCHASES OF COMMERCIAL ITEMS (OCTOBER 3, 1996)

Definition: Financing payments are payments made without regard to
acceptance of supplies or services. They include interim and advance
payments that are customary in the commercial marketplace. They do not
include payments for delivery, receipt, and acceptance of supplies or
services.

\(a\) Contractor entitlement to financing payments for commercial items.
The Contractor may request, and the Government may pay, contract
financing payments as specified elsewhere in this contract when: the
payment requested is properly due in accordance with this contract; the
supplies deliverable or services due under the contract will be
delivered or performed in accordance with the contract; and there has
been no impairment or diminution of the Government\'s security under
this contract.

\(b\) Special terms regarding termination for cause. If this contract is
terminated for cause, the Contractor shall, on demand, repay to the
Government the amount of outstanding contract financing payments. The
Government shall be liable for no payment except as provided by the
termination for default clause of this contract.

\(c\) Security for Government financing payments. In the event the
Contractor fails to provide adequate security, as required in this
contract, no financing payments shall be made under this contract. Upon
receipt of adequate security, financing payments shall be made,
including all previous payments to which the Contractor is entitled, in
accordance with the terms of the provisions for contract financing
payments. If at any time the Contracting Officer determines that the
security provided by the Contractor is insufficient, the Contractor
shall promptly provide such additional security as the Contracting
Officer determines necessary. In the event the Contractor fails to
provide such additional security, the Contracting Officer may collect or
liquidate such security that has been provided and suspend further
payments to the Contractor; and the Contractor shall repay to the
Government the amount of outstanding financing payments as the
Contracting Officer at his sole discretion deems repayable.

\(d\) Reservation of rights.

\(1\) No payment or other action by the Government under this clause
shall

\(i\) Excuse the Contractor from performance of obligations under this
contract, or

\(ii\) Constitute a waiver of any of the rights or remedies of the
parties under the contract.

\(2\) The Government \'s rights and remedies under this clause

\(i\) Shall not be exclusive, but rather shall be in addition to any
other rights and remedies provided by law or this contract; and

\(ii\) Shall not be affected by delayed, partial, or omitted exercise of
any right, remedy, power, or privilege, nor shall such exercise or any
single exercise preclude or impair any further exercise under this
clause or the exercise of any other right, power, or privilege of the
Government .

\(e\) Content of Contractor\'s request for financing payments. The
Contractor\'s request for financing payments shall contain the
following:

\(1\) The name and address of the Contractor;

\(2\) The date of the request;

\(3\) The contract number and/or other identifier of the contract or
order under which the request is made; and

\(4\) An appropriately itemized and totaled statement of the financing
payments requested and such other information as is necessary for
computation of the payment, prepared in accordance with the direction of
the Contracting Officer.

\(f\) Limitation on frequency of financing payments. Contractor
financing payments shall be provided no more frequently than monthly.

\(g\) In the event of any conflict between the terms proposed by the
offeror in response to an invitation to propose financing payments terms
and the terms in this clause, the terms of this clause shall govern.

(*End of clause*)

3.3.1-24 Fast Payment Procedures

FAST PAYMENT PROCEDURES (OCTOBER 3, 1996)

\(a\) General. Invoices will be paid on the basis of the Contractor's
delivery to a post office or common carrier (or, in shipment by other
means, to the point of first receipt by the Government).

\(b\) Responsibility for Supplies. Title to the supplies shall vest in
the Government upon delivery to a post office or common carrier for
shipment to the specific destination. If shipment is by means of other
than Postal Service or common carrier, title to supplies shall vest in
the Government upon delivery to the point of first receipt by the
Government. Notwithstanding any other provision of the contract, order,
blanket purchase agreement, the Contractor shall assume all
responsibility and risk of loss for supplies (1) not received at
destination, (2) damaged in transit, or (3) not conforming to purchase
requirements. The Contractor shall either replace, repair or correct
those supplies promptly at the Contractor's expense, but only if
instructions to do so are furnished by the Contracting Officer within
180 days from the date title to the supplies vests in the Government.

\(c\) Preparation of the Invoice. (1) Upon delivery of supplies to a
post office or common carrier (or shipment by other means, the point of
first receipt by the Government) the Contractor shall prepare an invoice
as provided in this contract, order, or blanket purchase agreement. In
addition, the invoice shall be prominently marked "FAST PAY."

\(2\) If the purchase price excluded the cost of transportation, the
Contractor shall enter the prepaid shipping cost on the invoice as a
separate item. The cost of parcel post insurance will not be paid by the
Government. If transportation charges are separately stated on the
invoice, the Contractor agrees to retain related paid freight bills or
other transportation billings paid separately for a period of 3 years
and to furnish the bill to the Government when requested for audit
purposes.

\(3\) If this contract, order, or blanket purchase agreement requires
the preparation of receiving report on a prescribed form , the
Contractor has the option of either preparing the receiving report on
the prescribed form or including the following information on the
invoice, in addition to that required in subparagraph (c)(1) above:

\(i\) A statement in prominent letters "NO RECEIVING REPORT PREPARED."

\(ii\) Shipment number.

\(iii\) Mode of shipment.

\(iv\) At line item level (A) national stock number and/or
manufacturer's part number, (B) unit of measure, (C) Ship-to Point, (D)
Mark-for Point, and (E) FEDSTRIP/MILSTRIP document number if in
contract.

\(4\) If this contract, order or blanket purchase agreement does not
require preparation of a receiving report on a prescribed form, the
invoice will include at the line item level in addition to that required
in subparagraph (c)(1) above:

\(i\) Ship-to Point.

\(ii\) Mark-for Point.

\(iii\) FEDSTRIP/MILSTRIP document number if in contract, in addition to
that required in (c)(1) above.

\(5\) Certification of Invoice. The Contractor agrees that the
submission of an invoice to the Government for payment is a
certification that the supplies for which the Government is being billed
have been shipped or delivered in accordance with shipping instructions
issued by the ordering officer, in the quantities shown on the invoice,
and that the supplies are in the quantity and of the quality designated
by the contract, order, or blanket purchase agreement.

\(e\) Fast Pay Container Identification. All outer shipping container
shall be marked "FAST PAY."

*(End of clause)*

3.3.1-25 Mandatory Information for Electronic Funds Transfer Payment.

MANDATORY INFORMATION FOR ELECTRONIC FUNDS

TRANSFER PAYMENT (OCTOBER 3, 1996)

\(a\) Method of payment. Payments by the Government under this contract,
including invoice and contract financing payments, may be made by check
or electronic funds transfer (EFT) at the option of the Government. If
payment is made by EFT, the Government may, at its option, also forward
the associated payment information by electronic transfer. As used in
this clause, the term "EFT" refers to the funds transfer and may also
include the information transfer.

\(b\) Mandatory submission of Contractor\'s EFT information. (1) The
Contractor is required, as a condition to any payment under this
contract, to provide the Government with the information required to
make payment by EFT as described in paragraph (d) of this clause, unless
the payment office determines that submission of the information is not
required. However, until January 1, 1999, in the event the Contractor
certifies in writing to the payment office that the Contractor does not
have an account with a financial institution or an authorized payment
agent, payment shall be made by other than EFT. For any payments to be
made after January 1, 1999, the Contractor shall provide EFT information
as described in paragraph (d) of this clause.

\(2\) If the Contractor provides EFT information applicable to multiple
contracts, the Contractor shall specifically state the applicability of
this EFT information in terms acceptable to the

payment office.

\(c\) Contractor\'s EFT information. Prior to submission of the first
request for payment (whether for invoice or contract financing payment)
under this contract, the Contractor shall provide the information
required to make contract payment by EFT, as described in paragraph (d)
of this clause, directly to the Government payment office named in this
contract. If more than one payment office is named for the contract, the
Contractor shall provide a separate notice to each office. In the event
that the EFT information changes, the Contractor shall be responsible
for providing the changed information to the designated payment
office(s).

\(d\) Required EFT information. The Government may make payment by EFT
through either an Automated Clearing House (ACH) subject to the banking
laws of the United States or the Federal Reserve Wire Transfer System at
the Government\'s option. The Contractor shall provide the following
information for both methods in a form acceptable to the designated
payment office. The Contractor may supply this data for this or multiple
contracts (see paragraph (b) of this clause).

\(1\) The contract number to which this notice applies.

\(2\) The Contractor\'s name and remittance address, as stated in the
contract, and account number at the Contractor\'s financial agent.

\(3\) The signature (manual or electronic, as appropriate), title, and
telephone number of the Contractor official authorized to provide this
information.

\(4\) For ACH payments only:

\(i\) Name, address, and 9-digit Routing Transit Number of the
Contractor\'s financial agent.

\(ii\) Contractor\'s account number and the type of account (checking,
saving, or lockbox).

\(5\) For Federal Reserve Wire Transfer System payments only:

\(i\) Name, address, telegraphic abbreviation, and the 9-digit Routing
Transit Number for the Contractor\'s financial agent.

\(ii\) If the Contractor\'s financial agent is not directly on-line to
the Federal Reserve Wire Transfer System and, therefore, not the
receiver of the wire transfer payment, the Contractor shall also provide
the name, address, and 9-digit Routing Transit Number of the
correspondent financial institution receiving the wire transfer payment.

\(e\) Suspension of payment. (1) Notwithstanding the provisions of any
other clause of this contract, the Government is not required to make
any payment under this contract until after receipt, by the designated
payment office, of the correct EFT payment information from the
Contractor or a certificate submitted in accordance with paragraph (b)
of this clause. Until receipt of the correct EFT information, any
invoice or contract financing request shall be deemed not to be a valid
invoice or contract financing request as defined in the Prompt Payment
clause of this contract.

\(2\) If the EFT information changes after submission of correct EFT
information, the Government shall begin using the changed EFT
information no later than the 30th day after its receipt to the extent
payment is made by EFT. However, the Contractor may request that no
further payments be made until the changed EFT information is
implemented by the payment office. If such suspension would

result in a late payment under the Prompt Payment clause of this
contract, the Contractor\'s request for suspension shall extend the due
date for payment by the number of days of the suspension.

\(f\) Contractor EFT arrangements. The Contractor shall designate a
single financial agent capable of receiving and processing the
electronic funds transfer using the EFT methods described in paragraph
(d) of this clause. The Contractor shall pay all fees and charges for
receipt and processing of transfers.

\(g\) Liability for uncompleted or erroneous transfers. (1) If an
uncompleted or erroneous transfer occurs because the Government failed
to use the Contractor-provided EFT information in the correct manner,
the Government remains responsible for (i) making a correct payment,
(ii) paying any prompt payment penalty due, and (iii) recovering any
erroneously directed funds.

\(2\) If an uncompleted or erroneous transfer occurs because
Contractor-provided EFT information was incorrect at the time of
Government release of the EFT payment transaction instruction to the
Federal Reserve System, and:

\(i\) If the funds are no longer under the control of the payment
office, the Government is deemed to have made payment and the Contractor
is responsible for recovery of any erroneously directed funds; or

\(ii\) If the funds remain under the control of the payment office, the
Government retains the right to either make payment by mail or suspend
the payment in accordance with paragraph (e) of this clause.

\(h\) EFT and prompt payment. (1) A payment shall be deemed to have been
made in a timely manner in accordance with the Prompt Payment clause of
this contract if, in the EFT payment transaction instruction given to
the Federal Reserve System, the date specified for settlement of the
payment is on or before the prompt payment due date, provided the
specified payment date is a valid date under the rules of the Federal
Reserve System.

\(2\) When payment cannot be made by EFT because of incorrect EFT
information provided by the Contractor, no interest penalty is due after
the date of the uncompleted or erroneous payment transaction,

provided that notice of the defective EFT information is issued to the
Contractor within 7 days after the Government is notified of the
defective EFT information.

\(i\) EFT and assignment of claims. If the Contractor assigns the
proceeds of this contract as provided for in the Assignment of Claims
clause of this contract, the assignee shall provide the assignee EFT
information required by paragraph (d) of this clause. In all respects,
the requirements of this clause shall apply to the assignee as if it
were the Contractor. EFT information which shows the ultimate recipient
of the transfer to be other than the Contractor, in the absence of a
proper assignment of claims acceptable to the Government, is incorrect
EFT information within the meaning of paragraph (e) of this clause.

\(j\) Payment office discretion. If the Contractor does not wish to
receive payment by EFT methods for one or more payments, the Contractor
may submit a request to the designated payment office to refrain from
requiring EFT information or using the EFT payment method. The decision
to grant the request is solely that of the Government.

\(k\) Change of EFT information by financial agent. The Contractor
agrees that the Contractor\'s financial agent may notify the Government
of a change to the routing transit number, Contractor account number, or
account type. The Government shall use the changed data in accordance
with paragraph (e)(2) of this clause. The Contractor agrees that the
information provided by the agent is deemed to be correct information as
if it were provided by the Contractor. The Contractor agrees that the
agent\'s notice of changed EFT data is deemed to be a request by the
Contractor in accordance with paragraph (e)(2) that no further payments
be made until the changed EFT information is implemented by the payment
office.

*(End of clause)*

3.3.1-26 Optional Information for Electronic Funds Transfer Payment.

OPTIONAL INFORMATION FOR ELECTRONIC

FUNDS TRANSFER PAYMENT (OCTOBER 3, 1996)

\(a\) Method of payment. (1) Except as provided in paragraph (a)(2) of
this clause, after the Contractor provides the information described in
paragraph (d) of this clause, in accordance with paragraph (b) of this
clause, payments by the Government under this contract, including
invoice and contract financing payments, may be made by check or
electronic funds transfer (EFT) at the option of the Government. If
payment is made by EFT, the Government may, at its option, also forward
the associated payment information by electronic transfer. As used in
this clause, the term EFT refers to the funds transfer and may also
include the information transfer.

\(2\) Notwithstanding the provision of this clause making the furnishing
of EFT information optional, the Contractor shall furnish the EFT
information described in paragraph (d) for any payment to be made after
January 1, 1999.

\(b\) Contractor consent. The following classes of contracts are
currently exempt from this requirement until January 1, 1999: contracts
awarded outside the United States and Puerto Rico; contracts denominated
and paid in other than United States dollars; classified contracts where
payment by EFT could compromise security or be impractical due to
security concerns; or contracts executed by deployed contracting
officers in the course of military operations.

\(1\) Notwithstanding such exemptions, a Contractor may consent to be
paid by EFT, by providing the EFT information described in paragraph (d)
of this clause. The Contractor agrees that, after providing EFT
information in accordance with this clause, the Contractor cannot
withdraw the Government\'s right to make payment by EFT for this
contract.

\(2\) If the Contractor provides EFT information applicable to multiple
contracts, the Contractor shall specifically state the applicability of
this EFT information in terms acceptable to the payment office.

\(c\) Contractor\'s EFT information. Prior to submission of the first
request for payment (whether for invoice or contract financing payment)
under this contract, for which the Contractor desires EFT payment, the
Contractor shall provide the information required to make contract
payment by EFT, as described in paragraph (d) of this clause, directly
to the Government payment office named in this contract. If more than
one payment office is named for the contract, the Contractor shall
provide a separate notice to each office. In the event that the EFT
information changes, the Contractor shall be responsible for providing
the changed information to the designated payment office(s).

\(d\) Required EFT information. The Government may make payment by EFT
through either an Automated Clearing House (ACH) subject to the domestic
banking laws of the United States or the Federal Reserve Wire Transfer
System at the Government\'s option. The Contractor shall provide the
following information for both methods in a form acceptable to the
designated payment office. The Contractor may supply this data for this
or multiple contracts (see paragraph (b) of this clause).

\(1\) The contract number to which this notice applies.

\(2\) The Contractor\'s name and remittance address, as stated in the
contract, and account number at the Contractor\'s financial

agent.

\(3\) The signature (manual or electronic, as appropriate), title, and
telephone number of the Contractor official authorized to provide this
information.

\(4\) For ACH payment only:

\(i\) Name, address, and 9-digit Routing Transit Number of the
Contractor\'s financial agent.

\(ii\) Contractor\'s account number and the type of account (checking,
saving, or lockbox).

\(5\) For Federal Reserve Wire Transfer System payments only:

\(i\) Name, address, telegraphic abbreviation, and the 9-digit Routing
Transit Number for the Contractor\'s financial agent.

\(ii\) If the Contractor\'s financial agent is not directly on-line to
the Federal Reserve Wire Transfer System and, therefore, not the
receiver of the wire transfer payment, the Contractor shall also provide
the name, address, and 9-digit Routing Transit Number of the
correspondent financial institution receiving the wire transfer payment.

\(e\) Suspension of payment. (1) Notwithstanding the provisions of any
other clause of this contract, if, after receipt of the Contractor\'s
EFT information in accordance with paragraph (b) of this clause, the EFT
information is found to be incorrect, or, for payment after January 1,
1999, if EFT information has not been furnished, then until receipt by
the designated payment office of the correct EFT information from the
Contractor, (i) the Government is not required to make any further
payment under this contract; and (ii) any invoice or contract financing
request shall be deemed not to be a valid invoice or contract financing
request as defined in the Prompt Payment clause of this contract.

\(2\) If the EFT information changes after submission of correct EFT
information, the Government shall begin using the changed EFT
information no later than the 30th day after its receipt to the extent
payment is made by EFT. However, the Contractor may request that no
further payments be made until the changed EFT information is
implemented by the payment office. If such suspension would result in a
late payment under the Prompt Payment clause of this contract, the
Contractor\'s request for suspension shall extend the due date for
payment by the number of days of the suspension.

\(f\) Contractor EFT arrangements. The Contractor shall designate a
single financial agent capable of receiving and processing the
electronic funds transfer using the EFT methods described in paragraph
(d) of this clause. The Contractor shall pay all fees and charges for
receipt and processing of transfers.

\(g\) Liability for uncompleted or erroneous transfers. (1) If an
uncompleted or erroneous transfer occurs because the Government failed
to use the Contractor-provided EFT information in the correct manner,
the Government remains responsible for (i) making a correct payment,
(ii) paying any prompt payment penalty due, and (iii) recovering any
erroneously directed funds.

\(2\) If an uncompleted or erroneous transfer occurs because
Contractor-provided EFT information was incorrect at the time of
Government release of the EFT payment transaction instruction to the
Federal Reserve System, and:

\(i\) If the funds are no longer under the control of the payment
office, the Government is deemed to have made payment and the Contractor
is responsible for recovery of any erroneously directed funds; or

\(ii\) If the funds remain under the control of the payment office, the
Government retains the right to either make payment by mail or suspend
the payment in accordance with paragraph (e) of this clause.

\(h\) EFT and prompt payment. (1) A payment shall be deemed to have been
made in a timely manner in accordance with the Prompt Payment clause of
this contract if, in the EFT payment transaction instruction given to
the Federal Reserve System, the date specified for settlement of the
payment is on or before the prompt payment due date, provided the
specified payment date is a valid date under the rules of the Federal
Reserve System.

\(2\) When payment cannot be made by EFT because of incorrect EFT
information provided by the Contractor, no interest penalty is due after
the date of the uncompleted or erroneous payment transaction, provided
that notice of the defective EFT information is issued to the Contractor
within 7 days after the Government is notified of the defective EFT
information.

\(i\) EFT and assignment of claims. If the Contractor assigns the
proceeds of this contract as provided for in the Assignment of Claims
clause of this contract, the assignee shall provide the assignee EFT
information required by paragraph (d) of this clause. In all respects,
the requirements of this clause shall apply to the assignee as if it
were the Contractor. EFT information which shows the ultimate recipient
of the transfer to be other than the Contractor, in the absence of a
proper assignment of claims acceptable to the Government, is incorrect
EFT information within the meaning of paragraph (e) of this clause.

\(j\) Payment office discretion. If, after submitting the EFT
information, the Contractor does not wish to receive payment by EFT
methods for one or more payments, the Contractor may submit a request to
the designated payment office to refrain from using the EFT payment
method. The decision to grant the request is solely that of the
Government.

\(k\) Change of EFT information by financial agent. The Contractor
agrees that the Contractor\'s financial agent may notify the Government
of a change to the routing transit number, Contractor account number, or
account type. The Government shall use the changed data in accordance
with paragraph (e)(2) of this clause. The Contractor agrees that the
information provided by the agent is deemed to be correct information as
if it were provided by the Contractor. The Contractor agrees that the
agent\'s notice of changed EFT data is deemed to be a request by the
Contractor in accordance with paragraph (e)(2) that no further payments
be made until the changed EFT information is implemented by the payment
office.

*(End of clause)*

3.3.2-1. FAA Cost Principles

FAA COST PRINCIPLES (OCTOBER 3, 1996)

\(a\) Federal Aviation Administration (FAA) "Contract Cost Principles"
shall be used for:

\(1\) The pricing of contracts, subcontracts, and modifications to
contracts and subcontracts whenever cost analysis is performed; and

\(2\) The determination, negotiation, or allowance of costs when
required by a contract clause.

\(b\) The Contracting Officer shall incorporate the FAA cost principles
and procedures in contracts with commercial organizations as the basis
for:

\(1\) Determining reimbursable costs under

\(i\) Cost-reimbursement contracts and cost-reimbursement subcontracts
under these contracts performed by commercial organizations and

\(ii\) The cost-reimbursement portion of time-and-materials contracts
except when material is priced on a basis other than at cost;

\(2\) Negotiating indirect cost rates, when:

\(i\) FAA has division or corporate contract administration
responsibilities;

\(ii\) Quick Close-out procedures are used; or

\(iii\) Indirect rate caps are negotiated in the contract.

\(3\) Proposing, negotiating, or determining costs under terminated
contracts;

\(4\) Price revision of fixed-price incentive contracts;

\(5\) Price redetermination of price redetermination contracts; and

\(6\) Pricing changes and other contract modifications.

\(c\) When division or corporate contract administration
responsibilities rest with another Government agency, the FAA will apply
the cost principles of the administering agency for the determination or
negotiation of indirect rates not covered by (2)(ii) or (2)(iii) above.

\(d\) Upon request, the Contracting Officer will provide a copy of the
FAA "Contract Cost Principles."

*(End of clause)*

3.4.1-3 RESERVED.

3.4.1-8 Patent Infringement Bond Requirements

PATENT INFRINGEMENT BOND REQUIREMENTS (OCTOBER 3, 1996)

The Contractor shall be required to submit a patent infringement bond in
a penal amount set by the Contracting Officer and in a form acceptable
to the Government. Failure to submit an acceptable bond may be cause for
termination of the contract for default.

*(End of clause)*

3.4.1-11 Insurance\--Liability to Third Persons

INSURANCE\--LIABILITY TO THIRD PERSONS (OCTOBER 3, 1996)

(a)(1) Except as provided in subparagraph (a)(2) of this clause, the
Contractor shall provide and maintain workers\' compensation,
employer\'s liability, comprehensive general liability (bodily injury),
comprehensive automobile liability (bodily injury and property damage)
insurance, and such other insurance as the Contracting Officer may
require under this contract.

\(2\) The Contractor may, with the approval of the Contracting Officer,
maintain a self‑insurance program; provided that, with respect to
workers\' compensation, the Contractor is qualified pursuant to
statutory authority.

\(3\) All insurance required by this paragraph shall be in a form and
amount and for those periods as the Contracting Officer may require or
approve and with insurers approved by the Contracting Officer.

\(b\) The Contractor agrees to submit for the Contracting Officer\'s
approval, to the extent and in the manner required by the Contracting
Officer, any other insurance that is maintained by the Contractor in
connection with the performance of this contract and for which the
Contractor seeks reimbursement.

\(c\) The Contractor shall be reimbursed:

\(1\) For that portion (i) of the reasonable cost of insurance allocable
to this contract, and (ii) required or approved under this clause; and

\(2\) For certain liabilities (and expenses incidental to such
liabilities) to third persons not compensated by insurance or otherwise
without regard to and as an exception to the limitation of cost or the
limitation of funds clause of this contract. These liabilities must
arise out of the performance of this contract, whether or not caused by
the negligence of the Contractor or of the Contractor\'s agents,
servants, or employees, and must be represented by final judgments or
settlements approved in writing by the Government. These liabilities are
for:

\(i\) Loss of or damage to property (other than property owned,
occupied, or used by the Contractor, rented to the Contractor, or in the
care, custody, or control of the Contractor); or

\(ii\) Death or bodily injury.

\(d\) The Government\'s liability under paragraph (c) of this clause is
subject to the availability of appropriated funds at the time a
contingency occurs. Nothing in this contract shall be construed as
implying that the Congress will, at a later date, appropriate funds
sufficient to meet deficiencies.

\(e\) The Contractor shall not be reimbursed for liabilities (and
expenses incidental to such liabilities)-

\(1\) For which the Contractor is otherwise responsible under the
express terms of any clause specified in the "Schedule" or elsewhere in
the contract;

\(2\) For which the Contractor has failed to insure or to maintain
insurance as required by the Contracting Officer; or

\(3\) That result from willful misconduct or lack of good faith on the
part of any of the Contractor\'s directors, officers, managers,
superintendents, or other representatives who have supervision or
direction of:

\(i\) All or substantially all of the Contractor\'s business;

\(ii\) All or substantially all of the Contractor\'s operations at any
one plant or separate location in which this contract is being
performed; or

\(iii\) A separate and complete major industrial operation in connection
with the performance of this contract.

\(f\) The provisions of paragraph (e) of this clause shall not restrict
the right of the Contractor to be reimbursed for the cost of insurance
maintained by the Contractor in connection with the performance of this
contract, other than insurance required in accordance with this clause;
provided, that such cost is allowable under the "Allowable Cost and
Payment" clause of this contract.

\(g\) If any suit or action is filed or any claim is made against the
Contractor, the cost and expense of which may be reimbursable to the
Contractor under this contract, and the risk of which is then uninsured
or is insured for less than the amount claimed, the Contractor shall:

\(1\) Immediately notify the Contracting Officer and promptly furnish
copies of all pertinent papers received;

\(2\) Authorize Government representatives to collaborate with counsel
for the insurance carrier in settling or defending the claim when the
amount of the liability claimed exceeds the amount of coverage; and

\(3\) Authorize Government representatives to settle or defend the claim
and to represent the Contractor in or to take charge of any litigation,
if required by the Government, when the liability is not insured or
covered by bond. The Contractor may, at its own expense, be associated
with the Government representatives in any such claim or litigation.

*(End of clause)*

3.4.2-6. Taxes\--Contracts Performed in U.S. Possessions or Puerto Rico

TAXES\--CONTRACTS PERFORMED IN U.S. POSSESSIONS OR PUERTO RICO (OCTOBER
3, 1996)

The term \'local taxes,\' as used in the "Federal, State, and Local
Taxes - Fixed Price Contract" clause of this contract, includes taxes
imposed by a possession of the United States or by Puerto Rico.

(*End of clause*)

3.5-10 Patent Rights-Retention by the Contractor (Short Form)

PATENT RIGHTS-RETENTION BY THE CONTRACTOR

(SHORT FORM) (OCTOBER 3, 1996)

\(a\) Definitions.

\(1\) "Invention" means any invention or discovery which is or may be
patentable or otherwise protectable under title 35 of the United States
Code, or any novel variety of plant which is or may be protected under
the Plant Variety Protection Act (7 U.S.C. 2321, et seq.).

\(2\) "Made" when used in relation to any invention means the conception
of first actual reduction to practice of such invention.

\(3\) "Nonprofit organization" means a university or other institution
of higher education or an organization of the type described in section
501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and
exempt from taxation under section 501(a) of the Internal Revenue Code
(26 U.S.C. 501(a)) or any nonprofit scientific or educational
organization qualified under a state nonprofit organization statute.

\(4\) "Practical application" means to manufacture, in the case of a
composition of product; to practice, in the case of a process or method,
or to operate, in the case of a machine or system; and, in each case,
under such conditions as to establish that the invention is being
utilized and that its benefits are, to the extent permitted by law or
Government regulations, available to the public on reasonable terms.

\(5\) "Small business firm" means a small business concern as defined in
the Federal Aviation Administration (FAA) Acquisition Management System.
For the purpose of this clause, the size standards for small business
concerns involved in Government procurement and subcontracting at 13 CFR
121.3-8 and 13 CFR 121.3-12, respectively, will be used.

\(6\) "Subject invention" means any invention of the contractor
conceived or first actually reduced to practice in the performance of
work under this contract, provided that in the case of a variety of
plant, the date of determination (as defined in section 41(d) of the
Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during
the period of contract performance.

\(b\) Allocation of principal rights. The Contractor may retain the
entire right, title, and interest throughout the world to each subject
invention subject to the provisions of this clause and 35 U.S.C. 203.
With respect to any subject invention in which the Contractor retains
title, the Federal Government shall have a nonexclusive,
nontransferable, irrevocable, paid-up license to practice or have
practiced for or on behalf of the United States the subject invention
throughout the world.

\(c\) Invention disclosure, election of title, and filing of patent
application by contractor.

\(1\) The Contractor will disclose each subject invention to the Federal
agency within 2 months after the inventor discloses it in writing to
Contractor personnel responsible for patent matters. The disclosure to
the agency shall be in the form of a written report and shall identify
the contract under which the invention was made and the inventor(s). It
shall be sufficiently complete in technical detail to convey a clear
understanding to the extent known at the time of the disclosure, of the
nature, purpose, operation, and the physical, chemical, biological or
electrical characteristics of the invention. The disclosure shall also
identify any publication, on sale or public use of the invention and
whether a manuscript describing the invention has been submitted for
publication and, if so, whether it has been accepted for publication at
the time of disclosure. In addition, after disclosure to the agency, the
contractor will promptly notify the agency of the acceptance of any
manuscript describing the invention for publication, or of any on sale
or public use planned by the Contractor.

\(2\) The Contractor will elect in writing whether or not to retain
title to any such invention by notifying the Federal agency within 2
years of disclosure to the Federal agency. However, in any case where
publication, on sale or public use has initiated the 1 year statutory
period wherein valid patent protection can still be obtained in the
United States, the period for election of title may be shortened by the
agency to a date that is no more than 60 days prior to the end of the
statutory period.

\(3\) The Contractor will file its initial patent application on a
subject invention to which it elects to retain title within 1 year after
election of title, or, if earlier, prior to the end of any statutory
period wherein valid patent protection can be obtained in the United
States after a publication, on sale, or public use. The Contractor will
file patent applications in additional countries or international patent
offices within either 10 months of the corresponding initial patent
application or 6 months from the date permission is granted by the
Commissioner of Patents and Trademarks to file foreign patent
applications where such filing has been prohibited by a Secrecy Order.

\(4\) Requests for extension of the time for disclosure election, and
filing under subparagraphs (c) (1), (2), and (3) of this clause may, at
the discretion of the agency, be granted.

\(d\) Conditions when the Government may obtain title. The Contractor
will convey to the Federal agency, upon written request, title to any
subject invention-

\(1\) If the Contractor fails to disclose or elect title to the subject
invention within the times specified in paragraph (c) of this clause, or
elects not to retain title; provided, that the agency may only request
title within 60 days after learning of the failure of the Contractor to
disclose or elect within the specified times.

\(2\) In those countries in which the Contractor fails to file patent
applications within the times specified in paragraph (c) of this clause;
provided, however, that if the Contractor has filed a patent application
in a country after the times specified in paragraph (c) of this clause,
but prior to its receipt of the written request of the Federal agency,
the Contractor may continue to retain title in that country.

\(3\) In any country in which the Contractor decides not to continue the
prosecution of any application for, to pay the maintenance fees on, or
defend in reexamination or opposition proceeding on, a patent on a
subject invention.

\(e\) Minimum rights to Contractor and protection of the Contractor
right to file.

\(1\) The Contractor will retain a nonexclusive royalty-free license
throughout the world in each subject invention to which the Government
obtains title, except if the Contractor fails to disclose the invention
within the times specified in paragraph (c) of this clause. The
Contractor\'s license extends to its domestic subsidiary and affiliates,
if any, within the corporate structure of which the Contractor is a
party and includes the right to grant sublicenses of the same scope to
the extent the Contractor was legally obligated to do so at the time the
contract was awarded. The license is transferable only with the approval
of the Federal Agency, except when transferred to the successor of that
part of the Contractor\'s business to which the invention pertains.

\(2\) The Contractor\'s domestic license may be revoked or modified by
the funding Federal agency to the extent necessary to achieve
expeditious practical application of subject invention pursuant to an
application for an exclusive license submitted in accordance with
applicable provisions at 37 CFR part 404 and agency licensing
regulations (if any). This license will not be revoked in that field of
use or the geographical areas in which the Contractor has achieved
practical application and continues to make the benefits of the
invention reasonably accessible to the public. The license in any
foreign country may be revoked or modified at the discretion of the
funding Federal agency to the extent the Contractor, its licensees, or
the domestic subsidiaries or affiliates have failed to achieve practical
application in that foreign country.

\(3\) Before revocation or modification of the license, the funding
Federal agency will furnish the Contractor a written notice of its
intention to revoke or modify the license, and the Contractor will be
allowed 30 days (or such other time as may be authorized by the funding
Federal agency for good cause shown by the Contractor) after the notice
to show cause why the license should not be revoked or modified. The
Contractor has the right to appeal, in accordance with applicable
regulations in 37 CFR part 404 and agency regulations, if any,
concerning the licensing revocation of modification of the license.

\(f\) Contractor action to protect the Government\'s interest.

\(1\) The Contractor agrees to execute or to have executed and promptly
deliver to the Federal agency all instruments necessary to (i) establish
or confirm the rights the Government has throughout the world in those
subject inventions to which the Contractor elects to retain title, and
(ii) convey title to the Federal agency when requested under paragraph
(d) of this clause and to enable the Government to obtain patent
protection throughout the world in that subject invention.

\(2\) The Contractor agrees to require, by written agreement, its
employees, other than clerical and nontechnical employees, to disclose
promptly in writing to personnel identified as responsible for the
administration of patent matters and in a format suggested by the
Contractor each subject invention made under contract in order that the
Contractor can comply with the disclosure provisions of paragraph (c) of
this clause, and to execute all papers necessary to file patent
applications on subject inventions and to establish the Government\'s
rights in the subject inventions. This disclosure format should require,
as a minimum, the information required by subparagraph (c)(1) of this
clause. The Contractor may instruct such employees, through employee
agreements or other suitable educational programs, on the importance of
reporting inventions in sufficient time to permit the filing of patent
applications prior to U.S. or foreign statutory bars.

\(3\) The Contractor will notify the Federal agency of any decisions not
to continue the prosecution of a patent application, pay maintenance
fees, or defend in a reexamination or opposition proceeding on a patent,
in any country, not less than 30 days before the expiration of the
response period required by the relevant patent office.

\(4\) The Contractor agrees to include, within the specification of any
United States patent application and any patent issuing thereon covering
a subject invention, the following statement, "The invention was made
with Government support under (identify the contract) awarded by
(identify the Federal agency). The Government has certain rights in the
invention."

\(g\) Subcontracts.

\(1\) The Contractor will include this clause, suitably modified to
identify the parties, in all subcontracts, regardless of tier, for
experimental, developmental, or research work to be performed by a small
business firm or domestic nonprofit organization. The subcontractor will
retain all rights provided for the Contractor in this clause, and the
Contractor will not, as part of the consideration for awarding the
subcontract, obtain rights in the subcontractor\'s subject inventions.

\(2\) The Contractor will include in all other subcontracts, regardless
of tier, for experimental, developmental, or research work the patent
rights clause required to adequately protect the Government's interests
consistent with section 3.5 of the FAA Acquisition Management System.

\(3\) In the case of subcontracts, at any tier, the agency,
subcontractor, and the Contractor agree that the mutual obligations of
the parties created by this clause constitute a contract between the
subcontractor and the Federal agency with respect to the matters covered
by the clause; provided, however, that nothing in this paragraph is
intended to confer any jurisdiction under the FAA disputes resolution
process, or any board or judicial proceeding, in connection with
proceedings under paragraph (j) of this clause.

\(h\) Reporting on utilization of subject inventions. The Contractor
agrees to submit, on request, periodic reports no more frequently than
annually on the utilization of a subject invention or on efforts at
obtaining such utilization that are being made by the Contractor or its
licensees or assignees. Such reports may include information regarding
the status of development, date of first commercial sale or use, gross
royalties received by the Contractor, and such other data and
information as the agency may reasonably specify. The Contractor also
agrees to provide additional reports as may be requested by the agency
in connection with any march-in proceeding undertaken by the agency in
accordance with paragraph (j) of this clause. As required by 35 U.S.C.
202(c)(5), the agency agrees it will not disclose such information to
persons outside the Government without permission of the Contractor.

\(i\) Preference for United States industry. Notwithstanding any other
provision of this clause, the Contractor agrees that neither it nor any
assignee will grant to any person the exclusive right to use or sell any
subject invention in the United States unless such person agrees that
any product embodying the subject invention or produced through the use
of the subject invention will be manufactured substantially in the
United States. However, in individual cases, the requirement for such an
agreement may be waived by the Federal agency upon a showing by the
Contractor or its assignee that reasonable but unsuccessful efforts have
been made to grant licenses on similar terms to potential licensees that
would be likely to manufacture substantially in the United States or
that under the circumstances domestic manufacture is not commercially
feasible.

\(j\) March-in rights. The Contractor agrees that, with respect to any
subject invention in which it has acquired title, the Federal agency has
the right in accordance with the procedures in 37 CFR 401.6 and any
supplemental regulations of the agency to require the Contractor, an
assignee or exclusive licensee of a subject invention to grant a
nonexclusive, partially exclusive, or exclusive license in any field of
use to a responsible applicant or applicants, upon terms that are
reasonable under the circumstances, and if the Contractor, assignee, or
exclusive licensee refuses such a request the Federal agency has the
right to grant such a license itself if the Federal agency determines
that\--

\(1\) Such action is necessary because the Contractor or assignee has
not taken, or is not expected to take within a reasonable time,
effective steps to achieve practical application of the subject
invention in such field of use;

\(2\) Such action is necessary to alleviate health or safety needs which
are not reasonably satisfied by the Contractor, assignee, or their
licensees;

\(3\) Such action is necessary to meet requirements for public use
specified by Federal regulations and such requirements are not
reasonably satisfied by the Contractor, assignee, or licensees;

\(4\) Such action is necessary because the agreement required by
paragraph (i) of this clause has not been obtained or waived or because
a licensee of the exclusive right to use or sell any subject invention
in the United States is in breach of such agreement.

\(k\) Special provisions for contracts with nonprofit organizations. If
the Contractor is a nonprofit organization, it agrees that\--

\(1\) Rights to a subject invention in the United States may not be
assigned without the approval of the Federal agency, except where such
assignment is made to an organization which has as one of its primary
functions the management of inventions, provided that such assignee will
be subject to the same provisions as the Contractor;

\(2\) The Contractor will share royalties collected on a subject
invention with the inventor, including Federal employee co-inventors
(when the agency deems it appropriate) when the subject invention is
assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10;

\(3\) The balance of any royalties or income earned by the Contractor
with respect to subject inventions, after payment of expenses (including
payments to inventors) incidental to the administration of subject
inventions will be utilized for the support of scientific research or
education; and

\(4\) It will make efforts that are reasonable under the circumstances
to attract licensees of subject inventions that are small business
firms, and that it will give a preference to a small business firm when
licensing a subject invention if the Contractor determines that the
small business firm has a plan or proposal for marketing the invention
which, if executed, is equally as likely to bring the invention to
practical application as any plans or proposals from applicants that are
not small business firms; provided, that the Contractor is also
satisfied that the small business firm has the capability and resources
to carry out its plan or proposal. The decision whether to give a
preference in any specific case will be at the discretion of the
contractor. However, the Contractor agrees that the Secretary of
Commerce may review the Contractor\'s licensing program and decisions
regarding small business applicants, and the Contractor will negotiate
changes to its licensing policies, procedures, or practices with the
Secretary of Commerce when the Secretary\'s review discloses that the
Contractor could take reasonable steps to more effectively implement the
requirements of this subparagraph (k)(4).

\(l\) Communications. (Reserved)

(*End of clause*)

ALTERNATE I

Add the following to the end of paragraph (b) of the basic clause.

The license may include the right of the Government to sublicense
foreign government , their nationals and international organizations
pursuant to the following treaties or international agreements:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\*

\[\*Contracting Officer complete with the names of applicable existing
treaties or international agreements. The above language is not intended
to apply to treaties or agreements that are in effect on the date of the
award but are not listed.\]

ALTERNATE II

Add the following to the end of paragraph (b) of the basic clause.

The agency reserves the right to unilaterally amend this contract to
identify specific treaties or international agreements entered into or
to be entered into by the Government after the effective date of the
contract and effectuate those license or other rights which are
necessary for the Government to meet its obligations to foreign
government , their nationals and international organizations under such
treaties or international agreements with respect to subject inventions
made after the date of the amendment.

ALTERNATE III

Substitute the following in place of paragraph (k)(3) of the basic
clause.

\(3\) After payment of patenting costs, licensing costs, payments to
inventors, and other expenses incidental to the administration of
subject inventions, the balance of any royalties or income earned and
retained by the Contractor during any fiscal year on subject inventions
under this or any successor contract containing the same requirement, up
to any amount equal to 5 percent of the budget of the facility for that
fiscal year, may be used by the Contractor for the scientific research,
development, and education consistent with the research and development
mission and objectives of the facility, including activities that
increase the licensing potential of other inventions of the facility. If
the balance exceeds 5 percent, 75 percent of the excess above 5 percent
may be paid by the Contractor to the Treasury of the United States and
the remaining 25 percent may be used by the Contractor only for the same
purposes as described above. To the extent it provides the most
effective technology transfer, the licensing of subject inventions may
be administered by Contractor employees on location at the facility.

ALTERNATE IV

Include the following subparagraph in paragraph (f) of the basic clause.

\(5\) The Contractor may establish and maintain active and effective
procedures to ensure that subject inventions are promptly identified and
timely disclosed, and may submit a description of the procedures to the
Contracting Officer so that the Contracting Officer may evaluate and
determine their effectiveness.

3.5-11 Patent Rights-Retention by the Contractor (Long Form)

PATENT RIGHTS-RETENTION BY THE CONTRACTOR

(LONG FORM) (OCTOBER 3, 1996)

\(a\) Definitions.

\(1\) "Invention" means any invention or discovery which is or may be
patentable or otherwise protectable under title 35 of the United States
Code or any novel variety of plant that is or may be protectable under
the Plant Variety Protection Act (7 U.S.C. 2321 et seq.).

\(2\) "Made" when used in relation to any invention means the conception
or first actual reduction to practice of such invention.

\(3\) "Nonprofit organization" means a domestic university or other
institution of higher education or an organization of the type described
in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C.
501(c)) and exempt from taxation under section 501(a) of the Internal
Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or
educational organization qualified under a state nonprofit organization
statute.

\(4\) "Practical application" means to manufacture in the case of a
composition or product, to practice in the case of a process or method,
or to operate in the case of a machine or system; and, in each case,
under such conditions as to establish that the invention is being
utilized and that its benefits are, to the extent permitted by law or
Government regulations, available to the public on reasonable terms.

\(5\) "Small business firm" means a small business concern as defined in
the Federal Aviation Administration (FAA) Acquisition Management System.
For the purpose of this clause, the size standards for small business
concerns involved in Government procurement and subcontracting at 13 CFR
121.3-8 and 13 CFR 121.3-12, respectively, will be used.

\(6\) "Subject invention" means any invention of the Contractor
conceived or first actually reduced to practice in the performance of
work under this contract; provided, that in the case of a variety of
plant, the date of determination (as defined in section 41(d) of the
Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during
the period of contract performance.

\(b\) Allocation of principal rights. The Contractor may elect to retain
the entire right, title, and interest throughout the world to each
subject invention subject to the provisions of this clause and 35 U.S.C.
203. With respect to any subject invention in which the Contractor
elects to retain title, the Federal Government shall have a
nonexclusive, nontransferable, irrevocable, paid-up license to practice
or have practiced for or on behalf of the United States the subject
invention throughout the world.

\(c\) Invention disclosure, election of title, and filing of patent
applications by Contractor.

\(1\) The Contractor shall disclose each subject invention to the
Contracting Officer within 2 months after the inventor discloses it in
writing to Contractor personnel responsible for patent matters or within
6 months after the Contractor becomes aware that a subject invention has
been made, whichever is earlier. The disclosure to the Contracting
Officer shall be in the form of a written report and shall identify the
contract under which the invention was made and the inventor(s). It may
be sufficiently complete in technical detail to convey a clear
understanding, to the extent known at the time of the disclosure, of the
nature, purpose, operation, and physical, chemical, biological, or
electrical characteristics of the invention. The disclosure may also
identify any publication, on sale, or public use of the invention and
whether a manuscript describing the invention has been submitted for
publication and, if so, whether it has been accepted for publication at
the time of disclosure. In addition, after disclosure to the Contracting
Officer, the Contractor shall promptly notify the Contracting Officer of
the acceptance of any manuscript describing the invention for
publication or of any on sale or public use planned by the Contractor.

\(2\) The Contractor shall elect in writing whether or not to retain
title to any such invention by notifying the Federal agency at the time
of disclosure or within 8 months of disclosure, as to those countries
(including the United States) in which the Contractor will retain title;
provided, that in any case where publication, on sale, or public use has
initiated the 1-year statutory period wherein valid patent protection
can still be obtained in the United States, the period of election of
title may be shortened by the agency to a date that is no more than 60
days prior to the end of the statutory period.

\(3\) The Contractor shall file its initial patent application on an
elected invention within 1 year after election or, if earlier, prior to
the end of any statutory period wherein valid patent protection can be
obtained in the United States after a publication, on sale, or public
use. The Contractor shall file patent applications in additional
countries (including the European Patent Office and under the Patent
Cooperation Treaty) within either 10 months of the corresponding initial
patent application or 6 months from the date permission is granted by
the Commissioner of Patents and Trademarks to file foreign patent
applications where such filing has been prohibited by a Secrecy Order.

\(4\) Requests for extension of the time for disclosure to the
Contracting Officer, election, and filing may, at the discretion of the
funding Federal agency, be granted, and will normally be granted unless
the Contracting Officer has reason to believe that a particular
extension would prejudice the Government\'s interest.

\(d\) Conditions when the Government may obtain title. The Contractor
shall convey to the Federal agency, upon written request, title to any
subject invention-

\(1\) If the Contractor elects not to retain title to a subject
invention;

\(2\) If the Contractor fails to disclose or elect the subject invention
within the times specified in paragraph (c) above (the agency may only
request title within 60 days after learning of the Contractor\'s failure
to report or elect within the specified times);

\(3\) In those countries in which the Contractor fails to file patent
applications within the times specified in paragraph ( ) above;
provided, however, that if the Contractor has filed a patent application
in a country after the times specified in paragraph (c) above, but prior
to its receipt of the written request of the Federal agency, the
Contractor may continue to retain title in that country; or

\(4\) In any country in which the Contractor decides not to continue the
prosecution of any application for, to pay the maintenance fees on, or
defend in reexamination or opposition proceeding on, a patent on a
subject invention.

\(e\) Minimum rights to Contractor.

\(1\) The Contractor shall retain a nonexclusive, royalty-free license
throughout the world in each subject invention to which the Government
obtains title except if the Contractor fails to disclose the subject
invention within the times specified in paragraph (c) above. The
Contractor\'s license extends to its domestic subsidiaries and
affiliates, if any, within the corporate structure of which the
Contractor is a part and includes the right to grant sublicenses of the
same scope to the extent the Contractor was legally obligated to do so
at the time the contract was awarded. The license is transferable only
with the approval of the funding Federal agency except when transferred
to the successor of that part of the Contractor\'s business to which the
invention pertains.

\(2\) The Contractor\'s domestic license may be revoked or modified by
the funding Federal agency to the extent necessary to achieve
expeditious practical application of the subject invention pursuant to
an application for an exclusive license submitted in accordance with
applicable Federal licensing provisions and agency licensing regulations
(if any). This license shall not be revoked in that field of use or the
geographical areas in which the Contractor has achieved practical
application and continues to make the benefits of the invention
reasonably accessible to the public. The license in any foreign country
may be revoked or modified at the discretion of the funding Federal
agency to the extent the Contractor, its licensees, or its domestic
subsidiaries or affiliates have failed to achieve practical application
in that foreign country.

\(3\) Before revocation or modification of the license, the funding
Federal agency shall furnish the Contractor a written notice of its
intention to revoke or modify the license, and the Contractor shall be
allowed 30 days (or such other time as may be authorized by the funding
Federal agency for good cause shown by the Contractor) after the notice
to show cause why the license should not be revoked or modified. The
Contractor has the right to appeal, in accordance with applicable agency
licensing regulations and 37 CFR 404 concerning the licensing of
Government-owned inventions, any decision concerning the revocation or
modification of its license.

\(f\) Contractor action to protect the Government\'s interest.

\(1\) The Contractor agrees to execute or to have executed and promptly
deliver to the Federal agency all instruments necessary to

\(i\) Establish or confirm the rights the Government has throughout the
world in those subject inventions to which the Contractor elects to
retain title, and

\(ii\) Convey title to the Federal agency when requested under paragraph
(d) above and subparagraph (n)(2) below, and to enable the Government to
obtain patent protection throughout the world in that subject invention.

\(2\) The Contractor agrees to require, by written agreement, its
employees, other than clerical and nontechnical employees, to disclose
promptly in writing to personnel identified as responsible for the
administration of patent matters and in a format suggested by the
Contractor each subject invention made under contract in order that the
Contractor can comply with the disclosure provisions of paragraph (c)
above, and to execute all papers necessary to file patent applications
on subject inventions and to establish the Government\'s rights in the
subject inventions. This disclosure format should require, as a minimum,
the information required by subparagraph (c)(1) above. The Contractor
shall instruct such employees through employee agreements or other
suitable educational programs on the importance of reporting inventions
in sufficient time to permit the filing of patent applications prior to
U.S. or foreign statutory bars.

\(3\) The Contractor shall notify the Federal agency of any decision not
to continue the prosecution of a patent application, pay maintenance
fees, or defend in a reexamination or opposition proceeding on a patent,
in any country, not less than 30 days before the expiration of the
response period required by the relevant patent office.

\(4\) The Contractor agrees to include, within the specification of any
United States patent application and any patent issuing thereon covering
a subject invention, the following statement: "This invention was made
with Government support under \_\_\_\_\_\_\_\_\_\_\_\_\_\_ (identify the
contract) awarded by \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (identify the
Federal agency). The Government has certain rights in this invention.'

\(5\) The Contractor shall establish and maintain active and effective
procedures to assure that subject inventions are promptly identified and
disclosed to Contractor personnel responsible for patent matters within
6 months of conception and/or first actual reduction to practice,
whichever occurs first in performance of work under this contract. These
procedures shall include the maintenance of laboratory notebooks or
equivalent records and other records as are reasonably necessary to
document the conception and/or the first actual reduction to practice of
subject inventions, and records that show that the procedures for
identifying and disclosing the inventions are followed. Upon request,
the Contractor may furnish the Contracting Officer a description of such
procedures for evaluation and for determination as to their
effectiveness.

\(6\) The Contractor agrees, when licensing a subject invention, to
arrange to avoid royalty charges on acquisitions involving Government
funds, including funds derived through Military Assistance Program of
the Government or otherwise derived through the Government, to refund
any amounts received as royalty charges on the subject invention in
acquisitions for, or on behalf of, the Government, and to provide for
such refund in any instrument transferring rights in the invention to
any party.

\(7\) The Contractor shall furnish the Contracting Officer the
following:

\(i\) Interim reports every 12 months (or such longer period as may be
specified by the Contracting Officer) from the date of the contract,
listing subject inventions during that period and certifying that all
subject inventions have been disclosed or that there are no such
inventions.

\(ii\) A final report, within 3 months after completion of the
contracted work, listing all subject inventions or certifying that there
were no such inventions, and listing all subcontracts at any tier
containing a patent rights clause or certifying that there were no such
subcontracts.

\(8\) The Contractor shall promptly notify the Contracting Officer in
writing upon the award of any subcontract at any tier containing a
patent rights clause by identifying the subcontractor, the applicable
patent rights clause, the work to be performed under the subcontract,
and the dates of award and estimated completion. Upon request of the
Contracting Officer, the Contractor may furnish a copy of such
subcontract, and no more frequently than annually, a listing of the
subcontracts that have been awarded.

\(9\) In the event of a refusal by a prospective subcontractor to accept
one of the clauses in subparagraph (g)(1) or (2) below, the Contractor
(i) shall promptly submit a written notice to the Contracting Officer
setting forth the subcontractor\'s reasons for such refusal and other
pertinent information that may expedite disposition of the matter and
(ii) may not proceed with such subcontracting without the written
authorization of the Contracting Officer.

\(10\) The Contractor shall provide, upon request, the filing date,
serial number and title, a copy of the patent application (including an
English-language version if filed in a language other than English), and
patent number and issue date for any subject invention for which the
Contractor has retained title.

\(11\) Upon request, the Contractor shall furnish the Government an
irrevocable power to inspect and make copies of the patent application
file.

\(g\) Subcontracts.

\(1\) The Contractor shall include the clause at 3.5-10, suitably
modified to identify the parties, in all subcontracts, regardless of
tier, for experimental, developmental, or research work to be performed
by a small business firm or nonprofit organization. The subcontractor
may retain all rights provided for the Contractor in this clause, and
the Contractor shall not, as part of the consideration for awarding the
subcontract, obtain rights in the subcontractor\'s subject inventions.

\(2\) The Contractor shall include this clause (3.5-11) in all other
subcontracts, regardless of tier, for experimental, developmental, or
research work.

\(3\) In the case of subcontracts, at any tier, when the prime award
with the Federal agency was a contract (but not a grant or cooperative
agreement), the agency, subcontractor, and the Contractor agree that the
mutual obligations of the parties created by this clause constitute a
contract between the subcontractor and the Federal agency with respect
to those matters covered by this clause.

\(h\) Reporting utilization of subject inventions. The Contractor agrees
to submit on request periodic reports no more frequently than annually
on the utilization of a subject invention or on efforts at obtaining
such utilization that are being made by the Contractor or its licensees
or assignees. Such reports may include information regarding the status
of development, date of first commercial sale or use, gross royalties
received by the Contractor, and such other data and information as the
agency may reasonably specify. The Contractor also agrees to provide
additional reports as may be requested by the agency in connection with
any march-in proceedings undertaken by the agency in accordance with
paragraph (j) of this clause. To the extent data or information supplied
under this paragraph is considered by the Contractor, its licensee or
assignee to be privileged and confidential and is so marked, the agency
agrees that, to the extent permitted by law, it may not disclose such
information to persons outside the Government.

\(i\) Preference for United States industry. Notwithstanding any other
provision of this clause, the Contractor agrees that neither it nor any
assignee will grant to any person the exclusive right to use or sell any
subject invention in the United States unless such person agrees that
any products embodying the subject invention will be manufactured
substantially in the United States. However, in individual cases, the
requirement for such an agreement may be waived by the Federal agency
upon a showing by the Contractor or its assignee that reasonable but
unsuccessful efforts have been made to grant licenses on similar terms
to potential licensees that would be likely to manufacture substantially
in the United States or that under the circumstances domestic
manufacture is not commercially feasible.

\(j\) March-in rights. The Contractor agrees that with respect to any
subject invention in which it has acquired title, the Federal agency has
the right to require the Contractor, an assignee, or exclusive licensee
of a subject invention to grant a nonexclusive, partially exclusive, or
exclusive license in any field of use to a responsible applicant or
applicants, upon terms that are reasonable under the circumstances, and
if the Contractor, assignee, or exclusive licensee refuses such a
request, the Federal agency has the right to grant such a license itself
if the Federal agency determines that\--

\(1\) Such action is necessary because the Contractor or assignee has
not taken, or is not expected to take within a reasonable time,
effective steps to achieve practical application of the subject
invention in such field of use;

\(2\) Such action is necessary to alleviate health or safety needs which
are not reasonably satisfied by the Contractor, assignee, or their
licensees;

\(3\) Such action is necessary to meet requirements for public use
specified by Federal regulations and such requirements are not
reasonably satisfied by the Contractor, assignee, or licensees,

\(4\) Such action is necessary because the agreement required by
paragraph (i) of this clause has not been obtained or waived or because
a licensee of the exclusive right to use or sell any subject invention
in the United States is in breach of such agreement.

\(k\) Special provisions for contracts with nonprofit organizations.
(Reserved)

\(l\) Communications. (Reserved)

\(m\) Other inventions. Nothing contained in this clause may be deemed
to grant to the Government any rights with respect to any invention
other than a subject invention.

\(n\) Examination of records relating to inventions.

\(1\) The Contracting Officer or any authorized representative shall,
until 3 years after final payment under this contract, have the right to
examine any books (including laboratory notebooks), records, and
documents of the Contractor relating to the conception or first
reduction to practice of inventions in the same field of technology as
the work under this contract to determine whether\--

\(i\) Any such inventions are subject inventions;

\(ii\) The Contractor has established and maintains the procedures
required by subparagraphs (f)(2) and (f)(3) of this clause;

\(iii\) The Contractor and its inventors have complied with the
procedures.

\(2\) If the Contracting Officer determines that an inventor has not
disclosed a subject invention to the Contractor in accordance with the
procedures required by subparagraph (f)(5) of this clause, the
Contracting Officer may, within 60 days after the determination, request
title in accordance with subparagraphs (d)(2) and (d)(3) of this clause.
However, if the Contractor establishes that the failure to disclose did
not result from the Contractor\'s fault or negligence, the Contracting
Officer may not request title.

\(3\) If the Contracting Officer learns of an unreported Contractor
invention which the Contracting Officer believes may be a subject
invention, the Contractor may be required to disclose the invention to
the agency for a determination of ownership rights.

\(4\) Any examination of records under this paragraph may be subject to
appropriate conditions to protect the confidentiality of the information
involved.

\(o\) Withholding of payment (this paragraph does not apply to
subcontracts).

\(1\) Any time before final payment under this contract, the Contracting
Officer may, in the Government\'s interest, withhold payment until a
reserve not exceeding \$50,000 or 5 percent of the amount of the
contract, whichever is less, may have been set aside if, in the
Contracting Officer\'s opinion, the Contractor fails to\--

\(i\) Establish, maintain, and follow effective procedures for
identifying and disclosing subject inventions pursuant to subparagraph
(f)(5) above;

\(ii\) Disclose any subject invention pursuant to subparagraph (c)(1)
above;

\(iii\) Deliver acceptable interim reports pursuant to subdivision
(f)(7)(i) above; or

\(iv\) Provide the information regarding subcontracts pursuant to
subparagraph (f)(8) of this clause.

\(2\) Such reserve or balance may be withheld until the Contracting
Officer has determined that the Contractor has rectified whatever
deficiencies exist and has delivered all reports, disclosures, and other
information required by this clause.

\(3\) Final payment under this contract shall not be made before the
Contractor delivers to the Contracting Officer all disclosures of
subject inventions required by subparagraph (c)(1) above, an acceptable
final report pursuant to subdivision (f)(7)(ii) above, and all past due
confirmatory instruments.

\(4\) The Contracting Officer may decrease or increase the sums withheld
up to the maximum authorized above. No amount may be withheld under this
paragraph while the amount specified by this paragraph is being withheld
under other provisions of the contract. The withholding of any amount or
the subsequent payment thereof may not be construed as a waiver of any
Government right.

(*End of clause*)

ALTERNATE I

Add the following sentence to the end of paragraph (b).

The license shall include the right of the Government to sublicense
foreign governments, their nationals, and international organizations
pursuant to the following treaties or international
agreements:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\*

\[\*Contracting Officer complete with the names of applicable existing
treaties or international agreements. The above language is not intended
to apply to treaties or agreements that are in effect on the date of the
award but are not listed.\]

ALTERNATE II

Add the following sentence to the end of paragraph (b).

The agency reserves the right to unilaterally amend this contract to
identify specific treaties or international agreements entered into or
to be entered into by the Government after the effective date of this
contract and effectuate those license or other rights which are
necessary for the Government to meet its obligations to foreign
governments, their nationals, and international organizations under such
treaties or international agreements with respect to subject inventions
made after the date of the amendment.

3.5-12 Patent Rights-Acquisition by the Government

PATENT RIGHTS - ACQUISITION BY THE GOVERNMENT (OCTOBER 3, 1996)

\(a\) Definitions.

\(1\) "Invention," as used in this clause, means any invention or
discovery which is or may be patentable or otherwise protectable under
title 35 of the United States Code or any novel variety of plant that is
or may be protectable under the Plant Variety Protection Act (7 U.S.C.
2321, et seq.).

\(2\) "Subject invention," as used in this clause, means any invention
of the Contractor conceived or first actually reduced to practice in the
performance of work under this contract; provided, that in the case of a
variety of plant, the date of determination (as defined in section 41(d)
of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur
during the period of contract performance.

\(3\) "Practical application," as used in this clause, means to
manufacture, in the case of a composition or product; to practice, in
the case of a process or method; or to operate, in the case of a machine
or system; and, in each case, under such conditions as to establish that
the invention is being utilized and that its benefits are, to the extent
permitted by law or Government regulations, available to the public on
reasonable terms.

\(b\) Allocations of principal rights.

\(1\) Assignment to the Government. The Contractor agrees to assign to
the Government the entire right, title, and interest throughout the
world in and to each subject invention, except to the extent that rights
are retained by the Contractor under subparagraph (b)(2) and paragraph
(d) below.

\(2\) Greater rights determinations

\(i\) The Contractor, or an employee-inventor after consultation with
the Contractor, may retain greater rights than the nonexclusive license
provided in paragraph (d) below.. A request for a determination of
whether the Contractor or the employee-inventor is entitled to retain
such greater rights must be submitted to the Head of the Contracting
Agency or designee at the time of the first disclosure of the invention
pursuant to subparagraph (e)(2) below, or not later than 8 months
thereafter, unless a longer period is authorized in writing by the
Contracting Officer for good cause shown in writing by the Contractor.
Each determination of greater rights under this contract normally may be
subject to paragraph (c) below, and to the reservations and conditions
deemed to be appropriate by the Head of the Contracting Agency or
designee.

\(ii\) Upon request, the Contractor shall provide the filing date,
serial number and title, a copy of the patent application (including an
English-language version if filed in a language other than English), and
patent number and issue date for any subject invention in any country
for which the Contractor has retained title.

\(iii\) Upon request, the Contractor shall furnish the Government an
irrevocable power to inspect and make copies of the patent application
file.

\(c\) Minimum rights acquired by the Government. (1) With respect to
each subject invention to which the Contractor retains principal or
exclusive rights, the Contractor agrees as follows:

\(i\) The Contractor hereby grants to the Government a nonexclusive,
nontransferable, irrevocable, paid-up license to practice or have
practiced each subject invention throughout the world by or on behalf of
the Government of the United States (including any Government agency).

\(ii\) The Contractor agrees that with respect to any subject invention
in which it has acquired title, the Federal agency has the right to
require the Contractor, an assignee, or exclusive licensee of a subject
invention to grant a nonexclusive, partially exclusive, or exclusive
license in any field of use to a responsible applicant or applicants,
upon terms that are reasonable under the circumstances, and if the
Contractor, assignee, or exclusive licensee refuses such a request, the
Federal agency has the right to grant such a license itself if the
Federal agency determines that\--

\(A\) Such action is necessary because the Contractor or assignee has
not taken, or is not expected to take within a reasonable time,
effective steps to achieve practical application of the subject
invention in such field of use;

\(B\) Such action is necessary to alleviate health or safety needs which
are not reasonably satisfied by the Contractor, assignee, or their
licensees;

\(C\) Such action is necessary to meet requirements for public use
specified by Federal regulations and such requirements are not
reasonably satisfied by the Contractor, assignee, or licensees;

\(D\) Such action is necessary because the agreement required by
paragraph (i) of this clause has neither been obtained nor waived or
because a licensee of the exclusive right to use or sell any subject
invention in the United States is in breach

of such agreement.

\(iii\) The Contractor agrees to submit on request periodic reports no
more frequently than annually on the utilization of a subject invention
or on efforts at obtaining such utilization of a subject invention or on
efforts at obtaining such utilization that are being made by the
Contractor or its licensees or assignees. Such reports shall include
information regarding the status of development, date of first
commercial sale or use, gross royalties received by the Contractor, and
such other data and information as the agency may reasonably specify.
The Contractor also agrees to provide additional reports as may be
requested by the agency in connection with any march-in proceedings
undertaken by the agency in accordance with subdivision (ii) above. To
the extent data or information supplied under this section is considered
by the Contractor, its licensee, or assignee to be privileged and
confidential and is so marked, the agency agrees that, to the extent
permitted by law, it will not disclose such information to persons
outside the Government.

\(iv\) The Contractor agrees, when licensing a subject invention, to
arrange to avoid royalty charges on acquisitions involving Government
funds, including funds derived through a Military Assistance Program of
the Government or otherwise derived through the Government, to refund
any amounts received as royalty charges on a subject invention in
acquisitions for, or on behalf of, the Government, and to provide for
such refund in any instrument transferring rights in the invention to
any party.

\(v\) The Contractor agrees to provide for the Government\'s paid-up
license pursuant to subdivision (i) above in any instrument transferring
rights in a subject invention and to provide for the granting of
licenses as required by subdivision (ii) above, and for the reporting of
utilization information as required by subdivision (iii) above, whenever
the instrument transfers principal or exclusive rights in a subject
invention.

\(2\) Nothing contained in this paragraph (c) may be deemed to grant to
the Government any rights with respect to any invention other than a
subject invention.

\(d\) Minimum rights to the Contractor.

\(1\) The Contractor is hereby granted a revocable nonexclusive,
royalty-free license in each patent application filed in any country on
a subject invention and any resulting patent in which the Government
obtains title, unless the Contractor fails to disclose the subject
invention within the times specified in subparagraph (e)(2) below. The
Contractor\'s license extends to its domestic subsidiaries and
affiliates, if any, within the corporate structure of which the
Contractor is a part and includes the right to grant sublicenses of the
same scope to the extent the Contractor was legally obligated to do so
at the time the contract was awarded. The license is transferable only
with the approval of the funding Federal agency except when transferred
to the successor of that part of the Contractor\'s business to which the
invention pertains.

\(2\) The Contractor\'s domestic license may be revoked or modified by
the funding Federal agency to the extent necessary to achieve
expeditious practical application of the subject invention pursuant to
an application for an exclusive license submitted in accordance with
applicable provisions in 37 CFR part 404 and agency licensing
regulations. This license will not be revoked in that field of use or
the geographical areas in which the Contractor has achieved practical
application and continues to make the benefits of the invention
reasonably accessible to the public. The license in any foreign country
may be revoked or modified at the discretion of the funding Federal
agency to the extent the Contractor, its licensees, or its domestic
subsidiaries or affiliates have failed to achieve practical application
in that foreign country.

\(3\) Before revocation or modification of the license, the funding
Federal agency will furnish the Contractor a written notice of its
intention to revoke or modify the license, and the Contractor will be
allowed 30 days (or such other time as may be authorized by the funding
Federal agency for good cause shown by the Contractor) after the notice
to show cause why the license should not be revoked or modified. The
Contractor has the right to appeal, in accordance with applicable agency
licensing regulations and 37 CFR part 404 concerning the licensing of
Government-owned inventions, any decision concerning the revocation or
modification of its license.

\(4\) When the Government has the right to receive title, and does not
elect to secure a patent in a foreign country, the Contractor may elect
to retain such rights in any foreign country in which the Government
elects not to secure a patent, subject to the Government\'s rights in
subparagraph (c)(1) of this clause.

\(e\) Invention identification, disclosures, and reports.

\(1\) The Contractor shall establish and maintain active and effective
procedures to assure that subject inventions are promptly identified and
disclosed to Contractor personnel responsible for patent matters within
6 months of conception and/or first actual reduction to practice,
whichever occurs first in the performance of work under this contract.
These procedures shall include the maintenance of laboratory notebooks
or equivalent records and other records as are reasonably necessary to
document the conception and/or the first actual reduction to practice of
subject inventions, and records that show that the procedures for
identifying and disclosing the inventions are followed. Upon request,
the Contractor may furnish the Contracting Officer a description of such
procedures for evaluation and for determination as to their
effectiveness.

\(2\) The Contractor shall disclose each subject invention to the
Contracting Officer within 2 months after the inventor discloses it in
writing to Contractor personnel responsible for patent matters or, if
earlier, within 6 months after the Contractor becomes aware that a
subject invention has been made, but in any event before any on sale,
public use, or publication of such invention known to the Contractor.
The disclosure to the agency shall be in the form of a written report
and shall identify the contract under which the invention was made and
the inventor(s). It may be sufficiently complete in technical detail to
convey a clear understanding, to the extent known at the time of the
disclosure, of the nature, purpose, operation, and physical, chemical,
biological, or electrical characteristics of the invention. The
disclosure shall also identify any publication, on sale, or public use
of the invention and whether a manuscript describing the invention has
been submitted for publication and, if so, whether it has been accepted
for publication at the time of disclosure. In addition, after disclosure
to the agency, the Contractor shall promptly notify the agency of the
acceptance of any manuscript describing the invention for publication or
of any on sale or public use planned by the Contractor.

\(3\) The Contractor shall furnish the Contracting Officer the
following:

\(i\) Interim reports every 12 months (or such longer period as may be
specified by the Contracting Officer) from the date of the contract,
listing subject inventions during that period, and certifying that all
subject inventions have been disclosed (or that there are not such
inventions) and that the procedures required by subparagraph (e)(1)
above have been followed.

\(ii\) A final report, within 3 months after completion of the
contracted work, listing all subject inventions or certifying that there
were no such inventions, and listing all subcontracts at any tier
containing a patent rights clause or certifying that there were no such
subcontracts.

\(4\) The Contractor agrees to require, by written agreement, its
employees, other than clerical and nontechnical employees, to disclose
promptly in writing to personnel identified as responsible for the
administration of patent matters and in a format suggested by the
Contractor each subject invention made under contract in order that the
Contractor can comply with the disclosure provisions of paragraph (c)
above, and to execute all papers necessary to file patent applications
on subject inventions and to establish the Government\'s rights in the
subject inventions. This disclosure format should require, as a minimum,
the information required by subparagraph (2) above.

\(5\) The Contractor agrees that the Government may duplicate and
disclose subject invention disclosures and all other reports and papers
furnished or required to be furnished pursuant to this clause.

\(f\) Examination of records relating to inventions.

\(1\) The Contracting Officer or any authorized representative shall,
until 3 years after final payment under this contract, have the right to
examine any books (including laboratory notebooks), records, and
documents of the Contractor relating to the conception or first actual
reduction to practice of inventions in the same field of technology as
the work under this contract to determine whether-

\(i\) Any such inventions are subject inventions;

\(ii\) The Contractor has established and maintains the procedures
required by subparagraphs (e)(1) and (4) of this clause; and

\(iii\) The Contractor and its inventors have complied with the
procedures.

\(2\) If the Contracting Officer learns of an unreported Contractor
invention which the Contracting Officer believes may be a subject
invention, the Contractor may be required to disclose the invention to
the agency for a determination of ownership rights.

\(3\) Any examination of records under this paragraph will be subject to
appropriate conditions to protect the confidentiality of the information
involved.

\(g\) Withholding of payment (this paragraph does not apply to
subcontracts).

\(1\) Any time before final payment under this contract, the Contracting
Officer may, in the Government\'s interest, withhold payment until a
reserve not exceeding \$50,000 or 5 percent of the amount of this
contract, whichever is less, may have been set aside if, in the
Contracting Officer\'s opinion, the Contractor fails to\--

\(i\) Establish, maintain, and follow effective procedures for
identifying and disclosing subject inventions pursuant to subparagraph
(e)(1) above;

\(ii\) Disclose any subject invention pursuant to subparagraph (e)(2)
above;

\(iii\) Deliver acceptable interim reports pursuant to subdivision
(e)(3)(i) above; or

\(iv\) Provide the information regarding subcontracts pursuant to
subparagraph (h)(4) below.

\(2\) Such reserve or balance may be withheld until the Contracting
Officer has determined that the Contractor has rectified whatever
deficiencies exist and has delivered all reports, disclosures, and other
information required by this clause.

\(3\) Final payment under this contract shall not be made before the
Contractor delivers to the Contracting Officer all disclosures of
subject inventions required by subparagraph (e)(2) above, and acceptable
final report pursuant to subdivision (e)(3)(ii) above, and all past due
confirmatory instruments.

\(4\) The Contracting Officer may decrease or increase the sums withheld
up to the maximum authorized above. No amount shall be withheld under
this paragraph while the amount specified by this paragraph is being
withheld under other provisions of the contract. The withholding of any
amount or the subsequent payment thereof may not be construed as a
waiver of any Government rights.

\(h\) Subcontracts.

\(1\) The Contractor shall include this clause (suitably modified to
identify the parties) in all subcontracts, regardless of tier, for
experimental, developmental, or research work. The subcontractor shall
retain all rights provided for the Contractor in this clause, and the
Contractor shall not, as part of the consideration for awarding the
subcontract, obtain rights in the subcontractor\'s subject inventions.

\(2\) In the event of a refusal by a prospective subcontractor to accept
such a clause the Contractor-

\(i\) Shall promptly submit a written notice to the Contracting Officer
setting forth the subcontractor\'s reasons for such refusal and other
pertinent information that may expedite disposition of the matter; and

\(ii\) Shall not proceed with such subcontract without the written
authorization of the Contracting Officer.

\(3\) In the case of subcontracts at any tier, the agency,
subcontractor, and Contractor agree that the mutual obligations of the
parties created by this clause constitute a contract between the
subcontractor and the Federal agency with respect to those matters
covered by this clause.

\(4\) The Contractor shall promptly notify the Contracting Officer in
writing upon the award of any subcontract at any tier containing a
patent rights clause by identifying the subcontractor, the applicable
patent rights clause, the work to be performed under the subcontract,
and the dates of award and estimated completion. Upon request of the
Contracting Officer, the Contractor shall furnish a copy of such
subcontract, and, no more frequently than annually, a listing of the
subcontracts that have been awarded.

\(i\) Preference for United States industry. Unless provided otherwise,
no Contractor that receives title to any subject invention and no
assignee of any such Contractor shall grant to any person the exclusive
right to use or sell any subject invention in the United States unless
such person agrees that any products embodying the subject invention
will be manufactured substantially in the United States. However, in
individual cases, the requirement may be waived by the Government upon a
showing by the Contractor or assignee that reasonable but unsuccessful
efforts have been made to grant licenses on similar terms to potential
licensees that would be likely to manufacture substantially in the
United States or that under the circumstances domestic manufacture is
not commercially feasible.

(*End of clause*)

ALTERNATE I

Add to the end of paragraph (c)(1)(i).

The license shall include the right of the Government to sublicense
foreign governments, their nationals, and international organizations
pursuant to the following treaties or international agreements:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \*

\[\*Contracting Officer complete with the names of applicable existing
treaties or international agreements. The above language is not intended
to apply to treaties or agreements that are in effect on the date of the
award but are not listed.\]

ALTERNATE II

Add to the end of paragraph (c)(1)(i).

The agency reserves the right to unilaterally amend this contract to
identify specific treaties or international agreements entered into or
to be entered into by the Government after the effective date of this
contract, and effectuate those license or other rights which are
necessary for the Government to meet its obligations to foreign
governments, their nationals, and international organizations under such
treaties or international agreements with respect to subject inventions
made after the date of the amendment.

3.5-13 Rights in Data-General

RIGHTS IN DATA-GENERAL (OCTOBER 3, 1996)

\(a\) Definitions.

\(1\) "Computer software," as used in this clause, means computer
programs, computer data bases, and documentation thereof.

\(2\) "Data," as used in this clause, means recorded information,
regardless of form or the media on which it may be recorded. The term
includes technical data and computer software. The term does not include
information incidental to contract administration, such as financial,
administrative, cost or pricing, or management information.

\(3\) "Form, fit, and function data," as used in this clause, means data
relating to items, components, or processes that are sufficient to
enable physical and functional interchangeability, as well as data
identifying source, size, configuration, mating, and attachment
characteristics, functional characteristics, and performance
requirements; except that for computer software it means data
identifying source, functional characteristics, and performance
requirements but specifically excludes the source code, algorithm,
process, formulae, and flow charts of the software.

\(4\) "Limited rights," as used in this clause, means the rights of the
Government in limited rights data as set forth in the Limited Rights
Notice of subparagraph (g)(2) if included in this clause.

\(5\) "Limited rights data," as used in this clause, means data (other
than computer software) that embody trade secrets or are commercial or
financial and confidential or privileged, to the extent that such data
pertain to items, components, or processes developed at private expense,
including minor modifications thereof.

\(6\) "Restricted computer software," as used in this clause, means
computer software developed at private expense and that is a trade
secret; is commercial or financial and is confidential or privileged; or
is published copyrighted computer software; including minor
modifications of such computer software.

\(7\) "Restricted rights," as used in this clause, means the rights of
the Government in restricted computer software, as set forth in a
Restricted Rights Notice of subparagraph (g)(3) if included in this
clause, or as otherwise may be provided in a collateral agreement
incorporated in and made part of this contract, including minor
modifications of such computer software.

\(8\) "Technical data," as used in this clause, means data (other than
computer software) which are of a scientific or technical nature.

\(9\) "Unlimited rights," as used in this clause, means the right of the
Government to use, disclose, reproduce, prepare derivative works,
distribute copies to the public, and perform publicly and display
publicly, in any manner and for any purpose, and to have or permit
others to do so.

\(b\) Allocations of rights.

\(1\) Except as provided in paragraph (c) of this clause regarding
copyright, the Government shall have unlimited rights in-

\(i\) Data first produced in the performance of this contract;

\(ii\) Form, fit, and function data delivered under this contract;

\(iii\) Data delivered under this contract (except for restricted
computer software) that constitute manuals or instructional and training
material for installation, operation, or routine maintenance and repair
of items, components, or processes delivered or furnished for use under
this contract; and

\(iv\) All other data delivered under this contract unless provided
otherwise for limited rights data or restricted computer software in
accordance with paragraph (g) of this clause.

\(2\) The Contractor shall have the right to\--

\(i\) Use, release to others, reproduce, distribute, or publish any data
first produced or specifically used by the Contractor in the performance
of this contract, unless provided otherwise in paragraph (d) of this
clause;

\(ii\) Protect from unauthorized disclosure and use those data which are
limited rights data or restricted computer software to the extent
provided in paragraph (g) of this clause;

\(iii\) Substantiate use of, add or correct limited rights, restricted
rights, or copyright notices and to take other appropriate action, in
accordance with paragraphs (e) and (f) of this clause; and

\(iv\) Establish claim to copyright subsisting in data first produced in
the performance of this contract to the extent provided in subparagraph
(c)(1) of this clause.

\(c\) Copyright.

\(1\) Data first produced in the performance of this contract. Unless
provided otherwise in paragraph (d) of this clause, the Contractor may
establish, without prior approval of the Contracting Officer, claim to
copyright subsisting in scientific and technical articles based on or
containing data first produced in the performance of this contract and
published in academic, technical or professional journals, symposia
proceedings or similar works. The prior, express written permission of
the Contracting Officer is required to establish claim to copyright
subsisting in all other data first produced in the performance of this
contract. When claim to copyright is made, the Contractor shall affix
the applicable copyright notices of 17 U.S.C. 401 or 402 and
acknowledgment of Government sponsorship (including contract number) to
the data when such data are delivered to the Government, as well as when
the data are published or deposited for registration as a published work
in the U.S. Copyright Office. For data other than computer software the
Contractor grants to the Government, and others acting on its behalf, a
paid-up, nonexclusive, irrevocable worldwide license in such copyrighted
data to reproduce, prepare derivative works, distribute copies to the
public, and perform publicly and display publicly, by or on behalf of
the Government. For computer software, the Contractor grants to the
Government and others acting in its behalf, a paid-up nonexclusive,
irrevocable worldwide license in such copyrighted computer software to
reproduce, prepare derivative works, and perform publicly and display
publicly by or on behalf of the Government.

\(2\) Data not first produced in the performance of this contract. The
Contractor shall not, without prior written permission of the
Contracting Officer, incorporate in data delivered under this contract
any data not first produced in the performance of this contract and
which contains the copyright notice of 17 U.S.C. 401 or 402, unless the
Contractor identifies such data and grants to the Government, or
acquires on its behalf, a license of the same scope as set forth in
subparagraph (c)(1) of this clause; provided, however, that if such data
are computer software the Government may acquire a copyright license as
set forth in subparagraph (g)(3) of this clause if included in this
contract or as otherwise may be provided in a collateral agreement
incorporated in or made part of this contract.

\(3\) Removal of copyright notices. The Government agrees not to remove
any copyright notices placed on data pursuant to this paragraph (c), and
to include such notices on all reproductions of the data.

\(d\) Release, publication and use of data.

\(1\) The Contractor shall have the right to use, release to others,
reproduce, distribute, or publish any data first produced or
specifically used by the Contractor in the performance of this contract,
except to the extent such data may be subject to the Federal export
control or national security laws or regulations, or unless otherwise
provided in this paragraph of this clause or expressly set forth in this
contract.

\(2\) The Contractor agrees that to the extent it receives or is given
access to data necessary for the performance of this contract which
contain restrictive markings, the Contractor shall treat the data in
accordance with such markings unless otherwise specifically authorized
in writing by the Contracting Officer.

\(e\) Unauthorized marking of data.

\(1\) Notwithstanding any other provisions of this contract concerning
inspection or acceptance, if any data delivered under this contract are
marked with the notices specified in subparagraph (g)(2) or (g)(3) of
this clause and use of such is not authorized by this clause, or if such
data bears any other restrictive or limiting markings not authorized by
this contract, the Contracting Officer may at any time either return the
data to the Contractor, or cancel or ignore the markings. However, the
following procedures shall apply prior to canceling or ignoring the
markings.

\(i\) The Contracting Officer shall make written inquiry to the
Contractor affording the Contractor 30 days from receipt of the inquiry
to provide written justification to substantiate the propriety of the
markings;

\(ii\) If the Contractor fails to respond or fails to provide written
justification to substantiate the propriety of the markings within the
30-day period (or a longer time not exceeding 90 days approved in
writing by the Contracting Officer for good cause shown), the Government
shall have the right to cancel or ignore the markings at any time after
said period and the data will no longer be made subject to any
disclosure prohibitions.

\(iii\) If the Contractor provides written justification to substantiate
the propriety of the markings within the period set in subdivision
(e)(1)(i) of this clause, the Contracting Officer shall consider such
written justification and determine whether or not the markings are to
be canceled or ignored. If the Contracting Officer determines that the
markings are authorized, the Contractor shall be so notified in writing.
If the Contracting Officer determines, with concurrence of the head of
the contracting activity, that the markings are not authorized, the
Contracting Officer shall furnish the Contractor a written
determination, which determination may become the final agency decision
regarding the appropriateness of the markings unless the Contractor
files suit in a court of competent jurisdiction within 90 days of
receipt of the Contracting Officer\'s decision. The Government shall
continue to abide by the markings under this subdivision (e)(1)(iii)
until final resolution of the matter either by the Contracting
Officer\'s determination becoming final (in which instance the
Government may thereafter have the right to cancel or ignore the
markings at any time and the data will no longer be made subject to any
disclosure prohibitions), or by final disposition of the matter by court
decision if suit is filed.

\(2\) The time limits in the procedures set forth in subparagraph (e)(1)
of this clause may be modified in accordance with agency regulations
implementing the Freedom of Information Act (5 U.S.C. 552) if necessary
to respond to a request thereunder.

(3)Reserved.

\(4\) Except to the extent the Government\'s action occurs as the result
of final disposition of the matter by a court of competent jurisdiction,
the Contractor is not precluded by this paragraph (e) from filing a
claim under the "Contract Disputes" clause of this contract, as
applicable, that may arise as the result of the Government removing or
ignoring authorized markings on data delivered under this contract.

\(f\) Omitted or incorrect markings.

\(1\) Data delivered to the Government without either the limited rights
or restricted rights notice as authorized by paragraph (g) of this
clause, or the copyright notice required by paragraph (c) of this
clause, may be deemed to have been furnished with unlimited rights, and
the Government assumes no liability for the disclosure, use, or
reproduction of such data. However, to the extent the data has not been
disclosed without restriction outside the Government, the Contractor may
request, within 6 months (or a longer time approved by the Contracting
Officer for good cause shown) after delivery of such data, permission to
have notices placed on qualifying data at the Contractor\'s expense, and
the Contracting Officer may agree to do so if the Contractor-

\(i\) Identifies the data to which the omitted notice is to be applied;

\(ii\) Demonstrates that the omission of the notice was inadvertent;

\(iii\) Establishes that the use of the proposed notice is authorized;

\(iv\) Acknowledges that the Government has no liability with respect to
the disclosure, use, or reproduction of any such data made prior to the
addition of the notice or resulting from the omission of the notice.

\(2\) The Contracting Officer may also (i) permit correction at the
Contractor\'s expense of incorrect notices if the Contractor identifies
the data on which correction of the notice is to be made, and
demonstrates that the correct notice is authorized, or (ii) correct any
incorrect notices.

\(g\) Protection of limited rights data and restricted computer
software. (1) When data other than that listed in subdivisions (b)(1)
(i), (ii), and (iii) of this clause are specified to be delivered under
this contract and qualify as either limited rights data or restricted
computer software, if the Contractor desires to continue protection of
such data, the Contractor may withhold such data and not furnish them to
the Government under this contract. As a condition to this withholding,
the Contractor may identify the data being withheld and furnish form,
fit, and function data in lieu thereof. Limited rights data that are
formatted as a computer data base for delivery to the Government are to
be treated as limited rights data and not restricted computer software.

\(2\) Reserved.

\(3\) Reserved

\(h\) Subcontracting. The Contractor has the responsibility to obtain
from its subcontractors all data and rights therein necessary to fulfill
the Contractor\'s obligations to the Government under this contract. If
a subcontractor refuses to accept terms affording the Government such
rights, the Contractor shall promptly bring such refusal to the
attention of the Contracting Officer and not proceed with subcontract
award without further authorization.

\(i\) Relationship to patents. Nothing contained in this clause shall
imply a license to the Government under any patent or be construed as
affecting the scope of any license or other right otherwise granted to
the Government.

*(End of clause)*

ALTERNATE I

Substitute the following definition in paragraph (a).

Limited rights data, as used in this clause, means data (other than
computer software) developed at private expense that embody trade
secrets or are commercial or financial and confidential or privileged.

ALTERNATE II

Insert the following in paragraph (g).

(g)(2) Notwithstanding subparagraph (g)(1) of this clause, the contract
may identify and specify the delivery of limited rights data, or the
Contracting Officer may require by written request the delivery of
limited rights data that has been withheld or would otherwise be
withholdable. If delivery of such data is so required, the Contractor
may affix the following Limited Rights Notice to the data and the
Government will thereafter treat the data, subject to the provisions of
paragraphs (e) and (f) of this clause, in accordance with such Notice:

LIMITED RIGHTS NOTICE

\(a\) These data are submitted with limited rights under Government
Contract No. \_\_\_\_\_\_\_\_\_\_\_ (and
subcontract\_\_\_\_\_\_\_\_\_\_\_\_, if appropriate). These data may be
reproduced and used by the Government with the express limitation that
they will not, without written permission of the Contractor, be used for
purposes of manufacture nor disclosed outside the Government; except
that the Government may disclose these data outside the Government for
the following purposes, if any, provided that the Government makes such
disclosure subject to prohibition against further use and disclosure:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \[Agencies may list
additional purposes or if none, so state\]

\(b\) This Notice may be marked on any reproduction of these data, in
whole or in part.

*(End of notice)*

ALTERNATE III

Insert the following in paragraph (g).

(g)(3)(i) Notwithstanding subparagraph (g)(1) of this clause, the
contract may identify and specify the delivery of restricted computer
software, or the Contracting Officer may require by written request the
delivery of restricted computer software that has been withheld or would
otherwise be withholdable. If delivery of such computer software is so
required, the Contractor may affix the following Restricted Rights
Notice to the computer software and the Government will thereafter treat
the computer software, subject to paragraphs (e) and (f) of this clause,
in accordance with the Notice:

RESTRICTED RIGHTS NOTICE

\(a\) This computer software is submitted with restricted rights under
Government Contract No. \_\_\_\_\_\_\_\_\_\_\_ (and subcontract
\_\_\_\_\_\_\_\_\_\_\_, if appropriate). It may not be used, reproduced,
or disclosed by the Government except as provided in paragraph (b) of
this Notice or as otherwise expressly stated in the contract.

\(b\) This computer software may be-

\(1\) Used or copied for use in or with the computer or computers for
which it was acquired, including use at any Government installation to
which such computer or computers may be transferred;

\(2\) Used or copied for use in a backup computer if any computer for
which it was acquired is inoperative;

\(3\) Reproduced for safekeeping (archives) or backup purposes;

\(4\) Modified, adapted, or combined with other computer software,
provided that the modified, combined, or adapted portions of the
derivative software incorporating restricted computer software are made
subject to the same restricted rights;

\(5\) Disclosed to and reproduced for use by support service Contractors
in accordance with subparagraphs (b) (1) through (4) of this clause,
provided the Government makes such disclosure or reproduction subject to
these restricted rights; and

\(6\) Used or copied for use in or transferred to a replacement
computer.

\(7\) Other uses
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\(c\) Notwithstanding the foregoing, if this computer software is
published copyrighted computer software, it is licensed to the
Government, without disclosure prohibitions, with the minimum rights set
forth in paragraph (b) of this clause.

\(d\) Any other rights or limitations regarding the use, duplication, or
disclosure of this computer software are to be expressly stated in, or
incorporated in, the contract.

\(e\) This Notice shall be marked on any reproduction of this computer
software, in whole or in part.

*(End of notice)*

\(ii\) Where it is impractical to include the Restricted Rights Notice
on restricted computer software, the following short- form Notice may be
used in lieu thereof:

RESTRICTED RIGHTS NOTICE (SHORT FORM)

Use, reproduction, or disclosure is subject to restrictions set forth in
Contract No. \_\_\_\_\_\_\_\_\_\_\_ (and subcontract
\_\_\_\_\_\_\_\_\_\_\_, if appropriate) with \_\_\_\_\_\_\_\_\_\_\_
(name of Contractor and subcontractor).

*(End of notice)*

\(iii\) If restricted computer software is delivered with the copyright
notice of 17 U.S.C. 401, it will be presumed to be published copyrighted
computer software licensed to the Government without disclosure
prohibitions, with the minimum rights set forth in paragraph (b) of this
clause, unless the Contractor includes the following statement with such
copyright notice: Unpublished-rights reserved under the Copyright Laws
of the United States.

ALTERNATE IV

Substitute for paragraph (c)(1).

\(c\) Copyright.

\(1\) Data First Produced in the Performance of the Contract. Except as
otherwise specifically provided in this contract, the Contractor may
establish claim to copyright subsisting in any data first produced in
the performance of this contract. When claim to copyright is made, the
Contractor shall affix the applicable copyright notice of 17 U.S.C. 401
or 402 and acknowledgment of Government sponsorship (including contract
number) to the data when such data are delivered to the Government, as
well as when the data are published or deposited for registration as a
published work in the U.S. Copyright Office. For data other than
computer software, the Contractor grants to the Government, and others
acting on its behalf, a paid-up, nonexclusive, irrevocable, worldwide
license for all such data to reproduce, prepare derivative works,
distribute copies to the public, and perform publicly and display
publicly, by or on behalf of the Government. For computer software, the
Contractor grants to the Government and others acting on its behalf, a
paid up, nonexclusive, irrevocable worldwide license for all such
computer software to reproduce, prepare derivative works, and perform
publicly and display publicly, by or on behalf of the Government.

ALTERNATE V

Add the following paragraph (j).

\(j\) The Contractor agrees, except as may be otherwise specified in
this contract for specific data items listed as not subject to this
paragraph, that the Contracting Officer or an authorized representative
may, up to three years after acceptance of all items to be delivered
under this contract, inspect at the Contractor\'s facility any data
withheld pursuant to paragraph (g)(1) of this clause, for purposes of
verifying the Contractor\'s assertion pertaining to the limited rights
or restricted rights status of the data or for evaluating work
performance. Where the Contractor whose data are to be inspected
demonstrates to the Contracting Officer that there would be a possible
conflict of interest if the inspection were made by a particular
representative, the Contracting Officer may designate an alternate
inspector.

3.5-14 Representation of Limited Rights Data and Restricted Computer
Software

REPRESENTATION OF LIMITED RIGHTS DATA AND

RESTRICTED COMPUTER SOFTWARE (OCTOBER 3, 1996)

\(a\) This Screening Information Request (SIR) sets forth the work to be
performed if a contract award results, and the Government\'s known
delivery requirements for data, as defined in the clause "Rights in
Data-General." Any resulting contract may also provide the Government
the option to order additional data under the "Additional Data
Requirements" clause, if included in the contract. Any data delivered
under the resulting contract will be subject to the "Rights in
Data-General" clause that is to be included in this contract. Under the
latter clause, a Contractor may withhold from delivery data that qualify
as limited rights data or restricted computer software, and deliver
form, fit, and function data in lieu thereof. The latter clause also may
be used with its Alternates II and/or III to obtain delivery of limited
rights data or restricted computer software, marked with limited rights
or restricted rights notices, as appropriate. In addition, use of
Alternate V with this latter clause provides the Government the right to
inspect such data at the Contractor\'s facility.

\(b\) As an aid in determining the Government\'s need to include any of
the aforementioned Alternates in the clause "Rights in Data-General,"
the offeror\'s response to this Screening Information Request (SIR) may,
to the extent feasible, complete the representation in paragraph (b) of
this provision to either state that none of the data qualify as limited
rights data or restricted computer software, or identify which of the
data qualifies as limited rights data or restricted computer software.
Any identification of limited rights data or restricted computer
software in the offeror\'s response is not determinative of the status
of such data should a contract be awarded to the offeror.

REPRESENTATION CONCERNING DATA RIGHTS

Offeror has reviewed the requirements for the delivery of data or
software and states (offeror check appropriate block)\--

\[ \] None of the data proposed for fulfilling such requirements
qualifies as limited rights data or restricted computer software.

\[ \] Data proposed for fulfilling such requirements qualify as limited
rights data or restricted computer software and are identified as
follows:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Note: "Limited rights data" and "Restricted computer software" are
defined in the contract clause titled "Rights In Data-General."

*(End of provision)*

3.5-18 Commercial Computer Software-Restricted Rights

COMMERCIAL COMPUTER SOFTWARE - RESTRICTED RIGHTS (OCTOBER 3, 1996)

\(a\) As used in this clause, "restricted computer software" means any
computer program, computer data base, or documentation thereof, that has
been developed at private expense and either is a trade secret, is
commercial or financial and confidential or-privileged, or is published
and copyrighted.

\(b\) Notwithstanding any provisions to the contrary contained in any
Contractor\'s standard commercial license or lease agreement pertaining
to any restricted computer software delivered under this purchase
order/contract, and irrespective of whether any such agreement has been
proposed prior to or after issuance of this purchase order/contract or
of the fact that such agreement may be affixed to or accompany the
restricted computer software upon delivery, vendor agrees that the
Government may have the rights that are set forth in paragraph (c) of
this clause to use, duplicate or disclose any restricted computer
software delivered under this purchase order/contract. The terms and
provisions of this contract, including any commercial lease or license
agreement, shall be subject to paragraph (c) of this clause and shall
comply with applicable Federal laws.

(c)(1) The restricted computer software delivered under this contract
shall not be used, reproduced or disclosed by the Government except as
provided in subparagraph (c)(2) of this clause or as expressly stated
otherwise in this contract.

\(2\) The restricted computer software may be-

\(i\) Used or copied for use in or with the computer or computers for
which it was acquired, including use at any Government installation to
which such computer or computers may be transferred;

\(ii\) Used or copied for use in or with backup computer if any computer
for which it was acquired is inoperative;

\(iii\) Reproduced for safekeeping (archives) or backup purposes;

\(iv\) Modified, adapted, or combined with other computer software,
provided that the modified, combined, or adapted portions of the
derivative software incorporating any of the delivered, restricted
computer software shall be subject to same restrictions set forth in
this purchase order/contract;

\(v\) Disclosed to and reproduced for use by support service Contractors
or their subcontractors, subject to the same restrictions set forth in
this purchase order/contract; and

\(vi\) Used or copied for use in or transferred to a replacement
computer.

\(3\) If the restricted computer software delivered under this purchase
order/contract is published and copyrighted, it is licensed to the
Government, without disclosure prohibitions, with the rights set forth
in subparagraph (c)(2) of this clause

unless expressly stated otherwise in this purchase order/contract.

\(4\) To the extent feasible the Contractor shall affix a Notice
substantially as follows to any restricted computer software delivered
under this purchase order/contract; or, if the vendor does not, the
Government has the right to do so: "Notice‑Notwithstanding any other
lease or license agreement that may pertain to, or accompany the
delivery of, this computer software, the rights of the Government
regarding its use, reproduction and disclosure are as set forth in
Government Contract No. \_\_\_\_\_\_\_."

\(d\) If any restricted computer software is delivered under this
contract with the copyright notice of 17 U.S.C. 401, it will be presumed
to be published and copyrighted and licensed to the Government in
accordance with subparagraph (c)(3) of this clause, unless a statement
substantially as follows accompanies such copyright notice:
"Unpublished-rights reserved under the copyright laws of the United
States."

(*End of clause*)

3.5-20 Technical Data Certification, Revision, and Withholding of
Payment\--Major Systems

TECHNICAL DATA CERTIFICATION, REVISION, AND

WITHHOLDING OF PAYMENT - MAJOR SYSTEMS (OCTOBER 3, 1996)

\(a\) Scope of clause. This clause shall apply to all technical data (as
defined in the Rights in Data\--General clause included in this
contract) that have been specified in this contract as being subject to
this clause. It shall apply to all such data delivered, or required to
be delivered, at any time during contract performance or within 3 years
after acceptance of all items (other than technical data) delivered
under this contract unless a different period is set forth herein. The
Contracting Officer may release the Contractor from all or part of the
requirements of this clause for specifically identified technical data
items at any time during the period covered by this clause.

\(b\) Technical data certification. (1) All technical data that are
subject to this clause shall be accompanied by the following
certification upon delivery:

TECHNICAL DATA CERTIFICATION (OCTOBER 1996)

The Contractor, \_\_\_\_\_\_\_\_\_\_\_\_ , hereby certifies that to the
best of its knowledge and belief the technical data delivered herewith
under Government contract No. \_\_\_\_\_\_\_\_\_\_\_\_ (and
subcontract\_\_\_\_\_\_\_\_\_\_\_\_, if appropriate) are complete,
accurate, and comply with the requirements of the contract concerning
such technical data.

(End of certification)

\(2\) The Government shall rely on the certification set out in
subparagraph (b)(1) of this clause in accepting delivery of the
technical data, and in consideration thereof may, at any time during the
period covered by this clause, request correction of any deficiencies
which are not in compliance with contract requirements. Such corrections
shall be made at the expense of the Contractor. Unauthorized markings on
data shall not be considered a deficiency for the purpose of this
clause, but will be treated in accordance with paragraph (e) of the
Rights in Data\--General clause included in this contract.

\(c\) Technical data revision. The Contractor also agrees, at the
request of the Contracting Officer, to revise technical data that are
subject to this clause to reflect engineering design changes made during
the performance of this contract and affecting the form, fit, and
function of any item (other than technical data) delivered under this
contract. The Contractor may submit a request for an equitable
adjustment to the terms and conditions of this contract for any
revisions to technical data made pursuant to this paragraph.

\(d\) Withholding of payment. (1) At any time before final payment under
this contract the Contracting Officer may, in the Government\'s
interest, withhold payment until a reserve not exceeding \$100,000 or 5
percent of the amount of this contract, whichever is less, if in the
Contracting Officer\'s opinion respecting any technical data that are
subject to this clause, the Contractor fails to\--

\(i\) Make timely delivery of such technical data as required by this
contract;

\(ii\) Provide the certification required by subparagraph (b)(1) of this
clause;

\(iii\) Make the corrections required by subparagraph (b)(2) of this
clause; or (iv) Make revisions requested under paragraph (c) of this
clause.

\(2\) Such reserve or balance shall be withheld until the Contracting
Officer has determined that the Contractor has delivered the data and/or
has made the required corrections or revisions. Withholding shall not be
made if the failure to make timely delivery, and/or the deficiencies
relating to delivered data, arose out of causes beyond the control of
the Contractor and without the fault or negligence of the Contractor.

\(3\) The Contracting Officer may decrease or increase the sums withheld
up to the sums authorized in subparagraph (d)(1) of this clause. The
withholding of any amount under this paragraph, or the subsequent
payment thereof, shall not be construed as a waiver of any Government
rights.

*(End of clause)*

3.6.1-2 Notice of Very Small Business Set-Aside

NOTICE OF VERY SMALL BUSINESS SET-ASIDE (OCTOBER 3, 1996)

\(a\) Definition. "Very small business concern," as used in this clause,
means a concern, including its affiliates, that is independently owned
and operated, not dominant in the field of operation in which it is
bidding on Government contracts, that has been in operation for less
than five years and whose size is no greater than 50 percent of the
numerical size standard applicable to the standard industrial
classification code assigned to a contracting opportunity.

\(b\) General.

\(1\) Information and/or offers under this acquisition are requested
from very small business concerns only. Information and/or offers that
are not from a very small business shall not be considered and shall be
rejected.

\(2\) Any award resulting from this SIR will be made to a very small
business concern.

\(c\) Agreement. A manufacturer or regular dealer submitting information
and/or an offer in its own name agrees to furnish, in performing the
contract, only end items manufactured or produced by very small business
concerns inside the United States, its territories and possessions, the
Commonwealth of Puerto Rico, the Trust Territory of the Pacific Islands,
or the District of Columbia. However, this requirement does not apply in
connection with construction or service contracts.

(*End of clause*)

3.6.3-4 Recovered Material Certification

RECOVERED MATERIAL CERTIFICATION (OCTOBER 3, 1996)

\(a\) The offeror's signature on this contract constitutes an
affirmative attestation that recovered materials will be used as
required by the applicable purchase descriptions.

\(b\) Definitions.

\(1\) "Recovered materials," as used in this clause, means waste
materials and by-products which have been recovered or diverted from
solid waste including postconsumer material, but such term does not
include those materials and by-products generated from, and commonly
reused within, an original

manufacturing process

\(2\) "Postconsumer material," as used in this clause, means a material
or finished product that has served its intended use and has been
discarded for disposal or recovery, having completed its life as a
consumer item. Postconsumer material is a part of the broader category
of "recovered material."

(*End of clause*)

3.7-1 Privacy Act Notification

PRIVACY ACT NOTIFICATION (OCTOBER 3, 1996)

The Contractor will be required to design, develop, or operate a system
of records on individuals, to accomplish an agency function subject to
the Privacy Act of 1974, Public Law 93-579, December 31, 1974 (5 U.S.C.
552a) and applicable agency regulations (49 CFR Part 10). Violation of
the Act may involve the imposition of criminal penalties.

*(End of clause)*

3.7-2 Privacy Act

PRIVACY ACT (OCTOBER 3, 1996)

\(a\) The Contractor agrees to\--

\(1\) Comply with the Privacy Act of 1974 (the Act) and the agency rules
and regulations (49 CFR Part 10) issued under the Act in the design,
development, or operation of any system of records on individuals to
accomplish an agency function when the contract specifically
identifies\--

\(i\) The systems of records; and

\(ii\) The design, development, or operation work that the contractor is
to perform;

\(2\) Include the Privacy Act notification contained in this contract in
every solicitation and resulting subcontract and in every subcontract
awarded without a solicitation, when the work statement in the proposed
subcontract requires the redesign, development, or operation of a system
of records on individuals that is subject to the Act; and

\(3\) Include this clause, including this subparagraph (3), in all
subcontracts awarded under this contract which requires the design,
development, or operation of such a system of records.

\(b\) In the event of violations of the Act, a civil action may be
brought against the agency involved when the violation concerns the
design, development, or operation of a system of records on individuals
to accomplish an agency function, and criminal penalties may be imposed
upon the officers or employees of the agency when the violation concerns
the operation of a system of records on individuals to accomplish an
agency function. For purposes of the Act, when the contract is for the
operation of a system of records on individuals to accomplish an agency
function, the Contractor is considered to be an employee of the agency.

(c)(1) \'Operation of a system of records,\' as used in this clause,
means performance of any of the activities associated with maintaining
the system of records, including the collection, use, and dissemination
of records.

\(2\) \'Record,\' as used in this clause, means any item, collection, or
grouping of information about an individual that is maintained by an
agency, including, but not limited to, education, financial
transactions, medical history, and criminal or employment history and
that contains the person\'s name, or the identifying

number, symbol, or other identifying particular assigned to the
individual, such as a fingerprint or voiceprint or a photograph.

\(3\) \'System of records on individuals,\' as used in this clause,
means a group of any records under the control of any agency from which
information is retrieved by the name of the individual or by some
identifying number, symbol, or other identifying particular assigned to
the individual.

*(End of clause)*

3.8.2-18 Certification of Data

CERTIFICATION OF DATA (OCTOBER 3, 1996)

\(a\) The offeror represents and certifies that to the best of its
knowledge and belief, the information and/or data (e.g., company
profile, qualifications, background statements, brochures) submitted
with its offer is current, accurate, and complete as of the date of its
offer.

\(b\) The offeror understands that any inaccurate data provided to the
Department of Transportation may subject the offeror, its employees, or
its representatives to: (1) prosecution for false statements pursuant to
18 U.S.C. 1001 and/or; (2) enforcement action for false claims or
statements pursuant to the Program Fraud Civil Remedies Act of 1986, 31
U.S.C. 3801-3812 and 49 CFR Part 31 and/or; (3) termination for default
under any contract resulting from its offer and/or; (4) debarment or
suspension.

\(c\) The offeror agrees to obtain a similar certification from its
subcontractors.

Signature: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Typed Name and
Title:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Company Name: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

This certification concerns a matter within the jurisdiction of an
agency of the United States and the making of a false, fictitious, or
fraudulent certification may render the maker subject to prosecution
under Title 18, United States Code, Section 1001.

*(End of provision)*

3.8.2-19 Prohibition on Advertising

PROHIBITION ON ADVERTISING (OCTOBER 3, 1996)

The Contractor or its representatives (including training instructors)
shall not advertise or solicit business from attendees for private,
non-Government training during contracted-for training sessions. This
prohibition extends to unsolicited oral comments, distribution or sales
of written materials, and/or sales of promotional videos or audio tapes.
The contractor agrees to insert this clause in its subcontracts.

*(End of clause)*

3.10.1-3 Penalties for Unallowable Costs

PENALTIES FOR UNALLOWABLE COSTS (OCTOBER 3, 1996)

\(a\) Definition. Proposal, as used in this clause, means either-

\(1\) A final indirect cost rate proposal submitted by the Contractor
after the expiration of its fiscal year which:

\(i\) Relates to any payment made on the basis of billing rates; or

\(ii\) Will be used in negotiating the final contract price;

\(2\) The final statement of costs incurred and estimated to be incurred
under the "Incentive Price Revision" clause (if applicable), which is
used to establish the final contract price.

\(b\) Contractors which include unallowable indirect costs in a proposal
may be subject to penalties, as described in paragraph (d) below..

\(c\) The Contractor shall not include in any proposal any cost which is
unallowable, as defined in the FAA Contract Cost Principles.

\(d\) If the Contracting Officer determines that a cost submitted by the
Contractor in its proposal is unallowable , the Contractor shall be
assessed a penalty equal to:

\(1\) The amount of the disallowed cost allocated to this contract; plus

\(2\) Simple interest, to be computed:

\(i\) On the amount the Contractor was paid (whether as a progress or
billing payment) in excess of the amount to which the Contractor was
entitled; and

\(ii\) Using the applicable rate effective for each six-month interval
prescribed by the Secretary of the Treasury pursuant to Pub. L. 92-41
(85 Stat. 97).

\(e\) If the Contracting Officer determines that a cost submitted by the
Contractor in its proposal includes a cost previously determined to be
unallowable for that Contractor, then the Contractor will be assessed a
penalty in an amount equal to two times the amount of the disallowed
cost allocated to this contract.

\(f\) Determinations under paragraphs (d) and (e) of this clause, if
disputed, may be the basis of a claim under the "Contract Disputes"
clause.

\(g\) The Contracting Officer may waive the penalties in paragraph (d)
or (e) of this clause if the contractor demonstrates that the error was
unintentional, or the proposal is withdrawn prior to commencement of an
audit.

\(h\) Payment by the Contractor of any penalty assessed under this
clause does not constitute repayment to the Government of any
unallowable cost which has been paid by the Government to the
Contractor.

(*End of clause*)

3.10.1-9 Stop-Work Order

STOP-WORK ORDER (OCTOBER 3, 1996)

\(a\) The Contracting Officer may, at any time, by written order to the
Contractor, require the Contractor to stop all, or any part, of the work
called for by this contract for a period of 90 days after the order is
delivered to the Contractor, and for any further period to which the
parties may agree. The order shall be specifically identified as a
stop-work order issued under this clause. Upon receipt of the order, the
Contractor shall immediately comply with its terms and take all
reasonable steps to minimize the incurrence of costs allocable to the
work covered by the order during the period of work stoppage. Within a
period of 90 days after a stop-work order is delivered to the
Contractor, or within any extension of that period to which the parties
shall have agreed, the Contracting Officer shall either\--

\(1\) Cancel the stop-work order; or

\(2\) Terminate the work covered by the order as provided in the
termination for default or the termination for convenience clause of
this contract.

\(b\) If a stop-work order issued under this clause is canceled or the
period of the order or any extension thereof expires, the Contractor
shall resume work. The Contracting Officer shall make an equitable
adjustment in the delivery schedule or contract price, or both, and the
contract shall be modified, in writing, accordingly, if-

\(1\) The stop-work order results in an increase in the time required
for, or in the Contractor\'s cost properly allocable to, the performance
of any part of this contract; and

\(2\) The Contractor asserts its right to the adjustment within 30 days
after the end of the period of work stoppage; provided, that, if the
Contracting Officer decides the facts justify the action, the
Contracting Officer may receive and act upon a claim submitted at any
time before final payment under this contract.

\(c\) If a stop-work order is not canceled, and the work covered by the
order is terminated for the convenience of the Government, the
Contracting Officer shall allow reasonable costs resulting from the
stop-work order in arriving at the termination settlement.

\(d\) If a stop-work order is not canceled and the work covered by the
order is terminated for default, the Contracting Officer shall allow, by
equitable adjustment or otherwise, reasonable costs resulting from the
stop-work order.

(*End of clause*)

ALTERNATE I

If this clause is inserted in a cost-reimbursement contract, substitute
in subparagraph (a)(2) "termination clause" for "termination for default
or termination for convenience clause" and in paragraph (b) substitute
the words "an equitable adjustment in the delivery schedule, the
estimated cost, the fee, or a combination thereof, and in any other
terms of the contract that may be affected" for the words "an equitable
adjustment in the delivery schedule or contract price, or both."

3.10.2-2 Subcontracts (Cost-Reimbursement and Ceiling Priced Contracts)

SUBCONTRACTS (COST-REIMBURSEMENT AND CEILING PRICED CONTRACTS)

(OCTOBER 3, 1996)

\(a\) Subcontract, as used in this clause, includes but is not limited
to purchase orders, and changes and modifications to purchase orders.
The Contractor shall notify the Contracting Officer reasonably in
advance of entering into any subcontract if:

\(1\) The proposed subcontract is of the cost-reimbursement,
time-and-materials, or labor-hour type;

\(2\) The proposed subcontract is fixed-price and exceeds either
\$100,000 or 5 percent of the total estimated cost of this contract;

\(3\) The proposed subcontract has experimental, developmental, or
research work as one of its purposes; or

\(4\) This contract is not a facilities contract and the proposed
subcontract provides for the fabrication, purchase, rental,
installation, or other acquisition of special test equipment valued in
excess of \$25,000 or of any items of facilities.

(b)(1) In the case of a proposed subcontract that (i) is of the
cost-reimbursement, time-and-materials, or labor-hour type and is
estimated to exceed \$25,000, including any fee, (ii) is proposed to
exceed \$100,000, or (iii) is one of a number of subcontracts with a
single subcontractor, under this contract, for the same or related
supplies or services that, in the aggregate, are expected to exceed
\$100,000, the advance notification required by paragraph (a) above
shall include the information specified in subparagraph (2) below.

(2)(i) A description of the supplies or services to be subcontracted.

\(ii\) Identification of the type of subcontract to be used.

\(iii\) Identification of the proposed subcontractor and an explanation
of why and how the proposed subcontractor was selected, including the
competition obtained.

\(iv\) The proposed subcontract price and the Contractor\'s cost or
price analysis.

\(v\) The subcontractor\'s current, complete, and accurate cost or
pricing data and Certificate of Current Cost or Pricing Data, if
required by other contract provisions.

\(vi\) The subcontractor\'s Disclosure Statement or Certificate relating
to Cost Accounting Standards when such data are required by other
provisions of this contract.

\(vii\) A negotiation memorandum reflecting-

\(A\) The principal elements of the subcontract price negotiations;

\(B\) The most significant considerations controlling establishment of
initial or revised prices;

\(C\) The reason cost or pricing data were or were not required;

\(D\) The extent, if any, to which the Contractor did not rely on the
subcontractor\'s cost or pricing data in determining the price objective
and in negotiating the final price;

\(E\) The extent to which it was recognized in the negotiation that the
subcontractor\'s cost or pricing data were not accurate, complete, or
current; the action taken by the Contractor and the subcontractor; and
the effect of any such defective data on the total price negotiated;

\(F\) The reasons for any significant difference between the
Contractor\'s price objective and the price negotiated; and

\(G\) A complete explanation of the incentive fee or profit plan when
incentives are used. The explanation shall identify each critical
performance element, management decisions used to quantify each
incentive element, reasons for the incentives, and a summary of all
trade-off possibilities considered.

\(c\) The Contractor shall obtain the Contracting Officer\'s written
consent before placing any subcontract for which advance notification is
required under paragraph (a) above. However, the Contracting Officer may
ratify in writing any such subcontract. Ratification shall constitute
the consent of the Contracting Officer.

\(d\) If the Contractor has an approved purchasing system and the
subcontract is within the scope of such approval, the Contractor may
enter into the subcontracts described in subparagraphs (a)(1) and (a)(2)
of this clause without the consent of the Contracting Officer.

\(e\) Even if the Contractor\'s purchasing system has been approved, the
Contractor shall obtain the Contracting Officer\'s written consent
before placing subcontracts identified below:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\(f\) Unless the consent or approval specifically provides otherwise,
neither consent by the Contracting Officer to any subcontract nor
approval of the Contractor\'s purchasing system shall constitute a
determination (1) of the acceptability of any subcontract terms or
conditions, (2) of the allowability of any cost under this contract, or
(3) to relieve the Contractor of any responsibility for performing this
contract.

\(g\) No subcontract placed under this contract shall provide for
payment on a cost-plus-a-percentage-of-cost basis.

\(h\) The Contractor shall give the Contracting Officer immediate
written notice of any action or suit filed and prompt notice of any
claim made against the Contractor by any subcontractor or vendor that,
in the opinion of the Contractor, may result in litigation related in
any way to this contract, with respect to which the Contractor may be
entitled to reimbursement from the Government.

(i)(1)Reserved.

\(2\) Additionally, the Contractor shall include in each cost-
reimbursement subcontract under this contract a requirement that the
subcontractor insert the substance of the appropriate modified
subparagraph referred to in subparagraph (1) above in each lower tier
price redetermination or incentive price revision subcontract under that
subcontract.

\(j\) To facilitate small business participation in subcontracting, the
Contractor agrees to provide payments on subcontracts under this
contract that are fixed-price subcontracts with small business concerns
in conformity with the standards for customary payments**,** as in
effect on the date of this contract. The Contractor further agrees that
the need for such financing payments will not be considered a handicap
or adverse factor in the award of subcontracts.

\(k\) The Government reserves the right to review the Contractor\'s
purchasing system.

(*End of clause*)

3.10.6-1 Termination for Convenience of the Government (Fixed Price)

TERMINATION FOR CONVENIENCE OF THE GOVERNMENT

(FIXED PRICE) (OCTOBER 3, 1996)

\(a\) The Government may terminate performance of work under this
contract in whole or, from time to time, in part if the Contracting
Officer determines that a termination is in the Government\'s interest.
The Contracting Officer shall terminate by delivering to the Contractor
a Notice of Termination specifying the extent of termination and the
effective date.

\(b\) After receipt of a Notice of Termination, and except as directed
by the Contracting Officer, the Contractor shall immediately proceed
with the following obligations, regardless of any delay in determining
or adjusting any amounts due under this clause:

\(1\) Stop work as specified in the notice.

\(2\) Place no further subcontracts or orders (referred to as
subcontracts in this clause) for materials, services, or facilities,
except as necessary to complete the continued portion of the contract.

\(3\) Terminate all subcontracts to the extent they relate to the work
terminated.

\(4\) Assign to the Government, as directed by the Contracting Officer,
all right, title, and interest of the Contractor under the subcontracts
terminated, in which case the Government shall have the right to settle
or to pay any termination settlement proposal arising out of those
terminations.

\(5\) With approval or ratification to the extent required by the
Contracting Officer, settle all outstanding liabilities and termination
settlement proposals arising from the termination of subcontracts; the
approval or ratification will be final for purposes of this clause.

\(6\) As directed by the Contracting Officer, transfer title and deliver
to the Government (i) the fabricated or unfabricated parts, work in
process, completed work, supplies, and other material produced or
acquired for the work terminated, and (ii) the completed or partially
completed plans, drawings, information, and other property that, if the
contract had been completed, would be required to be furnished to the
Government.

\(7\) Complete performance of the work not terminated.

\(8\) Take any action that may be necessary, or that the Contracting
Officer may direct, for the protection and preservation of the property
related to this contract that is in the possession of the contractor and
in which the Government has or may acquire an interest.

\(9\) Use its best efforts to sell, as directed or authorized by the
Contracting Officer, any property of the types referred to in
subparagraph (6) above; provided, however, that the Contractor (i) is
not required to extend credit to any purchaser and (ii) may acquire the
property under the conditions prescribed by, and at prices approved by,
the Contracting Officer. The proceeds of any transfer or disposition
will be applied to reduce any payments to be made by the Government
under this contract, credited to the price or cost of the work, or paid
in any other manner directed by the Contracting Officer.

\(c\) The Contractor may submit to the Contracting Officer a list,
certified as to quantity and quality, of termination inventory not
previously disposed of, excluding items authorized for disposition by
the Contracting Officer. The Contractor may request the Government to
remove those items or enter into an agreement for their storage. Within
15 days, the Government will accept title to those items and remove them
or enter into a storage agreement. The Contracting Officer may verify
the list upon removal of the items, or if stored, within 45 days from
submission of the list, and shall correct the list, as necessary, before
final settlement.

\(d\) After termination, the Contractor shall submit a final termination
settlement proposal to the Contracting Officer in the form and with the
certification prescribed by the Contracting Officer. The Contractor
shall submit the proposal promptly, but no later than 1-year from the
effective date of termination, unless extended in writing by the
Contracting Officer upon written request of the Contractor within this
1-year period. However, if the Contracting Officer determines that the
facts justify it, a termination settlement proposal may be received and
acted on after 1 year or any extension. If the Contractor fails to
submit the proposal within the time allowed, the Contracting Officer may
determine, on the basis of information available, the amount, if any,
due the Contractor because of the termination and shall pay the amount
determined.

\(e\) Subject to paragraph (d) above, the Contractor and the Contracting
Officer may agree upon the whole or any part of the amount to be paid
because of the termination. The amount may include a reasonable
allowance for profit on work done. However, the agreed amount, whether
under this paragraph (e) or paragraph (f) below, exclusive of costs
shown in subparagraph (f)(3) below, may not exceed the total contract
price as reduced by (1) the amount of payments previously made and (2)
the contract price of work not terminated. The contract shall be
amended, and the Contractor paid the agreed amount. Paragraph (f) below
shall not limit, restrict, or affect the amount that may be agreed upon
to be paid under this paragraph.

\(f\) If the Contractor and the Contracting Officer fail to agree on the
whole amount to be paid because of the termination of work, the
Contracting Officer shall pay the Contractor the amounts determined by
the Contracting Officer as follows, but without duplication of any
amounts agreed on under paragraph (e) above:

\(1\) The contract price for completed supplies or services accepted by
the Government (or sold or acquired under subparagraph (b)(9) above) not
previously paid for, adjusted for any saving of freight and other
charges.

\(2\) The total of\--

\(i\) The costs incurred in the performance of the work terminated,
including initial costs and preparatory expense allocable thereto, but
excluding any costs attributable to supplies or services paid or to be
paid under subparagraph (f)(1) above;

\(ii\) The cost of setting and paying termination settlement proposals
under terminated subcontracts that are properly chargeable to the
terminated portion of the contract if not included in subdivision (i)
above; and

\(iii\) A sum, as profit on subdivision (i) above, determined by the
Contracting Officer to be fair and reasonable; however, if it appears
that the Contractor would have sustained a loss on the entire contract
had it been completed, the Contracting Officer shall allow no profit
under this subdivision (iii) and shall reduce the settlement to reflect
the indicated rate of loss.

\(3\) The reasonable costs of settlement of the work terminated,
including\--

\(i\) Accounting, legal, clerical, and other expenses reasonably
necessary for the preparation of termination settlement proposals and
supporting data;

\(ii\) The termination and settlement of subcontracts (excluding the
amounts of such settlements); and

\(iii\) Storage, transportation, and other costs incurred, reasonably
necessary for the preservation, protection, or disposition of the
termination inventory.

\(g\) Except for normal spoilage, and except to the extent that the
Government expressly assumed the risk of loss, the Contracting Officer
shall exclude from the amounts payable to the Contractor under paragraph
(f) above, the fair value, as determined by the Contracting Officer, of
property that is destroyed, lost, stolen, or damaged so as to become
undeliverable to the Government or to a buyer.

\(h\) The cost principles and procedures, in effect on the date of this
contract, shall govern all costs claimed, agreed to, or determined under
this clause.

\(i\) The Contractor may file a claim with the Federal Aviation
Administration Office of Dispute Resolution based on any determination
made by the Contracting Officer under paragraph (d), (f), or (k), except
that if the Contractor failed to submit the termination settlement
proposal within the time provided in paragraph (d) or (k), and failed to
request a time extension, there is no right of appeal. If the
Contracting Officer has made a determination of the amount due under
paragraph (d), (f), or (k), the Government shall pay the Contractor (1)
the amount determined by the Contracting Officer if there is no right to
file a claim or if no claim has been filed, or (2) the amount finally
determined allowable by the Office of Dispute Resolution.

\(j\) In arriving at the amount due the Contractor under this clause,
there shall be deducted\--

\(1\) All unliquidated advance or other payments to the Contractor under
the terminated portion of this contract;

\(2\) Any claim which the Government has against the Contractor under
this contract; and

\(3\) The agreed price for, or the proceeds of sale of, materials,
supplies, or other things acquired by the Contractor or sold under the
provisions of this clause and not recovered by or credited to the
Government.

\(k\) If the termination is partial, the Contractor may file a proposal
with the Contracting Officer for an equitable adjustment of the price(s)
of the continued portion of the contract. The Contracting Officer shall
make any equitable adjustment agreed upon. Any proposal by the
Contractor for an equitable adjustment under this clause shall be
requested within 90 days from the effective date of termination unless
extended in writing by the Contracting Officer.

(l)(1) The Government may, under the terms and conditions it prescribes,
make partial payments and payments against costs incurred by the
Contractor for the terminated portion of the contract, if the
Contracting Officer believes the total of these payments will not exceed
the amount to which the Contractor will be entitled.

\(2\) If the total payments exceed the amount finally determined to be
due, the Contractor shall repay the excess to the Government upon
demand, together with interest computed at the rate established by the
Secretary of the Treasury under 50 U.S.C. App. 1215(b)(2). Interest
shall be computed for the period from the date the excess payment is
received by the Contractor to the date the excess is repaid. Interest
shall not be charged on any excess payment due to a reduction in the
Contractor\'s termination settlement proposal because of retention or
other disposition of termination inventory until 10 days after the date
of the retention or disposition, or a later date determined by the
Contracting Officer because of the circumstances.

\(m\) Unless otherwise provided in this contract or by statute, the
Contractor shall maintain all records and documents relating to the
terminated portion of this contract for 3 years after final settlement.
This includes all books and other evidence bearing on the Contractor\'s
costs and expenses under this contract. The Contractor shall make these
records and documents available to the Government, at the Contractor\'s
office, at all reasonable times, without any direct charge. If approved
by the Contracting Officer, photographs, microphotographs, or other
authentic reproductions may be maintained instead of original records
and documents.

(*End of clause*)

3.10-6-2. Termination for Convenience of the Government (Educational and
Other Nonprofit Institutions)

Termination for Convenience of the GOVERNMENT

(Educational and Other Nonprofit Institutions)

(OCTOBER 3, 1996)

\(a\) The Government may terminate performance of work under this
contract in whole or, from time to time, in part if the Contracting
Officer determines that a termination is in the Government\'s interest.
The Contracting Officer shall terminate by delivering to the Contractor
a Notice of Termination specifying the extent of the termination and the
effective date.

\(b\) After receipt of a Notice of Termination and except as directed by
the Contracting Officer, the Contractor shall immediately proceed with
the following obligations:

\(1\) Stop work as specified in the notice.

\(2\) Place no further subcontracts or orders (referred to as
subcontracts in this clause), except as necessary to complete the
continued portion of the contract.

\(3\) Terminate all applicable subcontracts and cancel or divert
applicable commitments covering personal services that extend beyond the
effective date of termination.

\(4\) Assign to the Government, as directed by the Contracting Officer,
all right, title, and interest of the Contractor under the subcontracts
terminated, in which case the Government shall have the right to settle
or pay any termination settlement proposal arising out of those
terminations.

\(5\) With approval or ratification to the extent required by the
Contracting Officer, settle all outstanding liabilities and termination
settlement proposals arising from the termination of subcontracts;
approval or ratification will be final for purposes of this clause.

\(6\) Transfer title (if not already transferred) and, as directed by
the Contracting Officer, deliver to the Government any information and
items that, if the contract had been completed, would have been required
to be furnished, including (i) materials or equipment produced, in
process, or acquired for the work terminated and (ii) completed or
partially completed plans, drawings, and information.

\(7\) Complete performance of the work not terminated.

\(8\) Take any action that may be necessary, or that the Contracting
Officer may direct, for the protection and preservation of the property
related to this contract and is in the possession of the Contractor and
in which the Government has or may acquire an interest.

\(9\) Use its best efforts to sell, as directed or authorized by the
Contracting Officer, termination inventory other than that retained by
the Government under subparagraph (6) above; provided, however, that the
Contractor (i) is not required to extend credit to any purchaser and
(ii) may acquire the property under the conditions prescribed by, and at
prices approved by, the Contracting Officer. The proceeds of any
transfer or disposition will be applied to reduce any payments to be
made by the Government under this contract, credited to the price or
cost of the work, or paid in any other manner directed by the
Contracting Officer.

\(c\) After termination, the Contractor shall submit a final termination
settlement proposal to the Contracting Officer in the form and with the
certification prescribed by the Contracting Officer. The Contractor
shall submit the proposal promptly but no later than 1 year from the
effective date of termination unless extended in writing by the
Contracting Officer upon written request of the Contractor within this
1-year period. If the Contractor fails to submit the termination
settlement proposal within the time allowed, the Contracting Officer may
determine, on the basis of information available, the amount, if any,
due the Contractor because of the termination and shall pay the amount
determined.

\(d\) Subject to paragraph (c) above, the Contractor and the Contracting
Officer may agree upon the whole or any part of the amount to be paid
because of the termination. This amount may include reasonable
cancellation charges incurred by the Contractor and any reasonable loss
on outstanding commitments for personal services that the Contractor is
unable to cancel; provided, that the Contractor exercised reasonable
diligence in diverting such commitments to other operations. The
contract shall be amended and the Contractor paid the agreed amount.

\(e\) The cost principles and procedures, in effect on the date of the
contract, shall govern all costs claimed, agreed to, or determined under
this clause.

\(f\) The Government may, under the terms and conditions it prescribes,
make partial payments against costs incurred by the Contractor for the
terminated portion of this contract, if the Contracting Officer believes
the total of these payments will not exceed the amount to which the
Contractor will be entitled.

\(g\) The Contractor may file a claim with the Federal Aviation
Administration Office of Dispute Resolution, except that if the
Contractor failed to submit the termination settlement proposal within
the time provided in paragraph (c) and failed to request a time
extension, there is no right to file a claim.

(*End of clause*)

3.10.6-3 Termination (Cost-Reimbursement)

TERMINATION (COST-REIMBURSEMENT) (OCTOBER 3, 1996)

\(a\) The Government may terminate performance of work under this
contract in whole or, from time to time, in part, if\--

\(1\) The Contracting Officer determines that a termination is in the
Government\'s interest; or

\(2\) The Contractor defaults in performing this contract. \'Default\'
includes failure to make progress in the work so as to endanger
performance.

\(b\) The Contracting Officer shall terminate by delivering to the
Contractor a Notice of Termination specifying whether termination is for
default of the Contractor or for convenience of the Government, the
extent of termination, and the effective date. If, after termination for
default, it is determined that the Contractor was not in default or that
the Contractor\'s failure to perform or to make progress in performance
is due to causes beyond the control and without the fault or negligence
of the Contractor as set forth in the "Excusable Delays" clause, the
rights and obligations of the parties will be the same as if the
termination was for the convenience of the Government.

\(c\) After receipt of a Notice of Termination, and except as directed
by the Contracting Officer, the Contractor shall immediately proceed
with the following obligations, regardless of any delay in determining
or adjusting any amounts due under this clause:

\(1\) Stop work as specified in the notice.

\(2\) Place no further subcontracts or orders (referred to as
subcontracts in this clause), except as necessary to complete the
continued portion of the contract.

\(3\) Terminate all subcontracts to the extent they relate to the work
terminated.

\(4\) Assign to the Government, as directed by the Contracting Officer,
all right, title, and interest of the Contractor under the subcontracts
terminated, in which case the Government shall have the right to settle
or to pay any termination settlement proposal arising out of those
terminations.

\(5\) With approval or ratification to the extent required by the
Contracting Officer, settle all outstanding liabilities and termination
settlement proposals arising from the termination of subcontracts, the
cost of which would be reimbursable in whole or in part, under this
contract; approval or ratification will be final for purposes of this
clause.

\(6\) Transfer title (if not already transferred) and, as directed by
the Contracting Officer, deliver to the Government (i) the fabricated or
unfabricated parts, work in process, completed work, supplies, and other
material produced or acquired for the work terminated, (ii) the
completed or partially completed plans, drawings, information, and other
property that, if the contract had been completed, would be required to
be furnished to the Government, and (iii) the jigs, dies, fixtures, and
other special tools and tooling acquired or manufactured for this
contract, the cost of which the Contractor has been or will be
reimbursed under this contract.

\(7\) Complete performance of the work not terminated.

\(8\) Take any action that may be necessary, or that the Contracting
Officer may direct, for the protection and preservation of the property
related to this contract that is in the possession of the Contractor and
in which the Government has or may acquire an interest.

\(9\) Use its best efforts to sell, as directed or authorized by the
Contracting Officer, any property of the types referred to in
subparagraph (6) above; provided, however, that the Contractor (i) is
not required to extend credit to any purchaser and (ii) may acquire the
property under the conditions prescribed by, and at prices approved by,
the Contracting Officer. The proceeds of any transfer or disposition
will be applied to reduce any payments to be made by the Government
under this contract credited to the price or cost of the work, or paid
in any other manner directed by the Contracting Officer.

\(d\) The Contractor shall submit to the Contracting Officer a list,
certified as to quantity and quality, of termination inventory not
previously disposed of, excluding items authorized for disposition by
the Contracting Officer. The Contractor may request the Government to
remove those items or enter into an agreement for their storage. Within
15 days, the Government will accept the items and remove them or enter
into a storage agreement. The Contracting Officer may verify the list
upon removal of the items, or if stored, within 45 days from submission
of the list, and shall correct the list, as necessary, before final
settlement.

\(e\) After termination, the Contractor shall submit a final termination
settlement proposal to the Contracting Officer in the form and with the
certification prescribed by the Contracting Officer. The Contractor
shall submit the proposal promptly, but no later than 1 year from the
effective date of termination, unless extended in writing by the
Contracting Officer upon written request of the Contractor within this
1-year period. However, if the Contracting Officer determines that the
facts justify it, a termination settlement proposal may be received and
acted on after 1 year or any extension. If the Contractor fails to
submit the proposal within the time allowed, the Contracting Officer may
determine, on the basis of information available, the amount, if any,
due the Contractor because of the termination and shall pay the amount
determined.

\(f\) Subject to paragraph (e) above, the Contractor and the Contracting
Officer may agree on the whole or any part of the amount to be paid
(including an allowance for fee) because of the termination. The
contract shall be amended, and the Contractor paid the agreed amount.

\(g\) If the Contractor and the Contracting Officer fail to agree in
whole or in part on the amount of costs and/or fee to be paid because of
the termination of work, the Contracting Officer shall determine, on the
basis of information available, the amount, if any, due the Contractor,
and shall pay that amount, which shall include the following:

\(1\) All costs reimbursable under this contract, not previously paid,
for the performance of this contract before the effective date of the
termination, and those costs that may continue for a reasonable time
with the approval of or as directed by the Contracting Officer; however,
the Contractor shall discontinue those costs as rapidly as practicable.

\(2\) The cost of settling and paying termination settlement proposals
under terminated subcontracts that are properly chargeable to the
terminated portion of the contract if not included in subparagraph (1)
above.

\(3\) The reasonable costs of settlement of the work terminated,
including\--

\(i\) Accounting, legal, clerical, and other expenses reasonably
necessary for the preparation of termination settlement proposals and
supporting data;

\(ii\) The termination and settlement of subcontracts (excluding the
amounts of such settlements); and

\(iii\) Storage, transportation, and other costs incurred, reasonably
necessary for the preservation, protection, or disposition of the
termination inventory.

If the termination is for default no amounts for the preparation of the
Contractor\'s termination settlement proposal may be included.

\(4\) A portion of the fee payable under the contract determined as
follows:

\(i\) If the contract is terminated for the convenience of the
Government, the settlement shall include a percentage of the fee equal
to the percentage of completion of work contemplated under the contract,
but excluding subcontract effort included in subcontractors\'
termination proposals, less previous payments for fee.

\(ii\) If the contract is terminated for default, the total fee payable
shall be such proportionate part of the fee as the total number of
articles (or amount of services) delivered to and accepted by the
Government is to the total number of articles (or amount of services) of
a like kind required by the contract.

\(5\) If the settlement includes only fee, it will be determined under
subparagraph (g)(4) above.

\(h\) The cost principles and procedures, in effect on the date of this
contract shall govern all costs claimed, agreed to, or determined under
this clause.

\(i\) The Contractor may file a claim with the Federal Aviation
Administration Office of Dispute Resolution based on any determination
made by the Contracting Officer under paragraph (e) or (g) above or
paragraph (k) below, except that if the Contractor failed to submit the
termination settlement proposal within the time provided in paragraph
(e) and failed to request a time extension, there is basis for a claim.
If the Contracting Officer has made a determination of the amount due
under paragraph (e), (g) or (k), the Government shall pay the Contractor
(1) the amount determined by the Contracting Officer if there is no
right to file a claim or if no claim has been filed, or (2) the amount
finally determined allowable by the Office of Dispute Resolution.

\(j\) In arriving at the amount due the Contractor under this clause,
there shall be deducted\--

\(1\) All unliquidated advance or other payments to the Contractor,
under the terminated portion of this contract;

\(2\) Any claim which the Government has against the Contractor under
this contract; and

\(3\) The agreed price for, or the proceeds of sale of materials,
supplies, or other things acquired by the Contractor or sold under this
clause and not recovered by or credited to the Government.

\(k\) The Contractor and Contracting Officer must agree to any equitable
adjustment in fee for the continued portion of the contract when there
is a partial termination. The Contracting Officer shall amend the
contract to reflect the agreement.

(l)(1) The Government may, under the terms and conditions it prescribes,
make partial payments and payments against costs incurred by the
Contractor for the terminated portion of the contract, if the
Contracting Officer believes the total of these payments will not exceed
the amount to which the Contractor will be entitled.

\(2\) If the total payments exceed the amount finally determined to be
due, the Contractor shall repay the excess to the Government upon
demand, together with interest computed at the rate established by the
Secretary of the Treasury under 50 U.S.C. App. 1215(b)(2). Interest
shall be computed for the period from the date the excess payment is
received by the Contractor to the date the excess is repaid. Interest
shall not be charged on any excess payment due to a reduction in the
Contractor\'s termination settlement proposal because of retention or
other disposition of termination inventory until 10 days after the date
of the retention or disposition, or a later date determined by the
Contracting Officer because of the circumstances.

\(m\) The provisions of this clause relating to fee are Inapplicable if
this contract does not include a fee.

(*End of clause*)

Alternate i

Construction. If the contract is for construction, the contracting
officer may substitute the following subparagraph (g)(4) for
subparagraph (g)(4) of the basic clause as follows:

\(g\) (4) A portion of the fee payable under the contract determined as
follows:

\(i\) If the contract is terminated for the convenience of the
Government, the settlement shall include a percentage of the fee equal
to the percentage of completion of work contemplated under the contract,
but excluding subcontract effort included in subcontractors\'
termination settlement proposals, less previous payments for fee.

\(ii\) If the contract is terminated for default, the total fee payable
shall be such proportionate part of the fee as the actual work in place
is to the total work in place required by the contract.

Alternate II

Partial Payments. If the contract is with an agency of the U.S.
Government or with State, local, or foreign governments or their
agencies, and if the contracting officer determines that the requirement
to pay interest on excess partial payments is inappropriate, the
contracting officer may use Alternate II which deletes subparagraph
(l)(2) from the basic clause.

Alternate III

Partial Payments Construction. If the contract is for construction and
with an agency of the U.S. Government or with State, contracting officer
determines that the requirement to pay interest on excess partial, use
Alternate III which substitutes the following subparagraph (g)(4) for
(g)(4) of the basic clause. Alternate III also allows deletion of
subparagraph (l)(2) from the basic clause if the contracting officer
determines that the requirement to pay interest on excess partial
payments is inappropriate.

(g)(4) A portion of the fee payable under the contract determined as
follows:

\(i\) If the contract is terminated for the convenience of the
Government, the settlement shall include a percentage of the fee equal
to the percentage of completion of work contemplated under the contract,
but excluding subcontract effort included in subcontractors\'
termination settlement proposals, less previous payments for fee.

\(ii\) If the contract is terminated for default, the total fee payable
shall be such proportionate part of the fee as the actual work in place
is to the total work in place required by the contract.

Alternate IV

Time and Material and Labor Hour Contracts. If the contract is a
time-and-material or labor-hour contract, the contracting officer may
use Alternate IV, which substitutes the following paragraphs (g) and (k)
for paragraphs (g) and (k) of the basic clause:

\(g\) If the Contractor and the Contracting Officer fail to agree in
whole or in part on the amount to be paid because of the termination of
work, the Contracting Officer shall determine, on the basis of
information available, the amount, if any, due the Contractor and shall
pay the amount determined as follows:

\(1\) If the termination is for the convenience of the Government,
include\--

\(i\) An amount for direct labor hours (as defined in the Schedule of
the contract) determined by multiplying the number of direct labor hours
expended before the effective date of termination by the hourly rate(s)
in the Schedule, less any hourly rate payments already made to the
Contractor;

\(ii\) An amount (computed under the provisions for payment of
materials) for material expenses incurred before the effective date of
termination, not previously paid to the Contractor;

\(iii\) An amount for labor and material expenses computed as if the
expenses were incurred before the effective date of termination, if they
are reasonably incurred after the effective date, with the approval of
or as directed by the Contracting Officer; however, the Contractor shall
discontinue these expenses as rapidly as practicable;

\(iv\) If not included in (i), (ii), or (iii) above, the cost of
settling and paying termination settlement proposals under terminated
subcontracts that are properly chargeable to the terminated portion of
contract; and

\(v\) The reasonable costs of settlement of the work terminated,
including-

\(A\) Accounting, legal, clerical, and other expenses reasonably
necessary for the preparation of termination settlement proposals and
supporting data;

\(B\) termination and settlement of subcontracts (excluding the amounts
of such settlements); and

\(C\) Storage, transportation, and other costs incurred, necessary for
the protection or disposition of the termination inventory.

\(2\) If the termination is for default of the Contractor, include the
amounts computed under (1) above but omit-

\(i\) Any amount for preparation of the Contractor\'s termination
settlement proposal; and

\(ii\) The portion of the hourly rate allocable to profit for any direct
labor hours expended in furnishing materials and services not delivered
to and accepted by the Government.

\(k\) If the termination is partial, the Contractor may file with the
Contracting Officer a proposal for an equitable adjustment of price(s)
for the continued portion of the contract. The Contracting Officer shall
make any equitable adjustment agreed upon. Any proposal by the
Contractor for an equitable adjustment under this clause shall be
requested within 90 days from the effective date of determination,
unless extended in writing by the Contracting Officer.

Alternate V

Time and Material and Labor Hour Contracts. If the contract is with an
agency of the U.S. Government or with State, local, or foreign
governments or their agencies, and if the contracting officer determines
that the requirement to pay interest on excess partial payments is
inappropriate, the contracting officer may use Alternate V, which
substitutes the following paragraphs (g) and (k) for paragraphs (g) and
(k) of the basic clause. Also, subparagraph (l)(2) may be deleted from
the basic clause if the contracting officer determines that the
requirement to pay interest on excess partial payments is inappropriate.

\(g\) If the Contractor and the Contracting Officer fail to agree in
whole or in part on the amount to be paid because of the termination of
work, the Contracting Officer shall determine, on the basis of
information available, the amount, if any, due the Contractor and shall
pay the amount determined as follows:

\(1\) If the termination is for the convenience of the Government,
include\--

\(i\) An amount for direct labor hours (as defined in the Schedule of
the contract) determined by multiplying the number of direct labor hours
expended before the effective date of termination by the hourly rate(s)
in the Schedule, less any hourly rate payments already made to the
contractor;

\(ii\) An amount (computed under the provisions for payment of
materials) for material expenses incurred before the effective date of
termination, not previously paid to the Contractor;

\(iii\) An amount for labor and material expenses computed as if the
expenses were incurred before the effective date of termination if they
are reasonably incurred after the effective date, with the approval of
or as directed by the Contracting Officer; however, the Contractor shall
discontinue these expenses as rapidly as practicable;

\(iv\) If not included in (i), (ii), or (iii) above, the cost of
settling and paying termination settlement proposals under terminated
subcontracts that are properly chargeable to the terminated portion of
the contract; and

\(v\) The reasonable costs of settlement of the work terminated,
including-

\(A\) Accounting, legal, clerical, and other expenses reasonably
necessary for the preparation of termination settlement proposals and
supporting data;

\(B\) The termination and settlement of subcontracts (excluding the
amounts of such settlements); and

\(C\) Storage, transportation, and other costs incurred, reasonably
necessary for the protection or disposition of the termination
inventory.

\(2\) If the termination is for default of the Contractor, include the
amounts computed under (1) above but omit\--

\(i\) Any amount for preparation of the Contractor\'s termination
settlement proposal; and

\(ii\) The portion of the hourly rate allocable to profit for any direct
labor hours expended in furnishing materials and services not delivered
to and accepted by the Government.

\(k\) If the termination is partial, the Contractor may file with the
Contracting Officer a proposal for an equitable adjustment of the
price(s) for the continued portion of the contract. The Contracting
Officer shall make any equitable adjustment agreed upon. Any proposal by
the Contractor for an equitable adjustment under this clause shall be
requested within 90 days from the effective date of termination, unless
extended in writing by the Contracting Officer.

3.10.6-4 Default (Fixed-Price Supply and Service)

Default (Fixed Price Supply and Service)

(a)(1) The Government may, subject to paragraphs (c) and (d) below, by
written notice of default to the Contractor, terminate this contract in
whole or in part if the Contractor fails to\--

\(i\) Deliver the supplies or to perform the services within the time
specified in this contract or any extension;

\(ii\) Make progress, so as to endanger performance of this contract
(but see subparagraph (a)(2) below); or

\(iii\) Perform any of the other provisions of this contract (but see
subparagraph (a)(2) below).

\(2\) Prior to terminating a contract for default, the Government will
issue a show cause notice permitting the Contractor to present any
defenses it may have to the default termination.

\(b\) If the Government terminates this contract in whole or in part, it
may acquire, under the terms and in the manner the Contracting Officer
considers appropriate, supplies or services similar to those terminated,
and the Contractor will be liable to the Government for any excess costs
for those supplies or services. However, the Contractor shall continue
the work not terminated.

\(c\) Except for defaults of subcontractors at any tier, the Contractor
shall not be liable for any excess costs if the failure to perform the
contract arises from causes beyond the control and without the fault or
negligence of the Contractor. Examples of such causes include (1) acts
of God or of the public enemy, (2) acts of the Government in either its
sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics,
(6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9)
unusually severe weather. In each instance the failure to perform must
be beyond the control and without the fault or negligence of the
Contractor.

\(d\) If the failure to perform is caused by the default of a
subcontractor at any tier, and if the cause of the default is beyond the
control of both the Contractor and subcontractor, and without the fault
or negligence of either, the Contractor shall not be liable for any
excess costs for failure to perform, unless the subcontracted supplies
or services were obtainable from other sources in sufficient time for
the Contractor to meet the required delivery schedule.

\(e\) If this contract is terminated for default, the Government may
require the Contractor to transfer title and deliver to the Government,
as directed by the Contracting Officer, any (1) completed supplies, and
(2) partially completed supplies and materials, parts, tools, dies,
jigs, fixtures, plans, drawings, information, and contract rights
(collectively referred to as \'manufacturing materials\' in this clause)
that the Contractor has specifically produced or acquired for the
terminated portion of this contract. Upon direction of the Contracting
Officer, the Contractor shall also protect and preserve property in its
possession in which the Government has an interest.

\(f\) The Government shall pay contract price for completed supplies
delivered and accepted. The Contractor and Contracting Officer shall
agree on the amount of payment for manufacturing materials delivered and
accepted and for the protection and preservation of the property.
Failure to agree will be a dispute under the "Contract Disputes" clause.
The Government may withhold from these amounts any sum the Contracting
Officer determines to be necessary to protect the Government against
loss because of outstanding liens or claims of former lien holders.

\(g\) If, after termination, it is determined that the Contractor was
not in default, or that the default was excusable, the rights and
obligations of the parties shall be the same as if the termination had
been issued for the convenience of the Government.

\(h\) The rights and remedies of the Government in this clause are in
addition to any other rights and remedies provided by law or under this
contract.

(*End of clause*)

3.10.6-5 Default (Fixed-Price Research and Development)

Default (Fixed Price Research and Development) (OCTOBER 3, 1996)

\(a\) The Government may, subject to paragraphs (c) and (d) below, by
written Notice of Default to the Contractor, terminate this contract in
whole or in part if the Contractor fails to\--

\(1\) Perform the work under the contract within the time specified in
this contract or any extension;

\(2\) Prosecute the work so as to endanger performance of this contract
(but see subparagraph (a)(2) below); or

\(3\) Perform any of the other provisions of this contract (but see
subparagraph (a)(2) below).

\(b\) Prior to terminating a contract for default, the Government will
issue a show cause notice permitting the Contractor to present any
defenses it may have to the default termination.

\(c\) If the Government terminates this contract in whole or in part, it
may acquire, under the terms and in the manner the Contracting Officer
considers appropriate, work similar to the work terminated, and the
Contractor will be liable to the Government for any excess costs for the
similar work. However, the Contractor shall continue the work not
terminated.

\(d\) Except for defaults of subcontractors at any tier, the Contractor
shall not be liable for any excess costs if the failure to perform the
contract arises from causes beyond the control and without the fault or
negligence of the Contractor. Examples of such causes include (1) acts
of God or of the public enemy, (2) acts of the Government in either its
sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics,
(6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9)
unusually severe weather. In each instance the failure to perform must
be beyond the control and without the fault or negligence of the
Contractor.

\(e\) If the failure to perform is caused by the default of a
subcontractor at any tier, and if the cause of the default is beyond the
control of both the Contractor and subcontractor, and without the fault
or negligence of either, the Contractor shall not be liable for any
excess costs for failure to perform, unless the subcontracted supplies
or services were obtainable from other sources in sufficient time for
the Contractor to meet the required delivery schedule or other
performance requirements.

\(f\) If this contract is terminated for default, the Government may
require the Contractor to transfer title and deliver to the Government,
as directed by the Contracting Officer, any (1) completed or partially
completed work not previously delivered to, and accepted by, the
Government and (2) other property, including contract rights,
specifically produced or acquired for the terminated portion of this
contract. Upon direction of the Contracting Officer, the Contractor
shall also protect and preserve property in its possession in which the
Government has an interest.

\(g\) The Government shall pay the contract price, if separately stated,
for completed work it has accepted and the amount agreed upon by the
Contractor and the Contracting Officer for (1) completed work for which
no separate price is stated, (2) partially completed work, (3) other
property described above that it accepts, and (4) the protection and
preservation of the property. Failure to agree will be a dispute under
the Acquisition Management System, Resolution of Protests and Disputes.
The Government may withhold from these amounts any sum the Contracting
Officer determines to be necessary to protect the Government against
loss from outstanding liens or claims of former lien holders

\(h\) If, after termination, it is determined that the Contractor was
not in default, or that the default was excusable, the rights and
obligations of the parties shall be the same as if the termination had
been issued for the convenience of the Government.

\(i\) The rights and remedies of the Government in this clause are in
addition to any other rights and remedies provided by law or under this
contract.

(*End of clause*)

3.10.6-6 Default (Fixed Price Construction)

Default (Fixed Price Construction) (OCTOBER 3, 1996)

\(a\) If the Contractor refuses or fails to prosecute the work or any
separable part, with the diligence that will insure its completion
within the time specified in this contract including any extension, or
fails to complete the work within this time, the Government may, by
written notice to the Contractor, terminate the right to proceed with
the work (or the separable part of the work) that has been delayed. In
this event, the Government may take over the work and complete it by
contract or otherwise, and may take possession of and use any materials,
appliances, and plant on the work site necessary for completing the
work. The Contractor and its sureties shall be liable for any damage to
the Government resulting from the Contractor\'s refusal or failure to
complete the work within the specified time, whether or not the
Contractor\'s right to proceed with the work is terminated. This
liability includes any increased costs incurred by the Government in
completing the work.

\(b\) The Contractor\'s right to proceed shall not be terminated nor the
Contractor charged with damages under this clause, if\--

\(1\) The delay in completing the work arises from unforeseeable causes
beyond the control and without the fault or negligence of the
Contractor. Examples of such causes include (i) acts of God or of the
public enemy, (ii) acts of the Government in either its sovereign or
contractual capacity, (iii) acts of another Contractor in the
performance of a contract with the Government, (iv) fires, (v) floods,
(vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix)
freight embargoes, (x) unusually severe weather, or (xi) delays of
subcontractors or suppliers at any tier arising from unforeseeable
causes beyond the control and without the fault or negligence of both
the Contractor and the subcontractors or suppliers; and

\(2\) The Contractor, within 10 days from the beginning of any delay
(unless extended by the Contracting Officer), notifies the Contracting
Officer in writing of the causes of delay. The Contracting Officer shall
ascertain the facts and the extent of delay. If, in the judgment of the
Contracting Officer, the findings of fact warrant such action, the time
for completing the work shall be extended. The findings of the
Contracting Officer shall be final and conclusive on the parties, but
subject to the right of the Contractor to file a claim with the Federal
Aviation Administration Office of Dispute Resolution.

\(c\) If, after termination of the Contractor\'s right to proceed it is
determined that the Contractor was not in default, or that the delay was
excusable, the rights and obligations of the parties will be the same as
if the termination had been issued for the convenience the Government.

\(d\) The rights and remedies of the Government in this clause are in
addition to any other rights and remedies provided by law or under this
contract.

(*End of clause*)

3.10.6-7 Excusable Delays

EXCUSABLE DELAYS (OCTOBER 3, 1996)

\(a\) Except for defaults of subcontractors at any tier, the Contractor
shall not be in default because of any failure to perform this contract
under its terms if the failure arises from causes beyond the control and
without the fault or negligence of the Contractor. Examples of these
causes are (1) acts of God or of the public enemy, (2) acts of the
Government in either its sovereign or contractual capacity, (3) fires,
(4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8)
freight embargoes, and (9) unusually severe weather. In each instance,
the failure to perform must be beyond the control and without the fault
or negligence of the Contractor. \'Default\' includes failure to make
progress in the work so as to endanger performance.

\(b\) If the failure to perform is caused by the failure of a
subcontractor at any tier to perform or make progress, and if the cause
of the failure was beyond the control of both the Contractor and
subcontractor, and without the fault or negligence of either, the
Contractor shall not be deemed to be in default, unless\--

\(1\) The subcontracted supplies or services were obtainable from other
sources;

\(2\) The Contracting Officer ordered the Contractor in writing to
purchase these supplies or services from the other source; and

\(3\) The Contractor failed to comply reasonably with this order.

\(c\) Upon request of the Contractor, the Contracting Officer shall
ascertain the facts and extent of the failure. If the Contracting
Officer determines that any failure to perform results from one or more
of the causes above, the delivery schedule shall be revised, subject to
the rights of the Government under the termination clause of this
contract.

(*End of clause*)

3.10.7-1 Indemnification under Public Law 85-804

INDEMNIFICATION UNDER PUBLIC LAW 85-804 (OCTOBER 3, 1996)

\(a\) A Contractor's principal officials, as used in this clause, means
directors, officers, managers, superintendents, or other representatives
supervising or directing

\(1\) All or substantially all of the Contractor's business;

\(2\) All or substantially all of the Contractor's operations at any one
plant or separate location in which this contract is being performed; or

\(3\) A separate and complete major industrial operation in connection
with the performance of this contract.

\(b\) Under Public Law 85-804 and Executive Order 10789, as amended, and
regardless of any other provisions of this contract, the Government
will, subject to the limitations contained in the other paragraphs of
this clause, indemnify the Contractor against:

\(1\) Claims (including reasonable expenses of litigation or settlement)
by third persons (including employees of the Contractor) for death;
personal injury; or loss of, damage to, or loss of use of property;

\(2\) Loss of, damage to, or loss of use of Contractor property,
excluding loss of profit; and (c) loss of, damage to, or loss of use of
Government property, excluding loss of profit.

\(c\) This indemnification applies only to the extent that the claim,
loss or damage:

\(1\) Arises out of or results from a risk defined in the contract as
unusually hazardous or nuclear and

\(2\) Is not compensated for by insurance or otherwise. Any such claim,
loss, or damage, to the extent that it is within the deductible amounts
of the Contractor's insurance, is not covered under this clause. If
insurance coverage or other financial protection in effect on the date
the approving official authorizes use this clause is reduced, the
Government's liability under this clause shall not increase as a result.

\(d\) When the claim, loss, or damage is caused by willful misconduct or
lack of good faith on the part of any of the Contractor's principal
officials, the Contractor will not be indemnified for:

\(1\) Government claims against the Contractor (other than those arising
through subrogation); or

\(2\) Loss or damage affecting the Contractor's property.

\(e\) With the Contracting Officer's prior written approval, the
Contractor may, in any subcontract under this contract, indemnify the
subcontractor against any risk defined in the contract as unusually
hazardous or nuclear. This indemnification will provide, between the
Contractor and the subcontractor, the same rights and duties, and the
same evidence or proof, and Government settlement or defense of claims
as this clause provides. The Contracting Officer may also approve
indemnification of subcontractor's at any lower tier, under the same
terms and conditions. The Government will indemnify the Contractor
against liability to subcontractors incurred under subcontract
provisions approved by the Contracting Officer.

\(f\) The rights and obligations of the parties under this clause will
survive this contract's termination, expiration, or completion. The
Government will make no payment under this clause unless the agency head
determines that the amount is just and reasonable. The Government may
pay the Contractor or subcontractors, or may directly pay parties to
whom the Contractor or subcontractors may be liable.

\(g\) The Contractor will:

\(1\) Promptly notify the Contracting Officer of any claim or action
against, or any loss by, the Contractor or any subcontractors that may
reasonably be expected to involve indemnification under this clause;

\(2\) Immediately furnish to the Government copies of all pertinent
papers the Contractor receives;

\(3\) Furnish evidence or proof of any claim, loss, or damage covered by
this clause in the manner and form the Government requires; and

\(4\) Comply with the Government's directions and execute any
authorizations required in connection with settlement or defense of
claims or actions.

\(h\) The Government may direct, control, or assist in settling or
defending any claim or action that may involve indemnification under
this clause.

(*End of clause*)

ALTERNATE I

In cost reimbursement contracts, add the following paragraph to the end
of the basic clause:

The cost of insurance (including self-insurance programs) covering a
risk defined in this contract as unusually hazardous or nuclear shall
not be reimbursed except to the extent that the Contracting Officer has
required or approved this insurance. The Government's obligations under
this clause are (a) excepted from the release required under this
contract's clause relating to allowable cost; and (b) not affected by
this contract's "Limitation of Cost" or "Limitation of Funds" clause.

**END OF CHANGE 3 - OCTOBER 3, 1996**