[SECTION H]{.underline}

[SPECIAL CONTRACT REQUIREMENTS]{.underline}

H.1 [LISTING OF CLAUSES INCORPORATED BY REFERENCE]{.underline}

\(a\) The following clauses are incorporated by reference:

1852.208-81 Restrictions on Printing and Duplicating (AUG 1993)

1852.223-70 Safety and Health (FEB 1996)

1852.228-72 Cross-Waiver of Liability for Space Shuttle Services

(SEP 1993)

1852.228-76 Cross-Waiver of Liability for Space Station Activities

(DEC 1994)

1852.246-70 Mission Critical Space System Personnel Reliability Program

(MAR 1991)

\(b\) The following clause is incorporated by reference and applies only
to facilities-related effort in this contract:

1852.236-73 Hurricane Plan (DEC 1988)

H.2 [REPRESENTATIONS, CERTIFICATIONS, AND OTHER STATEMENTS OF OFFERORS
(JSC 52.209-90)(SEPTEMBER 1988)]{.underline}

This contract incorporates Section K, Representations, Certifications,
and Other Statements of Offerors, as set forth in the contractor\'s
proposal USA 96-001-2, dated August 12, 1996, by reference, with the
same force and effect as if it were given in full text.

H.3 [PRICE ADJUSTMENT FOR \"MAKE-OR-BUY\" CHANGES (1852.215-79) (DEC
1988)]{.underline}

The following make-or-buy items are subject to the provisions of
paragraph (d) of the *Changes or Additions to Make-or-Buy Program*
clause of this contract:

[ITEM DESCRIPTION]{.underline} [MAKE-OR-BUY DETERMINATION]{.underline}

None

H.4 RESERVED

H.5 [LEVEL-OF-EFFORT (COST)]{.underline}

\(a\) During the term of the contract, the Contractor is obligated to
provide not less than 95% (657,082 hours) nor more than 105% (726,248
hours) of 691,665 total direct labor hours in performance of Statement
of Work section 1.7.2.

\(b\) \"Direct labor hours\" are those productive hours expended by
Contractor personnel performing work under this contract that are
charged as direct labor under the Contractor\'s established accounting
policy and procedures. The term does not include sick leave, vacation
leave, holiday leave, military leave, or any type of administrative
leave but does include direct labor hours provided under level-of-effort
subcontracts.

\(c\) Once the maximum number of direct labor hours is reached or the
contract term has ended, the Contractor\'s obligations under the
contract are fulfilled, even though the specified work may not have been
completed. The Contractor is not authorized to exceed the maximum of the
direct labor hours specified in paragraph (a) of this clause. Any
estimated cost and fee(s) adjustments for any additional direct labor
hours shall be based solely upon the quantity of additional hours being
added to the maximum number of direct labor hours specified in this
clause.

\(d\) The fee, if any, is based upon the furnishing of at least the
specified minimum number of direct labor hours, including subcontractor
hours. If the Contractor provides less than the specified minimum number
of hours prior to expiration of the contract term, and the Government
has not invoked its rights under the Termination clause of this contract
to adjust the contract for such reduced effort, the Contracting Officer
may unilaterally make an equitable downward adjustment to the contract
fee. The downward adjustment in fee will be based upon the difference
between the minimum direct labor hours specified under this clause and
the amount of direct labor hours provided by the Contractor. Prior to
making such adjustment, the Contracting Officer will request the
Contractor provide a written discussion of any extenuating circumstances
(e.g., productivity improvements or reductions in contract scope) which
contributed to the underrun. Any information provided by the Contractor
will be considered by the Contracting Officer in determining the amount
of downward adjustment in fee.

H.6 [MOTOR VEHICLE MANAGEMENT]{.underline}

\(a\) The contractor shall acquire and manage motor vehicles necessary
to support the performance of the contract. Such needed vehicles are to
be acquired and managed in the manner most efficient and economic to the
Government. Vehicles may be obtained from the GSA Interagency Motor
Pool, commercial sources, or other sources. Costs related to motor
vehicles shall be borne by the Contractor and

reimbursed by the Government to the extent allowable in accordance with
the terms of the contract relating to the reimbursement of costs.

\(b\) The contractor will use the appropriate NASA form (Vehicle Use
Record) to record vehicle utilization for all GSA and commercial rental
vehicles. These records will be maintained and made available at the
request of the Contracting Officer for a period of 18 months. Two copies
of the monthly billings, both GSA and commercial, for motor vehicle
services will be forwarded to the Contracting Officer each month. The
contractor shall assure that all vehicle operators are appropriately
licensed in the state. The contractor will furnish GSA a copy of their
third party automobile insurance policy if acquiring GSA motor vehicles.

\(c\) The contractor shall prepare and submit a Vehicle Utilization Plan
semiannually. This plan shall, as a minimum, demonstrate the economic
and efficient management of vehicles and fuel. It shall forecast the
vehicle requirements for 2 years allowing at least 6 months advance
notice for additional requirements. It shall demonstrate the techniques
utilized by the contractor to assure that vehicles are used for official
purposes only.

H.7 [INDEMNIFICATION]{.underline}

For purposes of FAR Clause 52.250-1, Alternate 1, (APR 84) the following
is the definition of unusually hazardous risks:

The unusually hazardous risks associated with this contract for which
indemnification is authorized are risks arising from or in connection
with (1) the burning, explosion, or detonation of Space Transportation
System (STS) flight elements or components, or ground support equipment;
(2) uncontrolled or accidental releases or spills of hazardous chemicals
or gases; or (3) the landfall of STS, Shuttle Carrier Aircraft (SCA), or
elements, components or fragments thereof; any or all of which may
result in liability for personal injury or death, loss of or damage to
property, or loss of use of property during the Flight Risk Period, SCA
operations with the Orbiter attached, or ground operations at Kennedy
Space Center. The Flight Risk Period begins upon STS rollout to the
launch pad and ends prior to launch upon STS rollback or after launch
when the Orbiter or the SCA with the Orbiter attached lands at the KSC,
exclusive of marine operations.

These risks are considered unusually hazardous in the sense that the
potential occurrence of such risks during the Flight Risk Period, SCA
Operations with the Orbiter attached, or ground operations at KSC may
result in a catastrophic accident with potential liability that could be
substantially in excess of the insurance coverage NASA contractors could
reasonably be expected to purchase and maintain, considering the
availability, cost, and terms and conditions of such insurance.

H.8 [PRIVACY OR SECURITY SAFEGUARDS]{.underline}

\(a\) The details of any safeguards the Contractor may design or develop
under this contract are the property of the Government and shall not be
published or disclosed in any manner without the Contracting Officer\'s
express written consent.

\(b\) The details of any safeguards that may be revealed to the
Contractor by the Government in the course of performance under this
contract shall not be published or disclosed in any manner without the
Contracting Officer\'s express written consent.

\(c\) The Government shall be afforded full, free, and uninhibited
access to all facilities, installations, technical capabilities,
operations, documentation, records, and data bases for the purpose of
carrying out a program of inspection to ensure continued efficacy and
efficiency of safeguards against threats and hazards to data security,
integrity, and confidentiality.

\(d\) If new or unanticipated threats or hazards are discovered by
either the Government or the Contractor, or if existing safeguards have
ceased to function, the discoverer shall immediately bring the situation
to the attention of the other party. Mutual agreement shall then be
reached on changes or corrections to existing safeguards or institution
of new safeguards, with final determination of appropriateness being
made by the Government. The Government\'s liability is limited to an
equitable adjustment of cost for such changes or corrections, and the
Government shall not be liable for claims of loss of business, damage to
reputation, or damages of any other kind arising from discovery of new
or unanticipated threats or hazards, or any public or private disclosure
thereof.

H.9 [POTENTIALLY HAZARDOUS ITEMS (1852.223-72) (DEC 1988)]{.underline}

\(a\) The Contractor shall furnish complete design information and
drawings showing all details of construction, including materials, for
the following items or components:

See Schedule Article I-6

These items or components are designated as potentially hazardous to
employees and subcontractors who are to perform any work in connection
with installing them in combination with other equipment, or in testing
them either alone or in combination with other items or components, or
in handling them. The Contractor shall inform such employees or
subcontractors of the potentially hazardous nature of these items or
components before requesting or directing the performance of work.

\(b\) This requirement for delivery of data supersedes any terms of this
contract permitting withholding of data.

\(c\) The Contractor shall include this clause, including this paragraph
(c), in each subcontract at any tier under this contract that calls for
the manufacture or handling of the items or components designated
according to paragraph (a) above as potentially hazardous.

H.10 [CUSTODY AND DISPOSITION OF COMPUTER SOFTWARE]{.underline}

\(a\) The computer software packages acquired, developed or used during
the performance of this contract may remain in the custody of the
Contractor until the Contracting Officer calls for the transfer or
delivery thereof, or until transfer or delivery is made pursuant to any
requirements specified elsewhere in this contract, whichever is earlier.
Whenever such software packages are commercially available, the
contractor shall either grant or obtain from the appropriate third party
vendors sufficient rights to transfer or deliver, without additional fee
or approval, the software packages and their licenses to the Government
or any authorized follow-on Government contractor.

\(b\) To comply with subparagraph (h) of the *Rights-In-Data\--General*
clause (FAR 52.227-14), the contractor shall include the *Commercial
Computer Software\--Licensing* clause (1852.227-86) in all subcontracts
and purchase orders when acquiring commercially available software in
accordance with paragraph (a) above. If a subcontractor or other vendor
refuses to accept this *Commercial Computer Software\--Licensing*
clause, the Contractor shall promptly notify the Contracting Officer and
not proceed with the contract award without further authorization.

H.11 [INFORMATION TECHNOLOGY PURCHASES]{.underline}

\(a\) Information Technology purchases may be made only after JSC Chief
Information Officer review and approval of the proposed purchases.
"Information Technology" applies to all resources as defined in the
Information Technology Management Reform Act (ITMRA).

\(b\) To satisfy the review and approval requirement, the Contractor
shall prepare, submit and present Information Technology Plans in
accordance with SOW 1.1.4.1, Information Management, and DRD 1.1.4.1-b,
Information Technology Plan.

H.12 [PROTECTION OF GOVERNMENT FIP ASSETS]{.underline}

\(a\) For the purpose of this clause, "FIP assets" mean computer
software such as programs, data files, data bases, and other automatic
data processing (ADP) material in whatever form such as magnetic tapes,
disks, cassettes, card decks, printed listing, or other recorded media.

\(b\) The Contractor shall establish procedures to protect Government
FIP assets whether furnished by the Government or first produced by the
Contractor under the work of the contract, from misuse, destruction,
loss, sale, publication or release to others, except as otherwise
provided by the *Rights in Data* clause included in the general
provisions of this contract. Such procedures will provide for the
accountability of FIP assets by the Contractor and the return to the
Government of any FIP assets in the possession of employees upon
termination or transfer of such employees.

\(c\) On completion of the contract work, Government FIP assets will be
delivered as authorized by the Contracting Officer.

\(d\) The Contractor shall flow this clause substantially as written to
any subcontract which will receive or first produce significant
Government FIP assets (i.e., valued at \$100,000 or more).

H.13 [RIGHTS TO COMPUTER SOFTWARE]{.underline}

\(a\) The *Rights In Data\--Special Works* clause shall apply to all
computer software and related documentation first produced in the
performance of this contract. On all data other than such computer
software documentation, the *Rights in Data-General* clause, as modified
by NFS 1852.227-14, shall apply.

\(b\) In reference to the Government's rights set forth in subparagraph
(c)(1)(ii) of the *Rights In Data\--Special Works* clause, the
Contractor hereby assigns and transfers to NASA the full and exclusive
copyright, both domestic and foreign, in and to all such computer
software and its related documentation.

\(c\) Unless directed otherwise by the Contracting Officer, the
Contractor shall place on such computer software and its related
documentation prior to their distribution the following notice:

> "Copyright (c) (year date, e.g., 1989) National Aeronautics and Space
> Administration. All Rights Reserved."

\(d\) If the Contractor is granted permission by the Contracting Officer
to assert or establish the claim of copyright in accordance with
subparagraph (c)(1)(i) of the *Rights In Data\--Special Works* clause,
the assignment and transfer of copyright in paragraph (b) above shall be
deemed waived. In requesting this permission, the Contractor shall
provide a marketing or utilization plan which (1) provides details on
how the computer software will be marketed or distributed and (2) shows
how copyright protection by the Contractor will enhance the appropriate
transfer and dissemination of such computer software within or outside
the Government.

H.14 [EXPORT OF TECHNICAL DATA, COMPUTER SOFTWARE, OR
HARDWARE]{.underline}

\(a\) During the conduct of this contract, NASA may have a need to
deliver, disclose, or transfer to a foreign entity or person ("export")
technical data, computer software, or hardware developed, used or
required to be delivered by the Contractor in the performance of this
contract. When such a need arises NASA may exercise the applicable
exemptions, general licenses, existing NASA export licenses or other
approvals available to a Federal agency under the US export control
laws, and may effect the export of such technical data, computer
software, or hardware for NASA by direction to the Contractor.

\(b\) When directed in writing by the Contracting Officer, the
Contractor, for purposes of export control, shall export on behalf of
NASA specifically identified technical data, computer software, or
hardware to a named foreign entity or person, in the manner and under
the conditions provided for in the direction.

\(c\) Any export made in accordance with this clause shall be limited to
only that technical data, computer software, and hardware which NASA
specifically identifies and authorizes the Contractor to export, in the
manner and under the conditions provided in the authorization. All other
exports of technical data, computer software and hardware by the
Contractor, whether related to the performance of this contract or
otherwise, are subject to the applicable requirements of the US export
control laws and regulations.

\(d\) Nothing contained in this clause shall affect the protection or
allocation of rights to technical data or computer software between NASA
and the Contractor or any subcontractors as provided for in this
contract or subcontract hereunder, nor shall this clause imply any
license or affect the scope of any license otherwise granted to the
Government or the recipient of the transferred or disclosed technical
data or computer software.

\(e\) The Contractor shall include this clause in all subcontracts at
any tier (suitably modified to reflect the relationship of the parties),
the performance of which may require the development, delivery, or use
of technical data, computer software, or hardware, and the Contractor
may direct an export on behalf of NASA, subject to the limitations of
paragraphs (c) and (d) above, by subcontractors. Alternately, any such
direction may be given by the Contracting Officer or his/her designated
representative directly to a subcontractor at any tier (with notice by
NASA to the Contractor.)

H.15 [MANAGEMENT AND PROTECTION OF INFORMATION]{.underline}

\(a\) It is anticipated that the Contractor will have access to, be
furnished, or use the following types of recorded information:

\(1\) Information of third parties with limited rights or restricted
rights notices submitted to NASA or directly to the Contractor.

\(2\) Information of third parties which NASA has agreed to handle under
protective arrangements.

\(3\) Information of which NASA intends to control the use and
dissemination.

\(b\) In order to provide appropriate management for protecting such
information, the Contractor agrees with respect to such information to
(1) use and disclose such information only to the extent necessary to
perform the work required under this contract, with particular emphasis
on restricting the information to those "need to know" employees, and
(2) to establish the necessary procedures to preclude disclosure of such
information outside the Contractor employees assigned work area, except
in accordance with the written instructions of the Contracting Officer.

H.16 [DUTY-FREE ENTRY SUPPLIES (1852.225-73) (Dec 1988)]{.underline}

In accordance with the Duty-Free Entry clause of this contract, the
following supplies will be given duty-free entry

[P/N]{.underline} [Description]{.underline} [Qty]{.underline}

8267427-901 Active Matrix Liquid Crystal 20

Display Glass Assemblies

H.17 [CONTRACTOR RESPONSIBILITY]{.underline}

All deliverables from other NASA prime Space Shuttle contracts,
identified in Attachment J-1-C, will be provided to the Contractor as
Government-furnished property to this contract until such time as the
Contractor assumes responsibility for the performance of these contracts
in Phase II. However, until such transfer of responsibility occurs, the
Contractor will treat deliverables made by its parent corporations,
Boeing, and Lockheed Martin and any subordinate elements thereof,
similar to contractor-furnished equipment, thereby allowing for the
direct communication, and coordination of SFOC requirements, with these
NASA prime contractors. Any prime contract performance related issue
will be directed to the appropriate NASA Contracting Officer for
resolution.

H.18 [CONTINUOUS IMPROVEMENT/PARTNERING]{.underline}

\(a\) The Contractor shall implement and maintain vigorous continuous
improvement (CI) activities for the full duration of this contract with
the overarching goals of improving productivity, achieving cost savings,
and achieving other economies and efficiencies across the full spectrum
of its performance of this contract and the performance of its
subcontractors whose subcontracts exceed a total of \$50 million over
the base period of this contract. The Contractor's plan is incorporated
herein as Attachment J-16.

\(b\) As part of its CI activities, the Contractor shall maintain data
regarding its achievement of each of the Performance Requirements
specified in Attachment J-1-B to this contract and its performance in
relationship to those Performance Requirements. Although the Contractor
may use any system and format to maintain this data, the data must be
easily and continuously accessible to the Government pursuant to the
*Access to Contractor Data* clause and be complete enough to be
meaningful.

\(c\) The parties recognize that the Government may need to change
policies or requirements in this contract in order to enable the
Contractor to achieve specific efficiencies under this contract. The
Contractor, therefore, is encouraged to request these changes when they
may result in additional improvements or cost savings. The Government
will, in good faith, consider accepting these changes. In the event that
the Government cannot accept a suggestion, it will provide rationale to
the Contractor as to why the suggestion was unacceptable. When possible,
the Government shall propose modifications to a suggestion in order to
make it acceptable. The Government's rejection of a suggestion submitted
pursuant to this clause shall not provide the basis for a dispute under
the *Disputes* clause, any equitable adjustment in accordance with the
*Changes* clause, or an adjustment of fee that might otherwise have been
earned.

\(d\) This clause is not an advance agreement on the part of NASA to
accept any changes made pursuant to this clause. Moreover, the
Contractor shall not request any changes that degrade either the safety
of the program or the ability to meet the flight manifest. Additionally,
the Government cannot accept any change which modifies or otherwise is
contrary to a statute, an Executive Order, or a regulation issued by
another Government agency.

\(e\) The *Changes* clause shall not apply to any suggestion accepted
pursuant to this clause. Instead, this clause shall be cited as
authority for any changes that are required to accept the Contractor's
suggestion. Additionally, for a period of three years after
implementation of a specific cost savings idea, an equitable adjustment
shall not be required for changes resulting from this clause.

\(f\) The Contractor understands and agrees that, this clause
notwithstanding, it is responsible for performance of all contract
requirements.

H.19 [ACCESS TO CONTRACTOR DATA]{.underline}

\(a\) "Data" for purposes of this clause, means recorded information,
regardless of the form or media on which it may be recorded. The term
includes technical data; computer software; and information incidental
to contract administration, such as financial, administrative, cost or
pricing, or management information. Types of data contained in the
definition also include contractor internal audits of any discipline,
system, or task which directly or indirectly supports Shuttle, payload,
and ISS ground support, launch, flight, or landing operations as well as
data from any audit of subcontractor(s) performing this contract. These
examples are illustrative and are not to be construed as a limitation on
the definition of data.

\(b\) The Contracting Officer or designee shall, through closeout, have
access to and the right to examine any of the data produced or
specifically used in the performance of this contract. The purpose of
this access provision is to permit the Government to monitor the
Contractor's performance under this contract and to permit sampling of
contractor data to verify requirements compliance and continuous
improvement without unduly increasing the number of data deliverables to
this contract.

\(c\) The Contractor shall make available at all reasonable times for
Government inspection all existing Government data provided to the
Contractor and any data first produced or used in the performance of
this contract for examination through closeout. Moreover, information
provided by the Contractor on this system shall contain all necessary
technical and business application data to determine the degree to which
contract requirements are met. At a minimum, the Contractor shall
maintain the types of data required by DRD 1.1.4.1-c.

\(d\) Except for software systems being provided as part of this
contract, the Contractor shall maintain all data on a commercially
available system for information management that is easily accessible by
NASA. For the purposes of this clause, "commercially available system"
is defined as a system comprised of a Commercial Off-the-Shelf (COTS)
database management system with its associated reporting/query tools,
and a COTS text and graphics viewer software package. The Contractor
shall include its plans and recommendations in the Information
Management Plan (DRD 1.1.4.1-a). The Contractor must obtain the approval
of the Contracting Officer prior to using any noncommercial system for
information management of data generated under this contract. As part of
this request, the Contractor must justify why no commercial system to
manage information is adequate for this contract. If use of a
noncommercial system is approved, then the Contractor shall demonstrate
the system to the Government and provide thorough training to Government
personnel to ensure they are able to access (i.e., read and copy) all
data maintained on the system.

\(e\) The Contractor shall provide the Government unimpeded access to
all areas determined by Government representatives as necessary for
surveillance, audit and independent evaluation purposes. In those
instances that access is restricted due to hazards or other personnel
access limitations, the Contractor shall accommodate Government
personnel such that access is provided and operational safety is not
compromised.

\(f\) Notwithstanding the *Additional Data Requirements* clause, the
Government shall have the right to reproduce any data found during the
examination that it wishes to retain. The Government will reimburse
reproduction costs only when it uses Contractor equipment for the
reproduction. The Government shall retain no greater rights in the
reproduced data than it would have under the *Rights in Data\--General*
clause.

\(g\) The Contractor shall describe the areas of its internal systems
where NASA access will be permitted, define access and interface
requirements, and provide NASA the required training to be able to
access and use these systems.

\(h\) The Contractor shall flow this clause to all cost type
subcontracts.

H.20 [SPECIAL PROVISION FOR CONTRACT CHANGES]{.underline}

\(a\) Notwithstanding the provisions of the *Changes* clause and the
*Government Property* clause, the parties agree that no change made
pursuant to the *Changes* clause shall give rise to an equitable
adjustment in the estimated cost or fee, delivery schedule, or any other
contract provision, when said change causes an increase or decrease in
estimated cost of \$1 million or less in this contract, when evaluated
for impact over a six year period from the date of the change. Each
change shall be controlling in making this determination, and such
change shall not, for purposes of determining the applicability of this
clause, be added to any other change(s). The parties recognize that
several changes may be grouped together in a bilateral contract
modification for definitization; however, the dollar value of each
individual change will be controlling in determining whether or not an
equitable adjustment is in order.

\(b\) Facility Projects:

> \(1\) The Government intends to issue Change Orders (CO's) for
> facility project requirements; however, the provisions of paragraph
> (a) above shall not apply to Facility Projects over \$500,000. To the
> extent that CO's are issued for facility project work exceeding
> \$500,000, the facility cost in Clause B.2 will be increased. There
> will be no increase in fee.
>
> \(2\) All facility projects under \$500,000 which: (i) are submitted
> in the Contractor's 5-year plan which identifies facility projects
> required, in accordance with DRD 1.1.6.1-a or (ii) meet the definition
> of unforeseen programmatic projects as defined by NPG 8820.2,
> "Facility Project Implementation Handbook" shall not be subject to the
> "Changes" clause. All costs associated with these projects are
> included in the baseline; therefore, no equitable adjustment shall be
> required.

\(c\) Flight Crew Equipment Requirements:

1.  The Government intends to issue Change Orders (CO's) for
    International Space Station crew requirements subsequent to FY99.
    The provisions of paragraph (a) above shall not apply to such CO's.

2.  The provisions of paragraph (a) above apply to all change orders
    issued for Flight Crew Equipment (FCE) requirements, except that the
    following contract adjustment mechanism is established for changes
    with an estimated value between \$250,000 and \$1,000,000:

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i.  An equitable adjustment to the target cost and fee(s) of the
    contract will be made for changes in excess of two issued in any one
    fiscal year, beginning with FY99.

ii. No equitable adjustment to the contract shall be made for the first
    two changes issued in any one fiscal year.

iii. For purposes of determining the estimated value of a change for
     applicability of this paragraph (2), the lower of the Government's
     cost estimate at the time the change is issued, or the contractor's
     actual costs of performing the changed work, shall be used.

iv. This paragraph (2) applies only to change orders issued against and
    exclusively affecting FCE requirements; change orders issued against
    other portions of the contract Statement of Work which, upon
    implementation by the contractor, may affect FCE work performance
    shall not be subject to this paragraph (2).

v.  The parties may make equitable adjustment to the contract pursuant
    to this paragraph (2) not more frequently than every two years, with
    the first adjustment, if appropriate pursuant to the limitations
    herein, to be made in October, 2000, or thereafter.

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h.  Nothing herein shall be construed to waive the requirements for
    submittal and certification of cost or pricing data, as applicable
    under this contract, for any contract adjustment made pursuant to
    this paragraph (2).

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(d) Upgrades:

> Effective October 1, 2002, Upgrades shall not be subject to the
> requirements of paragraph (a).

H.21 [COMPLIANCE WITH APPLICABLE CENTER POLICIES AND
PROCEDURES]{.underline}

\(a\) Contractor and subcontractor personnel (regardless of tier)
working on-site at NASA centers are required to comply with applicable
center policies and procedures. These are listed, by center, at
Attachment J-11. The Contractor must keep itself and pertinent
subcontractors up-to-date with the latest revisions of these policies
and procedures. Additions and deletions to this listing will be made by
contract modification. The Contractor shall promptly take corrective
action upon receipt of notice from the Contracting Officer or
representative of noncompliance with any applicable center policy or
procedure.

\(b\) Additional contract clauses with applicability specific to each
center are contained in Attachment J-18. The Contractor shall comply
with these clauses when performing effort at the respective NASA center.

H.22 [SAFETY AND HEALTH PLAN]{.underline}

\(a\) The Contractor shall implement and comply with the Safety and
Health Plan specified in DRD 1.3.

\(b\) The Contractor shall provide for safety inspection and acceptance
of work imposed by the SOW. Safety inspection and corrective action
reports shall be made available to the Contracting Officer upon request.

\(c\) The Contractor shall immediately report to the cognizant center
Director of Safety and Mission Assurance and the cognizant Contracting
Officer (by telephone if possible) accidents and incidents which result
in serious personal injuries or death; and incidents which result in
substantial damage to resources, equipment or facilities used or
occupied by the Contractor. Prepare and submit a NASA Mishap Report per
local center requirements.

H.23 [MANDATORY CONSIDERATION OF EMPLOYMENT\--SPACE FLIGHT
CONSOLIDATION]{.underline}

\(a\) The Contractor shall first consider hiring Government employees
who have been or will be adversely affected by the consolidation of
NASA's Office of Space Flight contracts before it fully advertises any
new position. Specifically, when a new position

is identified, the Contractor shall first consider filling the position
in-house or with a Government employee who will be, or has been
displaced as a result of the Space Flight Operations Contract
consolidation.

\(b\) The Contractor shall make available a listing of such employment
opportunities to NASA for those displaced Government employees. The
Contractor will only expand its search if it is unable to find the best
qualified candidate for the position from the initial pool of in-house
people and displaced Government employees who have applied for
positions.

\(c\) Any employment of a displaced Government employee must be
consistent with post-Government employment and conflict of interest
standards.

\(d\) The Contractor shall flow this clause to all first tier
subcontractors who are affiliates, successor, or assignees of, either
Rockwell International Corporation or Lockheed Martin Corporation.

H.24 RESERVED

H.25 [GOVERNMENT INSIGHT]{.underline}

\(a\) Definitions. For the purpose of this contract, the following
definitions apply:

"Insight," as used in this clause, means technical visibility into the
Program, maintained through audit, surveillance, assessment of trends
and metrics, software independent verification and validation, the
flight readiness review process, and review or independent assessment of
out-of-family anomalies occurring in any phase of the program.

"Surveillance," as used in this clause means continual monitoring and
verification of the status of manufacturing, testing, and processing of
Shuttle hardware, software and operations preparations to ensure that
requirements are being fulfilled. Items to be monitored and verified are
selected---this is not an all inclusive activity.

"Audit," as used in this clause, means the implementation of procedures
and requirements of the NASA Engineering Quality Audit (NEQA) or other
equivalent audit techniques used to perform periodic audit of all
aspects of processes and procedures required to manufacture, assemble,
test, and process hardware for flight. Audits may include an examination
of all disciplines and tasks which are involved with or support Shuttle
launch and landing operations, hardware and software production and
maintenance, safety and quality assurance, logistics, procurements and
operations. These descriptions are illustrative only and shall not be
construed as any limitation on the Government's right to conduct an
audit of the Contractor and subcontractors to determine performance on
this contract.

\(b\) The Government shall have the right to audit the Contractor and
cost-reimbursement subcontractors (with values exceeding \$1 million) to
determine compliance with the requirements of this contract. One purpose
of these audits is to afford the Government insight into and
understanding of Contractor and selected subcontractor processes and
procedures to determine whether the processes or procedures (1)
adversely affect safety; (2) are not within control limits; or (3)
adversely affect future launch schedules.

\(c\) The Government may schedule fact-finding meetings with the
Contractor and subcontractors as necessary to discuss issues requiring
Government insight. Scheduling and format of these meetings shall
indicate whether exchange of information will be required, and the
number and expertise of Contractor/subcontractor personnel who shall
attend the meetings. When requested by the Contracting Officer or
designee, the Contractor and subcontractors shall provide necessary
support to the Government when it audits the Contractor or subcontractor
and for the Government-Contractor/subcontractor meetings. The purpose of
these meetings is to understand the findings of the Government audits.
The parties understand and agree that no direction from the Government
or constructive change to the contract shall result from any of these
meetings.

H.26 [FISCAL YEAR EXPENDITURE CONSTRAINTS]{.underline}

\(a\) [Notification]{.underline}. In the event it is necessary to limit
the Contractor's fiscal year contract expenditures, in addition to the
amounts reflected in clause B.5, *Total Annual Funding Profile*, to
accommodate NASA fiscal constraints, the Contracting Officer shall so
notify the Contractor in writing.

\(b\) [Contractor Performance]{.underline}. Upon receipt of any such
notification, the Contractor shall proceed to tailor its contract
performance to accommodate such limitations, using its best efforts to
minimize program impact, and shall promptly advise the Contracting
Officer of significant actions taken or consequences expected.

\(c\) [Contract Changes]{.underline}: In the event contract changes are
issued when such a fiscal limitation is in effect, the Contracting
Officer shall advise the Contractor concurrent with their issuance the
extent, if any, to which the limitation is changed.

\(d\) [Limitation Deemed a Change]{.underline}. The imposition of any
fiscal year expenditure limitation shall be deemed to be a change issued
pursuant to the *Changes* clause of the contract after the Contractor
and NASA have determined that cost savings initiatives are not a
feasible solution to the fiscal year limitation. Any equitable
adjustment resulting from any such limitation shall be effected in
accordance with the procedures of the *Changes* clause.

\(e\) [Limitation in Relation to Contract Funding]{.underline}.
Notwithstanding the Contractor's obligation to use its best efforts to
comply with any fiscal year limitations, nothing in this contract clause
shall be construed as modifying the *Limitation of Funds* clause.

H.27 [ENGINEERING CHANGE PROPOSALS]{.underline}

\(a\) Definitions.

\"ECP\" means an Engineering Change Proposal (ECP) which is a proposed
engineering change and the documentation by which the change is
described, justified, and submitted to the procuring activity for
approval or disapproval.

\"NSTS 07700\" means the NASA publication entitled, Space Shuttle Flight
and Ground Specifications.

\(b\) Either party to the contract may originate ECPs. The originator
shall forward proposed ECPs to the Contracting Officer. Unless otherwise
required by the Contracting Officer, the ECP formats, forms and controls
specified in NSTS 07700, Volume IV, Book 1 shall be used for Shuttle
operations and in ISS 41170 for Space Station operations. Implementation
of an approved ECP may occur by either a supplemental agreement or, if
appropriate, as a written change order to the contract.

\(c\) Any ECP submitted to the Contracting Officer over \$1M, shall
include a \"not-to-exceed\" estimated cost increase or decrease
adjustment amount, if any, and the required time of delivery adjustment,
if any, acceptable to the originator of the ECP. If the change is
originated within the Government, the Contracting Officer shall obtain a
written agreement with the contractor regarding the \"not-to-exceed\"
estimated cost and delivery adjustments, if any, prior to issuing an
order for implementation of the change. An ECP accepted in accordance
with the Changes clause of this contract shall not be considered an
authorization to the Contractor to exceed the estimated cost in the
contract Schedule, unless the estimated cost is increased by the change
order or other contract modification.

\(d\) The contractor shall, in accordance with FAR 15.804-6, provide a
completed Standard Form 1411, Contract Pricing Proposal Cover Sheet
(Cost or Pricing Data Required), with appropriate attachments. At the
time of agreement on the estimated cost amount, the contractor may be
required to execute and submit to the Contracting Officer a Certificate
of Current Cost or Pricing Data (FAR 15.804-2 and 15.804-4).

H.28 [SPACE FLIGHT MOTIVATION AWARENESS PROGRAM]{.underline}

The Contractor shall maintain a product and performance-oriented
motivation (awareness) program in accordance with Safety NHB 1700.1
(VI-B) and NASA Policy Directive NPD 3500. The Program objective shall
be the prevention of human error by instilling in individuals performing
on the contract and on critical subcontracts an awareness of individual
responsibility for ISS, Shuttle, and any other ancillary
mission/payloads related to human space flight. As a minimum, goals
should be to

assure mission success, flight crew safety, and recognition of exemplary
performance necessary to achieve success. The program shall include as a
minimum:

\(a\) Participation in NASA-Industry Space Flight Awareness Program.

\(b\) Goal setting and measurement to provide documented practical goals
and performance standards for the reduction and elimination of human
errors at organizational and individual employee levels.

\(c\) Error Cause Identification and Removal System for detecting human
errors, relating them to an identifiable cause, and action to remove the
cause.

\(d\) Methods to obtain and distribute motivational information and
materials to concerned Contractor personnel, subcontractors, and vendors
supplying critical flight and ground support hardware and software.

\(e\) Motivational (awareness) indoctrination for Contractor supervisory
personnel and indoctrination of the work force in workmanship needs.

\(f\) Recognition of personnel who demonstrate their awareness through
exceptional craftsmanship, error free workmanship, and attention to
careful performance in their job responsibility. The Contractor shall
flow down the provisions of this clause to all critical subcontractors.

H.29 [SEVERABILITY OF THE MISSION CONTROL CENTER (MCC) AND INTEGRATED
PLANNING SYSTEM (IPS)]{.underline}

The MCC and IPS effort as described in Section 1.6.4 of the SOW is
included in this SFOC only for the period October 1, 1996, through
December 31, 1998, plus two additional option periods (see clause B.7).
Effective January 1, 1999, or the end of the last exercised option
period, the Contractor will have no further requirement to perform this
effort under the SFOC. The SOW was updated by activating Attachment
J-1-D, SFOC Flight Operations Systems Responsibilities Post Transaction
of MCC and IPS to CSOC. "Activation" means Attachment J-1-D replaces its
counterpart sections and exhibits in Attachment J-1-A, plus all current
approved SOW changes.

H.30 [CONSOLIDATION OF PHASE II CONTRACT REQUIREMENTS]{.underline}

\(a\) Based upon successful contractor performance, the contracts listed
in Attachment J-1-C will be consolidated into this contract. When the
date is agreed upon, the Government will negotiate an equitable
adjustment as succeeding requirements are added to the SFOC. The terms
and conditions of the basic contract shall govern for all effort
incorporated under the authority of this clause, except as expressly
agreed to by both parties. This clause shall be cited as authority to
modify the contract for these additions.

\(b\) Upon NASA decision to consolidate Phase II requirements into SFOC,
direction shall be issued by the Contracting Officer, which will include
specific requirements to update DRD 1.1.1.1-c.

H.31 [REQUIREMENT FOR COST TRACKING]{.underline}

Costs for the Space Shuttle and ISS shall be tracked and reported
separately in order to comply with requirements that accurate and timely
reporting of ISS costs to the Congress can be accomplished by NASA.
These costs, to be reported in accordance with the requirements of
1852.242-73, *NASA Contractor Financial Management Reporting*, and
1852.242-74, *NASA Contractor Financial Management Reporting
(Performance Analysis Report)*, must be in suitable format and adequate
detail to fulfill obligations placed on NASA.

H.32 [REPROCUREMENT DATA PACKAGE]{.underline}

\(a\) In addition to the requirement to maintain certain data in the
*Access to Contractor Data* clause, the Contractor shall maintain this
data in its data management system in a form and format such that it is
suitable for inclusion in a reprocurement data package. The
reprocurement data package shall be in accordance with requirements of
Data Requirements Document (DRD 1.1.4.1-d) . The parties recognize that
this contract does not require the delivery of the data necessary for a
reprocurement package. Instead, the Government would order this package
in accordance with FAR 52.227-16, *Additional Data Requirements*. The
Contractor shall be required to deliver this data to the Government
within six months of it being ordered per FAR 52.227-16.

\(b\) Moreover, if the Contractor is required to deliver data necessary
for a reprocurement data package, the Contractor shall deliver it with
unlimited rights as defined in FAR 52.227-14, *Rights in Data-General*.
The delivery of this data with unlimited rights shall be at no
additional cost to the Government.

\(c\) The only costs the Government shall bear for the delivery of data
necessary for a reprocurement package with unlimited rights shall be
those costs associated with reproduction and delivery. No costs shall be
permitted for converting data to a prescribed format since the
Contractor is required to maintain the data in a format suitable for a
reprocurement package. The costs associated solely with the conversion
of electronic data to a paper format, however, shall be deemed to be a
reproduction cost.

H.33 [LAUNCH SCHEDULE VARIATIONS]{.underline}

a.  The parties agree that the contract shall be equitably adjusted in
    accordance with the procedural provisions of the *Changes* clause if
    the number of flights during the term of the contract is more or
    less than the number anticipated for the contract. The anticipated
    number of flights is as follows:

b.  **[Year 1]{.underline} [Year 2]{.underline} [Year 3]{.underline}
    [Year 4]{.underline} [Year 5]{.underline} [Year 6]{.underline} [Year
    7]{.underline} [Year 8]{.underline} [Total]{.underline}**

    7 5 4 4 7 4 6 5 42

> \(b\) It is expected that the actual number of flights in any given
> year may vary from the anticipated flights per year noted above due to
> the spacing of the manifest. Variations of this type that cause the
> flight rate in any year to be 1 flight above or below the anticipated
> rate is considered normal and will not be subject to the *Changes*
> clause. This type of variation may also cause the anticipated number
> of flights for the entire contract period to vary by plus or minus 1
> flight. This variation will not be subject to the *Changes* clause.

c.  

d.  The parties agree that the total number of flights for the contract
    will be adjusted (either upward or downward) to reflect changes in
    the actual number of flights only for those years in which an
    equitable adjustment is otherwise made. By way of example, and not
    limitation, in the event there are 7 flights in Year 7 (not subject
    to an equitable adjustment) and 3 flights in Year 8 (subject to an
    equitable adjustment), the total number of flights for purposes of
    final contract total would be reduced by 2. At the end of the
    contract period, a variance greater than plus or minus 1 flight will
    be subject to the *Changes* clause.

H.34 [SELECTION OF FIRMS FOR ARCHITECT-ENGINEER (A-E)
SERVICES]{.underline}

When subcontracting for A-E services, the Contractor shall use
procedures generally consistent with FAR Subpart 36.6. A-E firms shall
be selected competitively based on qualifications, specialized
experience, and other critical considerations, instead of price alone.
The Contractor shall specifically comply with the requirements of FAR
36.602-1.

H.35 [PROGRAM PROVISIONING PROCEDURES]{.underline}

\(a\) There are areas within the contract where it is possible to
anticipate, estimate and negotiate work required in the near term, but
not possible to reasonably predict future requirements. These areas are
subject to Program Provisioning procedures set forth in Attachment J-19.
Tasks subject to Program Provisioning requirements will be provisioned
on an annual basis. Requirements subject to Program Provisioning include
SOW paragraphs: 1.4.1.2, Orbiter Logistics \[High Value Spares
(replacement parts with a unit cost of \$1M+) and Special Test Equipment
(Replacement/Upgrade of Orbiter Logistics STE with a unit cost of
\$500K+)\], 1.4.1.5.2 Hardware, Modifications, and Support; 1.6.2.5.5.2
Flight Crew Support; 1.6.5.4 Flight Operations Development; 1.7.1
Development, 1.7.1.1 KSC Shuttle Development Activities, 1.7.1.2 KSC
Construction of Facility Activities, 1.7.3 ISSPO Support, 1.7.4 Program
Reimbursables, 1.7.5 Solid Rocket Booster Effort, and 2.3 Change Impact
Assessment. Contractor cost performance with respect to these
requirements shall not be subject to the incentive provisions of the
contract, but shall be evaluated under award fee provisions. Cost
reporting under the contract shall be sufficient to ensure that cost
subject to award fee provisions will not be commingled with those
subject to cost incentive provisions.

b\. To provide for efficient and effective administration, the parties
have structured a Program Provisioning Management Plan (PPMP)
(Attachment J-19). This plan provides additional background and defines
administration requirements, specific tasks, schedules, and cost
estimates.

c Procedures for updating task content within the PPMP are described
below:

1 [First Year's Tasks]{.underline}: The estimated cost and fee for the
tasks authorized to be performed in Program Provisioning are included in
Clause B.2. The specific tasks to be performed are defined in the
Program Provisioning Task Book (PPTB).

2 [Subsequent Annual Augmentation]{.underline}: Each subsequent contract
year, the Contractor and NASA shall partner the annual PPTL for each
individual Exhibit, the contents of which are to be based on
requirements identified by the Government. Each PPTL shall only include
tasks which are expected to be initiated in the forthcoming Government
Fiscal Year (GFY), and will not include any amounts for the continuation
or completion of tasks initiated in prior years. However, if a task is
expected to be completed in a year subsequent to the one for which the
proposal is being submitted, the time phased cost for each year in which
work is to be performed on the task shall be included. The cost and fee
for the instant year, as well as the "out-year" work will be included in
the appropriate PPTB Exhibit and Clause B.2. Subsequent year PPTL's
shall not include this work for pricing purposes since it will have
already been included in the contract baseline. The Contractor and NASA
will negotiate and definitize said PPTL's, and adjust the cost and fee
for Program Provisioning in Clause B.2, before September 30^th^ of the
forthcoming GFY.

3\. Should the Government add, delete or modify a task during the fiscal
year which does not exceed the threshold(s) established in Attachment
J-19, Technical Direction will be provided by the cognizant TMR.
However, should such change exceed the threshold(s), the Contracting
Officer will issue written direction in the form of a Program
Provisioning Change Order (PPCO) to the Contractor. Such direction will
not result in a change to contract cost or fees provided that net result
of these changes is estimated to be within the negotiated annual value.
A PPCO is issued unilaterally by the Contracting Officer and will be
used as the contractual document to update the PPMP Exhibits.

4\. Recommendations for tasks not included in the PPTL may be identified
by both the Government and Contractor. At a minimum, recommendations
shall be supported by information concerning: flight effectivity; SOW or
specification impacts; and time-phased cost estimates.
Contractor-initiated recommendations shall be submitted to the cognizant
TMR for consideration. Submission of a recommendation by the Contractor
does not commit NASA to implementation.

H. 36 [DATA TO BE PROVIDED TO SHUTTLE PROGRAM DATABASE
CONTRACTOR]{.underline}

The Contractor recognizes that the Johnson Space Center (JSC) has
entered into a contract with a contractor that has administrative
responsibilities related to developing and implementing a Shuttle
Program database (this contractor is hereinafter referred to as \"the
Shuttle Program Database contractor\"). The data to be furnished to the
Shuttle Program Database contractor contains a wide variety of
information, some of which has been submitted to the Government by the
Contractor, or otherwise obtained by the Government, and which may be
regarded by the Contractor as being privileged or confidential (e.g.,
cost or pricing data in proposals and/or other sensitive business
information). The Contractor further recognizes that the contract
between JSC and the Shuttle Program Database contractor contains the
following provision:

> H. \_\_ HANDLING OF DATA
>
> It is anticipated that in the performance of this contract, the
> Contractor may have access to and use of (1) NASA\'s sensitive
> internal budget, accounting, cost or pricing, or other financial data;
> and/or (2) sensitive trade secret, commercial, business, financial
> (cost or pricing) data of other contractors. The Contractor agrees
> that it will not use, copy, or disclose such data, or any other data
> arguably within these categories, except to the extent necessary to
> perform the work under this contract, and will not make any other use
> or disclosure of such data without prior specific written permission
> of the Contracting Officer.

The Contractor agrees that the Government may provide to the Shuttle
Program Database contractor, or any successor contractor selected for
the purpose of performing the same or similar contract work, data
containing information provided to the Government in connection with
this contract, or otherwise obtained by the Government in connection
with this contract, provided, (1) that the information is furnished the
Shuttle Program Database contractor for purposes contemplated by the
contract, and (2) that in the case of a successor contractor, the
successor contract contains the above quoted provision or one to
substantially the same effect providing equivalent protection.

The contractor does not waive any of its rights under the Freedom of
Information Act (FOIA).

H.37 [LIMITATION OF LIABILITY -- HIGH-VALUE ITEMS]{.underline}

> The following items fall under applicability of the clause at
> 52.246-24:

Aft Skirt

Forward Skirt

Frustrum

Ordnance Ring

External Tank Attach Ring

Auxiliary Power Unit

Servoactuator

Range Safety System Distributor

Decelerator Subsystem

Integrated Electronic Assembly"

H.38 [SRB REFURBISHMENT, ASSEMBLY, AND CHECKOUT]{.underline}

The contractor is responsible for all "in-family" repair and
refurbishment of SRB Reusable Hardware identified within the SRB
Reusable Hardware List (Attachment J-22). Any "out-of-family" repair or
refurbishment of SRB Reusable Hardware and or any replacement of SRB
Reusable Hardware shall be subject to the provisions of Article H.20,
Special Provision for Contract Changes. If authorized, replacement SRB
Reusable Hardware will be acquired in economical lot buys."

H. 39 [ACTIVITY BASED COSTING]{.underline}

\(a\) From time to time, the Contracting Officer may initiate the
process leading to a price adjustment for a contract modification by
utilizing Activity Based Costing (ABC). ABC may be used when both the
work requirements and resources (Direct Labor, Subcontracts, ODC's,
etc.) necessary for accomplishing the work can be predicted with a high
degree of accuracy. For purposes of this special provision, ABC is a
technique in which requirements definition and cost estimating baselines
for a task to be proposed, are jointly developed and documented by
representatives of the Government and Contractor prior to submittal of
the Contractor\'s cost proposal. The Decision Package is the output of
this process and, when approved by the Government, becomes the Basis of
Estimate (BOE) to be proposed by the Contractor. Determination of the
price for a contract modification requires the application of labor
rates, indirect costs, and fee to the agreed upon BOE.

\(b\) Notwithstanding any other provision in this contract to the
contrary, the parties agree that when the ABC technique is utilized as
set forth in paragraph (a) of this provision, the Decision Package is
\"Information other than cost or pricing data,\" as defined by FAR
15.403, and is not required to be certified. The applied labor rates,
indirect costs and any other costs utilized to complete the
Contractor\'s cost proposal are "cost or pricing data", as defined in
15.403. Such cost or pricing data is certifiable in accordance with
15.406-2.

H. 40 [VALUE ENGINEERING (52.248-1) (MAR 1989) (DEVIATION)]{.underline}

(a) General, The Contractor is encouraged to develop, prepare, and
    submit value engineering change proposals (VEP's) voluntarily. The
    Contractor shall share in any net acquisition savings realized from
    accepted VEP's, in accordance with the incentive sharing rates in
    paragraph (f) below.

(b) Definitions.

"Acquisition savings," as used in this clause, means savings resulting
from the

application of a VECP to contracts awarded by the same contracting
office or its

successor for essentially the same services Acquisition savings
include---

1.  Instant contract savings, which are the net cost reductions on this,
    the instant contract, less the Contractor's allowable development
    and implementation

> costs;

2.  Concurrent savings, which are net reductions in the prices of other
    contracts

> that are definitized and ongoing at the time the VECP is accepted; and

3.  Future contract savings, which are the cost savings on extensions to
    the

> instant contract or on followon contracts, awarded during the sharing
> period
>
> for essentially the same services after VECP acceptance.
>
> "Collateral costs, "as used in this clause, means agency cost of
> operations, maintenance, logistic support or Government-furnished
> property.
>
> "Collateral costs", as used in this clause, means those measurable net
> reductions resulting from a VECP in the agency's overall projected
> collateral costs, exclusive of acquisition savings, whether or not the
> acquisition cost changes.
>
> "Contracting officer: includes any contracting office that the
> acquisition is transferred to, such as another branch of the agency or
> another agency's office that is performing a joint acquisition action.
>
> "Contractor's development and implementation cost," as used in this
> clause, means those costs the Contractor incurs on a VECP specifically
> in developing, testing, and submitting the VECP, as well as those
> costs the Contractor incurs to make the contractual changes required
> by Government acceptance of a VECP.
>
> "Government costs," as used in this clause, means those agency costs
> that result directly from developing and implementing the VECP, such
> as any net increases in the cost of testing, operations, maintenance,
> and logistics support. The term does not include the normal
> administrative costs of processing the VECP or any increase in this
> contract's cost of price resulting from negative instant contract
> savings.
>
> "Instant contract," as used in this clause, means this contract, under
> which the VECP is submitted. It does not include increases in
> quantities of supplies or services after acceptance of the VECP that
> are due to contract modification, exercise of options, or additional
> orders.
>
> "Negative instant contract savings" means that increase in the cost of
> this contract when the acceptance of a VECP results in an access of
> the Contractor's allowable development and implementation costs over
> the instant contract savings
>
> "Net acquisition savings" means total acquisition savings, including
> instant, concurrent, and future contract savings, less Government
> costs.
>
> "Sharing period," as used in this clause, means the period beginning
> with acceptance of the VECP and ending on the date established by
> mutual agreement of the parties upon Government acceptance of the
> VECP, except that in no cases shall the sharing period ending date be
> later than five years after the completion date of the instant
> contract.
>
> "Value engineering change proposal (VECP)" means a proposal that---

1.  Requires a change to this, the instant contract, to implement; and

2.  Results in reducing the overall projected cost to the agency without
    impairing essential functions or characteristics; provided, that it
    does not involve a change---

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i.  In deliverable end item quantities only;

ii. In research and development (R&D) end items or R&D test quantities
    that is due solely to results of previous testing under this
    contract;

iii. To the contract type only;

iv. To the assumption of Government functions only; or

v.  In the Space Shuttle manifest or number of launches specified in the
    contract.

© VCP preparation. As a minimum, the Contractor shall include in each
VECP the information described in subparagraphs ©(1) through (8) below.
If the proposed change is affected by contractually required
configuration management or similar procedures, the instructions in
those procedures relating to format, identification, and priority
assignment shall govern VEC preparation. The VECP shall include the
following:

1.  A Description of the difference between the existing contract or
    process requirement and the proposed process of requirement, the
    comparative advantages and disadvantages of each, a justification
    when a process or end item function or characteristics are being
    altered, the effect of the change on the process/end item
    performance or level of confidence in performance, and any pertinent
    objective test data.

2.  A list and analysis of the contract requirements that must be
    changed if the VECP is accepted, including any suggested
    specification revisions.

3.  Identification of the specific tasks or processes performs under the
    contract to which the VECP applies.

4.  A separate, detailed cost estimate for (I) the affected portions of
    the existing contract requirement and (ii) the VECP. The cost
    reduction associated with the VECP shall take into account the
    Contractor's allowable development and implementation costs,
    including any amount attributable to subcontracts under the
    Subcontracts paragraph of this clause, below.

5.  A description and estimate of costs the Government may incur in
    implementing the VECP, such as test and evaluation and operating and
    support costs.

6.  A prediction of any effects the proposed change would have on
    collateral costs to the agency.

7.  A statement of the time by which a contract modification accepting
    the VECP must be issued in order to achieve the maximum cost
    reduction, noting any effect on the contract completion time or
    delivery schedule.

8.  Identification of any previous submission of the VECP, including the
    dates submitted, the agencies and contract numbers involved, and
    previous Government actions, if known.

\(d\) Submission. The Contractor shall submit VECP's to the Contracting
Officer

e.  Government action. (1) The Contracting Officer shall notify the
    Contractor of the status of the VECP within 45 calendar days after
    the contracting officer receives it . If additional time is
    required, the Contracting officer shall notify the Contractor within
    the 45-day period and provide the reason for the delay and the
    expected date of the decision. The Government will process the
    VECP's expeditiously; however, it shall not be liable

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2.  If the VECP is not accepted, the Contracting Officer shall notify
    the Contractor in writing, explaining the reasons for rejection. The
    Contractor may withdraw any VECP, in whole or in part, at any time
    before it is accepted by the Government. The Contracting Officer may
    require that the Contractor provide written notification before
    undertaking significant expenditures for VECP effort.

3.  Any VECP may be accepted, in whole or in part, by the Contracting
    Officer's award of a modification to this contract citing this
    clause and made either before or within reasonable time after
    contract performance is completed. Until such a contract
    modification applies a VECP to this contract, the Contractor shall
    perform in accordance with the existing contract. The Contracting
    Officer's decision to accept or reject all or part of any VECP and
    the decision as to which of the sharing rates applies shall be final
    and not subject to the Disputes clause or otherwise subject to
    litigation under the Contract DisputesAct of 1978 (41 U.S.C.
    601-613)

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f.  Sharing rates. If a VECP is accepted, the Contractor shall share in
    net acquisition savings as follows:

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1.  Instant contract: work not subject to cost incentive - 25%

2.  Instant contract: work subject to cost incentive - 35%

3.  Concurrent and future contracts: pursuant to mutual agreement of the
    parties; rate shall not exceed 50% for any VECP.

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g.  Calculating net acquisition savings. (1) Acquisition savings are
    realized when (I) the cost or price is reduced on the instant
    contract, (ii) reductions are negotiated in concurrent
    contracts, (iii) future contracts are awarded, or (iv) agreement is
    reached on a lump-sum payment for future contract savings (see
    subparagraph (I)(4) below). Net acquisition savings are first
    realized, and the Contractor shall be paid a share, when Government
    costs and any negative instant contract savings have been fully
    offset against acquisition savings.

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2.  Recovery of Government costs on the instant contract shall

> be deferred and offset against concurrent and future
>
> contract savings. For the portion of the contract subject to the cost
> incentive, the Contractor shall share through the contract incentive
> structure in savings on the instant contract items affected. Any
> negative instant contract savings shall be added to the target cost or
> to the target price and ceiling price, and the amount shall be offset
> against concurrent and future contract savings.

3.  If the Government does not receive and accept all items on which it
    paid the Contractor's share, the Contractor shall reimburse the
    Government for the proportionate share of these payments.

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h.  Contract adjustment. The modification accepting the VECP (or a
    subsequent modification issued as soon as possible after any
    negotiations are completed) shall---

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1.  Reduce the contract price or estimated cost by the amount of instant
    contract savings, unless this is an incentive contract;

2.  When the amount of instant contract savings is negative, increase
    the contract price, target price and ceiling price, target cost, or
    estimated cost by that amount;

3.  Specify the Contractor's dollar share per unit on future contracts,
    or provide the lump sum payment.

4.  Specify the amount of any Government costs or negative instant
    contract savings to be offset in determining net acquisition savings
    realized from concurrent or future contract savings; and

5.  Provide, for contract work not subject to the cost incentive, the
    Contractor's share of any net acquisition savings under the instant
    contract by increasing the contract fee.

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i.  Concurrent and future contract savings. (1) Payments of the
    Contractor's share of concurrent and future contract savings shall
    be made by a modification to the instant contract in accordance with
    subparagraph (h)(5) above. For incentive contracts, shares shall be
    added as a separate firm-fixed-price line item on the instant
    contract.

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2.  The Contracting Officer shall calculate the Contractor's share of
    concurrent contract savings by---

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i.  Subtracting from the reduction in price negotiated on the concurrent
    contract any Government costs or negative contract savings not yet
    offset; and

ii. Multiplying the result by the Contractor's sharing rate.

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3.  The Contracting Officer shall calculate the Contractor's share of

> future contract savings by---

i.  Multiplying the future unit cost reduction by the number if future
    contract units scheduled for delivery during the sharing period;

ii. Subtracting any Government costs of negative instant contract
    savings not yet offset; and

iii. Multiplying the result by the Contractor's sharing rate.

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4.  When the Government wishes and the Contractor agrees, the

> Contractor's share of future contract savings may be paid in a single
> lump sum (installment payments of the lump sum may be used) rather
> than in a series of payments over time as future contracts are
> awarded. Under this alternate procedure, the future contract savings
> may be calculated when the VECP is accepted, on the basis of the
> Contracting officer's forecast of the number of units that will be
> delivered during the sharing period. The Contractor's share shall be
> included in a modification to this contract ( see subparagraph (h)(3)
> above and shall not be subject to subsequent adjustment.

5.  Alternate no-cost settlement method. When, in accordance with
    subsection 48.104-3 of the Federal Acquisition Regulation, the
    Government and the Contractor mutually agree to use the no-cost
    settlement method, the following applies:

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i.  The Contractor will keep all the savings on the instant contract and
    on its concurrent contracts only.

ii. The Government will keep all the savings resulting from concurrent
    contracts placed on other sources, savings from all future
    contracts, and all collateral savings

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j.  Collateral savings. If a VECP is accepted, the instant contract
    amount shall be increased, as specified in subparagraph (h)(5)
    above, by 20 percent of any projected collateral savings determined
    to be realized in a typical year of use after subtracting any
    Government costs not previously offset. However, the Contractor's
    share of collateral savings shall not exceed (1) the contract's
    firm-fixed price, target price, target cost, or estimated cost, at
    the time the VECP is accepted, or (2) \$100,000, whichever is
    greater. The Contracting Officer shall be the sole determiner of the
    amount of collateral savings, and that amount shall not be subject
    to the Disputes clause or otherwise subject to litigation under 41
    U.S.C. 601-613.

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k.  Relationship to other incentives. Only those benefits of an accepted
    VECP not rewardable under performance, design-to-cost (production
    unit cost, operating and support costs, reliability and
    maintainability), or similar incentives shall be rewarded under this
    clause. However, the targets of such incentives affected by the VECP
    shall not be adjusted because of VECP acceptance. If this contract
    specifies targets but provides no incentive to surpass them, the
    value engineering sharing shall apply only to the amount of
    achievement better than target.

l.  Subcontracts. The Contractor shall include an appropriate value
    engineering clause in any subcontract of \$50 million or more and
    may include one in subcontracts of lesser value. In calculating any
    adjustment in this contract's price for instant contract savings (or
    negative instant contract savings), the Contractor's allowable
    development and implementation costs shall include any
    subcontractor's allowable development and implementation costs, and
    any value engineering incentive payments to a subcontractor, clearly
    resulting from a VECP accepted by the Government under this
    contract. The Contractor may choose any arrangement for
    subcontractor value engineering incentive payments; provided, that
    the payments shall not reduce the Government's share of concurrent
    or future contract savings or collateral savings.

m.  Data. The Contractor may restrict the Government's rights to use any
    part of a VECP or the supporting data by marking the following
    legend on the affected parts:

These data, furnished under the Value Engineering cause of contract
NAS9-20000, shall not be disclosed outside the Government or duplicated,
used, or disclosed, in whole or in part, for any purpose other than to
evaluate a value engineering change proposal submitted under the clause.
This restriction does not limit the Government's right to use
information contained in these data if it has been obtained or is
otherwise available from the Contractor or from another source without
limitations.

If a VECP is accepted, the Contractor hereby grants the Government
unlimited rights in the VECP and supporting data, except that, with
respect to data qualifying and submitted as limited rights technical
data, the Government shall have the rights specified in the contract
modification implementing the VECP and shall appropriately mark the
data. (The terms "unlimited rights" and "limited rights" are defined in
Part 27 of the Federal Acquisition Regulation.)

H.41 [Minimum Insurance Coverage for Vessel Liability]{.underline}

\(a\) In accordance with clause 52.228-7, Insurance---Liability to Third
Persons, and clause 1852.228-75, Minimum Insurance Coverage, the
contractor agrees to obtain and maintain vessel liability coverage, in
addition to the insurance coverage specified in the cited clauses.

\(b\) During performance of this contract, the Contractor shall secure
Protection and Indemnity (P&I) marine insurance coverage similar to and
with limits, customarily offered by the International Group of
Protection and Indemnity Clubs, for all liabilities excluding those for
which the Contractor has been relieved by the Government Property clause
of this contract. Contractor may, at its option, exclude Workers'
Compensation, Jones Act and Longshore and Harbor Workers Compensation
Act liability coverage from its P&I coverage by covering such
liabilities under a separate Workers' Compensation policy.

\(c\) The Government shall be listed on the insurance policy required by
this clause as a "co-insured," and the policy shall contain the
provision specified in 1852.228-75(d)."

H.42 [Permission to Copyright Software]{.underline}

The Contractor has requested under paragraph (d)(3) of the \"Rights in
Data-General\" clause of this contract, permission to assert copyright
for and market or otherwise release or distribute the Portable Display
Builder software first produced in the performance of this contract.

The Contracting Officer hereby grants such request, subject to the
following conditions:

\(a\) the Contractor agrees to use its best efforts to commercially
market and distribute the computer software including supporting and
updating services;

\(b\) if the Contractor determines to assert copyright protection for
the software, the Contractor shall affix the copyright notice of 17
U.S.C. 401 to the computer software when it is delivered to the
government and released or furnished to third parties;

\(c\) NASA reserves a paid-up nonexclusive, irrevocable, worldwide
license to reproduce, prepare derivative works, perform publicly and
display publicly by or on behalf of the U.S. government all such
copyrighted computer software.

\(d\) In event the Contractor has not, or is not, making the efforts or
achieved the objectives, set forth in paragraph (a) above, NASA reserves
the right to obtain assignment of the copyright(s) in order to foster
the desired commercialization efforts.

\(e\) the Contractor agrees to deliver without charge copies of any
updated or enhanced versions of the software covered by the permission
herein granted which are generated on or before September 30, 2005. If
the Contractor desires, such updated or enhanced versions may be
delivered with restrictions on use for NASA purposes only.

\(f\) The foregoing permission does not affect in any way the
applicability of the U.S. export control laws and regulations on any use
and release of such software which the Contractor may contemplate under
the permission.

(End of Clause)