LIABILITY FOR THE FACILITIES (52.245-8) (JAN 1997) (DEVIATION) (PIC 99-15) (SEP 1999)

    (a) The term "Contractor's managerial personnel," as used in this clause, means any of the Contractor's directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of‑‑

    	(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 the facilities are installed or located: or

    	(3) A separate and complete major industrial operation in connection with which the facilities are used.

    (b) The Contractor shall not be liable for any loss or destruction of, or damage to, the facilities, or for expenses incidental to such loss, destruction, or damage, except as provided in this clause.

    (c) The Contractor shall be liable for loss or destruction of, or damage to, the facilities, and for expenses incidental to such loss, destruction, or damage‑‑

    	(1) That results from a risk expressly required to be insured under this contract, but only to the extent of the insurance required to be purchased and maintained, or to the extent of insurance actually purchased and maintained, whichever is greater;

    	(2) That results from a risk that is in fact covered by insurance or for which the Contractor is otherwise reimbursed, but only to the extent of such insurance or reimbursement;

    	(3) For which the Contractor is otherwise responsible under the express terms of this contract;

    	(4) That results from willful misconduct or lack of good faith on the part of the Contractor's managerial personnel; or

    	(5) That results from a failure, due to willful misconduct or lack of good faith on the part of the Contractor's managerial personnel‑‑

    		(i) To establish, maintain and administer a system for control of the facilities in accordance with the "Property administration" paragraph of the Government property clause; or

    		(ii) To maintain and administer a program for maintenance, repair, protection, and preservation of the facilities, in accordance with the "Property administration" paragraph of the Government Property clause, or to take reasonable steps to comply with any appropriate written direction that the Contracting Officer may prescribe as reasonably necessary for the protection of the facilities.  If the Government Property clause does not include the "Property administration" paragraph, then the Contractor shall exercise sound industrial practice in complying with the requirements of this subdivision (c)(5)(ii).

    (d) (1) If the Contractor fails to act as provided by subparagraph (c)(5) above, after being notified (by certified mail addressed to one of the Contractor's managerial personnel) of the Government's disapproval, withdrawal of approval, or nonacceptance of the system or program, it shall be conclusively presumed that such failure was due to willful misconduct or lack of good faith on the part of the Contractor's managerial personnel.

    	(2) Furthermore, any loss or destruction of, or damage to, the Government property shall be presumed to have resulted from such failure unless the Contractor can establish by clear and convincing evidence that such loss, destruction, or damage‑‑

    		(i) Did not result from the Contractor's failure to maintain an approved program or system; or

    		(ii) Occurred while an approved program or system was maintained by the Contractor.

    (e) If the Contractor transfers facilities to the possession and control of a subcontractor, the transfer shall not affect the liability of the Contractor for loss or destruction of, or damage to, the facilities.  However, the Contractor shall require the subcontractor to assume the risk of, and be responsible for, any loss or destruction of, or damage to, the facilities while in the subcontractor's possession or control, except to the extent that the subcontract, with the advance approval of the Contracting Officer, relieves the subcontractor from such liability.  In the absence of such approval, the subcontract shall contain appropriate provisions requiring the return of all the facilities in as good condition as when received, except for reasonable wear and tear or for their utilization in accordance with the provisions of the prime contract.

    (f) Unless expressly directed in writing by the Contracting Officer, the Contractor shall not include in the price or cost under any contract with the Government the cost of insurance (including self‑insurance) against any form of loss, destruction, or damage to the facilities.  Any insurance required under this clause shall be in such form, in such amounts, for such periods of time, and with such insurers (including the Contractor as self‑insurer in appropriate circumstances) as the Contracting Officer shall require or approve.  Such insurance shall provide for 30 days advance notice to the Contracting Officer, in the event of cancellation or material change in the policy coverage on the part of the insurer.  Documentation of insurance or an authenticated copy of such insurance shall be deposited promptly with the Contracting Officer.  The Contractor shall, not less than 30 days before the expiration of such insurance, deliver to the Contracting Officer documentation of insurance or an authenticated copy of each renewal policy.  The insurance shall be in the name of the United States of America (Agency Name), the Contractor, and such other interested parties as the Contracting Officer shall approve, and shall contain a loss payable clause reading substantially as follows:

    	"Any loss under this policy shall be adjusted with (Contractor) and the proceeds, at the direction of the Government, shall be paid to (Contractor).  Proceeds not paid to (Contractor) shall be paid to the office designated by the Contracting Officer."

    (g) When there is any loss or destruction of, or damage to, the facilities, with the exception of low value property for which loss, damage, or destruction is required to be reported at contract termination, completion, or when needed for contract performance,‑‑

    	(1) The Contractor shall promptly notify the Contracting Officer and, with the assistance of the Contracting Officer, shall take all reasonable steps to protect the facilities from further damage, separate the damaged and undamaged facilities, put all the facilities in the best possible order, and promptly furnish to the Contracting Officer (and in any event within 30 days) a statement of‑‑

    		(i) The facilities lost or damaged;

    		(ii) The time and origin of the loss or damage;

    		(iii) All known interests in commingled property of which the facilities are a part; and

    		(iv) Any insurance covering any part of or interest in such commingled property;

    	(2) The Contractor shall make such repairs, replacements, and renovations of the lost, destroyed, or damaged facilities, or take such other action as the Contracting Officer may direct in writing; and

    	(3) The Contractor shall perform its obligations under this paragraph (g) at Government expense, except to the extent that the Contractor is liable for such damage, destruction, or loss is compensated by insurance.

    (h) The Government is not obliged to replace or repair the facilities that have been lost, destroyed, or damaged.  If the Government does not replace or repair the facilities, the right of the parties to an equitable adjustment in delivery or performance dates, price, or both, and in any other contractual condition of the related contracts affected shall be governed by the terms and conditions of those contracts.

    (i) Except to the extent of any loss or destruction of, or damage to, the facilities for which the Contractor is relieved of liability, the facilities shall be returned to the Government or otherwise disposed of under the terms of this contract (1) in as good condition as when received by the Contractor, (2) improved, or (3) as required under the terms of this contract, less ordinary wear and tear.

    (j) If the Contractor is in any way compensated (excepting proceeds from use and occupancy insurance, the cost of which is not borne directly or indirectly by the Government) for any loss or destruction of, or damage to the facilities, the Contractor, as directed by the Contracting Officer, shall‑‑

    	(1) Use the proceeds to repair, renovate, or replace the facilities involved, or

    	(2) Pay such proceeds to the Government.

    (k) The Contractor shall do nothing to prejudice the Government's right to recover against third parties for any loss or destruction of, or damage to, the facilities.  Upon the request of the Contracting Officer, the Contractor shall furnish to the Government, at Government expense, all reasonable assistance and cooperation (including the prosecution of suit and the execution of instruments of assignment in favor of the Government) in obtaining recovery.

    (End of clause)