[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Proposed Rules]
[Pages 31490-31499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15222]



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DEPARTMENT OF DEFENSE

48 CFR Parts 216, 222, 225, 227, 228, 229, 232, 233, 236, 246, and 
252

[DFARS Case 94-D001]


Defense Federal Acquisition Regulation Supplement; U.S. European 
Command Supplement

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: The Department of Defense is proposing revisions to the 
Defense Federal Acquisition Regulation

[[Page 31491]]

Supplement (DFARS) to incorporate certain text and clauses presently 
contained in the U.S. European Command (EUCOM) Supplement. The proposed 
rule generally applies only to requirements which will be performed 
wholly or in part in a foreign country.

DATES: Comments on the proposed rule and/or the associated information 
collection requirement should be submitted in writing to the address 
shown below on or before August 19, 1996, to be considered in the 
formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, ATTN: Ms. Amy Williams, PDUSD 
(A&T) DP (DAR), 3062 Defense Pentagon, Washington, D.C. 20301-3062. 
Telefax number (703) 602-0350. Please cite DFARS Case 94-D001 in all 
correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:
Ms. Amy Williams, (703) 602-0131.

SUPPLEMENTARY INFORMATION: 

A. Background

    Firms awarded Department of Defense contracts to be performed in 
foreign countries must meet requirements imposed by the host country's 
government concerning local business, labor, environmental, tax, and 
other laws in addition to meeting the requirements of the U.S. 
Government and obtaining all customs and tax exemptions to which 
contractors with the U.S. Government are entitled. The proposed DFARS 
revisions elevate text and clauses presently contained in the U.S. 
EUCOM Supplement to provide uniformity in the implementation of these 
requirements overseas.

B. Regulatory Flexibility Act

    The proposed DFARS rule is not expected to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., 
because the rule only applies to contracts to be solicited, awarded, or 
performed overseas. More than 90 percent of such contracts are awarded 
to foreign firms. Those U.S. firms performing contracts overseas are 
not generally ``small entities.'' Under 5 U.S.C. 601 (3), the 
definition of ``small entity'' is the same as the definition of ``small 
business,'' contained in Section 3 of the Small Business Act (15 U.S.C. 
631 et seq.), as implemented in 13 CFR 121.403. Section 121.403(a) 
states that a ``business concern eligible for assistance as a small 
business is a business entity organized for profit, with a place of 
business located in the United States and which makes a significant 
contribution to the U.S. economy through payment of taxes and/or use of 
American products, materials and/or labor.'' The proposed rule applies 
only to contracts which will be awarded or performed, wholly or in 
part, in foreign countries. Firms which compete for such procurements 
must meet requirements imposed by the host country's government 
concerning local business, labor, environmental, tax, and other laws, 
and obtain permits to operate, hire the mix of employees needed, etc., 
which are unique to conducting business within a particular country. 
The nature of these procurements limits the competition for U.S. 
requirements to those firms which are authorized by the local 
governments to conduct business within that country. There are only a 
few small businesses that qualify as ``invited contractors'' under the 
Status of Forces Agreements. An Initial Regulatory Flexibility Analysis 
has, therefore, not been performed. Comments are invited from small 
entities and other interested parties. Comments from small entities 
concerning the affected DFARS subparts will also be considered in 
accordance with Section 610 of the Act. Such comments must be submitted 
separately and cite DFARS Case 94-D001 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies 
because the proposed rule contains reporting and recordkeeping 
requirements. Necessary requests for approval of the information 
collection requirements in the proposed rule, as well as extension of 
existing requirements in Part 216 and related clauses, have been 
submitted to the Office of Management and Budget under Section 3507(d) 
of the Act. Information collection requirements relating to retention 
of records and making books available are already covered under OMB 
Clearance 9000-0034 (i.e., DFARS 252.216-7003(c) and 252.222-7004(a)). 
Invoicing requirements are covered under OMB Clearance 0704-0248 (i.e., 
DFARS 252.229-7001(b), 252.229-7003(d), 252.229-7007, and 252.229-
7008(c)). Insurance requirements are covered in OMB Clearance 0704-0216 
(i.e., 252.228-7007(c)).

1. Comments

    Comments are invited. Particular comments are solicited on:
    a. Whether the collection of information is necessary for the 
proper performance of the functions of the agency, including whether 
the information will have practical utility;
    b. The accuracy of the agency's estimate of the burden of the 
information collection;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    d. Ways to minimize the burden of the information collection on 
respondents, including the use of automated collection techniques or 
other forms of information technology.

2. Title, Associated Form, and OMB Number

    a. Approval of the information collection requirements under 
proposed DFARS 252.216-7003(b)(1) has been requested as a revision and 
extension to ``Defense FAR Supplement, Part 216, Types of Contracts, 
and Related Clauses in Part 252.216,'' OMB Number 0704-0259.
    b. Approval of the information collection requirements in proposed 
DFARS 252.229-710 (b) and (c) has been requested as a new clearance, 
``Defense FAR Supplement Part 229, Taxes, and Related Clauses at 
252.229.'' This information collection is an existing collection in use 
in the U.S. European Command Supplement without an OMB control number, 
which is now being incorporated in the DFARS.

3. Needs and Uses

    a. The information collection required by the existing clauses, 
DFARS 252.216-7000(c) and DFARS 252.216-7001, and the proposed clause, 
DFARS 252.216-7003(b)(1), is necessary to enable the contracting 
officer to make a prompt modification to the contract, changing 
contract unit prices when appropriate. The information is used by 
contracting officers to evaluate the need for price adjustments.
    b. The information collection required by proposed clause DFARS 
252.229-7010 is necessary to permit Her Majesty's (HM) Customs to 
determine the amount of tax relief to be granted and to inform the 
contracting officer that an attempt to obtain relief has been 
initiated. After the Contractor obtains tax relief, the contracting 
officer appropriately adjusts the contract price. If the Contractor 
does not attempt to obtain relief within the time specified, the 
contracting officer may deduct from the contract price the amount of 
relief that would have been allowed if HM Customs and Excise had 
favorably considered a request for relief.
    4. Affected Public. Businesses or other for profit.

[[Page 31492]]



------------------------------------------------------------------------
             Extension                               New                
------------------------------------------------------------------------
         252.216-700/7001              252.216-7003       252.229-7010  
------------------------------------------------------------------------
240    48.........................               1568                 96
20    6...........................                196                 24
3    1............................                  2                  1
60    6...........................                392                 24
4    8............................                  4                  4
------------------------------------------------------------------------

    5. Annual Burden Hours: 1952.
    6. Number of Respondents: 246.
    7. Responses per Respondent: 2.
    8. Number of Responses: 482.
    9. Average Burden per Response: 4.
    10. Frequency: On occasion.
    11. Supplementary Information. a. i. DFARS 252.216-7000(c), for 
which DoD is requesting extension of the existing paperwork burden 
clearance, requires contractors to notify contracting officers of the 
amount and effective date of each decrease in any established catalog 
or market price and permits contractors to submit a written request to 
increase their established prices.
    ii. DFARS 252.216-7001(f), for which DoD is also requesting 
extension of the paperwork burden clearance, requires contractors, 
within 30 days of final delivery, to identify the correctness of the 
hourly earnings of their employees that are relevant to the 
computations of various labor indices and, upon request, make available 
all records used in the computation of those indices.
    iii. The proposed clause at DFARS 252.216-7003(b)(1) requires the 
contractor to provide a written request for contract adjustment within 
10 days of the increase in established wage rates or material prices, 
in order for the increase in contract unit price to be effective on the 
same date that the host government increases the applicable wage rates 
or material prices.
    b. The proposed clause at DFARS 252.229-7010, Relief from Customs 
Duty (United Kingdom), requires contractors, whose contracts are 
awarded in the United Kingdom and which require the use of certain 
fuels and lubricants during performance, to provide specific 
information to Her Majesty's (HM) Customs and Excise and to provide the 
contracting officer with evidence that an attempt to obtain relief from 
customs duty on fuels and lubricants has been initiated.

Lists of Subjects in 48 CFR Parts 216, 222, 225, 227, 228, 229, 232, 
233, 236, 246, and 252

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
    Therefore, 48 CFR Parts 216, 222, 225, 227, 228, 229, 232, 233, 
236, 246, and 252 are proposed to be amended as follows:
    1. The authority citation for 48 CFR Parts 216, 222, 225, 227, 228, 
229, 232, 233, 236, 246, and 252 continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 216--TYPES OF CONTRACTS

    2. Section 216.203-4-70 is amended by adding paragraph (c) to read 
as follows:


216.203-4-70  Additional clauses.

* * * * *
    (c) Price adjustment based on foreign government controlled wages 
or material prices. (1) The price adjustment clause at 252.216-7003, 
Economic Price Adjustment--Foreign Government Controlled Wages or 
Materials, may be used in fixed-price supply and service contracts 
when--
    (i) The contract is to be performed wholly or in part in a foreign 
country; and
    (ii) A foreign government controls wages or material prices and 
may, during contract performance, impose a mandatory change in wages or 
prices of material.
    (2) Verify the base wage rates and material prices prior to 
contract award and prior to making any adjustment in the contract 
price.

PART 222--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

    3. Subpart 222.72 is added to read as follows:

Subpart 222.72--Compliance With Host Country Labor Laws

Sec.
222.7200  Scope of subpart.
222.7201  Contract clauses.


222.7200  Scope of subpart.

    This subpart prescribes contract clauses, with respect to host 
country labor laws, for use when contracting for services or 
construction within the host country.


222.7201  Contract clauses.

    (a) Use the clause at 252.222-7002, Compliance with Local Labor 
Laws (Overseas), in solicitations and contracts for services or 
construction to be performed outside the United States, its 
possessions, or Puerto Rico.
    (b) Use the clause at 252.222-7003, Permit from Italian 
Inspectorate of Labor, in solicitations and contracts for porter, 
janitorial, or ordinary facility and equipment maintenance services to 
be performed in Italy.
    (c) Use the clause at 252.222-7004, Compliance with Spanish Social 
Security Laws and Regulations, in solicitations and contracts for 
services or construction when contract performance will be in Spain.

PART 225--FOREIGN ACQUISITION

    4. Subpart 225.9 is added to read as follows:

Subpart 225.9--Additional Foreign Acquisition Clauses

Sec.
225.970  Correspndence in English.
225.971  Authorization to Perform.


225.970  Correspondence in English.

    Use the clause at 252.225-7041, Correspondence in English, in 
solicitations and contracts when contract performance will be wholly or 
in part in a foreign country.


225.971  Authorization to perform.

    Use the clause at 252.225-7042, Authorization to Perform, in 
solicitations and contracts when contract performance will be wholly or 
in part in a foreign country.

PART 227--PATENTS, DATA, AND COPYRIGHTS

    5. Section 227.676 is added to read as follows:


227.676  Foreign patent interchange agreements.

    (a) Patent interchange agreements between the United States and 
foreign governments provide for the use of patent rights, compensation, 
free licenses, and the establishment of committees to review and make 
recommendations on these matters. The

[[Page 31493]]

agreements also may exempt the United States from royalty and other 
payments. The contracting officer shall ensure that royalty payments 
are consistent with patent interchange agreements.
    (b) Assistance with patent rights and royalty payments in the 
United States European Command (USEUCOM) area of responsibility is 
available from: HQ USEUCOM, ATTN; ECLA, Unit 30400, Box 1000, APO AE 
09128, Telephone No: DSN: 430-7474, Commercial: 49-0711-680-7474, 
Telefax No: 49-0711-680-7408.

PART 228--BONDS AND INSURANCE

    6. Section 228.370 is amended by adding paragraph (f) to read as 
follows:


228.370  Contract clauses.

* * * * *
    (f) Use the clause at 252.228-7008, Compliance with Spanish Laws 
and Insurance, in solicitations and contracts for services or 
construction to be performed in Spain by other than Spanish contractors 
or subcontractors.

PART 229--TAXES

    7. Section 229.101 is amended by redesignating paragraphs (d)(i), 
(d)(ii) and (d)(iii) as (d)(iii), (d)(iv) and (d)(v); and by adding new 
paragraphs (d)(i), (d)(ii), and (d)(vi) to read as follows:


229.101  Resolving tax problems.

* * * * *
    (d)(i) Tax relief agreements between the United States and foreign 
governments in Europe which exempt the United States from payment of 
specific taxes on purchases made for common defense purposes are 
maintained by the United States European Command (USEUCOM). For further 
information contact--HQ USEUCOM, ATTN: ECLA, Unit 30400, Box 1000, APO 
AE 09128, Telephone No: DSN: 430-7474, Commercial: 49-0711-680-7474, 
Telefax No: 49-0711-680-7408.
    (ii) Tax relief also may be available in countries which have not 
signed tax relief agreements. The potential for such relief should be 
explored in accordance with paragraph (d)(iii) of this section.
* * * * *
    (vi) See also subpart 229.70 for special procedures for obtaining 
tax relief and duty-free import privileges when conducting United 
States acquisitions in foreign countries with foreign contractors.
    8. Subpart 229.4 is added to read as follows:

Subpart 229.4--Contract Clauses

Sec.
229.402  Foreign contracts.
229.402-1-70  Foreign fixed-price contracts.
229.402-70  Additional clauses.


229.402  Foreign contracts.


229.402-1-70  Foreign fixed-price contracts.

    Use the clause at 252.229-7000, Invoices Exclusive of Taxes or 
Duties, in solicitations and contracts when a fixed-price contract will 
be awarded to a foreign contractor.


229.402-70  Additional clauses.

    (a) Use the clause at 252.229-7001, Tax Relief, in solicitations 
and contracts when a contract will be awarded to a foreign contractor 
in a foreign country. When contract performance will be in Germany, use 
the clause with its Alternate I.
    (b) Use the clause at 252.229-7002, Customs Exemptions (Germany), 
in solicitations and contracts requiring the import of United States 
manufactured products into Germany.
    (c) Use the clause at 252.229-7003, Tax Exemptions (Italy), in 
solicitations and contracts when contract performance will be in Italy.
    (d) Use the clause at 252.229-7004, Status of Contractor as a 
Direct Contractor (Spain), in solicitations and contracts requiring the 
import of supplies for construction, development, maintenance, and 
operation of Spanish-American installations and facilities.
    (e) Use the clause at 252.229-7005, Tax Exemptions (Spain), in 
solicitations and contracts when contract performance will be in Spain.
    (f) Use the clause at 252.229-7006, Value Added Tax Exclusion 
(United Kingdom), in solicitations and contracts when contract 
performance will be in the United Kingdom.
    (g) Use the clause at 252.229-7007, Verification of United States 
Receipt of Goods, in solicitations issued and contracts awarded in the 
United Kingdom.
    (h) Use the clause at 252.229-7008, Relief from Import Duty (United 
Kingdom), in solicitations issued and contracts awarded in the United 
Kingdom.
    (i) Use the clause at 252.229-7009, Relief from Customs Duty and 
Value Added Tax on Fuel (Passenger Vehicles) (United Kingdom) in 
solicitations issued and contracts awarded in the United Kingdom for 
fuels (gasoline or diesel) and lubricants used in passenger vehicles 
(excluding taxis).
    (j) Use the clause at 252.229-7010, Relief from Customs Duty on 
Fuel (United Kingdom), in solicitations issued and contracts awarded in 
the United Kingdom calling for the use of fuels (gasoline or diesel) 
and lubricants in taxis or vehicles other than passenger vehicles.
    9. Subpart 229.70 is added to read as follows:

Subpart 229.70--Special Procedures for Overseas Contracts

Sec.
229.7000  Scope of subpart.
229.7001  Tax exemption in Europe.
229.7002  Tax exemption in Spain.
229.7003  Tax exemption in the United Kingdom.
229.7003-1  Value added tax.
229.7003-2  Import duty.
229.7003-3  VAT/Duty problem resolution.
229.7003-4  Information required by HM Customs and Excise.


229.7000  Scope of subpart.

    This subpart prescribes procedures to be used by contracting 
officers to obtain tax relief and duty-free import privileges when 
conducting United States Government acquisitions in foreign countries 
with foreign contractors.


229.7001  Tax exemption in Europe.

    When standard commercial items or services are being acquired, the 
contracting officer shall require the contractor to identify and 
separately state the tax amount from which the United States is exempt 
and which has been excluded from the contract price. The contracting 
officer will compare the excluded amount with the tax relief authorized 
by tax relief agreements to ensure that the United States Government is 
accorded the full benefit of all tax exemptions (see also 229.402-70(a) 
and the clause at 252.229-7001).


229.7002  Tax exemption in Spain.

    (a) The Joint United States Military Group (JUSMG), Spain Policy 
Directive 400.4, or subsequent directive, applies to all United States 
contracting offices contracting for services or supplies in Spain which 
require the introduction of material or equipment into Spain.
    (b) Upon award of a contract with a ``Direct Contractor,'' as 
defined in the clause at 252.229-7004, the contracting officer will 
notify JUSMG-MAAG Madrid, Spain, and HQ 16AF/LGTT and forward three 
copies of the contract to JUSMG-MAAG, Spain.
    (c) If copies of the contract are not available and duty-free 
import of equipment or materials is urgent, the contracting officer 
will send JUSMG-MAAG three copies of the ``Letter of Intent'' or a 
similar document indicating the pending award. In these cases, 
authorization for duty-free import will

[[Page 31494]]

be issued by the Government of Spain. Upon formal award, the 
contracting officer will forward three copies of the completed contract 
to JUSMG-MAAG, Spain.
    (d) The contracting officer will notify JUSMG-MAAG, Spain, and HQ 
16AF/LGTT of ports-of-entry and identify the customs agents who will 
clear property on their behalf. Additional documents required for port-
of-entry and customs clearance can be obtained by contacting HQ 16AF/
LGTT. This information will be passed to the Secretaria General Tecnica 
del Ministerio de Hacienda (Technical General Secretariat of the 
Ministry of Finance). A list of customs agents may be obtained from the 
600 ABG, APO AE 09646.


229.7003  Tax exemption in the United Kingdom.

    This section contains procedures to be followed in securing relief 
from the British Value Added Tax (VAT) and import duties.


229.7003-1  Value added tax.

    (a) United States Government purchases qualifying for tax relief 
are equipment, materials, facilities, and services for the common 
defense effort and for foreign aid programs.
    (b) In order to facilitate the resolution of issues concerning 
specific waivers of import duty or tax exemption for United States 
Government purchases (see 229.7003-3), contracting offices shall 
provide the name and activity address of personnel who have been 
granted warranted contracting authority to Her Majesty's (HM) Customs 
and Excise at the following address: HM Customs and Excise, 
International Customs Division G, Branch 4, Adelaide House, London 
Bridge, London EC4R 9DB.


229.7003-2  Import duty.

    No import duty shall be paid by the United States and contract 
prices shall be exclusive of duty, except when the administrative cost 
compared to the low dollar value of a contract makes it impracticable 
to obtain relief from contract import duty. In this instance, the 
contracting officer shall document the contract file with a statement 
that
    (1) The administrative burden of securing tax relief under the 
contract was out of proportion to the tax relief involved;
    (2) It is impracticable to secure tax relief;
    (3) Tax relief is therefore not being secured; and
    (4) The acquisition does not involve the expenditure of any funds 
to establish a permanent military installation.


229.7003-3  VAT/Duty problem resolution.

    In the event a VAT or import duty problem cannot be resolved at the 
contracting officer's level, refer the issue to HQ Third Air Force, 
Staff Judge Advocate, Unit 4840, Box 45, APO AE 09459. Direct contract 
with HM Customs and Excise in London is prohibited.


229.7003-4  Information required by HM Customs and Excise.

    (a) School bus contracts. Provide one copy of the contract and all 
modifications to HM Customs and Excise.
    (b) Road fuel contracts. For contracts which involve an application 
for relief from duty on the road fuel used in performance of the 
contract provide--
    (1) To HM Customs and Excise--
    (i) Contract number;
    (ii) Name and address of contractor;
    (iii) Type of work (e.g., laundry, transportation);
    (iv) Area of work; and
    (v) Period of performance.
    (2) To the Regional Office of HM Customs and Excise to which the 
contractor applied for relief from the duty on road fuel--one copy of 
the contract.
    (c) Other contracts awarded to United Kingdom firms. Provide 
information when requested by HM Customs and Excise.

PART 232--CONTRACT FINANCING

    10. Section 232.806-70 is added to read as follows:


Sec. 232.806-70  Alternate contract clause for overseas contracting.

    Use the clause at 252.232-7008, Assignment of Claims (Overseas), in 
place of FAR clause 52.232-23, Assignment of Claims, in solicitations 
and contracts when contract performance will be in a foreign country.

PART 233--PROTESTS, DISPUTES, AND APPEALS

    11. Section 233.215-70 is added to read as follows:


Sec. 233.215-70  Additional contract clause.

    Use the clause at 252.233-7001, Choice of Law (Overseas), in 
solicitations and contracts when contract performance will be outside 
of the United States, its possessions, or Puerto Rico, unless otherwise 
provided for in a Government-to-Government agreement.

PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

    12. Section 236.570 is amended by adding paragraph (c) to read as 
follows:


Sec. 236.570  Additional provisions and clauses.

* * * * *
    (c) See also 246.710(4) for additional clause applicable to 
construction contracts to be performed in Germany.

PART 246--QUALITY ASSURANCE

    13. Section 246.710 is amended by adding paragraph (4) to read as 
follows:


Sec. 246.710  Contract clauses.

* * * * *
    (4) Use the clause at 252.246-7002, Warranty of Construction 
(Germany), in solicitations and contracts for construction when a 
fixed-price contract will be awarded and contract performance will be 
in Germany.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    14. Section 252.216-7003 is added to read as follows:


Sec. 252.216-7003  Economic Price Adjustment--Foreign Government 
Controlled Wages or Materials.

    As prescribed in 216.203-4-70(c), use the following clause:

Economic Price Adjustment--Foreign Government Controlled Wages or 
Materials (XXX XXXX)

    (a) The Contractor represents that the prices set forth in this 
contract--
    (1) Are based on the wage rate(s) or material price(s) 
established and controlled by the Government or ____________
(Contractor--insert name of host country); and
    (2) Do not include contingency allowances to pay for possible 
increases in wage rates or material prices.
    (b) If wage rates or material prices are revised by the 
Government named in paragraph (a) of this clause, the Contracting 
Officer shall make an equitable adjustment in the contract price and 
shall modify the contract to the extent that the Contractor's actual 
costs of performing this contract are increased or decreased, as a 
direct result of the revision, subject to the following:
    (1) For increases in established wage rates or material prices, 
the increase in contract unit price(s) shall be effective on the 
same date that the host government increased the applicable wage 
rate(s) or material price(s), but only if the Contracting Officer 
receives the Contractor's written request for contract adjustment 
within 10 days of the change. If the Contractor's request is 
received later, the effective date shall be the date that the 
Contracting Officer receives the Contractor's request.

[[Page 31495]]

    (2) For decreases in established wage rates or material prices, 
the decrease in contract unit price(s) shall be effective on the 
same date that the host government decreased the applicable wage 
rate(s) or material price(s). The decrease in contract unit price(s) 
shall apply to all items delivered on and after the effective date 
of the host government's rate or price decrease.
    (c) No modification changing the contract unit price(s) shall be 
executed until the Contracting Officer has verified the applicable 
change in the rates/prices set by the host government. The 
Contractor shall make available its books and records which support 
a requested change in contract price.
    (d) Failure to agree to any adjustment shall be a dispute under 
the Disputes clause of this contract.

(End of clause)

    15. Section 252.222-7002 is added to read as follows:


Sec. 252.222-7002  Compliance with Local Labor Laws (Overseas).

    As prescribed in 222.7201(a), use the following clause:

Compliance With Local Labor Laws (Overseas) (XXX XXXX)

    (a) The Contractor shall comply with all--
    (1) Local laws, regulations, and labor union agreements 
governing work hours; and
    (2) Labor regulations including collective bargaining 
agreements, workers' compensation, working conditions, fringe 
benefits, and labor standards or labor contract matters.
    (b) The Contractor indemnifies and holds harmless the United 
States Government from all claims arising out of the requirements of 
this clause. This indemnity includes the Contractor's obligation to 
handle and settle, without cost to the United States Government, any 
claims or litigation concerning allegations that the Contractor or 
the United States Government, or both, have not fully complied with 
local labor laws or regulations relating to the performance of work 
required by this contract.
    (c) Notwithstanding paragraph (b) of this clause, consistent 
with Federal Acquisition Regulation 31.205-15(a) and 31.205-47(d), 
the Contractor will be reimbursed for the costs of all fines, 
penalties, and reasonable litigation expenses incurred as a result 
of compliance with specific contract terms and conditions or written 
instructions from the Contracting Officer.

(End of clause)

    16. Section 252.222-7003 is added to read as follows:


252.222-7003  Permit from Italian Inspectorate of Labor.

    As prescribed in 222.7201(b), use the following clause:

Permit From Italian Inspectorate of Labor (XXX XXXX)

    Prior to the date set for commencement of work and services 
under this contract, the Contractor shall obtain the prescribed 
permit from the Inspectorate of Labor having jurisdiction over the 
work site, in accordance with Article 5g of Italian Law Number 1369, 
dated October 23, 1960. The Contractor shall ensure that a copy of 
the permit is available at all reasonable times for inspection by 
the Contracting Officer or an authorized representative. Failure to 
obtain such permit may result in termination of the contract for the 
convenience of the United States Government, at no cost to the 
United States Government.

(End of clause)

    17. Section 252.222-7004 is added to read as follows:


252.222-7004  Compliance with Spanish Social Security Laws and 
Regulations.

    As prescribed in 222.7201(c), use the following clause:

Compliance With Spanish Social Security Laws and Regulations (XXX XXXX)

    (a) The Contractor shall comply with all Spanish Government 
social security laws and regulations. Within 30 calendar days after 
the start of contract performance, the Contractor shall ensure that 
copies of the documents identified in paragraph (a)(1) through 
(a)(5) of this clause are available at all reasonable times for 
inspection by the Contracting Officer or an authorized 
representative. The Contractor shall retain the records in 
accordance with the Audit and Records clause of this contract.
    (1) TC1--Certificate of Social Security Payments;
    (2) TC2--List of employees;
    (3) TC2/1--Certificate of Social Security Payments for Trainees;
    (4) Nominal (pay statements) signed by both the employee and 
Contractor; and
    (5) INFORMA DE SITUACION DE EMPRESA (Report of the condition of 
the enterprise) from the Ministerio de Trabajo y S.S., Tesoreria 
General de la Seguridad Social (annotated with the pertinent 
contract number(s) next to the employee's name).
    (b) All TC1's, TC2's, and TC2/1's, shall contain a 
representation that they have been paid by either the Social 
Security Administration Office or the Contractor's bank or savings 
institution. Failure by the Contractor to comply with the 
requirements of this clause may result in termination of the 
contract under the clause entitled ``Default.''

(End of clause)

    18. Section 252.225-7041 is added to read as follows:


252.225-7041  Correspondence in English.

    As prescribed in 225.970, use the following clause:

Correspondence in English (XXX XXXX)

    The Contractor shall ensure that all contract correspondence 
which is addressed to the United States Government is submitted in 
English or with an English translation.

(End of clause)

    19. Section 252.225-7042 is added to read as follows:


252.225-7042  Authorization to Perform.

    As prescribed in 225.971, use the following clause:

Authorization To Perform (XXX XXXXX)

    The Contractor represents that it has been duly authorized to 
operate and do business in the country or countries in which this 
contract is to be performed. The Contractor also represents that it 
will fully comply with all laws, decrees, labor standards, and 
regulations of such country or countries, during the performance of 
this contract.

(End of clause)

    20. Section 252.228-7008 is added to read as follows:


252.228-7008  Compliance with Spanish Laws and Insurance.

    As prescribed at 228.370(f), use the following cause:

Compliance With Spanish Laws and Insurance (XXX XXXXX)

    (a) The Contractor shall, without additional expense to the 
United States Government, comply with all applicable Spanish 
Government laws pertaining to sanitation, traffic, security, 
employment of labor and all other laws relevant to the performance 
of this contract. The Contractor shall hold the United States 
Government harmless and free from any liability resulting from the 
Contractor's failure to comply with such laws.
    (b) The Contractor shall, at its own expense, provide and 
maintain during the entire performance of this contract, all 
workmen's compensation, employees' liability, bodily injury 
insurance, and other required insurance adequate to cover the risk 
assumed by the Contractor. The Contractor shall indemnify and hold 
harmless the United States Government from liability resulting from 
all claims for damages as a result of death or injury to personnel 
or damage to real or personal property related to the performance of 
this contract.
    (c) The Contractor agrees to represent in writing to the 
Contracting Officer, prior to commencement of work and not later 
than 15 days after the date of the ``Notice to Proceed,'' that the 
Contractor has obtained the required types of insurance in the 
following minimum amounts. The representation shall also state that 
the Contractor will promptly notify the Contracting Officer of any 
notice of cancellation of insurance or material change in insurance 
coverage which could affect the United States Government's 
interests.

[[Page 31496]]



----------------------------------------------------------------------------------------------------------------
                   Type of insurance                      Coverage/person   Coverage/accident   Property damage 
----------------------------------------------------------------------------------------------------------------
Comprehensive..........................................        $300,000.00      $1,000,000.00        $100,000.00
General Liability                                                                                               
----------------------------------------------------------------------------------------------------------------

    (d) The Contractor shall provide the Contracting Officer with a 
similar representation for all subcontractors who will perform work 
under this contract.
    (e) Insurance policies required herein shall be purchased from 
Spanish insurance companies or other insurance companies legally 
authorized to conduct business in Spain. Such policies shall conform 
to Spanish laws and regulations and shall--
    (1) Contain provisions requiring submission to Spanish law and 
jurisdiction of any problem that may arise with regard to the 
interpretation or application of the clauses and conditions of the 
insurance policy;
    (2) Contain a provision authorizing the insurance company, as 
subrogee of the insured entity, to assume and attend to directly, 
with respect to any person damaged, the legal consequences arising 
from the occurrence of such damages;
    (3) Contain a provision worded as follows: ``The insurance 
company waives any right of subrogation against the United States of 
America which may arise by reason of any payment under this 
policy'';
    (4) Not contain any deductible amount or similar limitation; and
    (5) Not contain any provisions requiring submission to any type 
of arbitration.

(End of clause)

    21. Section 252.229-7000 is added to read as follows:


252.229-7000  Invoices Exclusive of Taxes or Duties.

    As prescribed at 229.402-1-70, use the following clause:

Invoices Exclusive of Taxes or Duties (XXX XXXX)

    Invoices submitted in accordance with the terms and conditions 
of this contract shall be exclusive of all taxes or duties for which 
relief is available.

(End of clause)

    22. Section 252.229-7001 is added to read as follows:


252.229-7001  Tax Relief.

    As prescribed at 229.402-70(a), use the following clause:

Tax Relief (XXX XXXX)

    (a) Prices set forth in this contract are exclusive of all taxes 
and duties from which the United States Government is exempt by 
virtue of tax agreements between the United States Government and 
the Contractor's Government. The following taxes or duties have been 
excluded from the contract prices.

NAME OF TAX:-----------------------------------------------------------
(Contractor insert)

RATE (PERCENTAGE):-----------------------------------------------------
(Contractor insert)

    (b) The Contractor's invoice shall separately list the gross 
price, amount of tax deducted, and the net price charged.
    (c) When items manufactured to United States Government 
specifications are being acquired, the Contractor shall identify the 
materials or components intended to be imported in order to ensure 
that relief from import duties is obtained. If the Contractor 
intends to use imported products from inventories on hand, the price 
of which includes a factor for import duties, the Contractor shall 
still ensure the United States Government's exemption from these 
taxes. The Contractor may obtain a refund of the import duties from 
its government or request the duty-free import of an amount of 
supplies or components corresponding to that used from inventory for 
this contract.

(End of clause)

Alternate I. (XXX XXXX)

    As prescribed at 229.402-70(a), add the following paragraph (d) 
to the basic clause (Note: The ``Offshore Steuerabkommen'' refers to 
the agreement on tax relief at 252.229-7010):
    (d) Tax relief will be claimed in Germany pursuant to the United 
States-German Tax Agreement (Offshore Steuerabkommen). The 
Contractor shall use ``Abwicklungsschein fuer abgabenbeguenstigte 
Lieferungen/Leistungen nach dem Offshore Steuerabkommen'' 
(Performance certificate for tax-free deliveries/performance 
according to the offshore tax relief agreement) or other documentary 
evidence acceptable to the German tax authorities. All purchases 
made and paid for on a tax-free basis during a 30-day period may be 
accumulated, totaled, and reported as tax-free.

    23. Section 252.229-7002 is added to read as follows:


252.229-7002  Customs Exemptions (Germany)

    As prescribed at 229.402-70(b), use the following clause:

Customs Exemptions (Germany) (XXX XXXX)

    Imported products required for the direct benefit of the United 
States Forces are authorized to be acquired duty-free by contractors 
in accordance with the provisions of the ``Agreement Between the 
United States of America and Germany Concerning Tax Relief to be 
Accorded by Germany to United States Expenditures in the Interest of 
Common Defense.''

(End of clause)

    24. Section 252.229-7003 is added to read as follows:


252.229-7003  Tax Exemptions (Italy).

    As prescribed at 229.402-70(c), use the following clause:

Tax Exemptions (Italy) (XXX XXXX)

    (a) The Contractor represents that the contract prices, 
including the prices in subcontracts awarded hereunder, do not 
include taxes from which the United States Government is exempt.
    (b) The United States Government is exempt from payment of 
Imposta Valore Aggiunto (IVA) tax in accordance with Article 72 of 
the IVA implementing decree on all supplies and services sold to 
United States Military Commands in Italy.
    (1) Upon receipt of the invoice, the paying office will stamp 
the following statement on one copy of the invoice:
    ``I represent that this invoice is true and correct and reflects 
expenditures made in Italy for the Common Defense by the United 
States Government pursuant to international agreements. The amount 
to be paid does not include the IVA tax because this transaction is 
not subject to the tax in accordance with Article 72 of Decree Law 
633 of 26 October 1972.''
    (2) The copy with the representation, signed by an authorized 
Government official, will be returned together with payment to the 
Contractor. The payment will not include the amount of the IVA tax.
    (3) The Contractor must retain this copy of the invoice with the 
representation to substantiate non-payment of the IVA tax.
    (c) In addition to the IVA tax, purchases by the United States 
Forces in Italy are exempt from the following taxes:
    (1) Imposta di Fabbricazione (Production Tax for Petroleum 
Products).
    (2) Imposta di Consumo (Consumption Tax for Electrical Power).
    (3) Dazi Doganali (Customs Duties).
    (4) Tassa di Sbarco e d'Imbarco sulle Merci Transportate per Via 
Aerea e per Via Marittima (Port Fees).
    (5) Tassa de Circolazione sui Veicoli (Vehicle Circulation Tax).
    (6) Imposta di Registro (Registration Tax).
    (7) Imposta di Bollo (Stamp Tax).
    (d) The Contractor's administrative procedures for claiming and 
validating the exemptions are as follows:
    (1) Contract offer price shall not reflect IVA or any other tax 
or duty.
    (2) Contract number must be set forth on Contractor invoices, 
which should state the exemptions claimed pursuant to Art. 72, 
Decree No. 633, dated October 26, 1972, for IVA exemption.
    (3) Fiscal code for payments made by Aviano Air Base 
Appropriated Funds is: 91000190933.
    (4) Questions may be addressed to the Ministry of Finance, 11th 
District, Room (06) 5910982.

(End of clause)

    25. Section 252.229-7004 is added to read as follows:

[[Page 31497]]

252.229-7004  Status of Contractor as a Direct Contractor (Spain).

    As prescribed at 229.402-70(d), use the following clause:

Status of Contractor as a Direct Contractor (Spain) (XXX XXXX)

    (a) ``Direct Contractor'' means an individual, company, or 
entity with whom an agency of the United States Department of 
Defense has executed a written agreement which allows duty-free 
import of equipment, materials and supplies into Spain for the 
construction, development, maintenance, and operation of Spanish-
American installations and facilities.
    (b) The Contractor is hereby designated a ``Direct Contractor'' 
under the provisions of Complementary Agreement 5, articles 11, 14, 
15, 17, and 18 of the Agreement on Friendship, Defense and 
Cooperation between the United States Government and the Kingdom of 
Spain, dated July 2, 1982. The Agreement relates to contracts to be 
performed in whole or part in Spain, the provisions of which are 
hereby incorporated into and made a part of this contract by 
reference.
    (c) The Contractor shall apply to the appropriate Spanish 
authorities for approval of status as a ``Direct Contractor'' in 
order to complete duty-free import of non-Spanish materials and 
equipment represented as necessary for contract performance by the 
Contracting Officer. Material/equipment orders placed prior to 
official notifications of such approval shall be at the Contractor's 
own risk. The Contractor must submit its documentation in sufficient 
time to assure processing by the appropriate United States and 
Spanish Government agencies prior to the arrival of material/
equipment in Spain. Seasonal variations in processing times are 
common and the Contractor should program its projects accordingly. 
Any delay or expense arising directly or indirectly from this 
process shall not excuse untimely performance (except as expressly 
allowed in other provisions), constitute a direct or constructive 
change, or otherwise provide a basis for additional compensation or 
adjustment of any kind.
    (d) To ensure that all duty-free imports are properly accounted 
for, exported, or disposed of, in accordance with Spanish law, the 
Contractor shall obtain a written bank letter of guaranty payable to 
the Treasurer of the United States, or such other authority as may 
be designated by the Contracting Officer, in the amount set forth in 
paragraph (g) of this clause, prior to effecting any duty-free 
imports for the performance of this contract.
    (e) If the Contractor fails to obtain the required guaranty, the 
Contractor agrees that the Contracting Officer may withhold a 
portion of the contract payments in order to establish a fund, in 
the amount set forth in paragraph (g) of this clause. The fund shall 
be used for the payment of import taxes in the event that the 
Contractor fails to properly account for, export, or dispose of 
equipment, materials, or supplies imported duty-free.
    (f) The amount of the bank letter of guaranty or size of the 
fund required under paragraphs (d) or (e) of this clause shall 
normally be 5 percent of the contract value. However, if the 
Contractor demonstrates to the Contracting Officer's satisfaction 
that the amount retained by the United States Government or 
guaranteed by the bank is excessive, the amount shall be reduced to 
an amount commensurate with contingent import tax and duty-free 
liability. This bank guaranty or fund shall not be released to the 
Contractor until the Spanish General Directorate of Customs verifies 
the accounting, export, or disposition of the equipment, material, 
or supplies imported on a duty-free basis.
    (g) The amount required under paragraph (d), (e), or (f) of this 
clause is ____________________

(Contracting Officer insert amount at time of contract award.
    (h) The Contractor agrees to insert the provisions of this 
clause, including this paragraph (h), in all subcontracts.

(End of clause)

    26. Section 252.229-7005 is added to read as follows:


252.229-7005  Tax Exemptions (Spain).

    As prescribed at 229.402-70(e), use the following clause:

Tax Exemptions (Spain) (XXX 1995)

    (a) The Contractor represents that the contract prices, 
including subcontract prices, do not include the taxes identified 
herein, or any other taxes from which the United States Government 
is exempt.
    (b) In accordance with tax relief agreements between the United 
States Government and the Spanish Government and because the 
incumbent contract arises from the activities of the United States 
Forces in Spain, the contract will be exempt from the following 
excise, luxury, and transaction taxes:
    (1) Derechos de Aduana (Customs Duties).
    (2) Impuesto de Compensacion a la Importacion (Compensation Tax 
on Imports)
    (3) Transmissiones Patrionomiales (Property Transfer Tax).
    (4) Impuesto Sobre el Lujo (Luxury Tax).
    (5) Actos Juridocos Documentados (Legal Official Transactions).
    (6) Impuesto Sobre el Trafico de Empresas (Business Trade Tax).
    (7) Impuestos Especiales de Fabricacion (Special Products Tax).
    (8) Impuesto Sobre el Petroleo y Derivados (Tax on Petroleum and 
its by-products when CAMPSA coupons are used).
    (9) Impuesto Sobre el Uso de Telefona (Telephone Tax).
    (10) Impuesto General Sobre la Renta de Sociedades y demas 
Entidades Juridicas (General Corporation Income Tax).
    (11) Impuesto Industrial (Industrial Tax).
    (12) Impuesto de Rentas sobre el Capital (Capital Gains Tax).
    (13) Plus Vailia (Increase on Real Property).
    (14) Contribucion Territorial Urbana (Metropolitan Real Estate 
Tax).
    (15) Contribucion Territorial Rustica y Pecuaria (Farmland Real 
Estate Tax).
    (16) Impuestos de la Diputacion (County Service Charges).
    (17) Impuestos Municipal y Tasas Parafiscales (Municipal Tax and 
Charges).

(End of clause)

    27. Section 252.229-7006 is added to read as follows:


252.229-7006  Value Added Tax Exclusion (United Kingdom).

    As prescribed at 229.402-70(f), insert the following clause:

Value Added Tax Exclusion (United Kingdom) (XXX XXXX)

    The supplies or services identified in this contract or purchase 
order are to be delivered at a price exclusive of Value Added Tax 
under arrangements between the appropriate United States authorities 
and Her Majesty's Customs and Excise (Reference Priv 46/7). By 
executing this contract, the Contracting Officer certifies that 
these supplies and/or services are being purchased for United States 
Government official purposes only.

(End of clause)

    28. Section 252.229-7007 is added to read as follows:


252.229-7007  Verification of United States Receipt of Goods.

    As prescribed at 229.402-70(g), use the following clause:

Verification of United States Receipt of Goods (XXX XXXX)

    The Contractor shall insert the following statement on all 
Material Inspection and Receiving Reports (DD Form 250 series) for 
Contracting Officer approval:
    ``I represent that the items listed on this invoice have been 
received by the United States.''

(End of clause)

    29. Section 252.229-7008 is added to read as follows:


252.229-7008  Relief from Import Duty (United Kingdom).

    As prescribed at 229.402-70(h), use the following clause:

Relief From Import Duty (United Kingdom) (XXX XXXX)

    Any import dutiable articles, components, or raw materials 
supplied to the United States Government under this contract shall 
be exclusive of any United Kingdom import duties. Any imported items 
supplied for which import duty has already been paid will be 
supplied at a price exclusive of the amount of import duty paid. The 
Contractor is advised to contact Her Majesty's (HM) Customs and 
Excise in order to obtain a refund upon completion of the contract 
(Reference HM Customs and Excise Notice No. 431, February 1973, 
entitled ``Relief from Customs Duty and/or Value Added Tax on United 
States Government Expenditures in the United Kingdom.'')

(End of clause)

    30. Section 252.229-7009 is added to read as follows:

[[Page 31498]]

252.229-7009  Relief from Customs Duty and Value Added Tax on Fuel 
(Passenger Vehicles) (United Kingdom).

    As prescribed at 229.402-70(i), use the following clause:

Relief From Customs Duty and Value Added Tax on Fuel (Passenger 
Vehicles) (United Kingdom) (XXX XXXX)

    (a) Pursuant to an agreement between the United States 
Government and Her Majesty's (HM) Customs and Excise, fuels and 
lubricants used by passenger vehicles (except taxis) in the 
performance of this contract will be exempt from customs duty and 
value added tax. Therefore, the procedures outlined in HM Customs 
and Excise Notice 431B dated August 1982, and any amendment thereto, 
shall be used to obtain relief from both Customs Duty and value 
added tax for fuel used under the contract. These procedures shall 
apply to both loaded and unloaded miles. The unit prices should be 
based on the recoupment by the Contractor of Customs Duty in 
accordance with the following allowances:
    (1) Vehicles (except taxis) with a seating capacity of less than 
29, one gallon for every 27 miles.
    (2) Vehicles with a seating capacity of 29-53, one gallon for every 
13 miles.
    (3) Vehicles with a seating capacity of 54 or more, one gallon for 
every 10 miles.
    (b) In the event the mileage of any route is increased or decreased 
within 10 percent, resulting in no change in route price, the Customs 
Duty shall be reclaimed from HM Customs and Excise on actual mileage 
performed.

(End of clause)

    31. Section 252.229-7010 is added to read as follows:


252.229-7010  Relief from Customs Duty on Fuel (United Kingdom).

    As prescribed at 229.402-70(j), use the following clause:

Relief From Customs Duty on Fuel (United Kingdom (XXX 1995)

     (a) Pursuant to an agreement between the United States 
Government and Her Majesty's (HM) Customs and Excise, it is possible 
to obtain relief from customs duty on fuels and lubricants used in 
support of certain contracts. If vehicle fuels and lubricants are 
used in support of this contract, the Contractor shall seek relief 
from customs duty in accordance with HM Customs Notice No. 431, 
February 1973, entitled ``Relief from Customs Duty and/or Value 
Added Tax on United States Government Expenditures in the United 
Kingdom.'' Application should be sent to the contractor's local 
Customs and Excise Office.
    (b) Specific information should be included in the request for 
tax relief, such as the number of vehicles involved, types of 
vehicles, rating of vehicles, fuel consumption, estimated mileage 
per contract period, and any other information which will assist HM 
Customs and Excise in determining the amount of relief to be 
granted.
    (c) Within 30 days after the award of this contract, the 
Contractor shall provide the Contracting Officer with evidence that 
an attempt to obtain such relief has been initiated. In the event 
the Contractor does not attempt to obtain relief within the time 
specified, the Contracting Officer may deduct from the contract 
price the amount of relief that would have been allowed if HM 
Customs and Excise had favorably considered the request for relief.
    (d) The amount of any rebate granted by HM Customs and Excise 
shall be paid in full to the United States Government. Checks shall 
be made payable to the Treasurer of the United States and forwarded 
to the Administrative Contracting Officer.

(End of clause)

    32. Section 252.232-7008 is added to read as follows:


252.232-7008  Assignment of Claims (Overseas).

    As prescribed at 232.806-70, use the following clause:

Assignment of Claims (Overseas) (XXX XXXX)

    (a) No claims for monies due, or to become due, shall be 
assigned by the Contractor unless--
    (1) Approved in writing by the Contracting Officer;
    (2) Made in accordance with the laws and regulations of the 
United States of America; and
    (3) Permitted by the laws and regulations of the Contractor's 
country.
    (b) In no event shall copies of this contract or of any plans, 
specifications, or other similar documents relating to work under 
this contract, if marked ``Top Secret,'' ``Secret,'' or 
``Confidential'' be furnished to any assignee of any claim arising 
under this contract or to any other person not entitled to receive 
such documents. However, a copy of any part or all of this contract 
so marked may be furnished, or any information contained herein may 
be disclosed, to such assignee upon the Contracting Officer's prior 
written authorization.
    (c) Any assignment under this contract shall cover all amounts 
payable under this contract and not already paid, and shall not be 
made to more than one party, except that any such assignment may be 
made to one party as agent or trustee for two or more parties 
participating in such financing. On each invoice or voucher 
submitted for payment under this contract to which any assignment 
applies, and for which direct payment thereof is to be made to an 
assignee, the Contractor shall--
    (1) Identify the assignee by name and complete address; and
    (2) Acknowledge the validity of the assignment and the right of 
the named assignee to receive payment in the amount invoiced or 
vouchered.

(End of clause)

    33. Section 252.233-7001 is added to read as follows:


252.233-7001  Choice of Law (Overseas).

    As prescribed at 233.215-70, use the following clause:

Choice of Law (Overseas) (XXX XXXX)

    This contract shall be construed and interpreted in accordance 
with the substantive laws of the United States of America. By the 
execution of this contract, the Contractor expressly agrees to waive 
any rights to invoke the jurisdiction of local national courts where 
this contract is performed and agrees to accept the exclusive 
jurisdiction of the United States Armed Services Board of contract 
appeals and the United States court of Federal claims for the 
hearing and determination of any and all Disputes which may arise 
under the Disputes clause of this contract.

(End of clause)

    34. Section 252.246-7002 is added to read as follows:


252.246-7002  Warranty of Construction (Germany).

    As prescribed at 246.710(4), use the following clause:

Warranty of Construction (Germany) (XXXX)

    (a) In addition to any other representations in this contract, 
the Contractor represents, except as provided in paragraph (j) of 
this clause, that the work performed under this contract conforms to 
the contract requirements and is free of any defect of equipment, 
material, or design furnished, or workmanship performed by the 
Contractor or any subcontractor or supplier at any tier.
    (b) This warranty shall continue for the period(s) specified in 
Section 13, VOB, Part B, commencing from the date of final 
acceptance of the work under this contract. If the Government takes 
possession of any part of the work before final acceptance, this 
warranty shall continue for the period(s) specified in Section 13, 
VOB, Part B, from the date the Government takes possession.
    (c) The Contractor shall remedy, at the Contractor's expense, 
any failure to conform or any defect. In addition, the Contractor 
shall remedy, at the Contractor's expense, any damage to Government-
owned or -controlled real or personal property when that damage is 
the result of--
    (1) The Contractor's failure to conform to contract 
requirements; or
    (2) Any defect of equipment, material, workmanship, or design 
furnished.
    (d) The Contractor shall restore any work damaged in fulfilling 
the terms and conditions of this clause.
    (e) The Contracting Officer shall notify the Contractor, in 
writing, within a reasonable time after the discovery of any 
failure, defect, or damage.
    (f) If the Contractor fails to remedy any failure, defect, or 
damage within a reasonable time after receipt of notice, the 
Government shall have the right to replace, repair, or otherwise 
remedy the failure, defect, or damage at the Contractor's expense.
    (g) With respect to all warranties, express or implied, from 
subcontractors, manufacturers, or suppliers for work

[[Page 31499]]

performed and materials furnished under this contract, the 
Contractor shall--
    (1) Obtain all warranties that would be given in normal 
commercial practice;
    (2) Require all warranties to be executed, in writing, for the 
benefit of the Government, if directed by the Contracting Officer; 
and
    (3) Enforce all warranties for the benefit of the Government as 
directed by the Contracting Officer.
    (h) In the event the Contractor's warranty under paragraph (b) 
of this clause has expired, the Government may bring suit at its 
expense to enforce a subcontractor's, manufacturer's, or supplier's 
warranty.
    (i) Unless a defect is caused by the Contractor's negligence, or 
the negligence of a subcontractor or supplier at any tier, the 
Contractor shall not be liable for the repair of any defects of 
material or design furnished by the Government nor the repair of any 
damage resulting form any defect in Government-furnished material or 
design.
    (j) This warranty shall not limit the Government's right under 
the Inspection clause of this contract, with respect to latent 
defects, gross mistakes, or fraud.

(End of clause)

[FR Doc. 96-15222 Filed 6-19-96; 8:45 am]
BILLING CODE 5000-04-M