Document:

Exhibit
10.8

 

	
  AWARD/CONTRACT

  	
  1.

  	
  THIS CONTRACT IS A RATED ORDER

  UNDER DPAS (15 CFR 350)

  	
  RATING

  DO-A3

  	
  PAGE OF PAGES

      1        97

  
	
  2. CONTRACT (Proc.
  Inst.
  Ident.) NO.
  N00024-09-C-4207

  	
  3.

  	
  EFFECTIVE DATE

  28 Jan 2009

  	
  4. REQUISITION/PURCHASE
  REQUEST/PROJECT NO. N0002408NR59422

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5. ISSUED BY

  	
  CODE

  	
   

  	
  N00024

  	
  6. ADMINISTERED
  BY (If other than Item 5)

  	
  CODE S2206A

  
	
  NAVAL SEA SYSTEMS COMMAND

  	
  DCMA BOSTON

  	
   

  
	
  1333 ISAAC HULL AVE SE - MAIL STOP 2030

  	
  495 SUMMER STREET

  	
   

  
	
  WASHINGTON NAVY YARD DC 20376-2030

  	
  BOSTON MA 02210-2138

  	
   

  
	
   

  	
   

  	
   

  
	
  7. NAME AND
  ADDRESS OF CONTRACTOR (No., street,
  city, county, state and zip code)

  	
   

  
	
  BEACON POWER

  	
   

  	
  8.

  	
  DELIVERY

  
	
  65 MIDDLESEX ROAD

  	
   

  	
   

  	
  o FOB ORIGIN      x OTHER    (See below)

  
	
  TYNGSBORO MA 01879

  	
   

  	
  9.

  	
  DISCOUNT FOR PROMPT
  PAYMENT

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.

  	
  SUBMIT INVOICES

  	
  ITEM

  
	
   

  	
   

  	
  (4
  copies unless otherwise specified) 

  	
  Block 12

  
	
   

  	
   

  	
  TO THE  ADDRESS

  
	
  CODE 3EFH5

  	
  FACILITY CODE

  	
   

  	
  SHOWN IN:

  
	
  11.  SHIP
  TO/MARK FOR

  	
  CODE

  	
   

  	
  12. PAYMENT WILL BE MADE
  BY

  	
  CODE

  	
  HQ0337

  
	
   

  	
  DFAS COLUMBUS
  CENTER, NORTH ENTITLEMENT 

  	
   

  
	
   

  	
  P.O. BOX
  18224

  	
   

  
	
   

  	
  COLUMBUS OH
  43218-2264

  	
   

  
	
  See
  Schedule

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  AUTHORITY FOR USING OTHER THAN FULL AND OPEN 

  	
  14.

  	
  ACCOUNTING AND
  APPROPRIATION DATA 

  
	
   

  	
  COMPETITION:

  	
  See
  Schedule

  	
   

  
	
    o 10 U.S.C. 2304(c)(       )            o 41 U.S.C. 253(c)(       )

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  15A. ITEM NO.

  	
  15B. SUPPLIES/
  SERVICES

  	
  15C. QUANTITY

  	
  15D. UNIT

  	
  15E. UNIT PRICE

  	
  15F. AMOUNT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SEE
  SCHEDULE

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15G. TOTAL AMOUNT OF CONTRACT

  	
  $3,014,163.00

  
	
   

  	
   

  	
   

  	
   

  
	
  16. TABLE OF CONTENTS

  
	
  (X)

  	
  SEC.

  	
  DESCRIPTION

  	
  PAGE(S)

  	
  (X)

  	
  SEC.

  	
  DESCRIPTION

  	
  PAGE(S)

  
	
   

  	
   

  	
  PART I
  - THE SCHEDULE

  	
   

  	
   

  	
   

  	
  PART II
  - CONTRACT CLAUSES

  	
   

  
	
  x

  	
  A

  	
  SOLICITATION/
  CONTRACT FORM

  	
  1

  	
  x

  	
  I

  	
  CONTRACT CLAUSES

  	
  30 - 96

  
	
  x

  	
  B

  	
  SUPPLIES OR
  SERVICES AND PRICES/ 

  	
  2 - 11

  	
  PART III
  - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS

  
	
   

  	
   

  	
  COSTS

  	
   

  	
  x

  	
  J

  	
  LIST OF ATTACHMENTS

  	
  97

  
	
  x

  	
  C

  	
  DESCRIPTION/
  SPECS./ WORK STATEMENT

  	
  12 - 20

  	
  PART IV
  - REPRESENTATIONS AND INSTRUCTIONS

  	
   

  
	
  x

  	
  D

  	
  PACKAGING AND
  MARKING

  	
  21

  	
   

  	
  K

  	
  REPRESENTATIONS,
  CERTIFICATIONS AND

  	
   

  
	
  x

  	
  E

  	
  INSPECTION AND
  ACCEPTANCE

  	
  22

  	
   

  	
   

  	
  OTHER STATEMENTS OF
  OFFERORS

  	
   

  
	
  x

  	
  F

  	
  DELIVERIES OR PERFORMANCE

  	
  23

  	
   

  	
  L

  	
  INSTRS., CONDS., AND
  NOTICES TO OFFERORS

  	
   

  
	
  x

  	
  G

  	
  CONTRACT
  ADMINISTRATION DATA

  	
  24

  	
   

  	
  M

  	
  EVALUATION FACTORS FOR
  AWARD

  	
   

  
	
  x

  	
  H

  	
  SPECIAL CONTRACT
  REQUIREMENTS

  	
  25 - 29

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CONTRACTING
  OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE

  
	
  17. x CONTRACTOR’S NEGOTIATED AGREEMENT Contractor
  is required to sign this document and return 1        copies
  to issuing office.) Contractor agrees to furnish and deliver all items or
  perform all the services set forth or otherwise identified above and on any
  continuation sheets for the consideration stated herein. The rights and
  obligations of the parties to this contract shall be subject to and governed
  by the following documents: (a) this award/contract, (b) the
  solicitation, if any, and (c) such provisions, representations,
  certifications, and specifications, as are attached or incorporated by
  reference herein.

  (Attachments are listed
  herein.)

  	
   

  	
  18. o AWARD (Contractor is not required to
  sign this document.) Your offer on Solicitation Number

   

  including the additions
  or changes made by you which additions or changes are set forth in full above,
  is hereby accepted as to the items listed above and on any continuation
  sheets. This award consummates the contract which consists of the following
  documents: (a) the Government’s solicitation and your offer, and
  (b) this award/contract. No further contractual document is necessary.

  
	
  19A. NAME AND TITLE OF
  SIGNER (Type or print)

  	
   

  	
  20A. NAME OF CONTRACTING
  OFFICER

  
	
   

  	
   

  	
  TIMOTHY A. STARKER / SEA
  024 - CONTRACTING OFFICER

  
	
   

  	
   

  	
  TEL: 202-781-3944

  	
  EMAIL:
  Timothy.Starker@navy.mil

  
	
  19B. NAME OF CONTRACTOR

  	
  19C. DATE SIGNED

  	
   

  	
  20B. UNITED STATES OF
  AMERICA

  
	
   

  	
   

  	
   

  	
   

  
	
  BY

  	
   

  	
   

  	
   

  	
  BY

  	
  /s/ Timothy A.
  Starker

  	
  20C. DATE SIGNED

  
	
   

  	
  (Signature
  of person authorized to sign)

  	
   

  	
   

  	
   

  	
  (Signature
  of Contracting Officer)

  	
  28-Jan-2009

  
	
   

  	
   

  	
   

  
																																	

 

	
  NSN 7540-01-152-8069

  	
  26-107

  	
   

  	
  STANDARD FORM 26 (REV
  12/2002)

  
	
  Previous edition is
  usable

  	
  GPO 1985 O -
  469-794

  	
   

  	
  Prescribed by GSA

  
	
   

  	
   

  	
   

  	
  FAR (48 CFR) 53.214(a)

  

 

1

 

Section B - Supplies or Services and Prices

 

	
  ITEM NO

  	
   

  	
  SUPPLIES/SERVICES

  	
   

  	
  QUANTITY

  	
   

  	
  UNIT

  	
   

  	
  UNIT PRICE

  	
   

  	
  AMOUNT

  	
   

  
	
  0001

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Lot

  	
   

  	
   

  	
   

  	
  $

  	
  901,748.00

  	
   

  
	
   

  	
   

  	
  Integrated Power
  System

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Research and
  Development activities associated with the development of Flywheel Energy
  Storage for Next Generation Integrated Power Systems

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FOB: Destination

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASE REQUEST
  NUMBER: N0002408NR59422

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CPFF

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ESTIMATED COST

  	
   

  	
  $

  	
  828,411.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  FIXED FEE

  	
   

  	
  $

  	
  73,337.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TOTAL EST COST + FEE

  	
   

  	
  $

  	
  901,748.00

  	
   

  

 

	
  ITEM NO

  	
   

  	
  SUPPLIES/SERVICES

  	
   

  	
  QUANTITY

  	
   

  	
  UNIT

  	
   

  	
  UNIT PRICE

  	
   

  	
  AMOUNT

  	
   

  
	
  0001

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
  Funding

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To add a line of
  accounting.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FOB: Destination

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CPFF

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ESTIMATED COST

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  FIXED FEE

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TOTAL EST COST + FEE

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
  ACRN AA

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  500,000.00

  	
   

  

 

2

 

	
  ITEM NO

  	
   

  	
  SUPPLIES/SERVICES

  	
   

  	
  QUANTITY

  	
   

  	
  UNIT

  	
   

  	
  UNIT PRICE

  	
   

  	
  AMOUNT

  	
   

  
	
  0002

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  NSP

  	
   

  
	
   

  	
   

  	
  Data

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Data for CLIN
  0001 in accordance with the attached DD Form 1423. Not separately
  priced.  Price to be included in the
  prices of CLIN 0001

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FOB: Destination

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASE REQUEST
  NUMBER: N0002408NR59422

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CPFF

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ESTIMATED COST

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  FIXED FEE

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TOTAL EST COST + FEE

  	
   

  	
  $

  	
  0.00

  	
   

  

 

	
  ITEM NO

  	
   

  	
  SUPPLIES/SERVICES

  	
   

  	
  QUANTITY

  	
   

  	
  UNIT

  	
   

  	
  UNIT PRICE

  	
   

  	
  AMOUNT

  	
   

  
	
  0003

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Hours

  	
   

  	
   

  	
   

  	
  $

  	
  2,112,415.00

  	
   

  
	
   

  	
   

  	
  Engineering
  Services

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (SEE Note A)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FOB: Destination

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASE REQUEST
  NUMBER: N0002408NR59422

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CPFF

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ESTIMATED COST

  	
   

  	
  $

  	
  1,938,928.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  FIXED FEE

  	
   

  	
  $

  	
  173,487.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TOTAL EST COST + FEE

  	
   

  	
  $

  	
  2,112,415.00

  	
   

  

 

3

 

	
  ITEM NO

  	
   

  	
  SUPPLIES/SERVICES

  	
   

  	
  QUANTITY

  	
   

  	
  UNIT

  	
   

  	
  UNIT PRICE

  	
   

  	
  AMOUNT

  	
   

  
	
  0004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Lot

  	
   

  	
   

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
  Support for
  Engineering Services

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COST

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Cost only) (See
  Note B)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FOB: Destination

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASE REQUEST NUMBER: N0002408NR59422

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ESTIMATED COST

  	
   

  	
  $

  	
  0.00

  	
   

  

 

CLAUSES INCORPORATED BY FULL TEXT

 

LIMITATION OF
COST/LIMITATION OF FUNDS (NAVSEA) (SEP 1990)

 

The clause entitled
“LIMITATION OF COST” (FAR 52.232-20) or “LIMITATION OF FUNDS” (FAR 52.232-22),
as appropriate, shall apply separately and independently to each separately
identified estimated cost.

 

CLAUSES INCORPORATED BY FULL TEXT

 

NOTE A - The Government will fund these items
as needed during the contract performance via Technical Instructions.  Engineering Services includes incidental
materials (See Section C).

 

NOTE B: 
The Government will fund this item as needed during contract
performance.  Support for Engineering
Services includes travel and subsistence (See Section C) on a cost only
basis, with no provision for fee.

 

CLAUSES INCORPORATED BY FULL TEXT

 

PAYMENT
FOR ENGINEERING SERVICES AND SUPPORT (NAVSEA) (JAN 2008)

(Applicable
to CLINs 0003 and 0004)

 

(a) Invoices
for engineering services and overtime shall contain the name(s) of
engineer(s), date(s) and place(s) of performance, and a brief
description of the services performed. 
This information may be included in the Comments tab of the applicable
WAWF document.  Each invoice shall be
accompanied by a copy of the authorization for services and the original
certification of performance.  These
documents may be attached to the invoice as described in the Invoice
Instructions in Section G.  A copy
of each invoice shall be furnished to the applicable NAVSEA/DRPM/PEO code
identified in Section C under Engineering Services.

 

4

 

(b) Invoices for
subsistence and transportation shall be supported by a statement of actual
costs incurred by the Contractor and claimed to be reimbursable and shall be in
such form and reasonable detail as required by the cognizant Defense Contract
Audit Agency (DCAA).  The Government
shall make provisional payment after submission of each invoice and statement
of costs.  At any time prior to final
payment, DCAA may audit the invoice(s) and statement(s) of costs, as
appropriate.

 

(c) Each provisional
payment for subsistence and transportation costs shall be subject to reduction
to the extent any amount included in the related invoice and statement of costs
is found not to be reimbursable under the support item(s) and shall also
be subject to reduction for overpayment or to increase for underpayment on
preceding invoices.  Any disputes under
this requirement shall be determined in accordance with the clause of this
contract entitled “DISPUTES” (FAR 52.233-1).

 

CLAUSES INCORPORATED BY FULL TEXT

 

252.204-7006   BILLING
INSTRUCTIONS (OCT 2005)

 

When submitting a request for payment, the Contractor shall—

 

(a) Identify the contract line item(s) on the payment request
that reasonably reflect contract work performance; and

 

(b) Separately identify a payment amount for each contract line
item included in the payment request.

 

(End of clause)

 

CLAUSES INCORPORATED BY FULL TEXT

 

252.232-7003     ELECTRONIC SUBMISSION OF PAYMENT REQUESTS
AND RECEIVING REPORTS (MAR 2008)

 

(a) Definitions. As
used in this clause—

 

(1) Contract
financing payment and invoice payment have the meanings given in section 32.001
of the Federal Acquisition Regulation.

 

(2) Electronic form
means any automated system that transmits information electronically from the
initiating system to all affected systems. Facsimile, e-mail, and scanned
documents are not acceptable electronic forms for submission of payment
requests. However, scanned documents are acceptable when they are part of a
submission of a payment request made using Wide Area WorkFlow (WAWF) or another
electronic form authorized by the Contracting Officer.

 

(3) Payment request
means any request for contract financing payment or invoice payment submitted
by the Contractor under this contract.

 

5

 

(b) Except as
provided in paragraph (c) of this clause, the Contractor shall submit
payment requests and receiving reports using WAWF, in one of the following
electronic formats that WAWF accepts: Electronic Data Interchange, Secure File
Transfer Protocol, or World Wide Web input. Information regarding WAWF is
available on the Internet at https://wawf.eb.mil/.

 

(c) The Contractor
may submit a payment request and receiving report using other than WAWF only
when—

 

(1) The Contracting
Officer authorizes use of another electronic form. With such an authorization,
the Contractor and the Contracting Officer shall agree to a plan, which shall
include a timeline, specifying when the Contractor will transfer to WAWF;

 

(2) DoD is unable to
receive a payment request or provide acceptance in electronic form;

 

(3) The Contracting
Officer administering the contract for payment has determined, in writing, that
electronic submission would be unduly burdensome to the Contractor. In such
cases, the Contractor shall include a copy of the Contracting Officer’s
determination with each request for payment; or

 

(4) DoD makes
payment for commercial transportation services provided under a Government rate
tender or a contract for transportation services using a DoD-approved
electronic third party payment system or other exempted vendor
payment/invoicing system (e.g., PowerTrack, Transportation Financial Management
System, and Cargo and Billing System).

 

(d) The Contractor
shall submit any non-electronic payment requests using the method or methods
specified in Section G of the contract.

 

(e) In addition to
the requirements of this clause, the Contractor shall meet the requirements of
the appropriate payment clauses in this contract when submitting payments
requests.

 

(End of clause)

 

CLAUSES INCORPORATED BY FULL TEXT

 

EXPEDITING
CONTRACT CLOSEOUT (NAVSEA) (DEC 1995)

 

(a)  As part of the
negotiated fixed price or total estimated amount of this contact, both the
Government and the Contractor have agreed to waive any entitlement that
otherwise might accrue to either party in any residual dollar amount of $500 or
less at the time of final contract closeout. 
The term “residual dollar amount” shall include all money that would
otherwise be owed to either party at the end of the contract, except that,
amounts connected in any way with taxation, allegations of fraud and/or
antitrust violations shall be excluded. 
For purposes of determining residual dollar amounts, offsets of money
owed by one party against money that would otherwise be paid by that party may
be considered to the extent permitted by law.

 

(b)  This agreement
to waive entitlement to residual dollar amounts has been considered by both
parties.  It is agreed that the
administrative costs for either party associated with collecting such small
dollar amounts could exceed the amount to be recovered.

 

6

 

CLAUSES INCORPORATED BY FULL TEXT

 

PAYMENTS OF FEE
(S) (COMPLETION) (NAVSEA) (MAY 1993)

(Applicable to CLINs 0001
and 0002)

 

(a) For purposes of
this contract, “fee” means “target fee” in cost-plus-incentive-fee type
contracts, “base fee” in cost-plus-award-fee type contracts, “fixed fee” in
cost-plus-fixed-fee type contracts for completion and phase type contracts.

 

(b) The Government
shall make payments to the Contractor, subject to and in accordance with the
clause in this contract entitled “FIXED FEE” (FAR 52.216-8) or “INCENTIVE FEE”,
(FAR 52.216-10), as applicable.  Such
payments shall be equal to nine percent (9%) of the allowable
cost of each invoice submitted by and payable to the Contractor pursuant to the
clause of this contract entitled “ALLOWABLE COST AND PAYMENT” (FAR 52.216-7),
subject to the withholding terms and conditions of the “FIXED FEE” or
“INCENTIVE FEE” clause, as applicable (percentage of fee is based on fee
dollars divided by estimated cost dollars, including facilities capital cost of
money).  Total fee(s) paid to the
Contractor shall not exceed the fee amount(s) set forth in this contract.

 

(c) In the event of
discontinuance of the work under this contract, or any specified phase of the
contract, in accordance with the clause of this contract entitled “LIMITATION
OF FUNDS” (FAR 52.232-22) or “LIMITATION OF COST” (FAR 52.232-20), as
applicable, the fee shall be equitably adjusted by mutual agreement to reflect
the diminution of work.  If the adjusted
fee is less than the sum of all fee payments made to the Contractor under this
contract, the Contractor shall repay the excess amount to the Government.  If the adjusted fee exceeds all payments made
to the Contractor under this contract, the Contractor shall be paid the
additional amount, subject to the availability of funds.  In no event shall the Government be required
to pay the Contractor any amount in excess of the funds obligated under this
contract at the time of the discontinuance of work.

 

(d) 
Fee(s) withheld pursuant to the terms and conditions of this contract
shall not be paid until the contract has been modified to reduce the
fee(s) in accordance with paragraph (c) above, or until the Procuring
Contracting Officer has advised the paying office in writing that no fee adjustment
is required.

 

CLAUSES INCORPORATED BY FULL TEXT

 

PAYMENTS OF
FEE(S) (LEVEL OF EFFORT) (NAVSEA) (MAY 1993)

(Applicable to CLIN 0003)

 

(a)  For purposes of
this contract, “fee” means “target fee” in cost-plus-incentive-fee type
contracts, “base fee” in cost-plus-award-fee type contracts, or “fixed fee” in
cost-plus-fixed-fee type contracts for level of effort type contracts.

 

(b)  The Government
shall make payments to the Contractor, subject to and in accordance with the
clause in this contract entitled “FIXED FEE” (FAR 52.216-8) or “INCENTIVE FEE”,
(FAR 52.216-10), as applicable.  Such
payments shall be equal to nine percent (9%) of the allowable
cost of each invoice submitted by and payable to the Contractor pursuant to the
clause of this contract entitled “ALLOWABLE COST AND PAYMENT” (FAR 52.216-7),
subject to the withholding terms and conditions of the “FIXED FEE” or
“INCENTIVE FEE” clause.

 

(c)  The
fee(s) specified in SECTION B, and payment thereof, is subject to
adjustment pursuant to paragraph (g) of the special contract requirement
entitled “LEVEL OF EFFORT.”  If the
fee(s) is reduced and the reduced fee(s) is less than the sum of all
fee payments made to the Contractor under this contract, the Contractor shall
repay the excess amount to the Government. 
If the final adjusted fee exceeds all fee payments made to the
contractor under this contract, the Contractor shall be paid the additional
amount, subject to the availability of funds. 
In no event shall the Government be

 

7

 

required to pay the
Contractor any amount in excess of the funds obligated under this contract at
the time of the discontinuance of work.

 

(d) 
Fee(s) withheld pursuant to the terms and conditions of this contract
shall not be paid until the contract has been modified to reduce the
fee(s) in accordance with the “LEVEL OF EFFORT” special contract
requirement, or until the Procuring Contracting Officer has advised the paying
office in writing that no fee adjustment is required.

 

CLAUSES INCORPORATED BY FULL TEXT

 

TRAVEL
COSTS - ALTERNATE I (NAVSEA) (DEC 2005)

 

(a)  Except as
otherwise provided herein, the Contractor shall be reimbursed for its
reasonable actual travel costs in accordance with FAR 31.205-46.  The costs to be reimbursed shall be those
costs accepted by the cognizant DCAA.

 

(b)  Reimbursable
travel costs include only that travel performed from the Contractor’s facility
to the worksite, in and around the worksite, and from the worksite to the
Contractor’s facility.

 

(c)  Relocation
costs and travel costs incident to relocation are allowable to the extent
provided in FAR 31.205-35; however, Contracting Officer approval shall be
required prior to incurring relocation expenses and travel costs incident to
relocation.

 

(d)  The Contractor
shall not be reimbursed for the following daily local travel costs:

 

(i)  travel at U.S. Military Installations where
Government transportation is available,

 

(ii)  travel performed for personal
convenience/errands, including commuting to and from work, and

 

(iii) travel costs incurred in the replacement of
personnel when such replacement is accomplished for the Contractor’s or
employee’s convenience.

 

CLAUSES INCORPORATED BY FULL TEXT

 

CONTRACT SUMMARY FOR
PAYMENT OFFICE (COST TYPE) (FEB 1997)

 

This entire contract is
cost type.

 

Note: This is a Cost Plus
Fixed Fee Completion (CLIN 0001) and a Cost Plus Fixed Fee, Level of Effort
(CLIN 0003) type contract.

 

	
  ITEM

  	
   

  	
  ESTIMATED COST

  	
   

  	
  FIXED FEE

  	
   

  	
  TOTAL AMOUNT

  	
   

  	
  MAN-HOURS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GRAND TOTAL

  	
   

  	
  $

  	
  2,767,339

  	
   

  	
  $

  	
  246,824

  	
   

  	
  $

  	
  3,014,163

  	
   

  	
  14,196

  	
   

  
													

 

8

 

CLAUSES INCORPORATED BY FULL TEXT

 

PAYMENT
INSTRUCTIONS FOR MULTIPLE ACCOUNTING CITATIONS (NAVSEA) (JAN 2008)

 

Applicable to (CLINs
0001, 0003 and 0004)

 

For contracts or orders
that 1) include contract line items that are funded by multiple accounting classification
citations for which a contract line item or items are not broken out into
separately identifiable subline items (informational subline items are not
separately identifiable subline items); 2) contain cost-reimbursement or
time-and-material or labor-hour line items; or 3) authorize financing payments,
the payment office will make payment from each ACRN within the contract or
order in the same proportion as the amount of funding currently unliquidated
for each ACRN (contract-wide: proration).

 

CLAUSES INCORPORATED BY
FULL TEXT

 

INVOICE
INSTRUCTIONS (NAVSEA) (JAN 2008)

 

(a)  In accordance
with the clause of this contract entitled “ELECTRONIC SUBMISSION OF PAYMENT
REQUESTS” (DFARS 252.232-7003), the Naval Sea Systems Command (NAVSEA) will
utilize the DoD Wide Area Workflow Receipt and Acceptance (WAWF) system to
accept supplies/services delivered under this contract.  This web-based system located at
https://wawf.eb.mil provides the technology for government contractors and
authorized Department of Defense (DoD) personnel to generate, capture and
process receipt and payment-related documentation in a paperless
environment.  Invoices for
supplies/services rendered under this contract shall be submitted electronically
through WAWF.  Submission of hard copy
DD250/invoices may no longer be accepted for payment.

 

(b)  It is
recommended that the person in your company designated as the Central
Contractor Registration (CCR) Electronic Business (EB) Point of Contact and
anyone responsible for the submission of invoices, use the online training
system for WAWF at http://wawftraining.com. 
The Vendor, Group Administrator (GAM), and sections marked with an
asterisk in the training system should be reviewed.  Vendor Quick Reference Guides also are
available at http://acquisition.navy.mil/navyaos/content/view/full/3521/.  The most useful guides are “Getting Started
for Vendors” and “WAWF Vendor Guide”.

 

(c)  The designated
CCR EB point of contact is responsible for activating the company’s CAGE code
on WAWF by calling 1-866-618-5988.  Once
the company is activated, the CCR EB point of contact will self-register under
the company’s CAGE code on WAWF and follow the instructions for a group
administrator.  After the company is
set-up on WAWF, any additional persons responsible for submitting invoices must
self-register under the company’s CAGE code at https://wawf.eb.mil.

 

(d)  The contractor
shall use the following document types, DODAAC codes and inspection and
acceptance locations when submitting invoices in WAWF:

 

9

 

Type of Document (contracting officer check all that apply)

 

	
  o

  	
  Invoice (FFP
  Supply & Service)

  
	
   

  	
   

  
	
  o

  	
  Invoice and Receiving
  Report Combo (FFP Supply)

  
	
   

  	
   

  
	
  o

  	
  Invoice as 2-in-1 (FFP
  Service Only)

  
	
   

  	
   

  
	
  x

  	
  Cost Voucher (Cost
  Reimbursement,  T&M  and 
  LH)

  
	
   

  	
   

  
	
  o

  	
  Receiving Report (FFP,
  DD250 Only)

  

 

DODAAC Codes and
Inspection and Acceptance Locations (contracting
officer complete appropriate information as applicable)

 

	
  Issue DODAAC

  	
   

  	
  N00024

  
	
   

  	
   

  	
   

  
	
  Admin DODAAC

  	
   

  	
  S2206A

  
	
   

  	
   

  	
   

  
	
  Pay Office DODAAC

  	
   

  	
  HQ0337

  
	
   

  	
   

  	
   

  
	
  Inspector DODAAC

  	
   

  	
  N00024

  
	
   

  	
   

  	
   

  
	
  Service Acceptor DODAAC

  	
   

  	
  N00024

  
	
   

  	
   

  	
   

  
	
  Service Approver DODAAC

  	
   

  	
  N00024

  
	
   

  	
   

  	
   

  
	
  Ship To DODAAC

  	
   

  	
  See Section F

  
	
   

  	
   

  	
   

  
	
  DCAA Auditor DODAAC

  	
   

  	
  HAA621

  
	
   

  	
   

  	
   

  
	
  LPO DODAAC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Inspection Location

  	
   

  	
  See Section E

  
	
   

  	
   

  	
   

  
	
  Acceptance Location

  	
   

  	
  See Section E

  

 

Attachments created in
any Microsoft Office product may be attached to the WAWF invoice, e.g., backup
documentation, timesheets, etc.  Maximum
limit for size of each file is 2 megabytes. 
Maximum limit for size of files per invoice is 5 megabytes.

 

(e)  Before closing
out of an invoice session in WAWF, but after submitting the document(s), you
will be prompted to send additional email notifications.  Click on “Send More Email Notification” and
add the acceptor/receiver email addresses noted below in the first email
address block, and add any other additional email addresses desired in the
following blocks.  This additional
notification to the government is important to ensure that the
acceptor/receiver is aware that the invoice documents have been submitted into
WAWF.

 

Send
Additional Email Notification To:

Joseph.tannenbaum@navy.mil

 

10

 

(f)  The contractor
shall submit invoices/cost vouchers for payment per contract terms and the
government shall process invoices/cost vouchers for payment per contract
terms.  Contractors approved by DCAA for
direct billing will submit cost vouchers directly to DFAS via WAWF.  Final voucher submission will be approved by
the ACO.

 

(g)  The WAWF system
has not yet been implemented on some Navy programs; therefore, upon written
concurrence from the cognizant Procuring Contracting Officer, the Contractor is
authorized to use DFAS’s WInS for electronic end to end invoicing until the
functionality of WInS has been incorporated into WAWF.

 

(h)  If you have any
questions regarding WAWF, please contact the WAWF helpdesk at the above 1-866
number or the NAVSEA WAWF point of contact Margaret Morgan at (202) 781-4815 or
margaret.morgan@navy.mil.

 

11

 

Section C - Descriptions and Specifications

 

STATEMENT OF WORK

 

PART 1 — CONTRACT LINE ITEM DESCRIPTION

 

Item 0001
— RESEARCH AND DEVELOPMENT ACTIVITIES ASSOCIATED WITH FLYWHEEL ENERGY STORAGE
IN SUPPORT OF NAVAL INTEGRATED POWER SYSTEMS

 

1.1                                 The Contractor shall provide services,
materials, facilities and personnel necessary to perform the tasks identified
below.

 

1.2                                 The Contractor shall provide program
management, planning, control, subcontracts management, schedule accounting and
control, and cost accounting and control.

 

1.2.1                        The Contractor shall develop and maintain a Program
Plan.  The Program Plan shall include an
event-based schedule, reflecting how the effort will be executed, including
timing of reviews.  The schedule shall be
developed in a manner that reflects the Contractor’s customary way of
organizing projects and the need to have a direct relationship between project
events and cost projections.  The
schedule shall be maintained in Microsoft ProjectTM format and shall be made
available to the Navy electronically in Microsoft ProjectTM and PDF formats at
regular intervals during the execution of the effort.  The Contractor shall assess potential risks
associated with achievement of technical, cost, and schedule requirements and
define methods or alternatives to mitigate or minimize these risks, including
the identification of criteria upon which decisions can be based.  The Program Plan shall include a monthly
spend plan showing the expenditures predicted throughout the period of
performance.  The spend plan shall
include a chart that shows funded and disbursed for the total Contract and by
CLIN and shall be updated in each progress report.

 

1.3                                 The Contractor shall submit a monthly
Progress Report that reflects the technical, schedule, and cost status of the
effort.  A copy of the latest invoice
shall be appended to the Progress Report. 
The Progress Report shall contain the following information:

 

Planned efforts and costs: The Contractor shall provide a copy of
the schedule established in the Program Plan that has been updated to reflect
changes to planned tasks/milestones. The Contractor shall provide a brief
description of the work envisioned for the ensuing reporting period
highlighting any changes to the schedule, the objectives of those efforts, and
an estimate of costs and man-hours associated with planned efforts.  The Contractor shall note significant
accomplishments and identification of major problems/deficiencies with impact
and recommended solutions.  The
Contractor should identify any technical risks/challenges or problems
anticipated in the next reporting period.

 

Actual efforts and costs: The Contractor shall provide a copy of
the schedule updated to reflect work performed during the current reporting
period.  The Navy expects the Contractor
to maintain one schedule that will be updated monthly for both planned and
actual efforts. The Contractor shall detail work performed during the current
reporting period and associated financial status. Include an overall status of
each milestone, task, or unit of work.  
The Contractor shall document significant results of conferences, trips,
or directives from the Government’s representatives.  The Contractor shall maintain an action list
for programmatic and technical items that arise during the course of the effort
and a status of deliverable items.

 

1.4                                 The Contractor shall plan, conduct and
document meetings and reviews held between the Navy and the Contractor as
necessary.  The Contractor and the Navy
shall develop agendas for meetings jointly via electronic mail.  The Contractor shall prepare Meeting Minutes
which document all material presented, key discussions and decisions made, and
any action items which have arisen as a result of any meeting with the Navy or
the Navy’s representatives.  Reviews
shall be coordinated with major milestones and shall be scheduled to occur at a
minimum of a quarterly basis.  Contractor
personnel shall be available for informal conferences as required throughout
performance to discuss the direction, progress, and/or significant problems
encountered, and to discuss technical and fiscal information required for
performance.  The Navy reserves the right
to conduct an in-plant visit to the 

 

12

 

Contractor to review
implementation of the Contractor’s cost and schedule management system and to
understand the methods the Contractor utilizes to determine progress.  The intent is to ensure maximum visibility of
the Contractor’s technical, cost and schedule performance.

 

1.5                                 Advanced System
Architecture Conceptual Assessment:  The
Contractor shall assist NAVSEA with a system level analysis of future surface
combatant electrical power energy storage needs and shall identify three to
four candidate application(s) of a flywheel energy storage system that
offer the most benefit in terms of overall system development and production
cost, equipment volume and weight, and mission performance improvements. The
Contractor shall participate as part of the Navy’s power plant upgrade
architecture development team by providing characterization of the flywheel
energy storage technologies under consideration so the team can include those
technologies in system level trade studies. The Contractor shall independently
validate the results of the trade studies. Based on the results of this initial
trade studies, the Contractor shall perform a conceptual design of the notional
flywheel energy storage system. The Contractor shall develop simulation models
for the notional technologies.

 

Item 0002
— DATA

 

2.1                                 The data to be furnished hereunder shall
be prepared in accordance with the Contract Data Requirements List, DD Form 1423,
Exhibit A, attached hereto.

 

2.2                                 Data shall be submitted to NAVSEA PMS-320
in an electronic mailing using Microsoft Word, Microsoft Excel, Microsoft
PowerPoint, Microsoft Project, or PDF file formats unless otherwise agreed
to.  No paper copy shall be delivered
unless otherwise agreed to by the Navy. 
The Contractor’s format is acceptable, provided the technical content
requirement is met.  The content
requirements are specified for each data item in the SOW.

 

2.3                                 For those items requiring approval,
approval will be based on technical content and compliance with the SOW
requirements.  The Navy will make every
effort to expedite review and response to the contractor.  Disapproved documents shall be modified by
the Contractor in accordance with the comments provided by the Navy and
resubmitted for Navy reconsideration. 
Documents that are approved with comment may be considered acceptable if
the Contractor acknowledges acceptance of the Navy’s comment.

 

Item 0003 - ENGINEERING
SERVICES (NAVSEA) (MAY 1998)

 

The Contractor shall, at
the option of the Government, furnish 10,000
man-hours of the services of qualified engineers to perform Engineering Support
for follow-on investigations and hardware evaluations to determine the
effectiveness of the new technologies developed herein.  A requirement of a mix of lead, senior, and
intermediate level personnel in the ratio of 1:2:1 is anticipated, although the
Contractor’s requirement is to deliver the total amount of support in such mix
as required.  The nature of the services
to be performed shall be non-severable from the scope of the remaining aspects
of the contract.  As such, the manner of
work to be performed under this item shall be intimately related to the core
scope of the contract, shall form a logical extension of the work otherwise
performed (such as completion of testing of articles developed or extending the
performance capability of the articles developed), or shall provide amplifying
details of the articles or technologies beyond that otherwise required herein
and shall result in a specific end-product, e.g. a report.  The services shall cover the investigation of
potential alternative technologies on suitable demonstration vehicles, working
in support of NAVSEA objectives.  This
effort shall be undertaken only as directed by written technical instructions
issued by the COR.

 

The contractor shall
furnish materials and subcontracting incidental to the engineering services as
necessary to perform the efforts specified by PMS-320.  The amount of materials and subcontracting to
be provided shall be equal or less than $100,000
of direct costs.  Incidental materials
and subcontracting shall be fee bearing.

 

The engineering services
shall be performed within the limits, if any, as to place(s) and period(s) specified
there for, as authorized by the COR.

 

13

 

Each time services are
performed, the engineer(s) shall obtain a certification of performance
from a responsible U.S. Government official at the activity where the services
were performed, citing tasks satisfactorily performed and hours worked each
day.

 

The maximum liability of
the Government for each engineering services item shall not exceed the amount
set forth in the Schedule, or the amount obligated whichever is less.  If, at any time, the Contractor has reason to
believe that the amounts it expects to incur in the performance of each
engineering services item in the next succeeding sixty (60) days, when added to
all amounts previously incurred, will exceed seventy-five percent (75%) of the
amount then set forth in the Schedule; or if, at any time, the Contractor has
reason to believe that the man days and/or amount for the full performance of
each engineering services item will be greater than or substantially less than
that set forth in the Schedule, the Contractor shall notify the Contracting
Officer in writing, giving its revised estimate of the man days and/or amount
for the performance of said item.  The
Contractor shall not exceed the obligated amount for each engineering services
item, unless and until the Contracting Officer has increased such amount in
writing.

 

In the event the
Government does not designate time(s) and place(s) sufficient for
performance of the total quantity of engineering services set forth in the
Schedule within the period(s) provided there for, those services not
furnished shall be deemed to be terminated for the convenience of the
Government at no cost to the Government. 
Such termination shall be evidenced by a written document signed by the
Contracting Officer and mailed or otherwise furnished to the Contractor.

 

Performance of the work
under this effort shall be subject to written Technical Instructions (TIs)
signed by the COR.  If, in the opinion of
the Contractor, any technical instruction calls for effort outside the scope of
the contract or is inconsistent with this requirement, the Contractor shall
notify the Government Contracting Officer in writing within ten (10) working
days after the receipt of any such instruction. 
The Contractor shall not proceed with the work affected by the technical
instruction unless and until the Government Contracting Officer notifies the
Contractor that the technical instruction is within the scope of this contract.

 

Item 0004 - SUPPORT FOR
ENGINEERING SERVICES (NAVSEA) (JUN 1992)

 

(a)  The Contractor
shall be reimbursed for its reasonable actual subsistence, transportation, and
travel time costs incurred in the performance of the related engineering
services item(s) in accordance with FAR 31.205-46.  The costs to be reimbursed shall be those
costs accepted by the cognizant DCAA.

 

(b)  Overtime shall
be performed as required by the using activity and to the extent authorized by
the COR.  Overtime premium to be
negotiated as required.

 

(c)  The maximum
liability of the Government for each support item shall not exceed the estimated
amount set forth in the Schedule, or the amount obligated under the SLIN,
whichever is less.  If, at any time, the
Contractor has reason to believe that the costs it expects to incur in the
performance of each support item in the next succeeding sixty (60) days, when
added to all costs previously incurred, will exceed seventy-five percent (75%)
of the amount then set forth in the Schedule; or if, at any time, the
Contractor has reason to believe that the costs to the Government for the full
performance of each support item will be greater than or substantially less
than the amount set forth in the Schedule, the Contractor shall notify the
Contracting Officer in writing, giving its revised estimate of such costs for
the performance of said item.  The
Contracting Officer may, upon receipt of such notice or whenever the
Contracting Officer considers it necessary, increase or further increase the
total estimated amount for the performance of each support item.  When and to the extent the estimated amount
for a support item has been so increased, any amounts expended or incurred by
the Contractor for performance in excess of the estimated amount there for
prior to the increase, shall be paid or reimbursed to the same extent as if
expended or incurred after the increase.

 

COMPUTER SOFTWARE AND/OR
COMPUTER DATABASE(S) DELIVERED TO AND/OR RECEIVED FROM THE GOVERNMENT
(NAVSEA) (APR 2004)

 

14

 

(a)                                  The Contractor agrees to test for viruses
all computer software and/or computer databases, as defined in the clause
entitled “RIGHTS IN NONCOMMERCIAL COMPUTER SOFTWARE AND NONCOMMERCIAL COMPUTER
SOFTWARE DOCUMENTATION” (DFARS 252.227-7014), before delivery of that computer
software or computer database in whatever media and on whatever system the
software is delivered.  The Contractor
warrants that any such computer software and/or computer database will be free
of viruses when delivered.

 

(b)                                 The Contractor agrees to test any
computer software and/or computer database(s) received from the Government
for viruses prior to use under this contract.

 

(c)                                  Unless otherwise agreed in writing, any
license agreement governing the use of any computer software to be delivered as
a result of this contract must be paid-up and perpetual, or so nearly perpetual
as to allow the use of the computer software or computer data base with the
equipment for which it is obtained, or any replacement equipment, for so long
as such equipment is used.  Otherwise the
computer software or computer database does not meet the minimum functional
requirements of this contract. In the event that there is any routine to
disable the computer software or computer database after the software is
developed for or delivered to the Government, that routine shall not disable
the computer software or computer database until at least twenty-five calendar
years after the delivery date of the affected computer software or computer
database to the Government.

 

(d)                                 No copy protection devices or systems
shall be used in any computer software or computer database delivered under
this contract to restrict or limit the Government from making copies.  This does not prohibit license agreements
from specifying the maximum amount of copies that can be made.

 

(e)                                  Delivery by the Contractor to the
Government of certain technical data and other data is now frequently required
in digital form rather than as hard copy. 
Such delivery may cause confusion between data rights and computer
software rights.  It is agreed that, to
the extent that any such data is computer software by virtue of its delivery in
digital form, the Government will be licensed to use that digital-form with
exactly the same rights and limitations as if the data had been delivered as
hard copy.

 

(f)                                    Any limited rights legends or other
allowed legends placed by a Contractor on technical data or other data
delivered in digital form shall be digitally included on the same media as the
digital-form data and must be associated with the corresponding digital-form
technical data to which the legends apply to the extent possible.  Such legends shall also be placed in human
readable form on a visible surface of the media carrying the digital-form data
as delivered, to the extent possible.

 

CLAUSES INCORPORATED BY FULL TEXT

 

Item(s) 0002
- The data to be furnished hereunder shall be prepared in accordance with the
Contract Data Requirements List, DD Form 1423, Exhibit(s) A,
attached hereto.

 

ITEM(S) 0003-
ENGINEERING SERVICES (NAVSEA) (APR 2004)

 

(a)          The Contractor shall furnish the services
of qualified engineer(s) to:

 

(1) Assist in
planning, installation, testing, checkout, adjustment, operation, disassembly,
and repair of Flywheel Energy Storage System; and

 

15

 

(2) Perform on-the-job instruction and training
of Navy personnel (military and/or civilian). (Not applicable to SCN funded
items).

 

(b) For purposes of
this requirement, the following definitions apply:

 

(1) “Domestic
services” means services rendered within the United States (U.S.) and/or on
Navy vessels in ports within the U.S. or at sea, provided the vessel does not
enter port outside the U.S.

 

(2) “Foreign services”means services other than
domestic.

 

(3) “United States” means the United States, its
possessions, Puerto Rico, and any other place subject to its jurisdiction, but
does not include leased bases or trust territories.

 

(4) “Man day” means the services of one engineer
for one day of eight hours, Monday through Friday (excluding holidays).

 

(5) “Holidays” means all Federally recognized
holidays.

 

(c) The engineering
services shall be performed within the limits, if any, as to place(s)and
period(s)specified therefor, as authorized by PMS 320.

 

(d) When authorized
under paragraph(c) above, each engineer shall perform engineering services
in accordance with supplemental instructions provided by the Contract
Administration Office(CAO)cognizant of vessel construction/conversion contract,
a representative of the authorizing activity or a representative of the
activity where the engineering services are performed, as applicable.  However, each engineer shall not be
considered an employee of the Government.

 

(e) Travel time
necessary for performance of such services shall be included in computing the
man days of service.  When services are
performed at sea and the engineer(s) is unable to leave the vessel when
work is completed, the remaining time aboard the vessel shall be considered
travel time for purposes of computing the man days of services.  However, the Contractor shall be paid for no
more than one man day of service per calendar day for each engineer while in
travel status.

 

(f) Passports,
visas, inoculations and other medical requirements necessary for performance of
engineering services shall be at the sole responsibility and expense of the
Contractor.

 

(g) Each time
services are performed, the engineer(s)shall obtain a certification of
performance from a responsible U.S.Government official aboard the vessel or at
the activity where the services were performed, citing tasks satisfactorily
performed and hours worked each day.

 

(h) The maximum
liability of the Government for each engineering services item shall not exceed
the amount set forth in the Schedule, or the amount obligated whichever is
less. If, at any time, the Contractor has reason to believe that the amounts it
expects to incur in the performance of each engineering services item in the
next succeeding sixty(60)days, when added to all amounts previously incurred,
will exceed seventy-five percent(75%)of the amount then set forth in the
Schedule; or if, at any time, the Contractor has reason to believe that the man
days and/or amount for the full performance of each engineering services item
will be greater than or substantially less than that set forth in the Schedule,
the Contractor shall notify the Contracting Officer in writing, giving its
revised estimate of the man days and/or amount for the performance of said
item. The Contractor shall not exceed the obligated amount for each engineering
services item, unless and until such amount has been increased in writing by
the Contracting Officer.

 

(i) In the event the
Government does not designate time(s)and place(s)sufficient for performance of
the total quantity of engineering services set forth in the Schedule within the
period(s)provided therefor, those services not furnished shall be deemed to be
terminated for the convenience of the Government at no cost to the
Government.  Such

 

16

 

termination shall be
evidenced by a written document signed by the Contracting Officer and mailed or
otherwise furnished to the contractor.

 

SUPPORT FOR ENGINEERING
SERVICES (NAVSEA) (JUN 1992)

 

(a)  The Contractor
shall be reimbursed for its reasonable actual subsistence and transportation
costs incurred in the performance of the related engineering services item(s) in
accordance with FAR 31.205-46.  The costs
to be reimbursed shall be those costs accepted by the cognizant DCAA.

 

(b)  Overtime shall
be performed as required by the using activity and to the extent authorized by
the applicable NAVSEA/DRPM/PEO code identified in Section C under
Engineering Services.

 

(c)  The maximum
liability of the Government for each support item shall not exceed the
estimated amount set forth in the Schedule. 
If, at any time, the Contractor has reason to believe that the costs it
expects to incur in the performance of each support item in the next succeeding
sixty (60) days, when added to all costs previously incurred, will exceed
seventy-five percent (75%) of the amount then set forth in the Schedule; or if,
at any time, the Contractor has reason to believe that the costs to the
Government for the full performance of each support item will be greater than
or substantially less than the amount set forth in the Schedule, the Contractor
shall notify the Contracting Officer in writing, giving its revised estimate of
such costs for the performance of said item. 
The Contracting Officer may, upon receipt of such notice or whenever the
Contracting Officer considers it necessary, increase or further increase the
total estimated amount for the performance of each support item.  When and to the extent the estimated amount
for a support item has been so increased, any amounts expended or incurred by
the Contractor for performance in excess of the estimated amount therefor prior
to the increase, shall be paid or reimbursed to the same extent as if expended
or incurred after the increase.

 

COMPUTER SOFTWARE AND/OR
COMPUTER DATABASE(S) DELIVERED TO AND/OR RECEIVED FROM THE GOVERNMENT
(NAVSEA) (APR 2004)

 

(a)                                  The Contractor agrees to test for viruses
all computer software and/or computer databases, as defined in the clause
entitled “RIGHTS IN NONCOMMERCIAL COMPUTER SOFTWARE AND NONCOMMERCIAL COMPUTER
SOFTWARE DOCUMENTATION” (DFARS 252.227-7014), before delivery of that computer
software or computer database in whatever media and on whatever system the
software is delivered.  The Contractor
warrants that any such computer software and/or computer database will be free
of viruses when delivered.

 

(b)                                 The Contractor agrees to test any
computer software and/or computer database(s) received from the Government
for viruses prior to use under this contract.

 

(c)                                  Unless otherwise agreed in writing, any
license agreement governing the use of any computer software to be delivered as
a result of this contract must be paid-up and perpetual, or so nearly perpetual
as to allow the use of the computer software or computer data base with the
equipment for which it is obtained, or any replacement equipment, for so long
as such equipment is used.  Otherwise the
computer software or computer database does not meet the minimum functional
requirements of this contract. In the event that there is any routine to
disable the computer software or computer database after the software is
developed for or delivered to the Government, that routine shall not disable
the computer software or computer database until at least twenty-five calendar
years after the delivery date of the affected computer software or computer
database to the Government.

 

17

 

(d)                                 No copy protection devices or systems
shall be used in any computer software or computer database delivered under
this contract to restrict or limit the Government from making copies.  This does not prohibit license agreements
from specifying the maximum amount of copies that can be made.

 

(e)                                  Delivery by the Contractor to the
Government of certain technical data and other data is now frequently required
in digital form rather than as hard copy. 
Such delivery may cause confusion between data rights and computer
software rights.  It is agreed that, to
the extent that any such data is computer software by virtue of its delivery in
digital form, the Government will be licensed to use that digital-form with
exactly the same rights and limitations as if the data had been delivered as
hard copy.

 

(f)                                    Any limited rights legends or other
allowed legends placed by a Contractor on technical data or other data
delivered in digital form shall be digitally included on the same media as the
digital-form data and must be associated with the corresponding digital-form
technical data to which the legends apply to the extent possible.  Such legends shall also be placed in human
readable form on a visible surface of the media carrying the digital-form data
as delivered, to the extent possible.

 

CONTRACTOR’S PROPOSAL
(NAVSEA) (MAR 2001)

 

(a)  Performance of
this contract by the Contractor shall be conducted and performed in accordance
with detailed obligations to which the Contractor committed itself in Proposal entitled, “FLYWHEEL ENERGY STORAGE IN SUPPORT OF NAVAL
INTEGRATED POWER SYSTEMS” dated May 1,
2008 in response to NAVSEA Solicitation No. N00024-05-R-4201.

 

(b)  The technical
volume(s) of the Contractor’s proposal is incorporated by reference and
hereby made subject to the provisions of the “ORDER OF PRECEDENCE” (FAR
52.215-8) clause of this contract.  Under
the “ORDER OF PRECEDENCE” clause, the technical volume of the Contractor’s
proposal referenced herein is hereby designated as item (f) of the clause,
following “the specification” in the order of precedence.

 

INFORMATION AND DATA
FURNISHED BY THE GOVERNMENT - ALTERNATE II (NAVSEA) (JAN 2008)

 

(a)  NAVSEA Form 4340/2
or Schedule C, as applicable, Government Furnished Information, attached
hereto, incorporates by listing or specific reference, all the data or
information which the Government has provided or will provide to the Contractor
except for -

 

(1)  The specifications set forth in Section C,
and

 

(2)  Government specifications, including
drawings and other Government technical documentation which are referenced
directly or indirectly in the specifications set forth in Section C and
which are applicable to this contract as specifications, and which are
generally available and provided to Contractors or prospective Contractors upon
proper request, such as Federal or Military Specifications, and Standard
Drawings, etc.

 

(b)  Except for the
specifications referred to in subparagraphs (a)(1) and (2) above, the
Government will not be obligated to provide to the Contractor any
specification, drawing, technical documentation or other publication which is
not listed or specifically referenced in NAVSEA Form 4340/2 or Schedule C,
as applicable, notwithstanding anything to the contrary in the specifications,
the publications listed or specifically referenced in NAVSEA Form 4340/2
or Schedule C, as applicable, the clause entitled “GOVERNMENT PROPERTY” (FAR

 

18

 

52.245-1) or “GOVERNMENT
PROPERTY INSTALLATION OPERATION  SERVICES
“ (FAR 52.245-2), as applicable, as applicable, or any other term or condition
of this contract.

 

(c)(1)  The
Contracting Officer may at any time by written order:

 

(i)    delete, supersede, or revise, in whole or
in part, data listed or specifically referenced in NAVSEA Form 4340/2 or
Schedule C, as applicable; or

 

(ii)   add items of data or information to
NAVSEA Form 4340/2 or Schedule C, as applicable; or

 

(iii)  establish or revise due dates for items
of data or information in NAVSEA Form 4340/2 or Schedule C, as applicable.

 

(2)  If any action taken by the Contracting
Officer pursuant to subparagraph (c)(1) immediately above causes an
increase or decrease in the costs of, or the time required for, performance of
any part of the work under this contract, the contractor may be entitled to an
equitable adjustment in the contract amount and delivery schedule in accordance
with the procedures provided for in the “CHANGES” clause of this contract.

 

USE OF NAVY SUPPORT
CONTRACTORS FOR OFFICIAL CONTRACT FILES (NAVSEA) (APR 2004)

 

(a) NAVSEA may use
a file room management support contractor, hereinafter referred to as “the
support contractor”, to manage its file room, in which all official
contract files, including the official file supporting this procurement,
are retained.  These official files may contain information that is
considered a trade secret, proprietary, business sensitive or otherwise
protected pursuant to law or regulation, hereinafter referred to as “protected
information”.  File room management services consist of any of the
following: secretarial or clerical support; data entry; document reproduction,
scanning, imaging, or destruction; operation, management, or maintenance of
paper-based or electronic mail rooms, file rooms, or libraries; and supervision
in connection with functions listed herein.

 

(b) The cognizant
Contracting Officer will ensure that any NAVSEA contract under which
these file room management services are acquired will contain a
requirement that:

 

(1) The support
contractor not disclose any information;

 

(2) Individual
employees are to be instructed by the support contractor regarding the
sensitivity of the official contract files;

 

(3) The support
contractor performing these services be barred from providing any
other supplies and/or services, or competing to do so, to NAVSEA for the period
of performance of its contract and for an additional three years
thereafter unless otherwise provided by law or regulation; and,

 

(4) In addition to
any other rights the contractor may have, it is a third party beneficiary who
has the right of direct action against the support contractor, or any person to
whom the support contractor has released or disclosed protected information,
for the unauthorized duplication, release, or disclosure of such protected
information.

 

(c) Execution of
this contract by the contractor is considered consent to NAVSEA’s permitting
access to any information, irrespective of restrictive markings or the nature
of the information submitted, by its file room management support contractor
for the limited purpose of executing its file room support
contract responsibilities.

 

(d) NAVSEA may,
without further notice, enter into contracts with other contractors for
these services.  Contractors are free to
enter into separate non-disclosure agreements with the file room
contractor.  (Please contact Director, E

 

19

 

Business Division for
contractor specifics.)  However, any such agreement will not be considered
a prerequisite before information submitted is stored in the file room or
otherwise encumber the government.

 

20

 

Section D - Packaging and Marking

 

CLAUSES INCORPORATED BY FULL TEXT

 

All unclassified data
shall be prepared for shipment in accordance with best commercial practice.

 

Classified reports, data,
and documentation shall be prepared for shipment in accordance with National
Industrial Security Program Operating Manual (NISPOM), DOD 5220.22-M dated 28 February 2006.

 

CLAUSES INCORPORATED BY FULL TEXT

 

Item(s) 0001
- The supplies furnished hereunder shall be packaged in accordance with best
commercial practice.

 

MARKING OF REPORTS
(NAVSEA) (SEP 1990)

 

All reports delivered by
the Contractor to the Government under this contract shall prominently show on
the cover of the report:

 

(1) name and business address of the Contractor

 

(2)  contract number

 

(3)  contract dollar amount

 

(4)  whether the contract was competitively or
non-competitively awarded

 

	
  (5) sponsor:

  	
  JOSEPH TANNENBAUM

  
	
   

  	
  (Name of Individual
  Sponsor)

  
	
   

  	
  NAVSEA PMS-320

  
	
   

  	
  (Name of Requiring
  Activity)

  
	
   

  	
  WASHINGTON NAVY YARD,
  D.C. 20376

  
	
   

  	
  (City and State)

  

 

21

 

Section E - Inspection and Acceptance

 

CLAUSES INCORPORATED BY REFERENCE

 

	
  52.246-3 

  	
  Inspection Of
  Supplies Cost-Reimbursement 

  	
  MAY 2001 

  	
   

  
	
  52.246-5 

  	
  Inspection Of
  Services Cost-Reimbursement 

  	
  APR 1984 

  	
   

  
	
  52.246-8 

  	
  Inspection Of
  Research And Development Cost Reimbursement 

  	
  MAY 2001 

  	
   

  
	
  52.246-16 

  	
  Responsibility
  For Supplies 

  	
  APR 1984 

  	
   

  

 

CLAUSES INCORPORATED BY FULL TEXT

 

Item(s) 0001 -
Inspection and acceptance shall be made by the Contracting Officer’s
Representative (COR) or a designated representative of the Government.

 

Item 0002-  Inspection and acceptance of all data shall be
as specified on the attached Contract Data Requirements List(s), DD Form 1423.

 

Item(s) 0003 - Acceptance shall be made by the
cognizant ACO upon receipt of a copy of the authorization for services and the
original certification of performance.

 

Item(s) 0001
- Acceptance shall be made by the cognizant ACO upon receipt of a copy of the
authorization for services and the original certification of performance.

 

22

 

Section F - Deliveries or Performance

 

CLAUSES INCORPORATED BY REFERENCE

 

	
  52.242-15 

  	
  Stop-Work Order 

  	
  AUG 1989 

  	
   

  
	
  52.242-15 Alt I 

  	
  Stop-Work Order
  (Aug 1989) -  Alternate I 

  	
  APR 1984 

  	
   

  
	
  52.247-34 

  	
  F.O.B.
  Destination 

  	
  NOV 1991 

  	
   

  

 

CLAUSES INCORPORATED BY FULL TEXT

 

The Contractor shall
perform the work described in SECTION C, at the level of effort specified
in SECTION B, as follows:

 

	
  ITEM(S)

  	
   

  	
  FROM

  	
   

  	
  TO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0001

  	
   

  	
  Date of award

  	
   

  	
  12 Months after award

  
	
  000101

  	
   

  	
  Date of award

  	
   

  	
  30 September 2009

  
	
  0003

  	
   

  	
  Date of award

  	
   

  	
  36 Months after award

  
	
  0004

  	
   

  	
  Date of award

  	
   

  	
  36 Months after award

  

 

All data to be furnished
under this contract shall be delivered prepaid to the destination(s) and
at the time(s) specified on the Contract Data Requirements List(s), DD Form 1423.

 

23

 

Section G - Contract Administration Data

 

CLAUSES INCORPORATED BY FULL TEXT

 

CONTRACT ADMINISTRATION
DATA

 

Enter below the address
(street and number, city, county, state and zip code) of the Contractor’s
facility which will administer the contract if such address is different from
the address shown on the SF 26 or SF 33, as applicable.

 

CLAUSES INCORPORATED BY FULL TEXT

 

	
  CONTRACTING OFFICER’S

  	
  COMMANDER

  
	
  REPRESENTATIVE:

  	
  ATTN: Joseph Tannenbaum

  
	
   

  	
  NAVAL SEA SYSTEMS
  COMMAND PMS 320

  
	
   

  	
  1333 ISAAC HULL AVENUE
  SE STOP 2203

  
	
   

  	
  WASHINGTON NAVY YARD DC
  20376 -2203

  
	
   

  	
  Telephone
  No. 202/781-2629

  
	
   

  	
  Fax
  No. 202/781-4778

  
	
   

  	
  Email Address:
  joseph.tannenbaum@navy.mil

  

 

The Contractor shall
forward a copy of all invoices to the Contracting Officer’s Representative.

 

	
  PURCHASING OFFICE

  	
  COMMANDER

  
	
  REPRESENTATIVE:

  	
  ATTN: Timothy A.
  Starker

  
	
   

  	
  NAVAL SEA SYSTEMS
  COMMAND

  
	
   

  	
  1333 ISAAC HULL AVENUE
  SE STOP

  
	
   

  	
  WASHINGTON NAVY YARD DC
  20376

  
	
   

  	
  Telephone
  No. 202/781-3944

  
	
   

  	
  Fax No. 202/781-4637

  
	
   

  	
  Email Address: timothy.starker@navy.mil

  

 

24

 

Section H - Special Contract Requirements

 

CLAUSES INCORPORATED BY FULL TEXT

 

NAVSEA 5252.202-9101
ADDITIONAL DEFINITIONS (MAY 1993)

 

As used throughout this
contract, the following terms shall have the meanings set forth below:

 

(a) DEPARTMENT   means the Department of the Navy.

 

(b) REFERENCES TO
THE FEDERAL ACQUISITION REGULATION (FAR)  
All references to the FAR in this contract shall be deemed to also
reference the appropriate sections of the Defense FAR Supplement (DFARS),
unless clearly indicated otherwise.

 

(c) REFERENCES TO
ARMED SERVICES PROCUREMENT REGULATION OR DEFENSE ACQUISITION REGULATION   All references in this document to either
the Armed Services Procurement Regulation (ASPR) or the Defense Acquisition
Regulation (DAR) shall be deemed to be references to the appropriate sections
of the FAR/DFARS.

 

(d) NATIONAL STOCK
NUMBERS   Whenever the term Federal Item
Identification Number and its acronym FIIN or the term Federal Stock Number and
its acronym FSN appear in the contract, order or their cited specifications and
standards, the terms and acronyms shall be interpreted as National Item
Identification Number (NIIN) and National Stock Number (NSN) respectively which
shall be defined as follows:

 

(1)  National Item
Identification Number (NIIN).  The number
assigned to each approved Item Identification under the Federal Cataloging
Program.  It consists of nine numeric
characters, the first two of which are the National Codification Bureau (NCB)
Code.  The remaining positions consist of
a seven digit non significant number.

 

(2)  National Stock
Number (NSN).  The National Stock Number
(NSN) for an item of supply consists of the applicable four position Federal
Supply Class (FSC) plus the applicable nine position NIIN assigned to the
item of supply.

 

CLAUSES INCORPORATED BY FULL TEXT

 

5252.216-9122  LEVEL OF EFFORT (DEC 2000)

 

(a)  The Contractor
agrees to provide the total level of effort specified in the next sentence in
performance of the work described in Sections B and C of this contract.  The total level of effort for the performance
of this contract shall be 10,000 total man-hours of direct labor,
including subcontractor direct labor for those subcontractors specifically
identified in the Contractor’s proposal as having hours included in the
proposed level of effort.

 

(b)  Of the total
man-hours of direct labor set forth above, it is estimated that 0
(Offeror to fill-in) man-hours are uncompensated effort.

 

Uncompensated effort is
defined as hours provided by personnel in excess of 40 hours per week without
additional compensation for such excess work. 
All other effort is defined as compensated effort.  If no effort is indicated in the first
sentence of this paragraph, uncompensated effort performed by the Contractor
shall not be counted in fulfillment of the level of effort obligations under
this contract.

 

25

 

(c)  Effort
performed in fulfilling the total level of effort obligations specified above
shall only include effort performed in direct support of this contract
and shall not include time and effort expended on such things as (local travel
to and from an employee’s usual work location), uncompensated effort while on
travel status, truncated lunch periods, work (actual or inferred) at an
employee’s residence or other non-work locations (except as provided in
paragraph (j) below), or other time and effort which does not have a
specific and direct contribution to the tasks described in Sections B and C.

 

(d)  The level of
effort for this contract shall be expended at an average rate of approximately  hours
per week.  It is understood and agreed
that the rate of man-hours per month may fluctuate in pursuit of the technical
objective, provided such fluctuation does not result in the use of the total
man-hours of effort prior to the expiration of the term hereof, except as
provided in the following paragraph.

 

(e)  If, during the
term hereof, the Contractor finds it necessary to accelerate the expenditure of
direct labor to such an extent that the total man-hours of effort specified
above would be used prior to the expiration of the term, the Contractor shall
notify the Contracting Officer in writing setting forth the acceleration
required, the probable benefits which would result, and an offer to undertake
the acceleration at no increase in the estimated cost or fee together with an
offer, setting forth a proposed level of effort, cost breakdown, and proposed
fee, for continuation of the work until expiration of the term hereof.  The offer shall provide that the work
proposed will be subject to the terms and conditions of this contract and any
additions or changes required by then current law, regulations, or directives,
and that the offer, with a written notice of acceptance by the Contracting
Officer, shall constitute a binding contract. 
The Contractor shall not accelerate any effort until receipt of such
written approval by the Contracting Officer. 
Any agreement to accelerate will be formalized by contract modification.

 

(f)  The Contracting
Officer may, by written order, direct the Contractor to accelerate the
expenditure of direct labor such that the total man-hours of effort specified
in paragraph (a) above would be used prior to the expiration of the term.  This order shall specify the acceleration
required and the resulting revised term. 
The Contractor shall acknowledge this order within five days of receipt.

 

(g)  If the total
level of effort specified in paragraph (a) above is not provided by the Contractor
during the period of this contract, the Contracting Officer, at its sole
discretion, shall either (i) reduce the fee of this contract as follows:

 

	
  Fee Reduction = Fee (Required
  LOE - Expended LOE)

  
	
   

  	
  Required LOE

  	
   

  

 

or (ii) subject to
the provisions of the clause of this contract entitled “LIMITATION OF COST”
(FAR 52.232-20) or “LIMITATION OF COST (FACILITIES)” (FAR 52.232-21), as
applicable, require the Contractor to continue to perform the work until the
total number of man-hours of direct labor specified in paragraph (a) above
shall have been expended, at no increase in the fee of this contract.

 

(h)  The Contractor
shall provide and maintain an accounting system, acceptable to the
Administrative Contracting Officer and the Defense Contract Audit Agency
(DCAA), which collects costs incurred and effort (compensated and
uncompensated, if any) provided in fulfillment of the level of effort
obligations of this contract.  The
Contractor shall indicate on each invoice the total level of effort claimed during
the period covered by the invoice, separately identifying compensated effort
and uncompensated effort, if any.

 

(i)  Within 45 days
after completion of the work under each separately identified period of
performance hereunder, the Contractor shall submit the following information in
writing to the Contracting Officer with copies to the cognizant Contract
Administration Office and to the DCAA office to which vouchers are
submitted:  (1) the total number of
man-hours of direct labor expended during the applicable period; (2) a
breakdown of this total showing the number of man-hours expended in each direct
labor classification and associated direct and indirect costs; (3) a
breakdown of other costs incurred; and (4) the Contractor’s estimate of
the total allowable cost incurred under the contract for the period.  Within 45 days after completion of the work
under the contract, the Contractor shall submit, in addition, in the case of a
cost underrun; (5) the amount by which the estimated cost of this contract
may be 

 

26

 

reduced to recover excess
funds and, in the case of an underrun in hours specified as the total level of
effort; and (6) a calculation of the appropriate fee reduction in
accordance with this clause.  All
submissions shall include subcontractor information.

 

(j) Unless the
Contracting Officer determines that alternative worksite arrangements are
detrimental to contract performance, the Contractor may perform up to 10% of
the hours at an alternative worksite, provided the Contractor has a
company-approved alternative worksite plan. 
The primary worksite is the traditional “main office” worksite. An
alternative worksite means an employee’s residence or a telecommuting
center.  A telecommuting center is a
geographically convenient office setting as an alternative to an employee’s
main office. The Government reserves the right to review the Contractor’s
alternative worksite plan. In the event performance becomes unacceptable, the
Contractor will be prohibited from counting the hours performed at the
alternative worksite in fulfilling the total level of effort obligations of the
contract. Regardless of work location, all contract terms and conditions,
including security requirements and labor laws, remain in effect.  The Government shall not incur any additional
cost nor provide additional equipment for contract performance as a result of
the Contractor’s election to implement an alternative worksite plan.

 

(k) Notwithstanding
any of the provisions in the above paragraphs, the Contractor may furnish
man-hours up to five percent in excess of the total man-hours specified in
paragraph (a) above, provided that the additional effort is furnished
within the term hereof, and provided further that no increase in the estimated
cost or fee is required.

 

NAVSEA 5252.227-9113  GOVERNMENT-INDUSTRY DATA EXCHANGE PROGRAM
(OCT 2006)

 

(a) The Contractor
shall participate in the appropriate interchange of the Government-Industry
Data Exchange Program (GIDEP) in accordance with NAVSEA S0300-BU-GYD-010 dated November 1994.  Data entered is retained by the program and
provided to qualified participants. 
Compliance with this requirement shall not relieve the Contractor from
complying with any other requirement of the contract.

 

(b) The Contractor
agrees to insert paragraph (a) of this requirement in any subcontract
hereunder exceeding $500,000.00.  When so
inserted, the word “Contractor” shall be changed to “Subcontractor”.

 

(c) GIDEP materials,
software and information are available without charge from:

 

GIDEP

P.O. Box 8000

Corona, CA 92878-8000

 

Phone:     (951)
898-3207

FAX:       (951)
898-3250

Internet:   http://www.gidep.org

 

5252.232-9104  ALLOTMENT OF FUNDS (JAN 2008)

 

(a)  This contract
is incrementally funded with respect to both cost and fee.  The amount(s) presently available and
allotted to this contract for payment of fee for incrementally funded contract
line item number/contract subline item number (CLIN/SLIN), subject to the
clause entitled “FIXED FEE” (FAR

 

27

 

52.216-8) or “INCENTIVE
FEE” (FAR 52.216-10), as appropriate, is specified below.  The amount(s) presently available and
allotted to this contract for 

 

payment of cost for
incrementally funded CLINs/SLINs is set forth below.  As provided in the clause of this contract
entitled “LIMITATION OF FUNDS” (FAR 52.232-22), the CLINs/SLINs covered
thereby, and the period of performance for which it is estimated the allotted
amount(s) will cover are as follows:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ESTIMATED

  	
   

  
	
  ITEM(S)

  	
   

  	
  ALLOTED
  TO COST

  	
   

  	
  ALLOTTED
  TO FEE

  	
   

  	
  PERIOD
  OF PERFORMANCE

  	
   

  
	
  000101

  	
   

  	
  $

  	
  458,716

  	
   

  	
  $

  	
  41,284

  	
   

  	
  September 30, 2009

  	
   

  
										

 

(b)  The parties
contemplate that the Government will allot additional amounts to this contract
from time to time for the incrementally funded CLINs/SLINs by unilateral
contract modification, and any such modification shall state separately the
amount(s) allotted for cost, the amount(s) allotted for fee, the
CLINs/SLINs covered thereby, and the period of performance which the amount(s) are
expected to cover.

 

(c)  CLINs/SLINs       are fully
funded and performance under these CLINs/SLINs is subject to the clause of this
contract entitled “LIMITATION OF COST” (FAR 52.232-20).

 

(d)  The Contractor
shall segregate costs for the performance of incrementally funded CLINs/SLINs
from the costs of performance of fully funded CLINs/SLINs.

 

NAVSEA 5252.242-9115 TECHNICAL
INSTRUCTIONS (APR 1999)

 

(a)  Performance of
the work hereunder may be subject to written technical instructions signed by
the Contracting Officer’s Representative specified in Section G of this
contract.  As used herein, technical
instructions are defined to include the following:

 

(1)  Directions to
the Contractor which suggest pursuit of certain lines of inquiry, shift work
emphasis, fill in details or otherwise serve to accomplish the contractual
statement of work.

 

(2)  Guidelines to
the Contractor which assist in the interpretation of drawings, specifications
or technical portions of work description.

 

(b)  Technical instructions
must be within the general scope of work stated in the contract.  Technical instructions may not be used
to:  (1) assign additional work
under the contract; (2) direct a change as defined in the “CHANGES” clause
of this contract; (3) increase or decrease the contract price or estimated
contract amount (including fee), as applicable, the level of effort, or the
time required for contract performance; or (4) change any of the terms,
conditions or specifications of the contract.

 

(c)  If, in the opinion
of the Contractor, any technical instruction calls for effort outside the scope
of the contract or is inconsistent with this requirement, the Contractor shall
notify the Contracting Officer in writing within ten (10) working days
after the receipt of any such instruction. 
The Contractor shall not proceed with the work affected by the technical
instruction unless and until the Contractor is notified by the Contracting
Officer that the technical instruction is within the scope of this contract.

 

(d)  Nothing in the
foregoing paragraph shall be construed to excuse the Contractor from performing
that portion of the contractual work statement which is not affected by the
disputed technical instruction.

 

28

 

NAVSEA 5252.245-9106  FACILITIES TO BE GOVERNMENT FURNISHED
(COST-REIMBURSEMENT) (APR 2008)

 

(a)(1)  The
estimated cost and fee, if any, and delivery schedule set forth in this
contract contemplate the rent free use of the facilities identified in
paragraph (b) below and in paragraph (d) (applicable only for
research and development contracts) if such paragraph (d) is added to this
requirement.  If the Government limits or
terminates the Contractor’s rent free use of said facilities, and such action
affects the ability of the Contractor to perform this contract in accordance
with its terms and conditions, then an equitable adjustment in the estimated
cost and fee, if any, or delivery schedule, or both, shall be made pursuant to
the clause entitled “CHANGES- COST-REIMBURSEMENT” (FAR 52.243 2), provided,
however, that if the limitation or termination is due to failure by the
Contractor to perform its obligations under this contract, the Contractor shall
be entitled only to such adjustment as the Contracting Officer determines as a
fact to be appropriate under the circumstances.

 

(2)  For the
purposes of this requirement, facilities means industrial property (other than
material, special tooling, military property, and special test equipment) for
production, maintenance, research, development, or test, including real
property and rights therein, buildings, structures, improvements, and plant
equipment as defined in FAR Part 45.

 

(b)  The Contractor
is authorized to acquire or use the facilities described below upon the prior
written approval of the cognizant Contract Administration Office, which shall
determine that such facilities are required to carry out the work provided for
by this contract.  Immediately upon
delivery of each item of approved facilities to the Contractor’s plant, the
Contractor shall notify the cognizant Contract Administration Office of the
receipt of such facilities owned by the Government, which shall be made a part
of the plant account assigned to the Contractor at that location.

 

DESCRIPTION AND IDENTITY
OF FACILITIES

 

(c)(1)  In the event
that the cumulative total acquisition costs (actual or estimated) of all
facilities provided by the Naval Sea Systems Command to the Contractor at the
same plant or general location (including the facilities to be furnished
hereunder) does not exceed $50,000, such facilities shall be provided to the
Contractor as Government Property subject to and in accordance with the clause
entitled “GOVERNMENT PROPERTY” (FAR 52.245 1), unless there is in existence a
facilities management contract at the same plant or general location.

 

(2)  In the event
there is in existence a facilities management contract effective at the same
plant or general location, the facilities provided hereunder shall be made
subject to all the terms and conditions of the facilities management contract.

 

(d) In addition to
those items of facilities identified in paragraph (b) above, the following
items may be required for the complete performance of the work called for by
this contract:

 

ADDITIONAL ITEMS OF
FACILITIES

 

Accordingly, the right of
the parties to agree upon such additional facilities during the term of
performance of this contract is hereby expressly reserved.  The aggregate total value of facilities
provided shall in no case exceed $50,000 at any one plant or general location.

 

29

 

Section I - Contract Clauses

 

CLAUSES INCORPORATED BY REFERENCE

 

	
  52.202-1

  	
   

  	
  Definitions

  	
   

  	
  JUL 2004

  
	
  52.203-3

  	
   

  	
  Gratuities

  	
   

  	
  APR 1984

  
	
  52.203-5

  	
   

  	
  Covenant Against Contingent Fees

  	
   

  	
  APR 1984

  
	
  52.203-6

  	
   

  	
  Restrictions On Subcontractor Sales To The
  Government

  	
   

  	
  SEP 2006

  
	
  52.203-7

  	
   

  	
  Anti-Kickback Procedures

  	
   

  	
  JUL 1995

  
	
  52.203-8

  	
   

  	
  Cancellation, Rescission, and Recovery of Funds for
  Illegal or Improper Activity

  	
   

  	
  JAN 1997

  
	
  52.203-10

  	
   

  	
  Price Or Fee Adjustment For Illegal Or Improper
  Activity

  	
   

  	
  JAN 1997

  
	
  52.203-12

  	
   

  	
  Limitation On Payments To Influence Certain Federal
  Transactions

  	
   

  	
  SEP 2007

  
	
  52.204-2

  	
   

  	
  Security Requirements

  	
   

  	
  AUG 1996

  
	
  52.204-4

  	
   

  	
  Printed or Copied Double-Sided on Recycled Paper

  	
   

  	
  AUG 2000

  
	
  52.204-7

  	
   

  	
  Central Contractor Registration

  	
   

  	
  APR 2008

  
	
  52.209-6

  	
   

  	
  Protecting the Government’s Interest When
  Subcontracting With Contractors Debarred, Suspended, or Proposed for
  Debarment

  	
   

  	
  SEP 2006

  
	
  52.211-5

  	
   

  	
  Material Requirements

  	
   

  	
  AUG 2000

  
	
  52.215-2

  	
   

  	
  Audit and Records—Negotiation

  	
   

  	
  JUN 1999

  
	
  52.215-8

  	
   

  	
  Order of Precedence—Uniform Contract Format

  	
   

  	
  OCT 1997

  
	
  52.215-10

  	
   

  	
  Price Reduction for Defective Cost or Pricing Data

  	
   

  	
  OCT 1997

  
	
  52.215-11

  	
   

  	
  Price Reduction for Defective Cost or Pricing
  Data—Modifications

  	
   

  	
  OCT 1997

  
	
  52.215-12

  	
   

  	
  Subcontractor Cost or Pricing Data

  	
   

  	
  OCT 1997

  
	
  52.215-13

  	
   

  	
  Subcontractor Cost or Pricing Data—Modifications

  	
   

  	
  OCT 1997

  
	
  52.215-14

  	
   

  	
  Integrity of Unit Prices

  	
   

  	
  OCT 1997

  
	
  52.215-15

  	
   

  	
  Pension Adjustments and Asset Reversions

  	
   

  	
  OCT 2004

  
	
  52.215-18

  	
   

  	
  Reversion or Adjustment of Plans for Postretirement
  Benefits (PRB) Other than Pensions

  	
   

  	
  JUL 2005

  
	
  52.215-20 Alt I

  	
   

  	
  Requirements for Cost or Pricing Data or Information
  Other Than Cost or Pricing Data (Oct 1997) - Alternate I

  	
   

  	
  OCT 1997

  
	
  52.216-7

  	
   

  	
  Allowable Cost And Payment

  	
   

  	
  DEC 2002

  
	
  52.216-8

  	
   

  	
  Fixed Fee

  	
   

  	
  MAR 1997

  

 

CLAUSES INCORPORATED BY FULL TEXT

 

52.219-1      SMALL BUSINESS PROGRAM REPRESENTATIONS (MAY 2004)

 

(a)(1) The North
American Industry Classification System (NAICS) code for this acquisition is          (insert
NAICS code).

 

(2) The small
business size standard is          (insert
size standard).

 

(3) The small
business size standard for a concern which submits an offer in its own name,
other than on a construction or service contract, but which proposes to furnish
a product which it did not itself manufacture, is 500 employees.

 

30

 

(b) Representations.
(1) The offeror represents as part of its offer that it (  ) is, ( 
) is not a small business concern.

 

(2) (Complete only
if the offeror represented itself as a small business concern in paragraph (b)(1) of
this provision.) The offeror represents, for general statistical purposes, that
it (  ) is, (  ) is not a small disadvantaged business
concern as defined in 13 CFR 124.1002.

 

(3) (Complete only
if the offeror represented itself as a small business concern in paragraph (b)(1) of
this provision.) The offeror represents as part of its offer that it (  ) is, ( 
) is not a women-owned small business concern.

 

(4) (Complete only
if the offeror represented itself as a small business concern in paragraph (b)(1) of
this provision.) The offeror represents as part of its offer that it (  ) is, ( 
) is not a veteran-owned small business concern.

 

(5) (Complete only
if the offeror represented itself as a veteran-owned small business concern in paragraph
(b)(4) of this provision.) The offeror represents as part of its offer
that it (  ) is, (  ) is not a service-disabled veteran-owned
small business concern.

 

(6) (Complete only
if the offeror represented itself as a small business concern in paragraph (b)(1) of
this provision.) The offeror represents, as part of its offer, that—

 

(i) It (  ) is, ( 
) is not a HUBZone small business concern listed, on the date of this
representation, on the List of Qualified HUBZone Small Business Concerns
maintained by the Small Business Administration, and no material change in
ownership and control, principal office, or HUBZone employee percentage has
occurred since it was certified by the Small Business Administration in
accordance with 13 CFR part 126; and

 

(ii) It (  ) is, ( 
) is not a joint venture that complies with the requirements of 13 CFR
part 126, and the representation in paragraph (b)(6)(i) of this provision
is accurate for the HUBZone small business concern or concerns that are
participating in the joint venture. (The offeror shall enter the name or names
of the HUBZone small business concern or concerns that are participating in the
joint
venture:                        .)
Each HUBZone small business concern participating in the joint venture shall submit
a separate signed copy of the HUBZone representation.

 

(c) Definitions.  As used in this provision—

 

Service-disabled
veteran-owned small business concern—

 

(1) Means a small
business concern—

 

(i) Not less than 51
percent of which is owned by one or more service-disabled veterans or, in the
case of any publicly owned business, not less than 51 percent of the stock of
which is owned by one or more service-disabled veterans; and

 

(ii) The management
and daily business operations of which are controlled by one or more
service-disabled veterans or, in the case of a service-disabled veteran with
permanent and severe disability, the spouse or permanent caregiver of such
veteran.

 

(2) Service-disabled
veteran means a veteran, as defined in 38 U.S.C. 101(2), with a disability that
is service-connected, as defined in 38 U.S.C. 101(16).

 

“Small business concern,”
means a concern, including its affiliates, that is independently owned and
operated, not dominant in the field of operation in which it is bidding on Government
contracts, and qualified as a small business under the criteria in 13 CFR Part 121
and the size standard in paragraph (a) of this provision.

 

Veteran-owned small
business concern means a small business concern—

 

31

 

(1) Not less than 51
percent of which is owned by one or more veterans (as defined at 38 U.S.C.
101(2)) or, in the case of any publicly owned business, not less than 51
percent of the stock of which is owned by one or more veterans; and

 

(2) The management
and daily business operations of which are controlled by one or more veterans.

 

“Women-owned small
business concern,” means a small business concern —

 

(1) That is at least
51 percent owned by one or more women; in the case of any publicly owned
business, at least 51 percent of the stock of which is owned by one or more
women; and

 

(2) Whose management
and daily business operations are controlled by one or more women.

 

(d) Notice.

 

(1) If this
solicitation is for supplies and has been set aside, in whole or in part, for
small business concerns, then the clause in this solicitation providing notice
of the set-aside contains restrictions on the source of the end items to be
furnished.

 

(2) Under 15 U.S.C.
645(d), any person who misrepresents a firm’s status as a small, HUBZone
small,  small disadvantaged, or
women-owned small business concern in order to obtain a contract to be awarded
under the preference programs established pursuant to section 8(a), 8(d), 9, or
15 of the Small Business Act or any other provision of Federal law that
specifically references section 8(d) for a definition of program
eligibility, shall—

 

(i) Be punished by
imposition of fine, imprisonment, or both;

 

(ii) Be subject to
administrative remedies, including suspension and debarment; and

 

(iii) Be ineligible
for participation in programs conducted under the authority of the Act.

 

(End of provision)

 

CLAUSES INCORPORATED BY
REFERENCE

 

	
  52.219-4 

  	
   

  	
  Notice of Price
  Evaluation Preference for HUBZone Small Business Concerns 

  	
   

  	
  JUL 2005 

  
	
  52.219-8 

  	
   

  	
  Utilization of
  Small Business Concerns 

  	
   

  	
  MAY 2004 

  
	
  52.219-9 

  	
   

  	
  Small Business
  Subcontracting Plan 

  	
   

  	
  APR 2008 

  
	
  52.219-16 

  	
   

  	
   Liquidated Damages-Subcontracting Plan 

  	
   

  	
  JAN 1999 

  
	
  52.222-1 

  	
   

  	
  Notice To The
  Government Of Labor Disputes 

  	
   

  	
  FEB 1997 

  
	
  52.222-3 

  	
   

  	
  Convict Labor 

  	
   

  	
  JUN 2003 

  
	
  52.222-4 

  	
   

  	
  Contract Work
  Hours and Safety Standards Act - Overtime Compensation 

  	
   

  	
  JUL 2005 

  
	
  52.222-19 

  	
   

  	
  Child Labor —
  Cooperation with Authorities and Remedies 

  	
   

  	
  FEB 2008 

  
	
  52.222-21 

  	
   

  	
  Prohibition Of
  Segregated Facilities 

  	
   

  	
  FEB 1999 

  
	
  52.222-26 

  	
   

  	
  Equal
  Opportunity 

  	
   

  	
  MAR 2007 

  
	
  52.222-35 

  	
   

  	
  Equal
  Opportunity For Special Disabled Veterans, Veterans of the Vietnam Era, and
  Other Eligible Veterans 

  	
   

  	
  SEP 2006 

  
	
  52.222-36 

  	
   

  	
  Affirmative
  Action For Workers With Disabilities 

  	
   

  	
  JUN 1998 

  
	
  52.222-37 

  	
   

  	
  Employment
  Reports On Special Disabled Veterans, Veterans Of The Vietnam Era, and Other
  Eligible Veterans 

  	
   

  	
  SEP 2006 

  

 

 

32

 

	
  52.222-50 

  	
   

  	
  Combating
  Trafficking in Persons 

  	
   

  	
  AUG 2007 

  
	
  52.223-5 

  	
   

  	
  Pollution
  Prevention and Right-to-Know Information 

  	
   

  	
  AUG 2003 

  
	
  52.223-6 

  	
   

  	
  Drug-Free
  Workplace 

  	
   

  	
  MAY 2001 

  
	
  52.223-11 

  	
   

  	
  Ozone-Depleting
  Substances 

  	
   

  	
  MAY 2001 

  
	
  52.223-12 

  	
   

  	
  Refrigeration
  Equipment and Air Conditioners 

  	
   

  	
  MAY 1995 

  
	
  52.223-13 

  	
   

  	
  Certification of
  Toxic Chemical Release Reporting 

  	
   

  	
  AUG 2003 

  
	
  52.223-14 

  	
   

  	
  Toxic Chemical
  Release Reporting 

  	
   

  	
  AUG 2003 

  
	
  52.225-8 

  	
   

  	
  Duty-Free Entry 

  	
   

  	
  FEB 2000 

  
	
  52.225-13 

  	
   

  	
  Restrictions on
  Certain Foreign Purchases 

  	
   

  	
  JUN 2008 

  
	
  52.227-1 Alt I 

  	
   

  	
  Authorization
  And Consent (Dec 2007) -  Alternate I 

  	
   

  	
  APR 1984 

  
	
  52.227-10 

  	
   

  	
  Filing Of Patent
  Applications—Classified Subject Matter 

  	
   

  	
  DEC 2007 

  
	
  52.227-11 

  	
   

  	
  Patent
  Rights—Ownership By The Contractor 

  	
   

  	
  DEC 2007 

  
	
  252.227-7017 

  	
   

  	
  Identification
  and Assertion of Use, Release, or Disclosure Restrictions 

  	
   

  	
  JUN 1995 

  
	
  52.228-5 

  	
   

  	
  Insurance - Work
  On A Government Installation 

  	
   

  	
  JAN 1997 

  
	
  52.228-7 

  	
   

  	
  Insurance—Liability
  To Third Persons 

  	
   

  	
  MAR 1996 

  
	
  52.230-2 

  	
   

  	
  Cost Accounting
  Standards 

  	
   

  	
  APR 1998 

  
	
  52.230-3 

  	
   

  	
  Disclosure And
  Consistency Of Cost Accounting Practices 

  	
   

  	
  APR 1998 

  
	
  52.230-6 

  	
   

  	
  Administration
  of Cost Accounting Standards 

  	
   

  	
  MAR 2008 

  
	
  52.232-9 

  	
   

  	
  Limitation On
  Withholding Of Payments 

  	
   

  	
  APR 1984 

  
	
  52.232-17 

  	
   

  	
  Interest 

  	
   

  	
  JUN 1996 

  
	
  52.232-20 

  	
   

  	
  Limitation Of
  Cost 

  	
   

  	
  APR 1984 

  
	
  52.232-22 

  	
   

  	
  Limitation Of
  Funds 

  	
   

  	
  APR 1984 

  
	
  52.232-23 

  	
   

  	
  Assignment Of
  Claims 

  	
   

  	
  JAN 1986 

  
	
  52.232-23 Alt I 

  	
   

  	
  Assignment of
  Claims (Jan 1986) -  Alternate I 

  	
   

  	
  APR 1984 

  
	
  52.232-25 

  	
   

  	
  Prompt Payment 

  	
   

  	
  OCT 2003 

  
	
  52.232-25 Alt I 

  	
   

  	
  Prompt Payment
  (Oct 2008) Alternate I 

  	
   

  	
  FEB 2002 

  
	
  52.232-33 

  	
   

  	
  Payment by
  Electronic Funds Transfer—Central Contractor Registration 

  	
   

  	
  OCT 2003 

  
	
  52.233-1 

  	
   

  	
  Disputes 

  	
   

  	
  JUL 2002 

  
	
  52.233-1 Alt I 

  	
   

  	
  Disputes (Jul
  2002) -  Alternate I 

  	
   

  	
  DEC 1991 

  
	
  52.233-3 Alt I 

  	
   

  	
  Protest After
  Award (Aug 1996) -  Alternate I 

  	
   

  	
  JUN 1985 

  
	
  52.233-4 

  	
   

  	
  Applicable Law
  for Breach of Contract Claim 

  	
   

  	
  OCT 2004 

  

 

CLAUSES INCORPORATED BY FULL
TEXT

 

252.235-7010     Acknowledgment of Support and
Disclaimer.  (MAY 1995)

 

(a) The Contractor
shall include an acknowledgment of the Government’s support in the publication
of any material based on or developed under this contract, stated in the
following terms: This material is based upon work supported by the [name of
contracting agency(ies)] under Contract No. [Contracting agency(ies)
contract number(s)].

 

(b) All
material, except scientific articles or papers published in scientific
journals, must, in addition to any notices or disclaimers by the Contractor,
also contain the following disclaimer: Any opinions, findings and conclusions
or recommendations expressed in this material are those of the author(s) and
do not necessarily reflect the views of the [name of contracting agency(ies)].

 

33

 

CLAUSES INCORPORATED BY REFERENCE

 

	
  52.237-2 

  	
   

  	
  Protection Of
  Government Buildings, Equipment, And Vegetation 

  	
   

  	
  APR 1984 

  
	
  52.237-3 

  	
   

  	
  Continuity Of Services 

  	
   

  	
  JAN 1991 

  
	
  52.242-1 

  	
   

  	
  Notice of Intent to
  Disallow Costs 

  	
   

  	
  APR 1984 

  
	
  52.242-3 

  	
   

  	
  Penalties for
  Unallowable Costs 

  	
   

  	
  MAY 2001 

  
	
  52.242-4 

  	
   

  	
  Certification of Final
  Indirect Costs 

  	
   

  	
  JAN 1997 

  
	
  52.242-13 

  	
   

  	
  Bankruptcy 

  	
   

  	
  JUL 1995 

  
	
  52.243-2 Alt V 

  	
   

  	
  Changes—Cost-Reimbursement
  (Aug 1987) -  Alternate V 

  	
   

  	
  APR 1984 

  
	
  52.243-6 

  	
   

  	
  Change Order Accounting
  

  	
   

  	
  APR 1984 

  
	
  52.244-2 

  	
   

  	
  Subcontracts 

  	
   

  	
  JUN 2007 

  
	
  52.244-5 

  	
   

  	
  Competition In
  Subcontracting 

  	
   

  	
  DEC 1996 

  
	
  52.244-6 

  	
   

  	
  Subcontracts for
  Commercial Items 

  	
   

  	
  MAR 2007 

  
	
  52.245-1 

  	
   

  	
  Government Property 

  	
   

  	
  JUN 2007 

  
	
  52.245-9 

  	
   

  	
  Use And Charges 

  	
   

  	
  JUN 2007 

  
	
  52.246-23 

  	
   

  	
  Limitation Of Liability
  

  	
   

  	
  FEB 1997 

  
	
  52.246-25 

  	
   

  	
  Limitation Of
  Liability—Services 

  	
   

  	
  FEB 1997 

  
	
  52.247-68 

  	
   

  	
  Report of Shipment
  (REPSHIP) 

  	
   

  	
  FEB 2006 

  
	
  52.248-1 

  	
   

  	
  Value Engineering 

  	
   

  	
  FEB 2000 

  
	
  52.249-6 

  	
   

  	
  Termination (Cost
  Reimbursement) 

  	
   

  	
  MAY 2004 

  
	
  52.249-14 

  	
   

  	
  Excusable Delays 

  	
   

  	
  APR 1984 

  

 

CLAUSES INCORPORATED BY FULL TEXT

 

52.252-2      CLAUSES INCORPORATED BY REFERENCE (FEB
1998)

 

This contract
incorporates one or more clauses by reference, with the same force and effect
as if they were given in full text. Upon request, the Contracting Officer will
make their full text available. Also, the full text of a clause may be accessed
electronically at this/these address(es):

 

FAR at
http://www.arnet.gov/far/  & 
DFARS at http://www.acq.osd.mil/dp/dars/dfars.html

 

(End of clause)

 

CLAUSES INCORPORATED BY REFERENCE

 

	
  52.253-1
  

  	
   

  	
  Computer
  Generated Forms 

  	
   

  	
  JAN
  1991 

  
	
  252.201-7000
  

  	
   

  	
  Contracting
  Officer’s Representative 

  	
   

  	
  DEC
  1991 

  
	
  252.203-7001
  

  	
   

  	
  Prohibition
  On Persons Convicted of Fraud or Other Defense-Contract-Related Felonies 

  	
   

  	
  DEC
  2004 

  
	
  252.204-7000
  

  	
   

  	
  Disclosure
  Of Information 

  	
   

  	
  DEC
  1991 

  
	
  252.204-7003
  

  	
   

  	
  Control
  Of Government Personnel Work Product 

  	
   

  	
  APR
  1992 

  
	
  252.204-7004
  Alt A 

  	
  Central
  Contractor Registration (52.204-7) Alternate A 

  	
   

  	
  SEP
  2007 

  
	
  252.204-7005
  

  	
   

  	
  Oral
  Attestation of Security Responsibilities 

  	
   

  	
  NOV
  2001 

  
	
  252.204-7006
  

  	
   

  	
  Billing
  Instructions 

  	
   

  	
  OCT
  2005 

  
	
  252.205-7000
  

  	
   

  	
  Provision
  Of Information To Cooperative Agreement Holders 

  	
   

  	
  DEC
  1991 

  
	
  252.209-7004
  

  	
   

  	
  Subcontracting
  With Firms That Are Owned or Controlled By The Government of a Terrorist
  Country 

  	
   

  	
  DEC
  2006 

  
	
  252.211-7000
  

  	
   

  	
  Acquisition
  Streamlining 

  	
   

  	
  DEC
  1991 

  

 

34

 

	
  252.211-7007
  

  	
   

  	
  Item
  Unique Identification of Government Property 

  	
   

  	
  SEP
  2007 

  
	
  252.215-7000
  

  	
   

  	
  Pricing
  Adjustments 

  	
   

  	
  DEC
  1991 

  
	
  252.215-7002
  

  	
   

  	
  Cost
  Estimating System Requirements 

  	
   

  	
  DEC
  2006 

  
	
  252.219-7003
  

  	
   

  	
  Small
  Business Subcontracting Plan (DOD Contracts) 

  	
   

  	
  APR
  2007 

  
	
  252.223-7004
  

  	
   

  	
  Drug
  Free Work Force 

  	
   

  	
  SEP
  1988 

  
	
  252.223-7006
  

  	
   

  	
  Prohibition
  On Storage And Disposal Of Toxic And Hazardous Materials 

  	
   

  	
  APR
  1993 

  
	
  252.225-7001
  

  	
   

  	
  Buy
  American Act And Balance Of Payments Program 

  	
   

  	
  JUN
  2005 

  
	
  252.225-7002
  

  	
   

  	
  Qualifying
  Country Sources As Subcontractors 

  	
   

  	
  APR
  2003 

  
	
  252.225-7005
  

  	
   

  	
  Identification
  Of Expenditures In The United States 

  	
   

  	
  JUN
  2005 

  
	
  252.225-7006
  

  	
   

  	
  Quarterly
  Reporting of Actual Contract Performance Outside the United States 

  	
   

  	
  MAY 2007
  

  
	
  252.225-7007
  

  	
   

  	
  Prohibition
  on Acquisition of United States Munitions List Items from Communist Chinese
  Military Companies 

  	
   

  	
  SEP
  2006 

  
	
  252.225-7012
  

  	
   

  	
  Preference
  For Certain Domestic Commodities 

  	
   

  	
  MAR
  2008 

  
	
  252.225-7013
  

  	
   

  	
  Duty-Free
  Entry 

  	
   

  	
  OCT
  2006 

  
	
  252.225-7014
  

  	
   

  	
  Preference
  For Domestic Specialty Metals 

  	
   

  	
  JUN
  2005 

  
	
  252.225-7014
  (Dev) Alt I 

  	
   

  	
  Preference
  for Domestic Specialty Metals Alternate I (Deviation 2008-O0002) 

  	
   

  	
  OCT
  2007 

  
	
  252.225-7016
  

  	
   

  	
  Restriction
  On Acquisition Of Ball and Roller Bearings 

  	
   

  	
  MAR
  2006 

  
	
  252.225-7025
  

  	
   

  	
  Restriction
  on Acquisition of Forgings 

  	
   

  	
  JUL
  2006 

  
	
  252.225-7030
  

  	
   

  	
  Restriction
  On Acquisition Of Carbon, Alloy, And Armor Steel Plate 

  	
   

  	
  DEC
  2006 

  
	
  252.226-7001
  

  	
   

  	
  Utilization
  of Indian Organizations and Indian-Owned Economic Enterprises, and Native
  Hawaiian Small Business Concerns 

  	
   

  	
  SEP
  2004 

  
	
  252.227-7013
  

  	
   

  	
  Rights
  in Technical Data—Noncommercial Items 

  	
   

  	
  NOV
  1995 

  
	
  252.227-7014
  

  	
   

  	
  Rights
  in Noncommercial Computer Software and Noncommercial Computer Software
  Documentation 

  	
   

  	
  JUN
  1995 

  
	
  252.227-7016
  

  	
   

  	
  Rights
  in Bid or Proposal Information 

  	
   

  	
  JUN
  1995 

  
	
  252.227-7019
  

  	
   

  	
  Validation
  of Asserted Restrictions—Computer Software 

  	
   

  	
  JUN
  1995 

  
	
  252.227-7027
  

  	
   

  	
  Deferred
  Ordering Of Technical Data Or Computer Software 

  	
   

  	
  APR
  1988 

  
	
  252.227-7030
  

  	
   

  	
  Technical
  Data—Withholding Of Payment 

  	
   

  	
  MAR
  2000 

  
	
  252.227-7037
  

  	
   

  	
  Validation
  of Restrictive Markings on Technical Data 

  	
   

  	
  SEP
  1999 

  
	
  252.227-7039
  

  	
   

  	
  Patents—Reporting
  Of Subject Inventions 

  	
   

  	
  APR
  1990 

  
	
  252.231-7000
  

  	
   

  	
  Supplemental
  Cost Principles 

  	
   

  	
  DEC
  1991 

  
	
  252.232-7003
  

  	
   

  	
  Electronic
  Submission of Payment Requests and Receiving Reports 

  	
   

  	
  MAR
  2008 

  
	
  252.232-7010
  

  	
   

  	
  Levies
  on Contract Payments 

  	
   

  	
  DEC
  2006 

  
	
  252.235-7010
  

  	
   

  	
  Acknowledgment
  of Support and Disclaimer 

  	
   

  	
  MAY 1995
  

  
	
  252.242-7004
  

  	
   

  	
  Material
  Management And Accounting System 

  	
   

  	
  NOV
  2005 

  
	
  252.243-7002
  

  	
   

  	
  Requests
  for Equitable Adjustment 

  	
   

  	
  MAR
  1998 

  
	
  252.244-7000
  

  	
   

  	
  Subcontracts
  for Commercial Items and Commercial Components (DoD Contracts) 

  	
   

  	
  JAN
  2007 

  
	
  252.246-7001
  

  	
   

  	
  Warranty
  Of Data 

  	
   

  	
  DEC
  1991 

  
	
  252.246-7003
  

  	
   

  	
  Notification
  of Potential Safety Issues 

  	
   

  	
  JAN
  2007 

  
	
  252.249-7002
  

  	
   

  	
  Notification
  of Anticipated Program Termination or Reduction 

  	
   

  	
  DEC
  2006 

  

 

35

 

CLAUSES INCORPORATED BY
FULL TEXT

 

52.215-21      REQUIREMENTS FOR COST OR PRICING DATA OR
INFORMATION OTHER THAN COST OR PRICING DATA—MODIFICATIONS (OCT 1997)

 

(a) Exceptions from
cost or pricing data. (1) In lieu of submitting cost or pricing data for
modifications under this contract, for price adjustments expected to exceed the
threshold set forth at FAR 15.403-4 on the date of the agreement on price or
the date of the award, whichever is later, the Contractor may submit a written
request for exception by submitting the information described in the following
subparagraphs. The Contracting Officer may require additional supporting
information, but only to the extent necessary to determine whether an exception
should be granted, and whether the price is fair and reasonable—

 

(i) Identification
of the law or  regulation  establishing the price offered. If the price
is controlled under law by periodic rulings, reviews, or similar actions of a
governmental body, attach a copy of the controlling document, unless it was
previously submitted to the contracting office.

 

(ii) Information on
modifications of contracts or subcontracts for commercial items. (A) If—

 

(1) The original
contract or subcontract was granted an exception from cost or pricing data
requirements because the price agreed upon was based on adequate price
competition or prices set by law or 
regulation, or was a contract or subcontract for the  acquisition 
of a commercial item; and

 

(2) The modification
(to the contract or subcontract) is not exempted based on one of these
exceptions, then the Contractor may provide information to establish that the
modification would not change the contract or subcontract from a contract or
subcontract for the  acquisition  of a commercial item to a contract or
subcontract for the  acquisition  of an item other than a commercial item.

 

(B) For a commercial
item exception, the Contractor shall provide, at a minimum, information on
prices at which the same item or similar items have previously been sold that
is adequate for evaluating the reasonableness of the price of the modification.
Such information may include—

 

(1) For catalog
items, a copy of or identification of the catalog and its date, or the
appropriate pages for the offered items, or a statement that the catalog
is on file in the buying office to which the proposal is  being submitted. Provide a copy or describe
current discount policies and price lists (published or unpublished), e.g.,
wholesale, original equipment manufacturer, or reseller. Also explain the basis
of each offered price and its relationship to the established catalog price,
including how the proposed price relates to the price of recent sales in
quantities similar to the proposed quantities.

 

(2) For market-priced
items, the source and date or period of the market quotation or other basis for
market price, the base amount, and applicable discounts. In addition, describe
the nature of the market.

 

(3) For items
included on an active  Federal  Supply Service Multiple Award Schedule
contract, proof that an exception has been granted for the schedule item.

 

(2) The Contractor
grants the Contracting Officer or an authorized representative the right to
examine, at any time before award, books, records, documents, or other directly
pertinent records to verify any request for an exception under this clause, and
the reasonableness of price. For items priced using catalog or market prices,
or law or  regulation , access does not
extend to cost or profit information or other data relevant solely to the
Contractor’s determination of the prices to be offered in the catalog or
marketplace.

 

(b) Requirements for
cost or pricing data. If the Contractor is not granted an exception from the
requirement to submit cost or pricing data, the following applies:

 

(1) The Contractor
shall submit cost or pricing data and supporting attachments in accordance with
Table 15-2 of FAR 15.408.

 

36

 

As soon as practicable
after agreement on price, but before award (except for unpriced actions), the
Contractor shall submit a Certificate of Current Cost or Pricing Data, as
prescribed by FAR 15.406-2.

 

(End of clause)

 

CLAUSES INCORPORATED BY FULL TEXT

 

52.222-2      PAYMENT FOR OVERTIME PREMIUMS (JUL 1990)

 

(a) The use of
overtime is authorized under this contract if the overtime premium cost does
not exceed ZERO or the overtime premium is paid for work —

 

(1) Necessary to
cope with emergencies such as those resulting from accidents, natural disasters,
breakdowns of production equipment, or occasional production bottlenecks of a
sporadic nature;

 

(2) By
indirect-labor employees such as those performing duties in connection with
administration, protection, transportation, maintenance, standby plant
protection, operation of utilities, or accounting;

 

(3) To perform
tests, industrial processes, laboratory procedures, loading or unloading of
transportation conveyances, and operations in flight or afloat that are
continuous in nature and cannot reasonably be interrupted or completed
otherwise; or

 

(4) That will result
in lower overall costs to the Government.

 

(b) Any request for
estimated overtime premiums that exceeds the amount specified above shall
include all estimated overtime for contract completion and shall—

 

(1) Identify the
work unit; e.g., department or section in which the requested overtime will be
used, together with present workload, staffing, and other data of the affected
unit sufficient to permit the Contracting Officer to evaluate the necessity for
the overtime;

 

(2) Demonstrate the
effect that denial of the request will have on the contract delivery or
performance schedule;

 

(3) Identify the
extent to which approval of overtime would affect the performance or payments
in connection with other Government contracts, together with identification of
each affected contract; and

 

(4) Provide reasons
why the required work cannot be performed by using multishift operations or by
employing additional personnel.

 

* Insert either “zero” or
the dollar amount agreed to during negotiations. The inserted figure does not
apply to the exceptions in paragraph (a)(1) through (a)(4) of the
clause.

 

(End of clause)

 

37

 

CLAUSES INCORPORATED BY FULL TEXT

 

52.222-39 NOTIFICATION OF
EMPLOYEE RIGHTS CONCERNING PAYMENT OF UNION DUES OR FEES (DEC 2004)

 

(a) Definition. As
used in this clause—

 

United States means the
50 States, the District of Columbia, Puerto Rico, the Northern Mariana Islands,
American Samoa, Guam, the U.S. Virgin Islands, and Wake Island.

 

(b) Except as
provided in paragraph (e) of this clause, during the term of this
contract, the Contractor shall post a notice, in the form of a poster,
informing employees of their rights concerning union membership and payment of
union dues and fees, in conspicuous places in and about all its plants and
offices, including all places where notices to employees are customarily
posted. The notice shall include the following information (except that the
information pertaining to National Labor Relations Board shall not be included
in notices posted in the plants or offices of carriers subject to the Railway
Labor Act, as amended (45 U.S.C. 151-188)).

 

Notice to Employees

 

Under Federal law,
employees cannot be required to join a union or maintain membership in a union
in order to retain their jobs. Under certain conditions, the law permits a
union and an employer to enter into a union-security agreement requiring
employees to pay uniform periodic dues and initiation fees. However, employees
who are not union members can object to the use of their payments for certain
purposes and can only be required to pay their share of union costs relating to
collective bargaining, contract administration, and grievance adjustment.

 

If you do not want to pay
that portion of dues or fees used to support activities not related to
collective bargaining, contract administration, or grievance adjustment, you
are entitled to an appropriate reduction in your payment. If you believe that
you have been required to pay dues or fees used in part to support activities
not related to collective bargaining, contract administration, or grievance
adjustment, you may be entitled to a refund and to an appropriate reduction in
future payments.

 

For further information
concerning your rights, you may wish to contact the National Labor Relations
Board (NLRB) either at one of its Regional offices or at the following address
or toll free number:

 

National Labor Relations
Board

Division of Information

1099 14th Street, N.W.

Washington, DC 20570

1-866-667-6572

1-866-316-6572 (TTY)

 

To locate the nearest
NLRB office, see NLRB’s website at http://www.nlrb.gov.

 

(c) The Contractor
shall comply with all provisions of Executive Order 13201 of February 17,
2001, and related implementing regulations at 29 CFR part 470, and orders of
the Secretary of Labor.

 

(d) In the event
that the Contractor does not comply with any of the requirements set forth in
paragraphs (b), (c), or (g), the Secretary may direct that this contract be
cancelled, terminated, or suspended in whole or in part, and declare the
Contractor ineligible for further Government contracts in accordance with
procedures at 29 CFR part 470, Subpart B—Compliance Evaluations, Complaint
Investigations and Enforcement Procedures. Such other sanctions or remedies may
be imposed as are provided by 29 CFR part 470, which implements Executive Order
13201, or as are otherwise provided by law.

 

(e) The requirement
to post the employee notice in paragraph (b) does not apply to—

 

(1) Contractors and
subcontractors that employ fewer than 15 persons;

 

38

 

(2) Contractor
establishments or construction work sites where no union has been formally
recognized by the Contractor or certified as the exclusive bargaining
representative of the Contractor’s employees;

 

(3) Contractor
establishments or construction work sites located in a jurisdiction named in
the definition of the United States in which the law of that jurisdiction
forbids enforcement of union-security agreements;

 

(4) Contractor
facilities where upon the written request of the Contractor, the Department of
Labor Deputy Assistant Secretary for Labor-Management Programs has waived the
posting requirements with respect to any of the Contractor’s facilities if the
Deputy Assistant Secretary finds that the Contractor has demonstrated that—

 

(i) The facility is
in all respects separate and distinct from activities of the Contractor related
to the performance of a contract; and

 

(ii) Such a waiver
will not interfere with or impede the effectuation of the Executive order; or

 

(5) Work outside the
United States that does not involve the recruitment or employment of workers
within the United States.

 

(f) The Department
of Labor publishes the official employee notice in two variations; one for
contractors covered by the Railway Labor Act and a second for all other
contractors. The Contractor shall—

 

(1) Obtain the
required employee notice poster from the Division of Interpretations and Standards,
Office of Labor-Management Standards, U.S. Department of Labor, 200
Constitution Avenue, NW, Room N-5605, Washington, DC 20210, or from any
field office of the Department’s Office of Labor-Management Standards or Office
of Federal Contract Compliance Programs;

 

(2) Download a copy
of the poster from the Office of Labor-Management Standards website at
http://www.olms.dol.gov; or

 

(3) Reproduce and
use exact duplicate copies of the Department of Labor’s official poster.

 

(g) The Contractor
shall include the substance of this clause in every subcontract or purchase
order that exceeds the simplified acquisition threshold, entered into in
connection with this contract, unless exempted by the Department of Labor
Deputy Assistant Secretary for Labor-Management Programs on account of special
circumstances in the national interest under authority of 29 CFR 470.3(c). For
indefinite quantity subcontracts, the Contractor shall include the substance of
this clause if the value of orders in any calendar year of the subcontract is
expected to exceed the simplified acquisition threshold. Pursuant to 29 CFR
part 470, Subpart B—Compliance Evaluations, Complaint Investigations and
Enforcement Procedures, the Secretary of Labor may direct the Contractor to
take such action in the enforcement of these regulations, including the
imposition of sanctions for noncompliance with respect to any such subcontract
or purchase order. If the Contractor becomes involved in litigation with a
subcontractor or vendor, or is threatened with such involvement, as a result of
such direction, the Contractor may request the United States, through the
Secretary of Labor, to enter into such litigation to protect the interests of
the United States.

 

(End of clause)

 

CLAUSES INCORPORATED BY
FULL TEXT

 

52.234-1     INDUSTRIAL RESOURCES DEVELOPED UNDER
DEFENSE PRODUCTION ACT TITLE III 

(DEC 1994)

 

39

 

(a) Definitions.

 

“Title III industrial
resource” means materials, services, processes, or manufacturing equipment
(including the processes, technologies, and ancillary services for the use of
such equipment) established or maintained under the authority of Title III,
Defense Production Act (50 U.S.C. App. 2091-2093)..

 

“Title III project
contractor” means a contractor that has received assistance for the development
or manufacture of an industrial resource under 50 U.S.C. App. 2091-2093,
Defense Production Act.

 

(b) The Contractor
shall refer any request from a Title III project contractor for testing and
qualification of a Title III industrial resource to the Contracting Officer.

 

(c) Upon the
direction of the Contracting Officer, the Contractor shall test Title III
industrial resources for qualification. The Contractor shall provide the test
results to the Defense Production Act Office, Title III Program, located at
Wright Patterson Air Force Base, Ohio 45433-7739.

 

(d) When the
Contracting Officer modifies the contract to direct testing pursuant to this
clause, the Government will provide the Title III industrial resource to be
tested and will make an equitable adjustment in the contract for the costs of
testing and qualification of the Title III industrial resource.

 

(e) The Contractor
agrees to insert the substance of this clause, including paragraph (e), in
every subcontract issued in performance of this contract.

 

(End of clause)

 

52.243-7     NOTIFICATION OF CHANGES (APR 1984)

 

(a) Definitions.

 

“Contracting Officer,” as
used in this clause, does not include any representative of the Contracting
Officer.

 

“Specifically authorized
representative (SAR),”  as used in this
clause, means any person the Contracting Officer has so designated by written
notice (a copy of which shall be provided to the Contractor) which shall refer
to this subparagraph and shall be issued to the designated representative
before the SAR exercises such authority.

 

(b) Notice. The
primary purpose of this clause is to obtain prompt reporting of Government
conduct that the Contractor considers to constitute a change to this
contract.  Except for changes identified
as such in writing and signed by the Contracting Officer, the Contractor shall
notify the Administrative Contracting Officer in writing, within 30
calendar days from the date that the Contractor identifies any Government
conduct (including actions, inactions, and written or oral communications) that
the Contractor regards as a change to the contract terms and conditions. On the
basis of the most accurate information available to the Contractor, the notice
shall state—

 

(1) The date,
nature, and circumstances of the conduct regarded as a change;

 

(2) The name,
function, and activity of each Government individual and Contractor official or
employee involved in or knowledgeable about such conduct;

 

(3) The
identification of any documents and the substance of any oral communication
involved in such conduct;

 

(4) In the instance
of alleged acceleration of scheduled performance or delivery, the basis upon
which it arose;

 

40

 

(5) The particular
elements of contract performance for which the Contractor may seek an equitable
adjustment under this clause, including—

 

(i) What contract line
items have been or may be affected by the alleged change;

 

(ii) What labor or
materials or both have been or may be added, deleted, or wasted by the alleged
change;

 

(iii) To the extent
practicable, what delay and disruption in the manner and sequence of
performance and effect on continued performance have been or may be caused by
the alleged change;

 

(iv) What
adjustments to contract price, delivery schedule, and other provisions affected
by the alleged change are estimated; and

 

(6) The Contractor’s
estimate of the time by which the Government must respond to the Contractor’s
notice to minimize cost, delay or disruption of performance.

 

(c) Continued
performance.  Following submission of the
notice required by (b) above, the Contractor shall diligently continue
performance of this contract to the maximum extent possible in accordance with
its terms and conditions as construed by the Contractor, unless the notice
reports a direction of the Contracting Officer or a communication from a SAR of
the Contracting Officer, in either of which events the Contractor shall
continue performance; provided, however, that if the Contractor regards the
direction or communication as a change as described in (b) above, notice
shall be given in the manner provided. 
All directions, communications, interpretations, orders and similar
actions of the SAR shall be reduced to writing and copies furnished to the
Contractor and to the Contracting Officer. 
The Contracting Officer shall countermand any action which exceeds the
authority of the SAR.

 

(d) Government
response.  The Contracting Officer shall
promptly, within 45 calendar days after receipt of notice, respond to
the notice in writing.  In responding,
the Contracting Officer shall either—

 

(1) Confirm that the
conduct of which the Contractor gave notice constitutes a change and when
necessary direct the mode of further performance;

 

(2) Countermand any
communication regarded as a change;

 

(3) Deny that the
conduct of which the Contractor gave notice constitutes a change and when
necessary direct the mode of further performance; or

 

(4) In the event the
Contractor’s notice information is inadequate to make a decision under (1),
(2), or (3) above, advise the Contractor what additional information is
required, and establish the date by which it should be furnished and the date
thereafter by which the Government will respond.

 

(e) Equitable
adjustments.

 

(1) If the
Contracting Officer confirms that Government conduct effected a change as
alleged by the Contractor, and the conduct causes an increase or decrease in
the Contractor’s cost of, or the time required for, performance of any part of
the work under this contract, whether changed or not changed by such conduct,
an equitable adjustment shall be made—

 

(i) In the contract
price or delivery schedule or both; and

 

(ii) In such other
provisions of the contract as may be affected.

 

(2) The contract
shall be modified in writing accordingly. 
In the case of drawings, designs or specifications which are defective
and for which the Government is responsible, the equitable adjustment shall
include the cost and time 

 

41

 

extension for delay
reasonably incurred by the Contractor in attempting to comply with the
defective drawings, designs or specifications before the Contractor identified,
or reasonably should have identified, such defect.  When the cost of property made obsolete or
excess as a result of a change confirmed by the Contracting Officer under this
clause is included in the equitable adjustment, the Contracting Officer shall
have the right to prescribe the manner of disposition of the property.  The equitable adjustment shall not include
increased costs or time extensions for delay resulting from the Contractor’s
failure to provide notice or to continue performance as provided, respectively,
in (b) and (c) above.

 

Note:  The phrases “contract price” and “cost”
wherever they appear in the clause, may be appropriately modified to apply to
cost-reimbursement or incentive contracts, or to combinations thereof.

 

(End of clause)

 

52.244-2      SUBCONTRACTS (JUN 2007)

 

(a) Definitions. As
used in this clause—

 

Approved purchasing
system means a Contractor’s purchasing system that has been reviewed and
approved in accordance with Part 44 of the Federal Acquisition Regulation
(FAR).

 

Consent to subcontract
means the Contracting Officer’s written consent for the Contractor to enter
into a particular subcontract.

 

Subcontract means any
contract, as defined in FAR Subpart 2.1, entered into by a subcontractor to
furnish supplies or services for performance of the prime contract or a
subcontract. It includes, but is not limited to, purchase orders, and changes
and modifications to purchase orders.

 

purchase orders.

 

(b) When this clause is included in a fixed-price type contract,
consent to subcontract is required only on unpriced contract actions (including
unpriced modifications or unpriced delivery orders), and only if required in
accordance with paragraph (c) or (d) of this clause.

 

(c) If the Contractor does not have an approved purchasing system,
consent to subcontract is required for any subcontract that—

 

(1) Is of the cost-reimbursement, time-and-materials, or labor-hour
type; or

 

(2) Is fixed-price and exceeds—

 

(i) For a contract awarded by the Department of Defense, the Coast
Guard, or the National Aeronautics and Space Administration, the greater of the
simplified acquisition threshold or 5 percent of the total estimated cost of
the contract; or

 

(ii) For a contract awarded by a civilian agency other than the Coast
Guard and the National Aeronautics and Space Administration, either the
simplified acquisition threshold or 5 percent of the total estimated cost of
the contract.

 

(d) If the Contractor has an approved purchasing system, the Contractor
nevertheless shall obtain the Contracting Officer’s written consent before
placing the following subcontracts:

 

N/A

 

42

 

(e)(1) The Contractor shall notify the Contracting Officer reasonably
in advance of placing any subcontract or modification thereof for which consent
is required under paragraph (b), (c), or (d) of this clause,
including the following information:

 

(i) A description of the supplies or services to be subcontracted.

 

(ii) Identification of the type of subcontract to be used.

 

(iii) Identification of the proposed subcontractor.

 

(iv) The proposed subcontract price.

 

(v) The subcontractor’s current, complete, and accurate cost or
pricing data and Certificate of Current Cost or Pricing Data, if required by
other contract provisions.

 

(vi) The subcontractor’s Disclosure Statement or Certificate relating
to Cost Accounting Standards when such data are required by other provisions of
this contract.

 

(vii) A negotiation memorandum reflecting—

 

(A) The principal elements of the subcontract price negotiations;

 

(B) The most significant considerations controlling establishment of
initial or revised prices;

 

(C) The reason cost or pricing data were or were not required;

 

(D) The extent, if any, to which the Contractor did not rely on the
subcontractor’s cost or pricing data in determining

 

the price objective and in negotiating the final price;

 

(E) The extent to which it was recognized in the negotiation that the
subcontractor’s cost or pricing data were not accurate, complete, or current;
the action taken by the Contractor and the subcontractor; and the effect of any
such defective data on the total price negotiated;

 

(F) The reasons for any significant difference between the Contractor’s
price objective and the price negotiated; and

 

(G) A complete explanation of the incentive fee or profit plan when
incentives are used. The explanation shall identify each critical performance
element, management decisions used to quantify each incentive element, reasons
for the incentives, and a summary of all trade-off possibilities considered.

 

(2) The Contractor is not required to notify the Contracting Officer
in advance of entering into any subcontract for which consent is not required
under paragraph (c), (d), or (e) of this clause.

 

(f) Unless the consent or approval specifically provides otherwise,
neither consent by the Contracting Officer to any subcontract nor approval of
the Contractor’s purchasing system shall constitute a determination—

 

(1) Of the acceptability of any subcontract terms or conditions;

 

(2) Of the allowability of any cost under this contract; or

 

(3) To relieve the Contractor of any responsibility for performing
this contract.

 

(g) No subcontract or modification thereof placed under this contract
shall provide for payment on a cost-plus-a-percentage-of-cost basis, and any
fee payable under cost-reimbursement type subcontracts shall not exceed the fee
limitations in FAR 15.404-4(c)(4)(i).

 

43

 

(h) The Contractor shall give the Contracting Officer immediate
written notice of any action or suit filed and prompt notice of any claim made
against the Contractor by any subcontractor or vendor that, in the opinion of
the Contractor, may result in litigation related in any way to this contract,
with respect to which the Contractor may be entitled to reimbursement from the
Government.

 

(i) The Government reserves the right to review the Contractor’s
purchasing system as set forth in FAR Subpart 44.3.

 

(j) Paragraphs (c) and (e) of this clause do not apply
to the following subcontracts, which were evaluated during negotiations:

 

(End of clause)

 

52.244-6     SUBCONTRACTS FOR COMMERCIAL ITEMS (MAR
2007)

 

(a) Definitions.

 

“Commercial item”, has
the meaning contained in Federal Acquisition Regulation 2.101, Definitions.

 

“Subcontract”, includes a
transfer of commercial items between divisions, subsidiaries, or affiliates of
the Contractor or subcontractor at any tier.

 

(b) To the maximum
extent practicable, the Contractor shall incorporate, and require its
subcontractors at all tiers to incorporate, commercial items or
nondevelopmental items as components of items to be supplied under this
contract.

 

(c) (1) The
Contractor shall insert the following clauses in subcontracts for commercial
items:

 

(i) 52.219-8,
Utilization of Small Business Concerns (MAY 2004) (15 U.S.C. 637(d)(2) and
(3)), in all subcontracts that offer further subcontracting opportunities. If
the subcontract (except subcontracts to small business concerns) exceeds
$550,000 ($1,000,000 for construction of any public facility), the
subcontractor must include 52.219-8 in lower tier subcontracts that offer
subcontracting opportunities.

 

(ii) 52.222-26,
Equal Opportunity (MAR 2007) (E.O. 11246).

 

(iii) 52.222-35,
Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era
and Other Eligible Veterans  (SEP 2006)
(38 U.S.C. 4212(a)).

 

(iv) 52.222-36,
Affirmative Action for Workers with Disabilities (JUN 1998) (29 U.S.C. 793).

 

(v) 52.222-39,
Notification of Employee Rights Concerning Payment of Union Dues or Fees (DEC
2004) (E.O. 13201). Flow down as required in accordance with paragraph (g) of
FAR clause 52.222-39).

 

(vi) 52.247-64,
Preference for Privately Owned U.S.-Flag Commercial Vessels (FEB 2006) (46
U.S.C. Appx 1241 and 10 U.S.C. 2631) (flow down required in accordance with
paragraph (d) of FAR clause 52.247-64).

 

(2) While not
required, the Contractor may flow down to subcontracts for commercial items a
minimal number of additional clauses necessary to satisfy its contractual
obligations.

 

44

 

(d) The Contractor
shall include the terms of this clause, including this paragraph (d), in
subcontracts awarded under this contract.

 

(End of clause)

 

52.245-1     GOVERNMENT PROPERTY (JUN 2007)

 

(a) Definitions. As
used in this clause—

 

Acquisition cost means
the cost to acquire a tangible capital asset including the purchase price of
the asset and costs necessary to prepare the asset for use. Costs necessary to
prepare the asset for use include the cost of placing the asset in location and
bringing the asset to a condition necessary for normal or expected use.

 

Cannibalize means to
remove serviceable parts from one item of equipment in order to install them on
another item of equipment.

 

Contractor-acquired
property means property acquired, fabricated, or otherwise provided by the
Contractor for performing a contract, and to which the Government has title.

 

Contractor inventory means—

 

(1) Any property acquired by and in the possession of a Contractor or
subcontractor under a contract for which title is vested in the Government and
which exceeds the amounts needed to complete full performance under the entire
contract;

 

(2) Any property that the Government is obligated or has the option to
take over under any type of contract, e.g., as a result either of any changes
in the specifications or plans thereunder or of the termination of the contract
(or subcontract thereunder), before completion of the work, for the convenience
or at the option of the Government; and

 

(3) Government-furnished property that exceeds the amounts needed to
complete full performance under the entire contract.

 

Contractor's managerial personnel means 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 operation at any one
plant or separate location; or

 

(3) A separate and complete major industrial operation.

 

Demilitarization means rendering a product unusable for, and not
restorable to, the purpose for which it was designed or is customarily used.

 

Discrepancies incident to shipment means any differences (e.g., count
or condition) between the items documented to have been shipped and items
actually received.

 

Equipment means a tangible asset that is functionally complete for its
intended purpose, durable, nonexpendable, and needed for the performance of a
contract. Equipment is not intended for sale, and does not ordinarily lose its
identity or become a component part of another article when put into use.

 

45

 

Government-furnished property means property in the possession of, or
directly acquired by, the Government and subsequently furnished to the
Contractor for performance of a contract.

 

Government property means all property owned or leased by the
Government. Government property includes both Government-furnished and
Contractor-acquired property.

 

Material means property that may be consumed or expended during the
performance of a contract, component parts of a higher assembly, or items that
lose their individual identity through incorporation into an end-item. Material
does not include equipment, special tooling and special test equipment.

 

Nonseverable means property that cannot be removed after construction
or installation without substantial loss of value or damage to the installed
property or to the premises where installed.

 

Plant equipment as used in this part, means personal property of a
capital nature (including equipment, machine tools, test equipment, furniture,
vehicles, and accessory and auxiliary items) for use in manufacturing supplies,
in performing services, or for any administrative or general plant purpose. It
does not include special tooling or special test equipment.

Precious metals means silver, gold, platinum, palladium, iridium,
osmium, rhodium, and ruthenium.

 

Property means all tangible property, both real and personal.

 

Property Administrator means an authorized representative of the
Contracting Officer appointed in accordance with agency procedures, responsible
for administering the contract requirements and obligations relating to
Government property in the possession of a Contractor.

 

Provide means to furnish, as in Government-furnished property, or to
acquire, as in contractor-acquired property.

 

Real property means land and rights in land, ground improvements, utility
distribution systems, and buildings and other structures. It does not include
foundations and other work necessary for installing special tooling, special
test equipment, or plant equipment.

 

Sensitive property means property potentially dangerous to the public
safety or security if stolen, lost, or misplaced, or that shall be subject to
exceptional physical security, protection, control, and accountability.
Examples include weapons, ammunition, explosives, controlled substances,
radioactive materials, hazardous materials or wastes, or precious metals.

 

Surplus property means excess personal property not required by any
Federal agency as determined by the Administrator of the General Services
Administration (GSA).

 

(b) Property management. (1) The Contractor shall have a system to
manage (control, use, preserve, protect, repair and maintain) Government
property in its possession. The system shall be adequate to satisfy the
requirements of this clause. In doing so, the Contractor shall initiate and
maintain the processes, systems, procedures, records, and methodologies
necessary for effective control of Government property, consistent with
voluntary consensus standards and/or industry-leading practices and standards
for Government property management except where inconsistent with law or
regulation. During the period of performance, the Contractor shall disclose any
significant changes to their property management system to the Property
Administrator prior to implementation.

 

(2) The Contractor's responsibility extends from the initial
acquisition and receipt of property, through stewardship, custody, and use
until formally relieved of responsibility by authorized means, including
delivery, consumption, expending, disposition, or via a completed investigation,
evaluation, and final determination for lost, damaged, destroyed, or stolen
property. This requirement applies to all Government property under the
Contractor's accountability, stewardship, possession or control, including its
vendors or subcontractors (see paragraph (f)(1)(v) of this cluase).

 

46

 

(3) The Contractor shall include the requirements of this clause in all
subcontracts under which Government property is acquired or furnished for
subcontract performance.

 

(c) Use of Government property. The Contractor shall use Government
property, either furnished or acquired under this contract, only for performing
this contract, unless otherwise provided for in this contract or approved by
the Contracting Officer. The Contractor shall not modify, cannibalize, or make
alterations to Government property unless this contract specifically identifies
the modifications, alterations or improvements as work to be performed.

 

(d) Government-furnished property. (1) The Government shall deliver to
the Contractor the Government-furnished property described in this contract.
The Government shall furnish related data and information needed for the
intended use of the property. The warranties of suitability of use and timely delivery
of Government-furnished property do not apply to property acquired or
fabricated by the Contractor as contractor-acquired property and subsequently
transferred to another contract with this Contractor.

 

(2) The delivery and/or performance dates specified in this contract
are based upon the expectation that the Government-furnished property will be
suitable for contract performance and will be delivered to the Contractor by
the dates stated in the contract.

 

(i) If the property is not delivered to the Contractor by the dates
stated in the contract, the Contracting Officer shall, upon the Contractor's
timely written request, consider an equitable adjustment to the contract.

 

(ii) In the event property is received by the Contractor, or for
Government-furnished property after receipt and installation, in a condition
not suitable for its intended use, the Contracting Officer shall, upon the
Contractor's timely written request, advise the Contractor on a course of
action to remedy the problem. Such action may include repairing, replacing,
modifying, returning, or otherwise disposing of the property at the
Government's expense. Upon completion of the required action(s), the
Contracting Officer shall consider an equitable adjustment to the contract (see
also paragraph (f)(1)(ii)(A) of this clause).

 

(iii) The Government may, at its option, furnish property in an
``as-is'' condition. The Contractor will be given the opportunity to inspect
such property prior to the property being provided. In such cases, the Government
makes no warranty with respect to the serviceability and/or suitability of the
property for contract performance. Any repairs, replacement, and/or
refurbishment shall be at the Contractor's expense.

 

(3)(i) The Contracting Officer may by written notice, at any time--

 

(A) Increase or decrease the amount of Government-furnished property
under this contract;

 

(B) Substitute other Government-furnished property for the property
previously furnished, to be furnished, or to be acquired by the Contractor for
the Government under this contract; or

 

(C) Withdraw authority to use property.

 

(ii) Upon completion of any action(s) under aragraph (d)(3)(i) of this
clause, and the Contractor's timely written request, the Contracting Officer
shall consider an equitable adjustment to the contract.

 

(e) Title to Government property. (1) The Government shall retain title
to all Government-furnished property. Title to Government property shall not be
affected by its incorporation into or attachment to any property not owned by
the Government, nor shall Government property become a fixture or lose its
identity as personal property by being attached to any real property.

 

(2) Fixed-price contracts. (i) All Government-furnished property and
all property acquired by the Contractor, title to which vests in the Government
under this paragraph (collectively referred to as ``Government property)'', are
subject to the provisions of this clause.

 

47

 

(ii) Title to each item of equipment, special test equipment and
special tooling acquired by the Contractor for the Government under this
contract shall pass to and vest in the Government when its use in performing
this contract commences or when the Government has paid for it, whichever is earlier,
whether or not title previously vested in the Government.

 

(iii) If this contract contains a provision directing the Contractor to
purchase material for which the Government will reimburse the Contractor as a
direct item of cost under this contract--

 

(A) Title to material purchased from a vendor shall pass to and vest in
the Government upon the vendor's delivery of such material; and

 

(B) Title to all other material shall pass to and vest in the
Government upon--

 

(1) Issuance of the material for use in contract performance;

 

(2) Commencement of processing of the material or its use in contract
performance; or

 

(3) Reimbursement of the cost of the material by the Government,
whichever occurs first.

 

(3) Title under Cost-Reimbursement or Time-and-Material Contracts or
Cost-Reimbursable contract line items under Fixed-Price contracts. (i) Title to
all property purchased by the Contractor for which the Contractor is entitled
to be reimbursed as a direct item of cost under this contract shall pass to and
vest in the Government upon the vendor's delivery of such property.

 

(ii) Title to all other property, the cost of which is reimbursable to
the Contractor, shall pass to and vest in the Government upon--

 

(A) Issuance of the property for use in contract performance;

 

(B) Commencement of processing of the property for use in contract
performance; or

 

(C) Reimbursement of the cost of the property by the Government,
whichever occurs first.

 

(iii) All Government-furnished property and all property acquired by the
Contractor, title to which vests in the Government under this paragraph
(e)(3)(iii) (collectively referred to as ``Government property)'', are subject
to the provisions of this clause.

 

(f) Contractor plans and systems. (1) Contractors shall establish and
implement property management plans, systems, and procedures at the contract,
program, site or entity level to enable the following outcomes:

 

(i) Acquisition of Property. The Contractor shall document that all
property was acquired consistent with its engineering, production planning, and
material control operations.

 

(ii) Receipt of Government Property. The Contractor shall receive
Government property (document the receipt), record the information necessary to
meet the record requirements of paragraph (f)(1)(iii)(A)(1) through (5) of this
clause, identify as Government owned in a manner appropriate to the type of
property (e.g., stamp, tag, mark, or other identification), and manage any
discrepancies incident to shipment.

 

(A) Government-furnished property. The Contractor shall furnish a
written statement to the Property Administrator containing all relevant facts,
such as cause or condition and a recommended course(s) of action, if overages,
shortages, or damages and/or other discrepancies are discovered upon receipt of
Government-furnished property.

 

48

 

(B) Contractor-acquired property. The Contractor shall take all actions
necessary to adjust for overages, shortages, damage and/or other discrepancies
discovered upon receipt, in shipment of Contractor-acquired property from a
vendor or supplier, so as to ensure the proper allocability and allowability of
associated costs.

 

(iii) Records of Government property. The Contractor shall create and
maintain records of all Government property accountable to the contract,
including Government-furnished and Contractor-acquired property.

 

(A) Property records shall enable a complete, current, auditable record
of all transactions and shall, unless otherwise approved by the Property
Administrator, contain the following:

 

(1) The name, part number and description, manufacturer, model number,
and National Stock Number (if needed for additional item identification
tracking and/or disposition).

 

(2) Quantity received (or fabricated), issued, and balance-on-hand.

 

(3) Unit acquisition cost.

 

(4) Unique-item identifier or equivalent (if available and necessary
for individual item tracking).

 

(5) Unit of measure.

 

(6) Accountable contract number or equivalent code designation.

 

(7) Location.

 

(8) Disposition.

 

(9) Posting reference and date of transaction.

 

(10) Date placed in service.

 

(B) Use of a Receipt and Issue System for Government Material. When
approved by the Property Administrator, the Contractor may maintain, in lieu of
formal property records, a file of appropriately cross-referenced documents
evidencing receipt, issue, and use of material that is issued for immediate
consumption.

 

(iv) Physical inventory. The Contractor shall periodically perform,
record, and disclose physical inventory results. A final physical inventory
shall be performed upon contract completion or termination. The Property
Administrator may waive this final inventory requirement, depending on the
circumstances (e.g., overall reliability of the Contractor's system or the
property is to be transferred to a follow-on contract).

 

(v) Subcontractor control. (A) The Contractor shall award subcontracts
that clearly identify assets to be provided and shall ensure appropriate flow
down of contract terms and conditions (e.g., extent of liability for loss,
damage, destruction or theft of Government property).

 

(B) The Contractor shall assure its subcontracts are properly
administered and reviews are periodically performed to determine the adequacy
of the subcontractor's property management system.

 

(vi) Reports. The Contractor shall have a process to create and provide
reports of discrepancies; loss, damage, destruction, or theft; physical
inventory results; audits and self-assessments; corrective actions; and other
property related reports as directed by the Contracting Officer.

 

(A) Loss, damage, destruction, or theft. Unless otherwise directed by
the Property Administrator, the Contractor shall investigate and promptly
furnish a written narrative of all incidents of loss, damage, destruction, or
theft to the property administrator as soon as the facts become known or when
requested by the Government.

 

49

 

(B) Such reports
shall, at a minimum, contain the following information:

 

(1) Date of incident
(if known).

 

(2) The name,
commercial description, manufacturer, model number, and National Stock Number
(if applicable).

 

(3) Quantity.

 

(4) Unique Item
Identifier (if available).

 

(5) Accountable
Contract number.

 

(6) A statement
indicating current or future need.

 

(7) Acquisition
cost, or if applicable, estimated scrap proceeds, estimated repair or
replacement costs.

 

(8) All known
interests in commingled property of which the Government property is a part.

 

(9) Cause and
corrective action taken or to be taken to prevent recurrence.

 

(10) A statement
that the Government will receive any reimbursement covering the loss, damage,
destruction, or theft, in the event the Contractor was or will be reimbursed or
compensated.

 

(11) Copies of all
supporting documentation.

 

(12) Last known location.

 

(13) A statement that the
property did or did not contain sensitive or hazardous material, and if so,
that the appropriate

agencies were notified.

 

(vii) Relief of
stewardship responsibility. Unless the contract provides otherwise, the
Contractor shall be relieved of stewardship responsibility for Government
property when such property is—

 

(A) Consumed or
expended, reasonably and properly, or otherwise accounted for, in the
performance of the contract, including reasonable inventory adjustments of
material as determined by the Property Administrator; or a Property
Administrator granted relief of responsibility for loss, damage, destruction or
theft of Government property;

 

(B) Delivered or
shipped from the Contractor’s plant, under Government instructions, except when
shipment is to a subcontractor or other location of the Contractor; or

 

(C) Disposed of in
accordance with paragraphs (j) and (k) of this clause.

 

(viii) Utilizing
Government property. (A) The Contractor shall utilize, consume, move, and
store Government Property only as authorized under this contract. The
Contractor shall promptly disclose and report Government property in its
possession that is excess to contract performance.

 

(B) Unless otherwise
authorized in this contract or by the Property Administrator the Contractor
shall not commingle Government property with property not owned by the
Government.

 

(ix) Maintenance.
The Contractor shall properly maintain Government property. The Contractor’s
maintenance program shall enable the identification, disclosure, and
performance of normal and routine preventative maintenance

 

50

 

and repair. The
Contractor shall disclose and report to the Property Administrator the need for
replacement and/or capital rehabilitation.

 

(x) Property
closeout. The Contractor shall promptly perform and report to the Property
Administrator contract property closeout, to include reporting, investigating
and securing closure of all loss, damage, destruction, or theft cases;
physically inventorying all property upon termination or completion of this
contract; and disposing of items at the time they are determined to be excess
to contractual needs.

 

(2) The Contractor
shall establish and maintain Government accounting source data, as may be
required by this contract, particularly in the areas of recognition of
acquisitions and dispositions of material and equipment.

 

(3) The Contractor
shall establish and maintain procedures necessary to assess its property
management system effectiveness, and shall perform periodic internal reviews
and audits. Significant findings and/or results of such reviews and audits
pertaining to Government property shall be made available to the Property
Administrator.

 

(g) Systems
analysis. (1) The Government shall have access to the contractor’s
premises and all Government property, at reasonable times, for the purposes of
reviewing, inspecting and evaluating the Contractor’s property management plan,
systems, procedures, records, and supporting documentation that pertains to
Government property.

 

(2) Records of
Government property shall be readily available to authorized Government
personnel and shall be safeguarded from tampering or destruction.

 

(3) Should it be
determined by the Government that the Contractor’s property management
practices are inadequate or not acceptable for the effective management and/or
control of Government property under this contract, and/or present an undue
risk to the Government, the Contractor shall immediately take all necessary
corrective actions as directed by the Property Administrator.

 

(4) The Contractor
shall ensure Government access to subcontractor premises, and all Government
property located at subcontractor premises, for the purposes of reviewing,
inspecting and evaluating the subcontractor’s property management plan,
systems, procedures, records, and supporting documentation that pertains to
Government property.

 

(h) Contractor
Liability for Government Property. (1) Unless otherwise provided for in
the contract, the Contractor shall not be liable for loss, damage, destruction,
or theft to the Government property furnished or acquired under this contract,
except when any one of the following applies—

 

(i) The risk is
covered by insurance or the Contractor is otherwise reimbursed (to the extent
of such insurance or reimbursement). The allowability of insurance costs shall
be determined in accordance with 31.205-19.

 

(ii) The loss,
damage, destruction, or theft is the result of willful misconduct or lack of
good faith on the part of the Contractor’s managerial personnel. Contractor’s
managerial personnel, in this clause, means the Contractor’s directors,
officers, managers, superintendents, or equivalent representatives who have
supervision or direction of all or substantially all of the Contractor’s
business; all or substantially all of the Contractor’s operation at any one
plant or separate location; or a separate and complete major industrial
operation.

 

(iii) The
Contracting Officer has, in writing, revoked the Government’s assumption of
risk for loss, damage, destruction, or theft, due to a determination under
paragraph (g) of this clause that the Contractor’s property management
practices are inadequate, and/or present an undue risk to the Government, and
the Contractor failed to take timely corrective action. If the Contractor can
establish by clear and convincing evidence that the loss, damage, destruction,
or theft of Government property occurred while the Contractor had adequate
property management practices or the loss, damage, destruction, or theft of
Government property did not result from the Contractor’s failure to maintain adequate
property management practices, the Contractor shall not be held liable.    (2) The Contractor shall take all
reasonable actions necessary to protect the Government property from further
loss, damage,

 

51

 

destruction, or theft.
The Contractor shall separate the damaged and undamaged Government property,
place all the affected Government property in the best possible order, and take
such other action as the Property Administrator directs.

 

(3) The Contractor
shall do nothing to prejudice the Government’s rights to recover against third
parties for any loss, damage, destruction, or theft of Government property.

 

(4) Upon the request
of the Contracting Officer, the Contractor shall, at the Government’s expense,
furnish to the Government 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.

 

(i) Equitable
adjustment. Equitable adjustments under this clause shall be made in accordance
with the procedures of the Changes clause. The right to an equitable adjustment
shall be the Contractor’s exclusive remedy and the Government shall not be
liable to suit for breach of contract for the following:

 

(1) Any delay in
delivery of Government-furnished property.

 

(2) Delivery of
Government-furnished property in a condition not suitable for its intended use.

 

(3) An increase,
decrease, or substitution of Government-furnished property.

 

(4) Failure to repair
or replace Government property for which the Government is responsible.

 

(j) Contractor
inventory disposal. Except as otherwise provided for in this contract, the
Contractor shall not dispose of Contractor inventory until authorized to do so
by the Plant Clearance Officer.

 

(1) Scrap to which
the Government has obtained title under paragraph (e) of this clause. (i) Contractor
with an approved scrap procedure. (A) The Contractor may dispose of scrap
resulting from production or testing under this contract without Government
approval. However, if the scrap requires demilitarization or is sensitive
property, the Contractor shall submit the scrap on an inventory disposal
schedule.

 

(B) For scrap from
other than production or testing the Contractor may prepare scrap lists in lieu
of inventory disposal schedules (provided such lists are consistent with the
approved scrap procedures), except that inventory disposal schedules shall be
submitted for scrap aircraft or aircraft parts and scrap that—

 

(1) Requires demilitarization;

 

2) Is a classified item;

 

(3) Is generated
from classified items;

 

(4) Contains
hazardous materials or hazardous wastes;

 

(5) Contains
precious metals; or

 

(6) Is dangerous to
the public health, safety, or welfare.

 

(ii) Contractor
without an approved scrap procedure. The Contractor shall submit an inventory
disposal schedule for all scrap. The Contractor may not dispose of scrap
resulting from production or testing under this contract without Government
approval.

 

(2) Predisposal
requirements. (i) Once the Contractor determines that Contractor-acquired
property is no longer needed for contract performance, the Contractor in the
following order of priority—

 

52

 

(A) May contact
the Contracting Officer if use of the property in the performance of other
Government contracts is practical;

 

(B) May purchase
the property at the acquisition cost; or

 

(C) Shall make
reasonable efforts to return unused property to the appropriate supplier at
fair market value (less, if applicable, a reasonable restocking fee that is
consistent with the supplier’s customary practices).

 

(ii) The Contractor
shall list, on Standard Form 1428, Inventory Disposal Schedule, property
that was not used in the performance of other Government contracts under
paragraph (j)(2)(i)(A) of this clause, property that was not purchased
under paragraph (j)(2)(i)(B) of this clause, and property that could not
be returned to a supplier under paragraph (j)(2)(i)(C) of this clause.

 

(3) Inventory
disposal schedules. (i) The Contractor shall use Standard Form 1428,
Inventory Disposal Schedule, to identify—

 

(A) Government-furnished
property that is no longer required for performance of this contract, provided
the terms of another Government contract do not require the Government to
furnish that property for performance of this contract;

 

(B) Contractor-acquired
property, to which the Government has obtained title under paragraph (e) of
this clause, which is no longer required for performance of that contract; and

 

(C) Termination
inventory.

 

(ii) The Contractor
may annotate inventory disposal schedules to identify property the Contractor
wishes to purchase from the Government.

 

(iii) Unless the
Plant Clearance Officer has agreed otherwise, or the contract requires
electronic submission of inventory disposal schedules, the Contractor shall
prepare separate inventory disposal schedules for—

 

(A) Special test
equipment with commercial components;

 

(B) Special test
equipment without commercial components;

 

(C) Printing
equipment;

 

(D) Information
technology (e.g., computers, computer components, peripheral equipment, and
related equipment);

 

(E) Precious metals;

 

(F) Nonnuclear
hazardous materials or hazardous wastes; or

 

(G) Nuclear
materials or nuclear wastes.

 

(iv) The Contractor
shall describe the property in sufficient detail to permit an understanding of
its intended use. Property with the same description, condition code, and
reporting location may be grouped in a single line item.

 

(4) Submission requirements.
The Contractor shall submit inventory disposal schedules to the Plant Clearance
Officer no later than—

 

(i) 30-days
following the Contractor’s determination that a Government property item is no
longer required for performance of this contract;

 

53

 

(ii) 60 days, or
such longer period as may be approved by the Plant Clearance Officer, following
completion of contract deliveries or performance; or

 

(iii) 120 days, or
such longer period as may be approved by the Termination Contracting Officer
following contract termination in whole or in part.

 

(5) Corrections. The
Plant Clearance Officer may—

 

(i) Reject a
schedule for cause (e.g., contains errors, determined to be inaccurate); and

 

(ii) Require the
Contractor to correct an inventory disposal schedule.

 

(6) Postsubmission
adjustments. The Contractor shall notify the Plant Clearance Officer at least
10 working days in advance of its intent to remove an item from an approved
inventory disposal schedule. Upon approval of the Plant Clearance Officer, or
upon expiration of the notice period, the Contractor may make the necessary
adjustments to the inventory schedule.

 

(7) Storage. (i) The
Contractor shall store the property identified on an inventory disposal
schedule pending receipt of disposal instructions. The Government’s failure to
furnish disposal instructions within 120 days following acceptance of an
inventory disposal schedule may entitle the Contractor to an equitable
adjustment for costs incurred to store such property on or after the 121\st\
day.

 

(ii) The Contractor
shall obtain the Plant Clearance Officer’s approval to remove Government
property from the premises where the property is currently located prior to
receipt of final disposition instructions. If approval is granted, any costs
incurred by the Contractor to transport or store the property shall not
increase the price or fee of any Government contract. The storage facility
shall be appropriate for assuring the property’s physical safety and
suitability for use. Approval does not relieve the Contractor of any liability
for such property under this contract.

 

(8) Disposition
instructions. (i) If the Government does not furnish disposition
instructions to the Contractor within 45 days following acceptance of a scrap
list, the Contractor may dispose of the listed scrap in accordance with the
Contractor’s approved scrap procedures.

 

(ii) The Contractor
shall prepare for shipment, deliver f.o.b. origin, or dispose of Contractor
inventory as directed by the Plant Clearance Officer. If not returned to the
Government, the Contractor shall remove and destroy any markings identifying
the property as U.S. Government-owned property prior to its disposal.

 

(iii) The
Contracting Officer may require the Contractor to demilitarize the property
prior to shipment or disposal. In such cases, the Contractor may be entitled to
an equitable adjustment under paragraph (i) of this clause.

 

(9) Disposal
proceeds. As directed by the Contracting Officer, the Contractor shall credit
the net proceeds from the disposal of Contractor inventory to the contract, or
to the Treasury of the United States as miscellaneous receipts.

 

(10) Subcontractor
inventory disposal schedules. The Contractor shall require its Subcontractors
to submit inventory disposal schedules to the Contractor in accordance with the
requirements of paragraph (j)(4) of this clause.

 

(k) Abandonment of
Government property. (1) The Government shall not abandon sensitive
Government property or termination inventory without the Contractor’s written
consent.

 

(2) The Government,
upon notice to the Contractor, may abandon any nonsensitive Government property
in place, at which time all obligations of the Government regarding such
property shall cease.

 

(3) The Government
has no obligation to restore or rehabilitate the Contractor’s premises under
any circumstances; however, if Government—furnished property is withdrawn or is
unsuitable for the intended use, or if other 

 

54

 

Government property is
substituted, then the equitable adjustment under paragraph (i) of this
clause may properly include restoration or rehabilitation costs.

 

(l) Communication.
All communications under this clause shall be in writing.

 

(m) Contracts
outside the United States. If this contract is to be performed outside of the
United States and its outlying areas, the words ``Government’’ and
``Government-furnished’’ (wherever they appear in this clause) shall be
construed as ``United States Government’’ and ``United States
Government-furnished,’’ respectively.

 

(End of Clause)

 

52.245-1    GOVERNMENT PROPERTY (JUNE
2007) (DEVIATION)

 

(a) Definitions.
As used in this clause—

 

“Acquisition
cost” means the cost to acquire a tangible capital asset including
the purchase price of the asset and costs necessary to prepare the asset for
use. Costs necessary to prepare the asset for use include the cost of placing
the asset in location and bringing the asset to a condition necessary for
normal or expected use.

 

“Cannibalize” means to
remove serviceable parts from one item of equipment in order to install them on
another item of equipment.

 

“Contractor-acquired
property” means property acquired, fabricated, or otherwise
provided by the Contractor for performing a contract, and to which the
Government has title.

 

“Contractor
inventory” means—

 

(1) Any property acquired by and in the possession of a Contractor or
subcontractor under a contract for which title is vested in the Government and
which exceeds the amounts needed to complete full performance under the entire
contract;

 

(2) Any property that the Government is obligated or has the option to
take over under any type of contract, e.g., as a result either of any changes
in the specifications or plans thereunder or of the termination of the contract
(or subcontract thereunder), before completion of the work, for the convenience
or at the option of the Government; and

 

(3) Government-furnished property that exceeds the amounts needed to
complete full performance under the entire contract.

 

(4) “Contractor’s managerial
personnel” means 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 operation at any one
plant or separate location; or

 

(3) A separate and complete major industrial operation.

 

“Demilitarization” means
rendering a product unusable for, and not restorable to, the purpose for which
it was designed or is customarily used.

 

55

 

“Discrepancies
incident to shipment” means any differences (e.g.,
count or condition) between the items documented to have been shipped and items
actually received.

 

“Equipment”
means a tangible asset that is functionally complete for
its intended purpose, durable, nonexpendable, and needed for the performance of
a contract. Equipment is not intended for sale, and does not ordinarily lose
its identity or become a component part of another article when put into use.

 

“Government-furnished property”
means property in the possession of, or directly acquired by, the Government
and subsequently furnished to the Contractor for performance of a contract.

 

“Government
property” means all property owned or leased by the
Government. Government property includes both Government-furnished and
Contractor-acquired property.

 

“Material” means
property that may be consumed or expended during the performance of a contract,
component parts of a higher assembly, or items that lose their individual
identity through incorporation into an end-item. Material does not include
equipment, special tooling and special test equipment.

 

“Nonseverable” means
property that cannot be removed after construction or installation without
substantial loss of value or damage to the installed property or to the
premises where installed.

 

“Precious
metals” means silver, gold, platinum, palladium, iridium,
osmium, rhodium, and ruthenium.

 

“Property” means all
tangible property, both real and personal.

 

“Property
Administrator” means an authorized
representative of the Contracting Officer appointed in accordance with agency
procedures, responsible for administering the contract requirements and
obligations relating to Government property in the possession of a Contractor.

 

“Provide” means to
furnish, as in Government-furnished property, or to acquire, as in
contractor-acquired property.

 

“Real
property” means land and rights in land, ground improvements,
utility distribution systems, and buildings and other structures. It does not
include foundations and other work necessary for installing personal property.

 

“Sensitive
property” means property potentially dangerous to the
public safety or security if stolen, lost, or misplaced, or that shall be
subject to exceptional physical security, protection, control, and
accountability. Examples include weapons, ammunition, explosives, controlled
substances, radioactive materials, hazardous materials or wastes, or precious
metals.

 

“Surplus
property” means excess personal property not required by
any Federal agency as determined by the Administrator of the General Services
Administration (GSA).

 

(b) Property management.

 

(1) The Contractor shall have a system to manage (control, use,
preserve, protect, repair and maintain) Government property in its possession.
The system shall be adequate to satisfy the requirements of this clause. In
doing so, the Contractor shall initiate and maintain the processes, systems,
procedures, records, and methodologies necessary for effective control of
Government property, consistent with voluntary consensus standards and/or
industry-leading practices and standards for Government property management
except where inconsistent with law or regulation. During the period of
performance, the Contractor shall disclose any significant changes to their
property management system to the Property Administrator prior to
implementation.

 

(2) The Contractor’s responsibility extends from the initial
acquisition and receipt of property, through stewardship, custody, and use
until formally relieved of responsibility by authorized means, including
delivery, consumption, expending, disposition, or via a completed
investigation, evaluation, and final determination for lost, damaged,

 

56

 

destroyed, or stolen property. This requirement applies to all Government
property under the Contractor’s accountability, stewardship, possession or
control, including its vendors or subcontractors (see paragraph (f)(1)(v) of
this clause).

 

(3) The Contractor shall include the requirements of this clause in
all subcontracts under which Government property is acquired or furnished for
subcontract performance.

 

(c) Use
of Government property. The Contractor shall use
Government property, either furnished or acquired under this contract, only for
performing this contract, unless otherwise provided for in this contract or
approved by the Contracting Officer. The Contractor shall not modify,
cannibalize, or make alterations to Government property unless this contract
specifically identifies the modifications, alterations or improvements as work
to be performed.

 

(d) Government-furnished
property.

 

(1) The Government shall deliver to the Contractor the
Government-furnished property described in this contract. The Government shall
furnish related data and information needed for the intended use of the
property. The warranties of suitability of use and timely delivery of Government-furnished
property do not apply to property acquired or fabricated by the Contractor as
contractor-acquired property and subsequently transferred to another contract
with this Contractor.

 

(2) The delivery and/or performance dates specified in this contract
are based upon the expectation that the Government-furnished property will be
suitable for contract performance and will be delivered to the Contractor by
the dates stated in the contract.

 

(i) If the property is not delivered to the Contractor by the dates
stated in the contract, the Contracting Officer shall, upon the Contractor’s
timely written request, consider an equitable adjustment to the contract.

 

(ii) In the event property is received by the Contractor, or for
Government-furnished property after receipt and installation, in a condition
not suitable for its intended use, the Contracting Officer shall, upon the
Contractor’s timely written request, advise the Contractor on a course of
action to remedy the problem. Such action may include repairing, replacing,
modifying, returning, or otherwise disposing of the property at the Government’s
expense. Upon completion of the required action(s), the Contracting Officer
shall consider an equitable adjustment to the contract (see also paragraph
(f)(1)(ii)(A) of this clause).

 

(iii) The Government may, at its option, furnish property in an “as-is”
condition. The Contractor will be given the opportunity to inspect such
property prior to the property being provided. In such cases, the Government
makes no warranty with respect to the serviceability and/or suitability of the
property for contract performance. Any repairs, replacement, and/or
refurbishment shall be at the Contractor’s expense.

 

(3)

(i) The Contracting Officer may by written notice, at any time—

 

(A) Increase or decrease the amount of Government-furnished property
under this contract;

 

(B) Substitute other Government-furnished property for the property
previously furnished, to be furnished, or to be acquired by the Contractor for
the Government under this contract; or

 

(C) Withdraw authority to use property.

 

(ii) Upon completion of any action(s) under paragraph (d)(3)(i) of
this clause, and the Contractor’s timely written request, the Contracting
Officer shall consider an equitable adjustment to the contract.

 

(e) Title
to Government property.

 

57

 

(1) The Government shall retain title to all Government-furnished
property. Title to Government property shall not be affected by its
incorporation into or attachment to any property not owned by the Government,
nor shall Government property become a fixture or lose its identity as personal
property by being attached to any real property.

 

(2) Fixed-price
contracts.

 

(i) All Government-furnished property and all property acquired by the
Contractor, title to which vests in the Government under this paragraph
(collectively referred to as “Government property”), are subject to the
provisions of this clause.

 

(ii) Title to each item of equipment, special test equipment and
special tooling acquired by the Contractor for the Government under this
contract shall pass to and vest in the Government when its use in performing
this contract commences or when the Government has paid for it, whichever is
earlier, whether or not title previously vested in the Government.

 

(iii) If this contract contains a provision directing the Contractor
to purchase material for which the Government will reimburse the Contractor as
a direct item of cost under this contract—

 

(A) Title to material purchased from a vendor shall pass to and vest
in the Government upon the vendor’s delivery of such material; and

 

(B) Title to all other material shall pass to and vest in the
Government upon—

 

(1) Issuance of the material for use in contract performance;

 

(2) Commencement of processing of the material or its use in contract
performance; or

 

(3) Reimbursement of the cost of the material by the Government,
whichever occurs first.

 

(4) Title
under Cost-Reimbursement or Time-and-Material Contracts or Cost-Reimbursable
contract line items under Fixed-Price contracts.

 

(i) Title to all property purchased by the Contractor for which the
Contractor is entitled to be reimbursed as a direct item of cost under this
contract shall pass to and vest in the Government upon the vendor’s delivery of
such property.

 

(ii) Title to all other property, the cost of which is reimbursable to
the Contractor, shall pass to and vest in the Government upon—

 

(A) Issuance of the property for use in contract performance;

 

(B) Commencement of processing of the property for use in contract
performance; or

 

(C) Reimbursement of the cost of the property by the Government,
whichever occurs first.

 

(iii) All Government-furnished property and all property acquired by
the Contractor, title to which vests in the Government under this paragraph
(e)(3)(iii) (collectively referred to as “Government property”), are
subject to the provisions of this clause.

 

(f) Contractor
plans and systems.

 

(1) Contractors shall establish and implement property management
plans, systems, and procedures at the contract, program, site or entity level
to enable the following outcomes:

 

58

 

(i) Acquisition
of Property. The Contractor shall document that all
property was acquired consistent with its engineering, production planning, and
material control operations.

 

(ii) Receipt
of Government Property. The Contractor shall receive
Government property (document the receipt), record the information necessary to
meet the record requirements of paragraph (f)(1)(iii)(A)(1) through (5) of
this clause, identify as Government owned in a manner appropriate to the type
of property (e.g., stamp, tag, mark, or other
identification), and manage any discrepancies incident to shipment.

 

(A) Government-furnished
property. The
Contractor shall furnish a written statement to the Property Administrator
containing all relevant facts, such as cause or condition and a recommended
course(s) of action, if overages, shortages, or damages and/or other
discrepancies are discovered upon receipt of Government-furnished property.

 

(B) Contractor-acquired
property. The
Contractor shall take all actions necessary to adjust for overages, shortages,
damage and/or other discrepancies discovered upon receipt, in shipment of
Contractor-acquired property from a vendor or supplier, so as to ensure the proper
allocability and allowability of associated costs.

 

(iii) Records
of Government property. The Contractor shall create and
maintain records of all Government property accountable to the contract,
including Government-furnished and Contractor-acquired property.

 

(A) Property records shall enable a complete, current, auditable
record of all transactions and shall, unless otherwise approved by the Property
Administrator, contain the following:

 

(1) The name, part number and description, manufacturer, model number,
and National Stock Number (if needed for additional item identification
tracking and/or disposition).

 

(2) Quantity received (or fabricated), issued, and balance-on-hand.

 

(3) Unit acquisition cost.

 

(4) Unique-item identifier or equivalent (if available and necessary
for individual item tracking).

 

(5) Unit of measure.

 

(6) Accountable contract number or equivalent code designation.

 

(7) Location.

 

(8) Disposition.

 

(9) Posting reference and date of transaction.

 

(10) Date placed in service.

 

(B) Use
of a Receipt and Issue System for Government Material.
When approved by the Property Administrator, the Contractor may maintain, in
lieu of formal property records, a file of appropriately cross-referenced
documents evidencing receipt, issue, and use of material that is issued for
immediate consumption.

 

(iv) Physical
inventory. The
Contractor shall periodically perform, record, and disclose physical inventory
results. A final physical inventory shall be performed upon contract completion
or termination. The Property Administrator may waive this final inventory
requirement, depending on the circumstances (e.g., overall reliability
of the Contractor’s system or the property is to be transferred to a follow-on
contract).

 

(v) Subcontractor
control.

 

59

 

(A) The Contractor shall award subcontracts that clearly identify
assets to be provided and shall ensure appropriate flow down of contract terms
and conditions (e.g., extent of liability for loss,
damage, destruction or theft of Government property).

 

(B) The Contractor shall assure its subcontracts are properly
administered and reviews are periodically performed to determine the adequacy
of the subcontractor’s property management system.

 

(vi) Reports.
The Contractor shall have a process to create and provide reports of
discrepancies; loss, damage, destruction, or theft; physical inventory results;
audits and self-assessments; corrective actions; and other property related
reports as directed by the Contracting Officer.

 

(A) Loss, damage, destruction, or theft. Unless otherwise directed by
the Property Administrator, the Contractor shall investigate and promptly
furnish a written narrative of all incidents of loss, damage, destruction, or
theft to the property administrator as soon as the facts become known or when
requested by the Government.

 

(B) Such reports shall, at a minimum, contain the following
information:

 

(1) Date of incident (if known).

 

(2) The name, commercial description, manufacturer, model number, and
National Stock Number (if applicable).

 

(3) Quantity.

 

(4) Unique Item Identifier (if available).

 

(5) Accountable Contract number.

 

(6) A statement indicating current or future need.

 

(7) Acquisition cost, or if applicable, estimated scrap proceeds,
estimated repair or replacement costs.

 

(8) All known interests in commingled property of which the Government
property is a part.

 

(9) Cause and corrective action taken or to be taken to prevent
recurrence.

 

(10) A statement that the Government will receive any reimbursement
covering the loss, damage, destruction, or theft, in the event the Contractor
was or will be reimbursed or compensated.

 

(11) Copies of all supporting documentation.

 

(12) Last known location.

 

(13) A statement that the property did or did not contain sensitive or
hazardous material, and if so, that the appropriate agencies were notified.

 

(vii) Relief
of stewardship responsibility.
Unless the contract provides otherwise, the Contractor shall be relieved of
stewardship responsibility for Government property when such property is—

 

(A) Consumed or expended, reasonably and properly, or otherwise
accounted for, in the performance of the contract, including reasonable
inventory adjustments of material as determined by the Property Administrator;
or a Property Administrator granted relief of responsibility for loss, damage,
destruction or theft of Government property;

 

(B) Delivered or shipped from the Contractor’s plant, under Government
instructions, except when shipment is to a subcontractor or other location of
the Contractor; or

 

60

 

(C) Disposed of in accordance with paragraphs (j) and (k) of
this clause.

 

(viii) Utilizing
Government property.

 

(A) The Contractor shall utilize, consume, move, and store Government
Property only as authorized under this contract. The Contractor shall promptly
disclose and report Government property in its possession that is excess to
contract performance.

 

(B) Unless otherwise authorized in this contract or by the Property
Administrator the Contractor shall not commingle Government property with
property not owned by the Government.

 

(ix) Maintenance. The Contractor shall properly maintain Government
property. The Contractor’s maintenance program shall enable the identification,
disclosure, and performance of normal and routine preventative maintenance and
repair. The Contractor shall disclose and report to the Property Administrator
the need for replacement and/or capital rehabilitation.

 

(x) Property
closeout. The
Contractor shall promptly perform and report to the Property Administrator
contract property closeout, to include reporting, investigating and securing
closure of all loss, damage, destruction, or theft cases; physically
inventorying all property upon termination or completion of this contract; and
disposing of items at the time they are determined to be excess to contractual
needs.

 

(2) The Contractor shall establish and maintain Government accounting
source data, as may be required by this contract, particularly in the areas of
recognition of acquisitions and dispositions of material and equipment.

 

(3) The Contractor shall establish and maintain procedures necessary
to assess its property management system effectiveness, and shall perform
periodic internal reviews and audits. Significant findings and/or results of
such reviews and audits pertaining to Government property shall be made
available to the Property Administrator.

 

(g) Systems analysis.

 

(1) The Government shall have access to the contractor’s premises and
all Government property, at reasonable times, for the purposes of reviewing,
inspecting and evaluating the Contractor’s property management plan, systems,
procedures, records, and supporting documentation that pertains to Government
property.

 

(2) Records of Government property shall be readily available to
authorized Government personnel and shall be safeguarded from tampering or
destruction.

 

(3) Should it be determined by the Government that the Contractor’s
property management practices are inadequate or not acceptable for the
effective management and/or control of Government property under this contract,
and/or present an undue risk to the Government, the Contractor shall
immediately take all necessary corrective actions as directed by the Property
Administrator.

 

(4) The Contractor shall ensure Government access to subcontractor
premises, and all Government property located at subcontractor premises, for
the purposes of reviewing, inspecting and evaluating the subcontractor’s
property management plan, systems, procedures, records, and supporting
documentation that pertains to Government property.

 

(h) Contractor
Liability for Government Property.

 

(1) Unless otherwise provided for in the contract, the Contractor
shall not be liable for loss, damage, destruction, or theft to the Government
property furnished or acquired under this contract, except when any one of the
following applies—

 

61

 

(i) The risk is covered by insurance or the Contractor is otherwise
reimbursed (to the extent of such insurance or reimbursement). The allowability
of insurance costs shall be determined in accordance with 31.205-19.

 

(ii) The loss, damage, destruction, or theft is the result of willful
misconduct or lack of good faith on the part of the Contractor’s managerial
personnel. Contractor’s managerial personnel, in this clause, means the
Contractor’s directors, officers, managers, superintendents, or equivalent
representatives who have supervision or direction of all or substantially all
of the Contractor’s business; all or substantially all of the Contractor’s
operation at any one plant or separate location; or a separate and complete
major industrial operation.

 

(iii) The Contracting Officer has, in writing, revoked the Government’s
assumption of risk for loss, damage, destruction, or theft, due to a
determination under paragraph (g) of this clause that the Contractor’s
property management practices are inadequate, and/or present an undue risk to
the Government, and the Contractor failed to take timely corrective action. If
the Contractor can establish by clear and convincing evidence that the loss,
damage, destruction, or theft of Government property occurred while the
Contractor had adequate property management practices or the loss, damage,
destruction, or theft of Government property did not result from the Contractor’s
failure to maintain adequate property management practices, the Contractor
shall not be held liable.

 

(2) The Contractor shall take all reasonable actions necessary to
protect the Government property from further loss, damage, destruction, or
theft. The Contractor shall separate the damaged and undamaged Government
property, place all the affected Government property in the best possible
order, and take such other action as the Property Administrator directs.

 

(3) The Contractor shall do nothing to prejudice the Government’s
rights to recover against third parties for any loss, damage, destruction, or
theft of Government property.

 

(4) Upon the request of the Contracting Officer, the Contractor shall,
at the Government’s expense, furnish to the Government 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.

 

(i) Equitable adjustment. Equitable
adjustments under this clause shall be made in accordance with the procedures
of the Changes clause. The right to an equitable adjustment shall be the
Contractor’s exclusive remedy and the Government shall not be liable to suit
for breach of contract for the following:

 

(1) Any delay in delivery of Government-furnished property.

 

(2) Delivery of Government-furnished property in a condition not
suitable for its intended use.

 

(3) An increase, decrease, or substitution of Government-furnished
property.

 

(4) Failure to repair or replace Government property for which the
Government is responsible.

 

(j) Contractor inventory disposal. Except as
otherwise provided for in this contract, the Contractor shall not dispose of
Contractor inventory until authorized to do so by the Plant Clearance Officer.

 

(1) Scrap to which the Government has obtained title under
paragraph (e) of this clause.

 

(i) Contractor with an approved scrap procedure.

 

(A) The Contractor may dispose of scrap resulting from production or
testing under this contract without Government approval. However, if the scrap
requires demilitarization or is sensitive property, the Contractor shall submit
the scrap on an inventory disposal schedule.

 

62

 

(B) For scrap from other than production or testing the Contractor may
prepare scrap lists in lieu of inventory disposal schedules (provided such
lists are consistent with the approved scrap procedures), except that inventory
disposal schedules shall be submitted for scrap aircraft or aircraft parts and
scrap that—

 

(1) Requires demilitarization;

 

(2) Is a classified item;

 

(3) Is generated from classified items;

 

(4) Contains hazardous materials or hazardous wastes;

 

(5) Contains precious metals; or

 

(6) Is dangerous to the public health, safety, or welfare.

 

(ii) Contractor without an approved scrap procedure.
The Contractor shall submit an inventory disposal schedule for all scrap. The
Contractor may not dispose of scrap resulting from production or testing under
this contract without Government approval.

 

(2) Predisposal requirements.

 

(i) Once the Contractor determines that Contractor-acquired property
is no longer needed for contract performance, the Contractor in the following
order of priority—

 

(A) May contact the Contracting Officer if use of the property in
the performance of other Government contracts is practical;

 

(B) May purchase the property at the acquisition cost; or

 

(C) Shall make reasonable efforts to return unused property to the
appropriate supplier at fair market value (less, if applicable, a reasonable
restocking fee that is consistent with the supplier’s customary practices).

 

(ii) The Contractor shall list, on Standard Form 1428, Inventory
Disposal Schedule, property that was not used in the performance of other
Government contracts under paragraph (j)(2)(i)(A) of this clause, property
that was not purchased under paragraph (j)(2)(i)(B) of this clause, and
property that could not be returned to a supplier under paragraph (j)(2)(i)(C) of
ths clause.

 

(3) Inventory disposal schedules.

 

(i) The Contractor shall use Standard Form 1428, Inventory
Disposal Schedule, to identify—

 

(A) Government-furnished property that is no longer required for
performance of this contract, provided the terms of another Government contract
do not require the Government to furnish that property for performance of this
contract;

 

(B) Contractor-acquired property, to which the Government has obtained
title under paragraph (e) of this clause, which is no longer required for
performance of that contract; and

 

(C) Termination inventory.

 

(ii) The Contractor may annotate inventory disposal schedules to
identify property the Contractor wishes to purchase from the Government.

 

63

 

(iii) Unless the Plant Clearance Officer has agreed otherwise, or the
contract requires electronic submission of inventory disposal schedules, the
Contractor shall prepare separate inventory disposal schedules for—

 

(A) Special test equipment with commercial components;

 

(B) Special test equipment without commercial components;

 

(C) Printing equipment;

 

(D) Information technology (e.g., computers, computer components,
peripheral equipment, and related equipment);

 

(E) Precious metals;

 

(F) Nonnuclear hazardous materials or hazardous wastes; or

 

(G) Nuclear materials or nuclear wastes.

 

(iv) The Contractor shall describe the property in sufficient detail
to permit an understanding of its intended use. Property with the same
description, condition code, and reporting location may be grouped in a single
line item.

 

(4) Submission requirements. The Contractor
shall submit inventory disposal schedules to the Plant Clearance Officer no
later than—

 

(i) 30-days following the Contractor’s determination that a Government
property item is no longer required for performance of this contract;

 

(ii) 60 days, or such longer period as may be approved by the Plant
Clearance Officer, following completion of contract deliveries or performance;
or

 

(iii) 120 days, or such longer period as may be approved by the
Termination Contracting Officer following contract termination in whole or in
part.

 

(5) Corrections. The Plant Clearance Officer
may—

 

(i) Reject a schedule for cause (e.g., contains errors,
determined to be inaccurate); and

 

(ii) Require the Contractor to correct an inventory disposal schedule.

 

(6) Postsubmission adjustments. The
Contractor shall notify the Plant Clearance Officer at least 10 working days in
advance of its intent to remove an item from an approved inventory disposal
schedule. Upon approval of the Plant Clearance Officer, or upon expiration of
the notice period, the Contractor may make the necessary adjustments to the
inventory schedule.

 

(7) Storage.

 

(i) The Contractor shall store the property identified on an inventory
disposal schedule pending receipt of disposal instructions. The Government’s
failure to furnish disposal instructions within 120 days following acceptance
of an inventory disposal schedule may entitle the Contractor to an equitable
adjustment for costs incurred to store such property on or after the 121st day.

 

(ii) The Contractor shall obtain the Plant Clearance Officer’s
approval to remove Government property from the premises where the property is
currently located prior to receipt of final disposition instructions. If
approval is granted, any costs incurred by the Contractor to transport or store
the property shall not increase the price or fee of 

 

64

 

any Government contract. The storage facility shall be appropriate for
assuring the property’s physical safety and suitability for use. Approval does
not relieve the Contractor of any liability for such property under this
contract.

 

(8) Disposition instructions.

 

(i) If the Government does not furnish disposition instructions to the
Contractor within 45 days following acceptance of a scrap list, the Contractor
may dispose of the listed scrap in accordance with the Contractor’s approved
scrap procedures.

 

(ii) The Contractor shall prepare for shipment, deliver f.o.b. origin,
or dispose of Contractor inventory as directed by the Plant Clearance Officer.
If not returned to the Government, the Contractor shall remove and destroy any
markings identifying the property as U.S. Government-owned property prior to
its disposal.

 

(iii) The Contracting Officer may require the Contractor to
demilitarize the property prior to shipment or disposal. In such cases, the
Contractor may be entitled to an equitable adjustment under paragraph (i) of
this clause.

 

(9) Disposal proceeds. As directed by the
Contracting Officer, the Contractor shall credit the net proceeds from the
disposal of Contractor inventory to the contract, or to the Treasury of the United
States as miscellaneous receipts.

 

(10) Subcontractor inventory disposal schedules.
The Contractor shall require its Subcontractors to submit inventory disposal
schedules to the Contractor in accordance with the requirements of paragraph
(j)(4) of this clause.

 

(k) Abandonment of Government property.

 

(1) The Government shall not abandon sensitive Government property or
termination inventory without the Contractor’s written consent.

 

(2) The Government, upon notice to the Contractor, may abandon any nonsensitive
Government property in place, at which time all obligations of the Government
regarding such property shall cease.

 

(3) The Government has no obligation to restore or rehabilitate the
Contractor’s premises under any circumstances; however, if Government-furnished
property is withdrawn or is unsuitable for the intended use, or if other
Government property is substituted, then the equitable adjustment under
paragraph (i) of this clause may properly include restoration or
rehabilitation costs.

 

(l) Communication. All communications under
this clause shall be in writing.

 

(m) Contracts outside the United States. If
this contract is to be performed outside of the United States and its outlying
areas, the words “Government” and “Government-furnished” (wherever they appear
in this clause) shall be construed as “United States Government” and “United
States Government-furnished,” respectively.

 

(End of clause)

 

52.245-1     GOVERNMENT PROPERTY (JUNE 2007) ALTERNATE
I (JUNE 2007)

 

(a) Definitions. As
used in this clause—

 

Acquisition cost means
the cost to acquire a tangible capital asset including the purchase price of
the asset and costs necessary to prepare the asset for use. Costs necessary to
prepare the asset for use include the cost of placing the asset in location and
bringing the asset to a condition necessary for normal or expected use.

 

65

 

Cannibalize means to
remove serviceable parts from one item of equipment in order to install them on
another item of equipment.

 

Contractor-acquired
property means property acquired, fabricated, or otherwise provided by the
Contractor for performing a contract, and to which the Government has title.

 

Contractor inventory means—

 

(1) Any property
acquired by and in the possession of a Contractor or subcontractor under a
contract for which title is vested in the Government and which exceeds the
amounts needed to complete full performance under the entire contract;

 

(2) Any property
that the Government is obligated or has the option to take over under any type
of contract, e.g., as a result either of any changes in the specifications or
plans thereunder or of the termination of the contract (or subcontract
thereunder), before completion of the work, for the convenience or at the
option of the Government; and

 

(3) Government-furnished
property that exceeds the amounts needed to complete full performance under the
entire contract.

 

Contractor’s managerial
personnel means 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 operation at any one plant or separate
location; or

 

(3) A separate and
complete major industrial operation.

 

Demilitarization means
rendering a product unusable for, and not restorable to, the purpose for which
it was designed or is customarily used.

 

Discrepancies incident to
shipment means any differences (e.g., count or condition) between the items
documented to have been shipped and items actually received.

 

Equipment means a
tangible asset that is functionally complete for its intended purpose, durable,
nonexpendable, and needed for the performance of a contract. Equipment is not
intended for sale, and does not ordinarily lose its identity or become a
component part of another article when put into use.

 

Government-furnished
property means property in the possession of, or directly acquired by, the
Government and subsequently furnished to the Contractor for performance of a
contract.

 

Government property means
all property owned or leased by the Government. Government property includes
both Government-furnished and Contractor-acquired property.

 

Material means property
that may be consumed or expended during the performance of a contract,
component parts of a higher assembly, or items that lose their individual
identity through incorporation into an end-item. Material does not include
equipment, special tooling and special test equipment.

 

Nonseverable means
property that cannot be removed after construction or installation without
substantial loss of value or damage to the installed property or to the
premises where installed.

 

Plant equipment as used
in this part, means personal property of a capital nature (including equipment,
machine tools, test equipment, furniture, vehicles, and accessory and auxiliary
items) for use in manufacturing supplies, in 

 

66

 

performing services, or
for any administrative or general plant purpose. It does not include special
tooling or special test equipment.

Precious metals means
silver, gold, platinum, palladium, iridium, osmium, rhodium, and ruthenium.

 

Property means all
tangible property, both real and personal.

 

Property Administrator
means an authorized representative of the Contracting Officer appointed in
accordance with agency procedures, responsible for administering the contract
requirements and obligations relating to Government property in the possession
of a Contractor.

 

Provide means to furnish,
as in Government-furnished property, or to acquire, as in contractor-acquired
property.

 

Real property means land
and rights in land, ground improvements, utility distribution systems, and
buildings and other structures. It does not include foundations and other work
necessary for installing special tooling, special test equipment, or plant
equipment.

 

Sensitive property means
property potentially dangerous to the public safety or security if stolen,
lost, or misplaced, or that shall be subject to exceptional physical security,
protection, control, and accountability. Examples include weapons, ammunition,
explosives, controlled substances, radioactive materials, hazardous materials
or wastes, or precious metals.

 

Surplus property means
excess personal property not required by any Federal agency as determined by
the Administrator of the General Services Administration (GSA).

 

(b) Property
management. (1) The Contractor shall have a system to manage (control,
use, preserve, protect, repair and maintain) Government property in its
possession. The system shall be adequate to satisfy the requirements of this
clause. In doing so, the Contractor shall initiate and maintain the processes,
systems, procedures, records, and methodologies necessary for effective control
of Government property, consistent with voluntary consensus standards and/or
industry-leading practices and standards for Government property management
except where inconsistent with law or regulation. During the period of
performance, the Contractor shall disclose any significant changes to their
property management system to the Property Administrator prior to
implementation.

 

(2) The Contractor’s
responsibility extends from the initial acquisition and receipt of property,
through stewardship, custody, and use until formally relieved of responsibility
by authorized means, including delivery, consumption, expending, disposition,
or via a completed investigation, evaluation, and final determination for lost,
damaged, destroyed, or stolen property. This requirement applies to all
Government property under the Contractor’s accountability, stewardship,
possession or control, including its vendors or subcontractors (see paragraph
(f)(1)(v) of this cluase).

 

(3) The Contractor
shall include the requirements of this clause in all subcontracts under which
Government property is acquired or furnished for subcontract performance.

 

(c) Use of
Government property. The Contractor shall use Government property, either
furnished or acquired under this

 

contract, only for
performing this contract, unless otherwise provided for in this contract or
approved by the Contracting Officer. The Contractor shall not modify,
cannibalize, or make alterations to Government property unless this contract
specifically identifies the modifications, alterations or improvements as work
to be performed.

 

(d) Government-furnished
property. (1) The Government shall deliver to the Contractor the
Government-furnished property described in this contract. The Government shall
furnish related data and information needed for the intended use of the
property. The warranties of suitability of use and timely delivery of
Government-furnished property do not apply to property acquired or fabricated
by the Contractor as contractor-acquired property and subsequently transferred
to another contract with this Contractor.

 

67

 

(2) The delivery and/or performance dates specified in this contract
are based upon the expectation that the Government-furnished property will be
suitable for contract performance and will be delivered to the Contractor by
the dates stated in the contract.

 

(i) If the property is not delivered to the Contractor by the dates
stated in the contract, the Contracting Officer shall, upon the Contractor's
timely written request, consider an equitable adjustment to the contract.

 

(ii) In the event property is received by the Contractor, or for
Government-furnished property after receipt and installation, in a condition
not suitable for its intended use, the Contracting Officer shall, upon the
Contractor's timely written request, advise the Contractor on a course of
action to remedy the problem. Such action may include repairing, replacing,
modifying, returning, or otherwise disposing of the property at the
Government's expense. Upon completion of the required action(s), the
Contracting Officer shall consider an equitable adjustment to the contract (see
also paragraph (f)(1)(ii)(A) of this clause).

 

(iii) The Government may, at its option, furnish property in an
``as-is'' condition. The Contractor will be given the opportunity to inspect
such property prior to the property being provided. In such cases, the
Government makes no warranty with respect to the serviceability and/or
suitability of the property for contract performance. Any repairs, replacement,
and/or refurbishment shall be at the Contractor's expense.

 

(3)(i) The Contracting Officer may by written notice, at any time--

 

(A) Increase or decrease the amount of Government-furnished property
under this contract;

 

(B) Substitute other Government-furnished property for the property
previously furnished, to be furnished, or to be acquired by the Contractor for
the Government under this contract; or

 

(C) Withdraw authority to use property.

 

(ii) Upon completion of any action(s) under aragraph (d)(3)(i) of this
clause, and the Contractor's timely written request, the Contracting Officer
shall consider an equitable adjustment to the contract.

 

(e) Title to Government property. (1) The Government shall retain title
to all Government-furnished property. Title to 

Government property shall not be affected by its incorporation into or
attachment to any property not owned by the Government, nor shall Government
property become a fixture or lose its identity as personal property by being
attached to any real property.

 

(2) Fixed-price contracts. (i) All Government-furnished property and
all property acquired by the Contractor, title to which vests in the Government
under this paragraph (collectively referred to as ``Government property)'', are
subject to the provisions of this clause.

 

(ii) Title to each item of equipment, special test equipment and
special tooling acquired by the Contractor for the Government under this
contract shall pass to and vest in the Government when its use in performing
this contract commences or when the Government has paid for it, whichever is earlier,
whether or not title previously vested in the Government.

 

(iii) If this contract contains a provision directing the Contractor to
purchase material for which the Government will reimburse the Contractor as a
direct item of cost under this contract--

 

(A) Title to material purchased from a vendor shall pass to and vest in
the Government upon the vendor's delivery of such material; and

 

(B) Title to all other material shall pass to and vest in the
Government upon--

 

68

 

(1) Issuance of the material for use in contract performance;

 

(2) Commencement of processing of the material or its use in contract
performance; or

 

(3) Reimbursement of the cost of the material by the Government,
whichever occurs first.

 

(3) Title under Cost-Reimbursement or Time-and-Material Contracts or
Cost-Reimbursable contract line items under Fixed-Price contracts. (i) Title to
all property purchased by the Contractor for which the Contractor is entitled
to be reimbursed as a direct item of cost under this contract shall pass to and
vest in the Government upon the vendor's delivery of such property.

 

(ii) Title to all other property, the cost of which is reimbursable to
the Contractor, shall pass to and vest in the Government upon--

 

(A) Issuance of the property for use in contract performance;

 

(B) Commencement of processing of the property for use in contract
performance; or

 

(C) Reimbursement of the cost of the property by the Government,
whichever occurs first.

 

(iii) All Government-furnished property and all property acquired by
the Contractor, title to which vests in the Government under this paragraph
(e)(3)(iii) (collectively referred to as ``Government property)'', are subject
to the provisions of this clause.

 

(f) Contractor plans and systems. (1) Contractors shall establish and
implement property management plans, systems, and procedures at the contract,
program, site or entity level to enable the following outcomes:

 

(i) Acquisition of Property. The Contractor shall document that all
property was acquired consistent with its engineering, production planning, and
material control operations.

 

(ii) Receipt of Government Property. The Contractor shall receive
Government property (document the receipt), record the information necessary to
meet the record requirements of paragraph (f)(1)(iii)(A)(1) through (5) of this
clause, identify as Government owned in a manner appropriate to the type of
property (e.g., stamp, tag, mark, or other identification), and manage any
discrepancies incident to shipment.

 

(A) Government-furnished property. The Contractor shall furnish a
written statement to the Property Administrator containing all relevant facts,
such as cause or condition and a recommended course(s) of action, if overages,
shortages, or damages and/or other discrepancies are discovered upon receipt of
Government-furnished property.

 

(B) Contractor-acquired property. The Contractor shall take all actions
necessary to adjust for overages, shortages, damage and/or other discrepancies
discovered upon receipt, in shipment of Contractor-acquired property from a
vendor or supplier, so as to ensure the proper allocability and allowability of
associated costs.

 

(iii) Records of Government property. The Contractor shall create and
maintain records of all Government property accountable to the contract,
including Government-furnished and Contractor-acquired property.

 

(A) Property records shall enable a complete, current, auditable record
of all transactions and shall, unless otherwise approved by the Property
Administrator, contain the following:

 

(1) The name, part number and description, manufacturer, model number,
and National Stock Number (if needed for additional item identification
tracking and/or disposition).

 

(2) Quantity received (or fabricated), issued, and balance-on-hand.

 

69

 

(3) Unit acquisition cost.

 

(4) Unique-item identifier or equivalent (if available and necessary
for individual item tracking).

 

(5) Unit of measure.

 

(6) Accountable contract number or equivalent code designation.

 

(7) Location.

 

(8) Disposition.

 

(9) Posting reference and date of transaction.

 

(10) Date placed in service.

 

(B) Use of a Receipt and Issue System for Government Material. When
approved by the Property Administrator, the Contractor may maintain, in lieu of
formal property records, a file of appropriately cross-referenced documents
evidencing receipt, issue, and use of material that is issued for immediate
consumption.

 

(iv) Physical inventory. The Contractor shall periodically perform,
record, and disclose physical inventory results. A final physical inventory
shall be performed upon contract completion or termination. The Property
Administrator may waive this final inventory requirement, depending on the
circumstances (e.g., overall reliability of the Contractor's system or the
property is to be transferred to a follow-on contract).

 

(v) Subcontractor control. (A) The Contractor shall award subcontracts
that clearly identify assets to be provided and shall ensure appropriate flow
down of contract terms and conditions (e.g., extent of liability for loss,
damage, destruction or theft of Government property).

 

(B) The Contractor shall assure its subcontracts are properly
administered and reviews are periodically performed to determine the adequacy
of the subcontractor's property management system.

 

(vi) Reports. The Contractor shall have a process to create and provide
reports of discrepancies; loss, damage, destruction, or theft; physical
inventory results; audits and self-assessments; corrective actions; and other
property related reports as directed by the Contracting Officer.

 

(A) Loss, damage, destruction, or theft. Unless otherwise directed by
the Property Administrator, the Contractor shall investigate and promptly
furnish a written narrative of all incidents of loss, damage, destruction, or
theft to the property administrator as soon as the facts become known or when
requested by the Government.

 

(B) Such reports shall, at a minimum, contain the following
information:

 

(1) Date of incident (if known).

 

(2) The name, commercial description, manufacturer, model number, and
National Stock Number (if applicable).

 

(3) Quantity.

 

(4) Unique Item Identifier (if available).

 

(5) Accountable Contract number.

 

(6) A statement indicating current or future need.

 

70

 

(7) Acquisition cost, or if applicable, estimated scrap proceeds,
estimated repair or replacement costs.

 

(8) All known interests in commingled property of which the Government
property is a part.

 

(9) Cause and corrective action taken or to be taken to prevent
recurrence.

 

(10) A statement that the Government will receive any reimbursement
covering the loss, damage, destruction, or theft, in the event the Contractor
was or will be reimbursed or compensated.

 

(11) Copies of all supporting documentation.

 

(12) Last known location.

 

(13) A statement that the property did or did not contain sensitive or
hazardous material, and if so, that the appropriate 

agencies were notified.

 

(vii) Relief of stewardship responsibility. Unless the contract
provides otherwise, the Contractor shall be relieved of stewardship
responsibility for Government property when such property is--

 

(A) Consumed or expended, reasonably and properly, or otherwise
accounted for, in the performance of the contract, including reasonable
inventory adjustments of material as determined by the Property Administrator;
or a Property Administrator granted relief of responsibility for loss, damage,
destruction or theft of Government property;

 

(B) Delivered or shipped from the Contractor's plant, under Government
instructions, except when shipment is to a subcontractor or other location of
the Contractor; or

 

(C) Disposed of in accordance with paragraphs (j) and (k) of this
clause.

 

(viii) Utilizing Government property. (A) The Contractor shall utilize,
consume, move, and store Government Property only as authorized under this
contract. The Contractor shall promptly disclose and report Government property
in its possession that is excess to contract performance.

 

(B) Unless otherwise authorized in this contract or by the Property
Administrator the Contractor shall not commingle Government property with
property not owned by the Government.

 

(ix) Maintenance. The Contractor shall properly maintain Government
property. The Contractor's maintenance program shall enable the identification,
disclosure, and performance of normal and routine preventative maintenance and
repair. The Contractor shall disclose and report to the Property Administrator
the need for replacement and/or capital rehabilitation.

 

(x) Property closeout. The Contractor shall promptly perform and report
to the Property Administrator contract property closeout, to include reporting,
investigating and securing closure of all loss, damage, destruction, or theft
cases; physically inventorying all property upon termination or completion of
this contract; and disposing of items at the time they are determined to be
excess to contractual needs.

 

(2) The Contractor shall establish and maintain Government accounting
source data, as may be required by this contract, particularly in the areas of
recognition of acquisitions and dispositions of material and equipment.

 

(3) The Contractor shall establish and maintain procedures necessary to
assess its property management system effectiveness, and shall perform periodic
internal reviews and audits. Significant findings and/or results of such
reviews and audits pertaining to Government property shall be made available to
the Property Administrator.

 

71

 

(g) Systems analysis. (1) The Government shall have access to the
contractor's premises and all Government property, at reasonable times, for the
purposes of reviewing, inspecting and evaluating the Contractor's property
management plan, systems, procedures, records, and supporting documentation
that pertains to Government property.

 

(2) Records of Government property shall be readily available to
authorized Government personnel and shall be safeguarded from tampering or
destruction.

 

(3) Should it be determined by the Government that the Contractor's
property management practices are inadequate or not acceptable for the
effective management and/or control of Government property under this contract,
and/or present an undue risk to the Government, the Contractor shall
immediately take all necessary corrective actions as directed by the Property
Administrator.

 

(4) The Contractor shall ensure Government access to subcontractor
premises, and all Government property located at subcontractor premises, for
the purposes of reviewing, inspecting and evaluating the subcontractor's
property management plan, systems, procedures, records, and supporting
documentation that pertains to Government property.

 

(h)(1) The Contractor assumes the risk of, and shall be responsible
for, any loss, damage, destruction, or theft of Government property upon its
delivery to the Contractor as Government-furnished property. However, the
Contractor is not responsible for reasonable wear and tear to Government
property or for Government property properly consumed in performing this
contract.

 

(2) The Contractor shall take all reasonable actions necessary to
protect the Government property from further loss, damage, destruction, or
theft. The Contractor shall separate the damaged and undamaged Government
property, place all the affected Government property in the best possible
order, and take such other action as the Property Administrator directs.

 

(3) The Contractor shall do nothing to prejudice the Government's
rights to recover against third parties for any loss, damage, destruction, or
theft of Government property.

 

(4) Upon the request of the Contracting Officer, the Contractor shall,
at the Government's expense, furnish to the Government 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.

 

(i) Equitable adjustment. Equitable adjustments under this clause shall
be made in accordance with the procedures of the Changes clause. The right to
an equitable adjustment shall be the Contractor's exclusive remedy and the
Government shall not be liable to suit for breach of contract for the following:

 

(1) Any delay in delivery of Government-furnished property.

 

(2) Delivery of Government-furnished property in a condition not
suitable for its intended use.

 

(3) An increase, decrease, or substitution of Government-furnished
property.

 

(4) Failure to repair or replace Government property for which the
Government is responsible.

 

(j) Contractor inventory disposal. Except as otherwise provided for in
this contract, the Contractor shall not dispose of Contractor inventory until
authorized to do so by the Plant Clearance Officer.

 

(1) Scrap to which the Government has obtained title under paragraph
(e) of this clause. (i) Contractor with an approved scrap procedure. (A) The
Contractor may dispose of scrap resulting from production or testing under this
contract without Government approval. However, if the scrap requires
demilitarization or is sensitive property, the Contractor shall submit the
scrap on an inventory disposal schedule.

 

72

 

(B) For scrap from other than production or testing the Contractor may
prepare scrap lists in lieu of inventory disposal schedules (provided such
lists are consistent with the approved scrap procedures), except that inventory
disposal schedules shall be submitted for scrap aircraft or aircraft parts and
scrap that--

 

(1) Requires demilitarization;

 

2) Is a classified item;

 

(3) Is generated from classified items;

 

(4) Contains hazardous materials or hazardous wastes;

 

(5) Contains precious metals; or

 

(6) Is dangerous to the public health, safety, or welfare.

 

(ii) Contractor without an approved scrap procedure. The Contractor
shall submit an inventory disposal schedule for all scrap. The Contractor may
not dispose of scrap resulting from production or testing under this contract
without Government approval.

 

(2) Predisposal requirements. (i) Once the Contractor determines that
Contractor-acquired property is no longer needed for contract performance, the
Contractor in the following order of priority—

 

(A) May contact the Contracting Officer if use of the property in the
performance of other Government contracts is practical;

 

(B) May purchase the property at the acquisition cost; or

 

(C) Shall make reasonable efforts to return unused property to the
appropriate supplier at fair market value (less, if applicable, a reasonable
restocking fee that is consistent with the supplier's customary practices).

 

(ii) The Contractor shall list, on Standard Form 1428, Inventory
Disposal Schedule, property that was not used in the performance of other
Government contracts under paragraph (j)(2)(i)(A) of this clause, property that
was not purchased under paragraph (j)(2)(i)(B) of this clause, and property
that could not be returned to a supplier under paragraph (j)(2)(i)(C) of this
clause.

 

(3) Inventory disposal schedules. (i) The Contractor shall use Standard
Form 1428, Inventory Disposal Schedule, to identify--

 

(A) Government-furnished property that is no longer required for
performance of this contract, provided the terms of another Government contract
do not require the Government to furnish that property for performance of this
contract;

 

(B) Contractor-acquired property, to which the Government has obtained
title under paragraph (e) of this clause, which is no longer required for performance
of that contract; and

 

(C) Termination inventory.

 

(ii) The Contractor may annotate inventory disposal schedules to
identify property the Contractor wishes to purchase from the Government.

 

(iii) Unless the Plant Clearance Officer has agreed otherwise, or the
contract requires electronic submission of inventory disposal schedules, the
Contractor shall prepare separate inventory disposal schedules for--

 

73

 

(A) Special test equipment with commercial components;

 

(B) Special test equipment without commercial components;

 

(C) Printing equipment;

 

(D) Information technology (e.g., computers, computer components,
peripheral equipment, and related equipment);

 

(E) Precious metals;

 

(F) Nonnuclear hazardous materials or hazardous wastes; or

 

(G) Nuclear materials or nuclear wastes.

 

(iv) The Contractor shall describe the property in sufficient detail to
permit an understanding of its intended use. Property with the same
description, condition code, and reporting location may be grouped in a single
line item.

 

(4) Submission requirements. The Contractor shall submit inventory
disposal schedules to the Plant Clearance Officer no later than--

 

(i) 30-days following the Contractor's determination that a Government
property item is no longer required for performance of this contract;

 

(ii) 60 days, or such longer period as may be approved by the Plant
Clearance Officer, following completion of contract deliveries or performance;
or

 

(iii) 120 days, or such longer period as may be approved by the
Termination Contracting Officer following contract termination in whole or in
part.

 

(5) Corrections. The Plant Clearance Officer may--

 

(i) Reject a schedule for cause (e.g., contains errors, determined to
be inaccurate); and

 

(ii) Require the Contractor to correct an inventory disposal schedule.

 

(6) Postsubmission adjustments. The Contractor shall notify the Plant
Clearance Officer at least 10 working days in advance of its intent to remove
an item from an approved inventory disposal schedule. Upon approval of the
Plant Clearance Officer, or upon expiration of the notice period, the
Contractor may make the necessary adjustments to the inventory schedule.

 

(7) Storage. (i) The Contractor shall store the property identified on
an inventory disposal schedule pending receipt of disposal instructions. The
Government's failure to furnish disposal instructions within 120 days following
acceptance of an inventory disposal schedule may entitle the Contractor to an
equitable adjustment for costs incurred to store such property on or after the
121\st\ day.

 

(ii) The Contractor shall obtain the Plant Clearance Officer's approval
to remove Government property from the premises where the property is currently
located prior to receipt of final disposition instructions. If approval is
granted, any costs incurred by the Contractor to transport or store the
property shall not increase the price or fee of any Government contract. The
storage facility shall be appropriate for assuring the property's physical
safety and suitability for use. Approval does not relieve the Contractor of any
liability for such property under this contract.

 

74

 

(8) Disposition instructions. (i) If the Government does not furnish
disposition instructions to the Contractor within 45 days following acceptance
of a scrap list, the Contractor may dispose of the listed scrap in accordance
with the Contractor's approved scrap procedures.

 

(ii) The Contractor shall prepare for shipment, deliver f.o.b. origin,
or dispose of Contractor inventory as directed by the Plant Clearance Officer.
If not returned to the Government, the Contractor shall remove and destroy any
markings identifying the property as U.S. Government-owned property prior to
its disposal.

 

(iii) The Contracting Officer may require the Contractor to
demilitarize the property prior to shipment or disposal. In such cases, the
Contractor may be entitled to an equitable adjustment under paragraph (i) of
this clause.

 

(9) Disposal proceeds. As directed by the Contracting Officer, the
Contractor shall credit the net proceeds from the disposal of Contractor
inventory to the contract, or to the Treasury of the United States as
miscellaneous receipts.

 

(10) Subcontractor inventory disposal schedules. The Contractor shall
require its Subcontractors to submit inventory disposal schedules to the
Contractor in accordance with the requirements of paragraph (j)(4) of this
clause.

 

(k) Abandonment of Government property. (1) The Government shall not
abandon sensitive Government property or termination inventory without the
Contractor's written consent.

 

(2) The Government, upon notice to the Contractor, may abandon any
nonsensitive Government property in place, at which time all obligations of the
Government regarding such property shall cease.

 

(3) The Government has no obligation to restore or rehabilitate the
Contractor's premises under any circumstances; however, if
Government--furnished property is withdrawn or is unsuitable for the intended
use, or if other Government property is substituted, then the equitable
adjustment under paragraph (i) of this clause may properly include restoration
or rehabilitation costs.

 

(l) Communication. All communications under this clause shall be in
writing.

 

(m) Contracts outside the United States. If this contract is to be
performed outside of the United States and its outlying areas, the words
``Government'' and ``Government-furnished'' (wherever they appear in this
clause) shall be construed as ``United States Government'' and ``United States
Government-furnished,'' respectively.

 

(End of Clause)

 

52.245-1    GOVERNMENT PROPERTY
(JUNE 2007) ALTERNATE II (JUNE 2007)

 

(a) Definitions. As used in this clause--

 

Acquisition cost means the cost to acquire a tangible capital asset
including the purchase price of the asset and costs necessary to prepare the
asset for use. Costs necessary to prepare the asset for use include the cost of
placing the asset in location and bringing the asset to a condition necessary
for normal or expected use.

 

Cannibalize means to remove serviceable parts from one item of
equipment in order to install them on another item of equipment.

 

Contractor-acquired property means property acquired, fabricated, or
otherwise provided by the Contractor for performing a contract, and to which
the Government has title.

 

Contractor inventory means--

 

75

 

(1) Any property
acquired by and in the possession of a Contractor or subcontractor under a
contract for which title is vested in the Government and which exceeds the
amounts needed to complete full performance under the entire contract;

 

(2) Any property
that the Government is obligated or has the option to take over under any type
of contract, e.g., as a result either of any changes in the specifications or
plans thereunder or of the termination of the contract (or subcontract
thereunder), before completion of the work, for the convenience or at the
option of the Government; and

 

(3) Government-furnished
property that exceeds the amounts needed to complete full performance under the
entire contract.

 

Contractor’s managerial
personnel means 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 operation at any one plant or separate
location; or

 

(3) A separate and
complete major industrial operation.

 

Demilitarization means
rendering a product unusable for, and not restorable to, the purpose for which
it was designed or is customarily used.

 

Discrepancies incident to
shipment means any differences (e.g., count or condition) between the items
documented to have been shipped and items actually received.

 

Equipment means a
tangible asset that is functionally complete for its intended purpose, durable,
nonexpendable, and needed for the performance of a contract. Equipment is not
intended for sale, and does not ordinarily lose its identity or become a
component part of another article when put into use.

 

Government-furnished
property means property in the possession of, or directly acquired by, the
Government and subsequently furnished to the Contractor for performance of a
contract.

 

Government property means
all property owned or leased by the Government. Government property includes
both Government-furnished and Contractor-acquired property.

 

Material means property
that may be consumed or expended during the performance of a contract,
component parts of a higher assembly, or items that lose their individual
identity through incorporation into an end-item. Material does not include
equipment, special tooling and special test equipment.

 

Nonseverable means
property that cannot be removed after construction or installation without
substantial loss of value or damage to the installed property or to the
premises where installed.

 

Plant equipment as used
in this part, means personal property of a capital nature (including equipment,
machine tools, test equipment, furniture, vehicles, and accessory and auxiliary
items) for use in manufacturing supplies, in performing services, or for any
administrative or general plant purpose. It does not include special tooling or
special test equipment.Precious metals means silver, gold, platinum, palladium,
iridium, osmium, rhodium, and ruthenium.

 

Property means all
tangible property, both real and personal.

 

76

 

Property Administrator
means an authorized representative of the Contracting Officer appointed in
accordance with agency procedures, responsible for administering the contract
requirements and obligations relating to Government property in the possession
of a Contractor.

 

Provide means to furnish,
as in Government-furnished property, or to acquire, as in contractor-acquired
property.

 

Real property means land
and rights in land, ground improvements, utility distribution systems, and
buildings and other structures. It does not include foundations and other work
necessary for installing special tooling, special test equipment, or plant
equipment.

 

Sensitive property means
property potentially dangerous to the public safety or security if stolen,
lost, or misplaced, or that shall be subject to exceptional physical security,
protection, control, and accountability. Examples include weapons, ammunition,
explosives, controlled substances, radioactive materials, hazardous materials
or wastes, or precious metals.

 

Surplus property means
excess personal property not required by any Federal agency as determined by
the Administrator of the General Services Administration (GSA).

 

(b) Property
management. (1) The Contractor shall have a system to manage (control,
use, preserve, protect, repair and maintain) Government property in its
possession. The system shall be adequate to satisfy the requirements of this
clause. In doing so, the Contractor shall initiate and maintain the processes,
systems, procedures, records, and methodologies necessary for effective control
of Government property, consistent with voluntary consensus standards and/or
industry-leading practices and standards for Government property management
except where inconsistent with law or regulation. During the period of
performance, the Contractor shall disclose any significant changes to their
property management system to the Property Administrator prior to
implementation.

 

(2) The Contractor’s
responsibility extends from the initial acquisition and receipt of property,
through stewardship, custody, and use until formally relieved of responsibility
by authorized means, including delivery, consumption, expending, disposition,
or via a completed investigation, evaluation, and final determination for lost,
damaged, destroyed, or stolen property. This requirement applies to all
Government property under the Contractor’s accountability, stewardship,
possession or control, including its vendors or subcontractors (see paragraph
(f)(1)(v) of this cluase).

 

(3) The Contractor
shall include the requirements of this clause in all subcontracts under which
Government property is acquired or furnished for subcontract performance.

 

(c) Use of
Government property. The Contractor shall use Government property, either
furnished or acquired under this contract, only for performing this contract,
unless otherwise provided for in this contract or approved by the Contracting
Officer. The Contractor shall not modify, cannibalize, or make alterations to
Government property unless this contract specifically identifies the
modifications, alterations or improvements as work to be performed.

 

(d) Government-furnished
property. (1) The Government shall deliver to the Contractor the
Government-furnished property described in this contract. The Government shall
furnish related data and information needed for the intended use of the
property. The warranties of suitability of use and timely delivery of
Government-furnished property do not apply to property acquired or fabricated
by the Contractor as contractor-acquired property and subsequently transferred
to another contract with this Contractor.

 

(2) The delivery
and/or performance dates specified in this contract are based upon the
expectation that the Government-furnished property will be suitable for
contract performance and will be delivered to the Contractor by the dates
stated in the contract.

 

(i) If the property
is not delivered to the Contractor by the dates stated in the contract, the
Contracting Officer shall, upon the Contractor’s timely written request,
consider an equitable adjustment to the contract.

 

77

 

(ii) In the event
property is received by the Contractor, or for Government-furnished property
after receipt and installation, in a condition not suitable for its intended
use, the Contracting Officer shall, upon the Contractor’s timely written
request, advise the Contractor on a course of action to remedy the problem. Such
action may include repairing, replacing, modifying, returning, or otherwise
disposing of the property at the Government’s expense. Upon completion of the
required action(s), the Contracting Officer shall consider an equitable
adjustment to the contract (see also paragraph (f)(1)(ii)(A) of this
clause).

 

(iii) The Government
may, at its option, furnish property in an ``as-is’’ condition. The Contractor
will be given the opportunity to inspect such property prior to the property
being provided. In such cases, the Government makes no warranty with respect to
the serviceability and/or suitability of the property for contract performance.
Any repairs, replacement, and/or refurbishment shall be at the Contractor’s
expense.

 

(3)(i) The
Contracting Officer may by written notice, at any time—

 

(A) Increase or
decrease the amount of Government-furnished property under this contract;

 

(B) Substitute other
Government-furnished property for the property previously furnished, to be
furnished, or to be acquired by the Contractor for the Government under this
contract; or

 

(C) Withdraw
authority to use property.

 

(ii) Upon completion
of any action(s) under aragraph (d)(3)(i) of this clause, and the
Contractor’s timely written request, the Contracting Officer shall consider an
equitable adjustment to the contract.

 

(e) Title to
Government property. (1) The Government shall retain title to all
Government-furnished property. Title to Government property shall not be
affected by its incorporation into or attachment to any property not owned by
the Government, nor shall Government property become a fixture or lose its
identity as personal property by being attached to any real property.

 

(2) Fixed-price
contracts. (i) All Government-furnished property and all property acquired
by the Contractor, title to which vests in the Government under this paragraph
(collectively referred to as ``Government property)’’, are subject to the
provisions of this clause.

 

(ii) Title to each
item of equipment, special test equipment and special tooling acquired by the
Contractor for the Government under this contract shall pass to and vest in the
Government when its use in performing this contract commences or when the
Government has paid for it, whichever is earlier, whether or not title previously
vested in the Government.

 

(iii) If this
contract contains a provision directing the Contractor to purchase material for
which the Government will reimburse the Contractor as a direct item of cost
under this contract—

 

(A) Title to
material purchased from a vendor shall pass to and vest in the Government upon
the vendor’s delivery of such material; and

 

(B) Title to all
other material shall pass to and vest in the Government upon—

 

(1) Issuance of the
material for use in contract performance;

 

(2) Commencement of
processing of the material or its use in contract performance; or

 

(3) Reimbursement of
the cost of the material by the Government, whichever occurs first.

 

78

 

(3) Title to
property (and other tangible personal property) purchased with funds available
for research and having an acquisition cost of less than $5,000 shall vest in
the Contractor upon acquisition or as soon thereafter as feasible; provided
that the Contractor obtained the Contracting Officer’s approval before each
acquisition. Title to property purchased with funds available for research and
having an acquisition cost of $5,000 or more shall vest as set forth in this
contract. If title to property vests in the Contractor under this paragraph,
the Contractor agrees that no costs shall be allowed for any depreciation,
amortization, or use under any existing or future Government contract or
subcontract thereunder. The Contractor shall furnish the Contracting Officer a
list of all property to which title is vested in the Contractor under this
paragraph within 10 days following the end of the calendar quarter during which
it was received. Vesting title under this paragraph is subject to civil rights
legislation, 42 U.S.C. 2000d. Before title is vested and by signing this
contract, the Contractor accepts and agrees that—    ``No person in the United States or its
outlying areas shall, on the ground of race, color, or national origin, be
excluded from participation in, be denied the benefits of, or be otherwise
subjected to discrimination under this contemplated financial assistance (title
to property).’’

 

(f) Contractor plans
and systems. (1) Contractors shall establish and implement property
management plans, systems, and procedures at the contract, program, site or
entity level to enable the following outcomes:

 

(i) Acquisition of
Property. The Contractor shall document that all property was acquired
consistent with its engineering, production planning, and material control
operations.

 

(ii) Receipt of
Government Property. The Contractor shall receive Government property (document
the receipt), record the information necessary to meet the record requirements
of paragraph (f)(1)(iii)(A)(1) through (5) of this clause, identify
as Government owned in a manner appropriate to the type of property (e.g.,
stamp, tag, mark, or other identification), and manage any discrepancies
incident to shipment.

 

(A) Government-furnished
property. The Contractor shall furnish a written statement to the Property
Administrator containing all relevant facts, such as cause or condition and a
recommended course(s) of action, if overages, shortages, or damages and/or
other discrepancies are discovered upon receipt of Government-furnished
property.

 

(B) Contractor-acquired
property. The Contractor shall take all actions necessary to adjust for
overages, shortages, damage and/or other discrepancies discovered upon receipt,
in shipment of Contractor-acquired property from a vendor or supplier, so as to
ensure the proper allocability and allowability of associated costs.

 

(iii) Records of
Government property. The Contractor shall create and maintain records of all
Government property accountable to the contract, including Government-furnished
and Contractor-acquired property.

 

(A) Property records
shall enable a complete, current, auditable record of all transactions and
shall, unless otherwise approved by the Property Administrator, contain the
following:

 

(1) The name, part
number and description, manufacturer, model number, and National Stock Number
(if needed for additional item identification tracking and/or disposition).

 

(2) Quantity
received (or fabricated), issued, and balance-on-hand.

 

(3) Unit acquisition
cost.

 

(4) Unique-item
identifier or equivalent (if available and necessary for individual item
tracking).

 

(5) Unit of measure.

 

(6) Accountable
contract number or equivalent code designation.

 

(7) Location.

 

79

 

(8) Disposition.

 

(9) Posting
reference and date of transaction.

 

(10) Date placed in
service.

 

(B) Use of a Receipt
and Issue System for Government Material. When approved by the Property
Administrator, the Contractor may maintain, in lieu of formal property records,
a file of appropriately cross-referenced documents evidencing receipt, issue,
and use of material that is issued for immediate consumption.

 

(iv) Physical
inventory. The Contractor shall periodically perform, record, and disclose
physical inventory results. A final physical inventory shall be performed upon
contract completion or termination. The Property Administrator may waive this
final inventory requirement, depending on the circumstances (e.g., overall
reliability of the Contractor’s system or the property is to be transferred to
a follow-on contract).

 

(v) Subcontractor
control. (A) The Contractor shall award subcontracts that clearly identify
assets to be provided and shall ensure appropriate flow down of contract terms
and conditions (e.g., extent of liability for loss, damage, destruction or
theft of Government property).

 

(B) The Contractor
shall assure its subcontracts are properly administered and reviews are
periodically performed to determine the adequacy of the subcontractor’s
property management system.

 

(vi) Reports. The
Contractor shall have a process to create and provide reports of discrepancies;
loss, damage, destruction, or theft; physical inventory results; audits and
self-assessments; corrective actions; and other property related reports as
directed by the Contracting Officer.

 

(A) Loss, damage,
destruction, or theft. Unless otherwise directed by the Property Administrator,
the Contractor shall investigate and promptly furnish a written narrative of
all incidents of loss, damage, destruction, or theft to the property
administrator as soon as the facts become known or when requested by the
Government.

 

(B) Such reports
shall, at a minimum, contain the following information:

 

(1) Date of incident
(if known).

 

(2) The name,
commercial description, manufacturer, model number, and National Stock Number
(if applicable).

 

(3) Quantity.

 

(4) Unique Item
Identifier (if available).

 

(5) Accountable
Contract number.

 

(6) A statement
indicating current or future need.

 

(7) Acquisition
cost, or if applicable, estimated scrap proceeds, estimated repair or
replacement costs.

 

(8) All known
interests in commingled property of which the Government property is a part.

 

(9) Cause and
corrective action taken or to be taken to prevent recurrence.

 

(10) A statement
that the Government will receive any reimbursement covering the loss, damage,
destruction, or theft, in the event the Contractor was or will be reimbursed or
compensated.

 

(11) Copies of all
supporting documentation.

 

80

 

(12) Last known location.

 

(13) A statement that the
property did or did not contain sensitive or hazardous material, and if so,
that the appropriate

agencies were notified.

 

(vii) Relief of
stewardship responsibility. Unless the contract provides otherwise, the
Contractor shall be relieved of stewardship responsibility for Government
property when such property is—

 

(A) Consumed or
expended, reasonably and properly, or otherwise accounted for, in the
performance of the contract, including reasonable inventory adjustments of
material as determined by the Property Administrator; or a Property
Administrator granted relief of responsibility for loss, damage, destruction or
theft of Government property;

 

(B) Delivered or
shipped from the Contractor’s plant, under Government instructions, except when
shipment is to a subcontractor or other location of the Contractor; or

 

(C) Disposed of in
accordance with paragraphs (j) and (k) of this clause.

 

(viii) Utilizing
Government property. (A) The Contractor shall utilize, consume, move, and
store Government Property only as authorized under this contract. The
Contractor shall promptly disclose and report Government property in its
possession that is excess to contract performance.

 

(B) Unless otherwise
authorized in this contract or by the Property Administrator the Contractor
shall not commingle Government property with property not owned by the
Government.

 

(ix) Maintenance.
The Contractor shall properly maintain Government property. The Contractor’s
maintenance program shall enable the identification, disclosure, and
performance of normal and routine preventative maintenance and repair. The
Contractor shall disclose and report to the Property Administrator the need for
replacement and/or capital rehabilitation.

 

(x) Property
closeout. The Contractor shall promptly perform and report to the Property
Administrator contract property closeout, to include reporting, investigating
and securing closure of all loss, damage, destruction, or theft cases;
physically inventorying all property upon termination or completion of this
contract; and disposing of items at the time they are determined to be excess
to contractual needs.

 

(2) The Contractor
shall establish and maintain Government accounting source data, as may be
required by this contract, particularly in the areas of recognition of
acquisitions and dispositions of material and equipment.

 

(3) The Contractor
shall establish and maintain procedures necessary to assess its property
management system effectiveness, and shall perform periodic internal reviews
and audits. Significant findings and/or results of such reviews and audits
pertaining to Government property shall be made available to the Property
Administrator.

 

(g) Systems
analysis. (1) The Government shall have access to the contractor’s
premises and all Government property, at reasonable times, for the purposes of
reviewing, inspecting and evaluating the Contractor’s property management plan,
systems, procedures, records, and supporting documentation that pertains to
Government property.

 

(2) Records of
Government property shall be readily available to authorized Government
personnel and shall be safeguarded from tampering or destruction.

 

(3) Should it be
determined by the Government that the Contractor’s property management
practices are inadequate or not acceptable for the effective management and/or control
of Government property under this contract, and/or

 

81

 

present an undue risk to
the Government, the Contractor shall immediately take all necessary corrective
actions as directed by the Property Administrator.

 

(4) The Contractor
shall ensure Government access to subcontractor premises, and all Government
property located at subcontractor premises, for the purposes of reviewing,
inspecting and evaluating the subcontractor’s property management plan,
systems, procedures, records, and supporting documentation that pertains to
Government property.

 

(h) Contractor
Liability for Government Property. (1) Unless otherwise provided for in
the contract, the Contractor shall not be liable for loss, damage, destruction,
or theft to the Government property furnished or acquired under this contract,
except when any one of the following applies—

 

(i) The risk is
covered by insurance or the Contractor is otherwise reimbursed (to the extent
of such insurance or reimbursement). The allowability of insurance costs shall
be determined in accordance with 31.205-19.

 

(ii) The loss,
damage, destruction, or theft is the result of willful misconduct or lack of
good faith on the part of the Contractor’s managerial personnel. Contractor’s
managerial personnel, in this clause, means the Contractor’s directors,
officers, managers, superintendents, or equivalent representatives who have
supervision or direction of all or substantially all of the Contractor’s
business; all or substantially all of the Contractor’s operation at any one
plant or separate location; or a separate and complete major industrial
operation.

 

(iii) The
Contracting Officer has, in writing, revoked the Government’s assumption of
risk for loss, damage, destruction, or theft, due to a determination under
paragraph (g) of this clause that the Contractor’s property management
practices are inadequate, and/or present an undue risk to the Government, and
the Contractor failed to take timely corrective action. If the Contractor can
establish by clear and convincing evidence that the loss, damage, destruction,
or theft of Government property occurred while the Contractor had adequate
property management practices or the loss, damage, destruction, or theft of
Government property did not result from the Contractor’s failure to maintain
adequate property management practices, the Contractor shall not be held
liable.    (2) The Contractor shall
take all reasonable actions necessary to protect the Government property from
further loss, damage, destruction, or theft. The Contractor shall separate the
damaged and undamaged Government property, place all the affected Government
property in the best possible order, and take such other action as the Property
Administrator directs.

 

(3) The Contractor
shall do nothing to prejudice the Government’s rights to recover against third
parties for any loss, damage, destruction, or theft of Government property.

 

(4) Upon the request
of the Contracting Officer, the Contractor shall, at the Government’s expense,
furnish to the Government 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.

 

(i) Equitable
adjustment. Equitable adjustments under this clause shall be made in accordance
with the procedures of the Changes clause. The right to an equitable adjustment
shall be the Contractor’s exclusive remedy and the Government shall not be
liable to suit for breach of contract for the following:

 

(1) Any delay in
delivery of Government-furnished property.

 

(2) Delivery of
Government-furnished property in a condition not suitable for its intended use.

 

(3) An increase,
decrease, or substitution of Government-furnished property.

 

(4) Failure to
repair or replace Government property for which the Government is responsible.

 

(j) Contractor
inventory disposal. Except as otherwise provided for in this contract, the
Contractor shall not dispose of Contractor inventory until authorized to do so
by the Plant Clearance Officer.

 

82

 

(1) Scrap to which
the Government has obtained title under paragraph (e) of this clause. (i) Contractor
with an approved scrap procedure. (A) The Contractor may dispose of scrap
resulting from production or testing under this contract without Government
approval. However, if the scrap requires demilitarization or is sensitive
property, the Contractor shall submit the scrap on an inventory disposal
schedule.

 

(B) For scrap from
other than production or testing the Contractor may prepare scrap lists in lieu
of inventory disposal schedules (provided such lists are consistent with the
approved scrap procedures), except that inventory disposal schedules shall be
submitted for scrap aircraft or aircraft parts and scrap that—

 

(1) Requires
demilitarization;

 

2) Is a classified item;

 

(3) Is generated
from classified items;

 

(4) Contains
hazardous materials or hazardous wastes;

 

(5) Contains
precious metals; or

 

(6) Is dangerous to
the public health, safety, or welfare.

 

(ii) Contractor
without an approved scrap procedure. The Contractor shall submit an inventory
disposal schedule for all scrap. The Contractor may not dispose of scrap
resulting from production or testing under this contract without Government
approval.

 

(2) Predisposal
requirements. (i) Once the Contractor determines that Contractor-acquired
property is no longer needed for contract performance, the Contractor in the following
order of priority—

 

(A) May contact
the Contracting Officer if use of the property in the performance of other
Government contracts is practical;

 

(B) May purchase
the property at the acquisition cost; or

 

(C) Shall make
reasonable efforts to return unused property to the appropriate supplier at
fair market value (less, if applicable, a reasonable restocking fee that is
consistent with the supplier’s customary practices).

 

(ii) The Contractor
shall list, on Standard Form 1428, Inventory Disposal Schedule, property
that was not used in the performance of other Government contracts under
paragraph (j)(2)(i)(A) of this clause, property that was not purchased
under paragraph (j)(2)(i)(B) of this clause, and property that could not
be returned to a supplier under paragraph (j)(2)(i)(C) of this clause.

 

(3) Inventory
disposal schedules. (i) The Contractor shall use Standard Form 1428,
Inventory Disposal Schedule, to identify—

 

(A) Government-furnished
property that is no longer required for performance of this contract, provided
the terms of another Government contract do not require the Government to
furnish that property for performance of this contract;

 

(B) Contractor-acquired
property, to which the Government has obtained title under paragraph (e) of
this clause, which is no longer required for performance of that contract; and

 

(C) Termination
inventory.

 

83

 

(ii) The Contractor
may annotate inventory disposal schedules to identify property the Contractor
wishes to purchase from the Government.

 

(iii) Unless the
Plant Clearance Officer has agreed otherwise, or the contract requires
electronic submission of inventory disposal schedules, the Contractor shall
prepare separate inventory disposal schedules for—

 

(A) Special test
equipment with commercial components;

 

(B) Special test
equipment without commercial components;

 

(C) Printing
equipment;

 

(D) Information technology
(e.g., computers, computer components, peripheral equipment, and related
equipment);

 

(E) Precious metals;

 

(F) Nonnuclear
hazardous materials or hazardous wastes; or

 

(G) Nuclear
materials or nuclear wastes.

 

(iv) The Contractor
shall describe the property in sufficient detail to permit an understanding of
its intended use. Property with the same description, condition code, and
reporting location may be grouped in a single line item.

 

(4) Submission
requirements. The Contractor shall submit inventory disposal schedules to the
Plant Clearance Officer no later than—

 

(i) 30-days
following the Contractor’s determination that a Government property item is no
longer required for performance of this contract;

 

(ii) 60 days, or
such longer period as may be approved by the Plant Clearance Officer, following
completion of contract deliveries or performance; or

 

(iii) 120 days, or
such longer period as may be approved by the Termination Contracting Officer
following contract termination in whole or in part.

 

(5) Corrections. The
Plant Clearance Officer may—

 

(i) Reject a
schedule for cause (e.g., contains errors, determined to be inaccurate); and

 

(ii) Require the
Contractor to correct an inventory disposal schedule.

 

(6) Postsubmission
adjustments. The Contractor shall notify the Plant Clearance Officer at least
10 working days in advance of its intent to remove an item from an approved
inventory disposal schedule. Upon approval of the Plant Clearance Officer, or
upon expiration of the notice period, the Contractor may make the necessary
adjustments to the inventory schedule.

 

(7) Storage. (i) The
Contractor shall store the property identified on an inventory disposal
schedule pending receipt of disposal instructions. The Government’s failure to
furnish disposal instructions within 120 days following acceptance of an
inventory disposal schedule may entitle the Contractor to an equitable
adjustment for costs incurred to store such property on or after the 121\st\
day.

 

(ii) The Contractor
shall obtain the Plant Clearance Officer’s approval to remove Government
property from the premises where the property is currently located prior to
receipt of final disposition instructions. If approval is granted, any costs
incurred by the Contractor to transport or store the property shall not
increase the price or fee of

 

84

 

any Government contract.
The storage facility shall be appropriate for assuring the property’s physical
safety and suitability for use. Approval does not relieve the Contractor of any
liability for such property under this contract.

 

(8) Disposition
instructions. (i) If the Government does not furnish disposition
instructions to the Contractor within 45 days following acceptance of a scrap
list, the Contractor may dispose of the listed scrap in accordance with the
Contractor’s approved scrap procedures.

 

(ii) The Contractor
shall prepare for shipment, deliver f.o.b. origin, or dispose of Contractor
inventory as directed by the Plant Clearance Officer. If not returned to the
Government, the Contractor shall remove and destroy any markings identifying
the property as U.S. Government-owned property prior to its disposal.

 

(iii) The
Contracting Officer may require the Contractor to demilitarize the property prior
to shipment or disposal. In such cases, the Contractor may be entitled to an
equitable adjustment under paragraph (i) of this clause.

 

(9) Disposal
proceeds. As directed by the Contracting Officer, the Contractor shall credit
the net proceeds from the disposal of Contractor inventory to the contract, or
to the Treasury of the United States as miscellaneous receipts.

 

(10) Subcontractor
inventory disposal schedules. The Contractor shall require its Subcontractors
to submit inventory disposal schedules to the Contractor in accordance with the
requirements of paragraph (j)(4) of this clause.

 

(k) Abandonment of
Government property. (1) The Government shall not abandon sensitive
Government property or termination inventory without the Contractor’s written consent.

 

(2) The Government,
upon notice to the Contractor, may abandon any nonsensitive Government property
in place, at which time all obligations of the Government regarding such
property shall cease.

 

(3) The Government
has no obligation to restore or rehabilitate the Contractor’s premises under
any circumstances; however, if Government–furnished property is withdrawn or is
unsuitable for the intended use, or if other Government property is
substituted, then the equitable adjustment under paragraph (i) of this
clause may properly include restoration or rehabilitation costs.

 

(l) Communication.
All communications under this clause shall be in writing.

 

(m) Contracts
outside the United States. If this contract is to be performed outside of the
United States and its outlying areas, the words ``Government’’ and
``Government-furnished’’ (wherever they appear in this clause) shall be
construed as ``United States Government’’ and ``United States
Government-furnished,’’ respectively.

 

(End of Clause)

 

52.245-9     USE
AND CHARGES (JUN 2007)

 

(a) Definitions. As used in this clause:

 

Acquisition cost means
the cost to acquire a tangible capital asset including the purchase price of
the asset and costs necessary to prepare the asset for use. Costs necessary to
prepare the asset for use include the cost of placing the asset in location and
bringing the asset to a condition necessary for normal or expected use.

 

Government property means
all property owned or leased by the Government. Government property includes
both Government-furnished and Contractor-acquired property.

 

85

 

Plant equipment, as used
in this part, means personal property of a capital nature (including equipment,
machine tools, test equipment, furniture, vehicles, and accessory and auxiliary
items) for use in manufacturing supplies, in performing services, or for any
administrative or general plant purpose. It does not include special tooling or
special test equipment.

 

Real property means land and rights in land, ground
improvements, utility distribution systems, and buildings and other structures.
It does not include foundations and other work necessary for installing special
tooling, special test equipment, or plant equipment.

 

Rental period means the calendar period during which
Government property is made available for nongovernmental purposes.

 

Rental time means the number of hours, to the nearest
whole hour, rented property is actually used for nongovernmental purposes. It
includes time to set up the property for such purposes, perform required
maintenance, and restore the property to its condition prior to rental (less
normal wear and tear).

 

(b) Use of Government property. The Contractor
may use the Government property without charge in the performance of—

 

(1) Contracts with the Government that
specifically authorize such use without charge;

 

(2) Subcontracts of any tier under Government
prime contracts if the Contracting Officer having cognizance of the prime
contract—

 

(i) Approves a subcontract specifically
authorizing such use; or

 

(ii) Otherwise authorizes such use in writing;
and

 

(3) Other work, if the Contracting Officer
specifically authorizes in writing use without charge for such work.

 

(c) Rental. If granted written permission by the
Contracting Officer, or if it is specifically provided for in the Schedule, the
Contractor may use the Government property (except material) for a rental fee
for work other than that provided in paragraph (b) of this clause.
Authorizing such use of the Government property does not waive any rights of
the Government to terminate the Contractor’s right to use the Government
property. The rental fee shall be determined in accordance with the following
paragraphs.

 

(d) General. (1) Rental requests shall be
submitted to the Administrative Contracting Officer (ACO), identify the
property for which rental is requested, propose a rental period, and compute an
estimated rental charge by using the Contractor’s best estimate of rental time
in the formulae described in paragraph (e) of this clause.

 

(2) The Contractor shall not use Government
property for nongovernmental purposes, including Independent Research and
Development, until a rental charge for real property, or estimated rental
charge for other property, is agreed upon. Rented property shall be used only
on a non-interference basis.

 

(e) Rental charge.—

 

(1) Real property and associated fixtures.

 

(i) The Contractor shall obtain, at its expense,
a property appraisal from an independent licensed, accredited, or certified
appraiser that computes a monthly, daily, or hourly rental rate for comparable
commercial property. The appraisal may be used to compute rentals under this
clause throughout its effective period or, if an effective period is not stated
in the appraisal, for one year following the date the appraisal was performed.
The Contractor shall submit the appraisal to the ACO at least 30 days prior to
the date the property is needed for nongovernmental use. Except as

 

86

 

provided in paragraph (e)(1)(iii) of this clause,
the ACO shall use the appraisal rental rate to determine a reasonable rental
charge.

 

(ii) Rental charges shall be determined by
multiplying the rental time by the appraisal rental rate expressed as a rate
per hour. Monthly or daily appraisal rental rates shall be divided by 720 or
24, respectively, to determine an hourly rental rate.

 

(iii) When the ACO believes the appraisal rental
rate is unreasonable, the ACO shall promptly notify the Contractor. The parties
may agree on an alternative means for computing a reasonable rental charge.

 

(iv) The Contractor shall obtain, at its expense,
additional property appraisals in the same manner as provided in paragraph
(e)(1)(i) if the effective period has expired and the Contractor desires
the continued use of property for nongovernmental use. The Contractor may
obtain additional appraisals within the effective period of the current
appraisal if the market prices decrease substantially.

 

(2) Other Government property. The Contractor may
elect to compute the rental charge using the appraisal method described in
paragraph (e)(1) of this clause subject to the constraints therein or the
following formula in which rental time shall be expressed in increments of not
less than one hour with portions of hours rounded to the next higher hour: The
rental charge is calculated by multiplying 2 percent of the acquisition cost by
the hours of rental time, and dividing by 720.

 

(3) Alternative methodology. The Contractor may
request consideration of an alternative basis for computing the rental charge
if it considers the monthly rental rate or a time-based rental unreasonable or
impractical.

 

(f) Rental payments. (1) Rent is due 60 days
following completion of the rental period or as otherwise specified in the
contract. The Contractor shall compute the rental due, and furnish records or
other supporting data in sufficient detail to permit the ACO to verify the
rental time and computation. Payment shall be made by check payable to the
Treasurer of the United States and sent to the contract administration office
identified in this contract, unless otherwise specified by the Contracting
Officer.

 

(2) Interest will be charged if payment is not
made by the date specified in paragraph (f)(1) of this clause. Interest
will accrue at the ``Renegotiation Board Interest Rate’’ (published in the
Federal Register semiannually on or about January 1\st\ and July 1\st\)
for the period in which the rent is due.

 

(3) The Government’s acceptance of any rental
payment under this clause, in whole or in part, shall not be construed as a
waiver or relinquishment of any rights it may have against the Contractor
stemming from the Contractor’s unauthorized use of Government property or any
other failure to perform this contract according to its terms.

 

(g) Use revocation. At any time during the rental
period, the Government may revoke nongovernmental use authorization and require
the Contractor, at the Contractor’s expense, to return the property to the
Government, restore the property to its pre-rental condition (less normal wear
and tear), or both.

 

(h) Unauthorized use. The unauthorized use of
Government property can subject a person to fines, imprisonment, or both, under
18 U.S.C. 641.

 

(End of clause)

 

52.252-6     AUTHORIZED DEVIATIONS IN CLAUSES (APR
1984)

 

(a) The use in this
solicitation or contract of any Federal Acquisition Regulation (48 CFR Chapter
1) clause with an authorized deviation is indicated by the addition of “(DEVIATION)”
after the date of the clause.

 

87

 

(b) The use in this
solicitation or contract of any Defense Federal Acquisition Regulation
Supplement (48 CFR Chapter 2) clause with an authorized deviation is
indicated by the addition of “(DEVIATION)” after the name of the regulation.

 

(End of clause)

 

252.211-7003    ITEM IDENTIFICATION AND VALUATION (AUG
2008)

 

(a) Definitions. As
used in this clause’

 

Automatic identification
device means a device, such as a reader or interrogator, used to retrieve data
encoded on machine-readable media.

 

Concatenated unique item
identifier means—

 

(1) For items that
are serialized within the enterprise identifier, the linking together of the
unique identifier data elements in order of the issuing agency code, enterprise
identifier, and unique serial number within the enterprise identifier; or

 

(2) For items that
are serialized within the original part, lot, or batch number, the linking
together of the unique identifier data elements in order of the issuing agency
code; enterprise identifier; original part, lot, or batch number; and serial
number within the original part, lot, or batch number.

 

Data qualifier means a
specified character (or string of characters) that immediately precedes a data
field that defines the general category or intended use of the data that
follows.

 

DoD recognized unique
identification equivalent means a unique identification method that is in
commercial use and has been recognized by DoD. All DoD recognized unique
identification equivalents are listed at
http://www.acq.osd.mil/dpap/pdi/uid/iuid_equivalents.html.

 

Enterprise means the
entity (e.g., a manufacturer or vendor) responsible for assigning unique item
identifiers to items.

 

Enterprise identifier
means a code that is uniquely assigned to an enterprise by an issuing agency.

 

Government’s unit
acquisition cost means—

 

(1) For fixed-price
type line, subline, or exhibit line items, the unit price identified in the
contract at the time of delivery;

 

(2) For cost-type or
undefinitized line, subline, or exhibit line items, the Contractor’s estimated
fully burdened unit cost to the Government at the time of delivery; and

 

(3) For items
produced under a time-and-materials contract, the Contractor’s estimated fully
burdened unit cost to the Government at the time of delivery.

 

Issuing agency means an
organization responsible for assigning a non-repeatable identifier to an
enterprise (i.e., Dun & Bradstreet’s Data Universal Numbering System
(DUNS) Number, GS1 Company Prefix, or Defense Logistics Information System
(DLIS) Commercial and Government Entity (CAGE) Code).

 

88

 

Issuing agency code means
a code that designates the registration (or controlling) authority for the
enterprise identifier.

 

Item means a single
hardware article or a single unit formed by a grouping of subassemblies,
components, or constituent parts.

 

Lot or batch number means
an identifying number assigned by the enterprise to a designated group of
items, usually referred to as either a lot or a batch, all of which were
manufactured under identical conditions.

 

Machine-readable means an
automatic identification technology media, such as bar codes, contact memory
buttons, radio frequency identification, or optical memory cards.

 

Original part number
means a combination of numbers or letters assigned by the enterprise at item
creation to a class of items with the same form, fit, function, and interface.

 

Parent item means the
item assembly, intermediate component, or subassembly that has an embedded item
with a unique item identifier or DoD recognized unique identification
equivalent.

 

Serial number within the
enterprise identifier means a combination of numbers, letters, or symbols
assigned by the enterprise to an item that provides for the differentiation of
that item from any other like and unlike item and is never used again within
the enterprise.

 

Serial number within the
part, lot, or batch number means a combination of numbers or letters assigned
by the enterprise to an item that provides for the differentiation of that item
from any other like item within a part, lot, or batch number assignment.

 

Serialization within the
enterprise identifier means each item produced is assigned a serial number that
is unique among all the tangible items produced by the enterprise and is never
used again. The enterprise is responsible for ensuring unique serialization
within the enterprise identifier.

 

Serialization within the
part, lot, or batch number means each item of a particular part, lot, or batch
number is assigned a unique serial number within that part, lot, or batch
number assignment. The enterprise is responsible for ensuring unique
serialization within the part, lot, or batch number within the enterprise
identifier.

 

Unique item identifier
means a set of data elements marked on items that is globally unique and
unambiguous. The term includes a concatenated unique item identifier or a DoD
recognized unique identification equivalent.

 

Unique item identifier
type means a designator to indicate which method of uniquely identifying a part
has been used. The current list of accepted unique item identifier types is
maintained at http://www.acq.osd.mil/dpap/pdi/uid/uii_types.html.

 

(b) The Contractor
shall deliver all items under a contract line, subline, or exhibit line item.

 

(c) Unique item
identifier.

 

(1) The Contractor
shall provide a unique item identifier for the following:

 

(i) All delivered
items for which the Government’s unit acquisition cost is $5,000 or more.

 

(ii) The following
items for which the Government’s unit acquisition cost is less than $5,000:

 

Contract line, subline,
or exhibit line

	
  item No.

  	
  Item description

  	
   

  

 

89

 

(iii) Subassemblies,
components, and parts embedded within delivered items as specified in
Attachment Number ----.

 

(2) The unique item
identifier and the component data elements of the DoD unique item
identification shall not change over the life of the item.

 

(3) Data syntax and
semantics of unique item identifiers. The Contractor shall ensure that—

 

(i) The encoded data
elements (except issuing agency code) of the unique item identifier are marked
on the item using one of the following three types of data qualifiers, as
determined by the Contractor:

 

(A) Application
Identifiers (AIs) (Format Indicator 05 of ISO/IEC International Standard
15434), in accordance with ISO/IEC International Standard 15418, Information
Technology—EAN/UCC Application Identifiers and Fact Data Identifiers and
Maintenance and ANSI MH 10.8.2 Data Identifier and Application Identifier
Standard.

 

(B) Data Identifiers
(DIs) (Format Indicator 06 of ISO/IEC International Standard 15434), in
accordance with ISO/IEC International Standard 15418, Information Technology—EAN/UCC
Application Identifiers and Fact Data Identifiers and Maintenance and ANSI MH
10.8.2 Data Identifier and Application Identifier Standard.

 

(C) Text Element
Identifiers (TEIs) (Format Indicator 12 of ISO/IEC International Standard
15434), in accordance with the Air Transport Association Common Support Data
Dictionary; and

 

(ii) The encoded
data elements of the unique item identifier conform to the transfer structure,
syntax, and coding of messages and data formats specified for Format Indicators
05, 06, and 12 in ISO/IEC International Standard 15434, Information Technology—Transfer
Syntax for High Capacity Automatic Data Capture Media.

 

(4) Unique item
identifier.

 

(i) The Contractor
shall—

 

(A) Determine
whether to—

 

(1) Serialize within
the enterprise identifier;

 

(2) Serialize within
the part, lot, or batch number; or

 

(3) Use a DoD
recognized unique identification equivalent; and

 

(B) Place the data
elements of the unique item identifier (enterprise identifier; serial number;
DoD recognized unique identification equivalent; and for serialization within
the part, lot, or batch number only: original part, lot, or batch number) on
items requiring marking by paragraph (c)(1) of this clause, based on the
criteria provided in the version of MIL-STD-130, Identification Marking of U.S.
Military Property, cited in the contract Schedule.

 

(ii) The issuing
agency code—

 

(A) Shall not be
placed on the item; and

 

(B) Shall be derived
from the data qualifier for the enterprise identifier.

 

(d) For each item
that requires unique item identification under paragraph (c)(1)(i) or (ii) of
this clause, in addition to the information provided as part of the Material
Inspection and Receiving Report specified elsewhere in this

 

90

 

contract, the Contractor
shall report at the time of delivery, either as part of, or associated with,
the Material Inspection and Receiving Report, the following information:

 

(1) Unique item identifier.

 

(2) Unique item identifier type.

 

(3) Issuing agency
code (if concatenated unique item identifier is used).

 

(4) Enterprise
identifier (if concatenated unique item identifier is used).

 

(5) Original part
number (if there is serialization within the original part number).

 

(6) Lot or batch
number (if there is serialization within the lot or batch number).

 

(7) Current part
number (optional and only if not the same as the original part number).

 

(8) Current part
number effective date (optional and only if current part number is used).

 

(9) Serial number
(if concatenated unique item identifier is used).

 

(10) Government’s
unit acquisition cost.

 

(11) Unit of measure.

 

(e) For embedded
subassemblies, components, and parts that require DoD unique item
identification under paragraph (c)(1)(iii) of this clause, the Contractor
shall report as part of, or associated with, the Material Inspection and
Receiving Report specified elsewhere in this contract, the following
information:

 

(1) Unique item
identifier of the parent item under paragraph (c)(1) of this clause that
contains the embedded subassembly, component, or part.

 

(2) Unique item
identifier of the embedded subassembly, component, or part.

 

(3) Unique item
identifier type.**

 

(4) Issuing agency
code (if concatenated unique item identifier is used).**

 

(5) Enterprise
identifier (if concatenated unique item identifier is used).**

 

(6) Original part
number (if there is serialization within the original part number).**

 

(7) Lot or batch
number (if there is serialization within the lot or batch number).**

 

(8) Current part
number (optional and only if not the same as the original part number).**

 

(9) Current part
number effective date (optional and only if current part number is used).**

 

(10) Serial number
(if concatenated unique item identifier is used).**

 

(11) Description.

 

** Once per item.

 

91

 

(f) The Contractor
shall submit the information required by paragraphs (d) and (e) of
this clause in accordance with the data submission procedures at
http://www.acq.osd.mil/dpap/pdi/uid/data_

submission_information.html.

 

(g) Subcontracts. If
the Contractor acquires by subcontract, any item(s) for which unique item
identification is required in accordance with paragraph (c)(1) of this
clause, the Contractor shall include this clause, including this paragraph (g),
in the applicable subcontract(s).

 

(End of clause)

 

252.227-7025     LIMITATIONS ON THE USE OR DISCLOSURE OF
GOVERNMENT-FURNISHED INFORMATION MARKED WITH RESTRICTIVE LEGENDS.  (JUN 1995)

 

(a)(1) For contracts
requiring the delivery of technical data, the terms “limited rights” and “Government
purpose rights” are defined in the Rights in Technical Data—Noncommercial Items
clause of this contract.

 

(2) For contracts
that do not require the delivery of technical data, the terms “government
purpose rights” and “restricted rights” are defined in the Rights in
Noncommercial Computer Software and Noncommercial Computer Software
Documentation clause of this contract.

 

(3) For Small
Business Innovative Research program contracts, the terms “limited rights” and “restricted
rights” are defined in the Rights in Noncommercial Technical Data and Computer
Software—Small Business Innovative Research (SBIR) Program clause of this
contract.

 

(b) Technical data
or computer software provided to the Contractor as Government furnished
information (GFI) under this contract may be subject to restrictions on use,
modification, reproduction, release, performance, display, or further
disclosure.

 

(1) GFI marked with
limited or restricted rights legends. The Contractor shall use, modify,
reproduce, perform, or display technical data received from the Government with
limited rights legends or computer software received with restricted rights
legends only in the performance of this contract. The Contractor shall not,
without the express written permission of the party whose name appears in the
legend, release or disclose such data or software to any person.

 

(2) GFI marked with
government purpose rights legends. The Contractor shall use technical data or
computer software received from the Government with government purpose rights
legends for government purposes only. The Contractor shall not, without the
express written permission of the party whose name appears in the restrictive
legend, use, modify, reproduce, release, perform, or display such data or
software for any commercial purpose or disclose such data or software to a
person other than its subcontractors, suppliers, or prospective subcontractors
or suppliers, who require the data or software to submit offers for, or
perform, contracts under this contract. Prior to disclosing the data or
software, the Contractor shall require the persons to whom disclosure will be
made to complete and sign the non-disclosure agreement at 227.7103-7 of the
Defense Federal Acquisition Regulation Supplement (DFARS).

 

(3) GFI marked with
specially negotiated license rights legends. The Contractor shall use, modify,
reproduce, release, perform, or display technical data or computer software
received from the Government with specially negotiated license legends only as
permitted in the license. Such data or software may not be released or
disclosed to other persons unless permitted by the license and, prior to
release or disclosure, the intended recipient has completed the non-disclosure
agreement at DFARS 227.7103-7. The Contractor shall modify paragraph (1)(c) of
the non-disclosure agreement to reflect the recipient’s obligations regarding
use, modification, reproduction, release, performance, display, and disclosure
of the data or software.

 

92

 

(c) Indemnification
and creation of third party beneficiary rights. The Contractor agrees—

 

(1) To indemnify and
hold harmless the Government, its agents, and employees from every claim or
liability, including attorneys fees, court costs, and expenses, arising out of,
or in any way related to, the misuse or unauthorized modification,
reproduction, release, performance, display, or disclosure of technical data or
computer software received from the Government with restrictive legends by the
Contractor or any person to whom the Contractor has released or disclosed such
data or software; and

 

(2) That the party
whose name appears on the restrictive legend, in addition to any other rights
it may have, is a third party beneficiary who has the right of direct action
against the Contractor, or any person to whom the Contractor has released or
disclosed such data or software, for the unauthorized duplication, release, or
disclosure of technical data or computer software subject to restrictive
legends.

 

(End of clause)

 

252.247-7023     Transportation of Supplies by Sea (MAY 2002)

 

(a) Definitions.  As used in this clause —

 

(1) “Components”
means articles, materials, and supplies incorporated directly into end products
at any level of manufacture, fabrication, or assembly by the Contractor or any
subcontractor.

 

(2) “Department of
Defense” (DoD) means the Army, Navy, Air Force, Marine Corps, and defense
agencies.

 

(3) “Foreign flag
vessel” means any vessel that is not a U.S.-flag vessel.

 

(4) “Ocean
transportation” means any transportation aboard a ship, vessel, boat, barge, or
ferry through international waters.

 

(5) “Subcontractor”
means a supplier, materialman, distributor, or vendor at any level below the prime
contractor whose contractual obligation to perform results from, or is
conditioned upon, award of the prime contract and who is performing any part of
the work or other requirement of the prime contract.

 

(6) “Supplies” means
all property, except land and interests in land, that is clearly identifiable
for eventual use by or owned by the DoD at the time of transportation by sea.

 

(i) An item is
clearly identifiable for eventual use by the DoD if, for example, the contract
documentation contains a reference to a DoD contract number or a military
destination.

 

(ii) “Supplies”
includes (but is not limited to) public works; buildings and facilities; ships;
floating equipment and vessels of every character, type, and description, with
parts, subassemblies, accessories, and equipment; machine tools; material;
equipment; stores of all kinds; end items; construction materials; and
components of the foregoing.

 

(7) “U.S.-flag
vessel” means a vessel of the United States or belonging to the United States,
including any vessel registered or having national status under the laws of the
United States.

 

(b)(1) The
Contractor shall use U.S.-flag vessels when transporting any supplies by sea
under this contract.

 

(2) A subcontractor
transporting supplies by sea under this contract shall use U.S.-flag vessels if—

 

(i) This contract is
a construction contract; or

 

93

 

(ii) The supplies
being transported are--

 

(A) Noncommercial
items; or

 

(B) Commercial items
that--

 

(1) The Contractor
is reselling or distributing to the Government without adding value (generally,
the Contractor does not add value to items that it contracts for f.o.b.
destination shipment);

 

(2) Are shipped in
direct support of U.S. military contingency operations, exercises, or forces
deployed in humanitarian or peacekeeping operations; or

 

(3) Are commissary
or exchange cargoes transported outside of the Defense Transportation System in
accordance with 10 U.S.C. 2643.

 

(c) The Contractor
and its subcontractors may request that the Contracting Officer authorize
shipment in foreign-flag vessels, or designate available U.S.-flag vessels, if
the Contractor or a subcontractor believes that --

 

(1) U.S.-flag
vessels are not available for timely shipment;

 

(2) The freight
charges are inordinately excessive or unreasonable; or

 

(3) Freight charges
are higher than charges to private persons for transportation of like goods.

 

(d) The Contractor
must submit any request for use of other than U.S.-flag vessels in writing to
the Contracting Officer at least 45 days prior to the sailing date necessary to
meet its delivery schedules.  The
Contracting Officer will process requests submitted after such date(s) as
expeditiously as possible, but the Contracting Officer’s failure to grant
approvals to meet the shipper’s sailing date will not of itself constitute a
compensable delay under this or any other clause of this contract.  Requests shall contain at a minimum --

 

(1) Type, weight,
and cube of cargo;

 

(2) Required
shipping date;

 

(3) Special handling
and discharge requirements;

 

(4) Loading and
discharge points;

 

(5) Name of shipper
and consignee;

 

(6) Prime contract
number; and

 

(7) A documented
description of efforts made to secure U.S.-flag vessels, including points of
contact (with names and telephone numbers) with at least two U.S.-flag carriers
contacted.  Copies of telephone notes,
telegraphic and facsimile message or letters will be sufficient for this
purpose.

 

(e) The Contractor
shall, within 30 days after each shipment covered by this clause, provide the
Contracting Officer and the Maritime Administration, Office of Cargo
Preference, U.S. Department of Transportation, 400 Seventh Street SW.,
Washington, DC 20590, one copy of the rated on board vessel operating carrier’s
ocean bill of lading, which shall contain the following information:

 

(1) Prime contract
number;

 

94

 

(2) Name of vessel;

 

(3) Vessel flag of
registry;

 

(4) Date of loading;

 

(5) Port of loading;

 

(6) Port of final
discharge;

 

(7) Description of
commodity;

 

(8) Gross weight in
pounds and cubic feet if available;

 

(9) Total ocean
freight in U.S. dollars; and

 

(10) Name of the
steamship company.

 

(f) The Contractor
shall provide with its final invoice under this contract a representation that
to the best of its knowledge and belief--

 

(1) No ocean
transportation was used in the performance of this contract;

 

(2) Ocean
transportation was used and only U.S.-flag vessels were used for all ocean
shipments under the contract;

 

(3) Ocean
transportation was used, and the Contractor had the written consent of the
Contracting Officer for all non-U.S.-flag ocean transportation; or

 

(4) Ocean
transportation was used and some or all of the shipments were made on
non-U.S.-flag vessels without the written consent of the Contracting
Officer.  The Contractor shall describe
these shipments in the following format:

 

	
  ITEM

  DESCRIPTION

  	
   

  	
  CONTRACT

  LINE ITEMS

  	
   

  	
  QUANTITY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  

 

(g) If the final
invoice does not include the required representation, the Government will
reject and return it to the Contractor as an improper invoice for the purposes
of the Prompt Payment clause of this contract. 
In the event there has been unauthorized use of non-U.S.-flag vessels in
the performance of this contract, the Contracting Officer is entitled to
equitably adjust the contract, based on the unauthorized use.

 

(h) In the award of
subcontracts for the types of supplies described in paragraph (b)(2) of
this clause, the Contractor shall flow down the requirements of this clause as
follows:

 

(1) The Contractor
shall insert the substance of this clause, including this paragraph (h), in
subcontracts that exceed the simplified acquisition threshold in part 2 of the
Federal Acquisition Regulation.

 

(2) The Contractor
shall insert the substance of paragraphs (a) through (e) of this
clause, and this paragraph (h), in subcontracts that are at or below the
simplified acquisition threshold in part 2 of the Federal Acquisition
Regulation.

 

(End of clause)

 

95

 

252.247-7024 Notification
of Transportation of Supplies by Sea (MAR 2000)

 

(a) The Contractor
has indicated by the response to the solicitation provision, Representation of
Extent of Transportation by Sea, that it did not anticipate transporting by sea
any supplies.  If, however, after the
award of this contract, the Contractor learns that supplies, as defined in the
Transportation of Supplies by Sea clause of this contract, will be transported
by sea, the Contractor --

 

(1) Shall notify the
Contracting Officer of that fact; and

 

(2) Hereby agrees to
comply with all the terms and conditions of the Transportation of Supplies by
Sea clause of this contract.

 

(b) The Contractor
shall include this clause; including this paragraph (b), revised as necessary
to reflect the relationship of the contracting parties--

 

(1) In all
subcontracts under this contract, if this contract is a construction contract;
or

 

(2) If this contract
is not a construction contract, in all subcontracts under this contract that
are for--

 

(i) Noncommercial
items; or

 

(ii) Commercial
items that—

 

(A) The Contractor
is reselling or distributing to the Government without adding value (generally,
the Contractor does not add value to items that it subcontracts for f.o.b.
destination shipment);

 

(B) Are shipped in
direct support of U.S. military contingency operations, exercises, or forces
deployed in humanitarian or peacekeeping operations; or

 

(C) Are commissary
or exchange cargoes transported outside of the Defense Transportation System in
accordance with 10 U.S.C. 2643.

 

(End of clause)

 

96

 

Section J - List of
Documents, Exhibits and Other Attachments

 

CLAUSES INCORPORATED BY
FULL TEXT

 

The following
document(s), exhibit(s), and other attachment(s) form a part of this
contract:

 

Contract Data
Requirements List, DD Form 1423 – Exhibit A, 3,
page(s);

 

Contractor Data Rights
Assertion – Attachment 1, 1, page(s);

 

Financial Accounting Data
Sheet – Attachment 2, 1, page(s).

 

97Exhibit 10.34

 

NETWORK ENGINES, INC.

 

2009 INCENTIVE
PLAN

 

1.            Purpose

 

The purpose of this 2009
Incentive Plan (the “Plan”) of
Network Engines, Inc., a Delaware corporation (the “Company”),
is to advance the interests of the Company’s stockholders by enhancing the
Company’s ability to attract, retain and motivate persons who are expected to
make important contributions to the Company and by providing such persons with
equity ownership opportunities and performance-based incentives that are intended
to better align the interests of such persons with those of the Company’s
stockholders.  Except where the context
otherwise requires, the term “Company”
shall include any of the Company’s present or future parent or subsidiary
corporations as defined in Sections 424(e) or (f) of the Internal
Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”) and any other business
venture (including, without limitation, joint venture or limited liability
company) in which the Company has a controlling interest, as determined by the
Board of Directors of the Company (the “Board”).

 

2.           
Eligibility

 

All of the Company’s employees,
officers, and directors are eligible to be granted options, stock appreciation
rights (“SARs”), restricted stock,
restricted stock units (“RSUs”) and
other stock- and cash-based awards (each, an “Award”)
under the Plan.  Consultants and advisors
to the Company (as such terms are defined and interpreted for purposes of Form S-8
(or any successor form)) are also eligible to be granted Awards. Each person
who is granted an Award under the Plan is deemed a “Participant.”

 

3.           
Administration and Delegation

 

(a)           Administration
by Board of Directors.  The Plan will
be administered by the Board.  The Board
shall have authority to grant Awards and to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable.  The Board may construe
and interpret the terms of the Plan and any Award agreements entered into under
the Plan.  The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it shall deem expedient to carry the Plan
into effect and it shall be the sole and final judge of such expediency.  All decisions by the Board shall be made in
the Board’s sole discretion and shall be final and binding on all persons
having or claiming any interest in the Plan or in any Award.

 

(b)           Appointment of
Committees.  To the extent permitted
by applicable law, the Board may delegate any or all of its powers under the
Plan to one or more committees or subcommittees of the Board (a “Committee”).  All references in the Plan to the “Board” shall mean the Board or a
Committee of the Board or the officers referred to in Section 3(c) to
the extent that the Board’s powers or authority under the Plan have been
delegated to such Committee or officers.

 

 

(c)           Delegation
to Officers.  To the extent permitted
by applicable law, the Board may delegate to one or more officers of the
Company the power to grant Options and other Awards that constitute rights
under Delaware law (subject to any limitations under the Plan) to employees or
officers of the Company or any of its present or future subsidiary corporations
and to exercise such other powers under the Plan as the Board may determine,
provided that the Board shall fix the terms of the Awards to be granted by such
officers (including the exercise price of the Awards, which may include a
formula by which the exercise price will be determined) and the maximum number
of shares subject to such Awards that the officers may grant; provided further,
however, that no officer shall be authorized to grant Awards to any “executive
officer” of the Company (as defined by Rule 3b-7 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”))
or to any “officer” of the Company (as defined by Rule 16a-1 under the
Exchange Act).  The Board may not
delegate authority under this Section 3(c) to grant restricted stock,
unless Delaware law then permits such delegation.

 

(d)           Awards
to Non-Employee Directors. 
Discretionary Awards to non-employee directors will only be granted and
administered by a Committee, all of the members of which are independent as
defined by Section 4200(a)(15) of the Nasdaq Marketplace Rules.

 

4.           
Stock Available for Awards

 

(a)           Number
of Shares; Share Counting.

 

(1)           Authorized Number of Shares.  Subject to adjustment under Section 10,
Awards may be made under the Plan for up to 750,000 shares of common stock,
$.01 par value per share, of the Company (the “Common
Stock”), any or all of which Awards may be in the form of
Incentive Stock Options.  Shares issued
under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.

 

(2)           Share Counting. 
For purposes of counting the number of shares available for the grant of
Awards under the Plan and under the sublimits contained in Sections 4(b)(2) and
4(b)(3), (i) all shares of Common Stock covered by independent SARs shall
be counted against the number of shares available for the grant of Awards;
provided, however, that independent SARs that may be settled only in cash shall
not be so counted; (ii) if any Award (A) expires or is terminated,
surrendered or canceled without having been fully exercised or is forfeited in
whole or in part (including as the result of shares of Common Stock subject to
such Award being repurchased by the Company at the original issuance price
pursuant to a contractual repurchase right) or (B) results in any Common
Stock not being issued (including as a result of an independent SAR that was
settleable either in cash or in stock actually being settled in cash), the
unused Common Stock covered by such Award shall again be available for the
grant of Awards; provided, however, in the case of
Incentive Stock Options (as hereinafter defined), the foregoing shall be
subject to any limitations under the Code; and provided further, in the case of
independent SARs, that the full number of shares subject to any stock-settled
SAR shall be counted against the shares available under the Plan and against
the sublimits listed in the first clause of this Section in proportion to
the portion of the SAR actually exercised regardless of the number of shares
actually used to settle such SAR upon exercise; (iii) shares of Common
Stock delivered (either by actual delivery, attestation, or net exercise) to
the Company by a Participant to (A) purchase shares of Common Stock upon
the exercise of an Award or (B) satisfy tax 

 

2

 

withholding obligations
(including shares retained from the Award creating the tax obligation) shall
not be added back to the number of shares available for the future grant of
Awards; and (iv) shares of Common Stock repurchased by the Company on the
open market using the proceeds from the exercise of an Award shall not increase
the number of shares available for future grant of Awards.

 

(b)           Sub-limits.  Subject to adjustment under Section 10,
the following sub-limits on the number of shares subject to Awards shall apply:

 

(1)           Section 162(m) Per-Participant Limit.  The maximum number of shares of Common Stock
with respect to which Awards may be granted to any Participant under the Plan shall
be 750,000 per fiscal year.  For purposes
of the foregoing limit, the combination of an Option in tandem with a SAR (as
each is hereafter defined) shall be treated as a single Award.  The per Participant limit described in this Section 4(b)(1) shall
be construed and applied consistently with Section 162(m) of the Code
or any successor provision thereto, and the regulations thereunder (“Section 162(m)”).

 

(2)           Limit on Awards other than Options and SARS.  The maximum number of shares with respect to
which Awards other than Options and SARs may be granted shall be 75% of the
maximum number of authorized shares set forth in Section 4(a)(1).

 

(3)           Limit on Awards to Directors.  The maximum number of shares with respect to
which Awards may be granted to directors who are not employees of the Company
at the time of grant shall be 20% of the maximum number of authorized shares
set forth in Section 4(a)(1).

 

(c)           Substitute
Awards.  In connection with a merger
or consolidation of an entity with the Company or the acquisition by the
Company of property or stock of an entity, the Board may grant Awards in
substitution for any options or other stock or stock-based awards granted by
such entity or an affiliate thereof. 
Substitute Awards may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Awards
contained in the Plan.  Substitute Awards
shall not count against the overall share limit set forth in Section 4(a)(1) or
any sublimits contained in the Plan, except as may be required by reason of Section 422
and related provisions of the Code.

 

5.           
Stock Options

 

(a)           General.  The Board may grant options to purchase
Common Stock (each, an “Option”)
and determine the number of shares of Common Stock to be covered by each
Option, the exercise price of each Option and the conditions and limitations
applicable to the exercise of each Option, including conditions relating to
applicable federal or state securities laws, as it considers necessary or
advisable.  An Option that is not
intended to be an Incentive Stock Option (as hereinafter defined) shall be
designated a “Nonstatutory Stock Option.”

 

(b)           Incentive
Stock Options.  An Option that the
Board intends to be an “incentive stock option” as defined in Section 422
of the Code (an “Incentive Stock Option”)
shall only be granted to employees of Network Engines, Inc., any of
Network Engines, Inc.’s present or future parent or subsidiary
corporations as defined in Sections 424(e) or (f) of the Code, and
any other 

 

3

 

entities the employees of which
are eligible to receive Incentive Stock Options under the Code, and shall be
subject to and shall be construed consistently with the requirements of Section 422
of the Code.  The Company shall have no
liability to a Participant, or any other party, if an Option (or any part
thereof) that is intended to be an Incentive Stock Option is not an Incentive
Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory
Stock Option.

 

(c)           Exercise
Price.  The Board shall establish the
exercise price of each Option and specify the exercise price in the applicable
option agreement.  The exercise price
shall be not less than 100% of the Fair Market Value (as defined below) on the
date the Option is granted; provided that if the Board approves the grant of an
Option with an exercise price to be determined on a future date, the exercise
price shall be not less than 100% of the Fair Market Value on such future date.

 

(d)           Duration
of Options.  Each Option shall be
exercisable at such times and subject to such terms and conditions as the Board
may specify in the applicable option agreement; provided,
however, that no Option will be granted with a term in excess of 10
years.

 

(e)           Exercise
of Option.  Options may be exercised
by delivery to the Company of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice) approved by
the Company, together with payment in full as specified in Section 5(f) for
the number of shares for which the Option is exercised.  Shares of Common Stock subject to the Option
will be delivered by the Company as soon as practicable following exercise.

 

(f)            Payment
Upon Exercise.  Common Stock purchased
upon the exercise of an Option granted under the Plan shall be paid for as
follows:

 

(1)           in cash or by check, payable to the order of the Company;

 

(2)           except as may otherwise be provided in the applicable
option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery
by the Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash
or a check sufficient to pay the exercise price and any required tax
withholding;

 

(3)           to the extent provided for in the applicable option
agreement or approved by the Board, in its sole discretion, by delivery (either
by actual delivery or attestation) of shares of Common Stock owned by the
Participant valued at their fair market value, determined as provided below (“Fair Market Value”), provided (i) such
method of payment is then permitted under applicable law, (ii) such Common
Stock, if acquired directly from the Company, was owned by the Participant for
such minimum period of time, if any, as may be established by the Board in its
discretion and (iii) such Common Stock is not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements;

 

(4)           to the extent provided for in the applicable Nonstatutory
Stock Option agreement or approved by the Board in its sole discretion, by
delivery of a notice of “net 

 

4

 

exercise” to the Company, as a
result of which the Participant would receive the number of shares of Common
Stock underlying the Option so exercised reduced by the number of shares of
Common Stock equal to the aggregate exercise price of the Option divided by the
Fair Market Value on the date of exercise;

 

(5)           to the extent permitted by applicable law and provided for
in the applicable Option agreement or approved by the Board, in its sole discretion,
by payment of such other lawful consideration as the Board may determine; or

 

(6)           by any combination of the above permitted forms of
payment.

 

“Fair Market Value”
of a share of Common Stock for purposes of the Plan will be determined as
follows:

 

(A) if the Common Stock
trades on a national securities exchange, the closing sale price (for the
primary trading session) on the date of grant; or

 

(B) if the Common Stock
does not trade on any such exchange, the average of the closing bid and asked
prices as reported by an authorized OTCBB market data vendor as listed on the
OTCBB website (otcbb.com) on the date of grant; or

 

(C) if the Common Stock is
not publicly traded, the Board will determine the Fair Market Value for
purposes of the Plan using any measure of value it determines to be appropriate
(including, as it considers appropriate, relying on appraisals) in a manner
consistent with the valuation principles under Code Section 409A, except
as the Board or Committee may expressly determine otherwise.

 

For any date that is not a trading day, the
Fair Market Value of a share of Common Stock for such date will be determined
by using the closing sale price or average of the bid and asked prices, as
appropriate, for the immediately preceding trading day and with the timing in
the formulas above adjusted accordingly. 
The Board can substitute a particular time of day or other measure of “closing
sale price” or “bid and asked prices” if appropriate because of exchange or
market procedures or can, in its sole discretion, use weighted averages either
on a daily basis or such longer period as complies with Code Section 409A.

 

The Board has sole discretion to determine
the Fair Market Value for purposes of this Plan, and all Awards are conditioned
on the participants’ agreement that the Board’s determination is conclusive and
binding even though others might make a different determination.

 

(g)           Limitation
on Repricing.  Unless such action is
approved by the Company’s stockholders:  (1) no
outstanding Option granted under the Plan may be amended to provide an exercise
price per share that is lower than the then-current exercise price per share of
such outstanding Option (other than adjustments pursuant to Section 10)
and (2) the Board may not cancel any outstanding Option (whether or not
granted under the Plan) and grant in substitution therefor new Awards under the
Plan covering the same or a different number of shares of Common Stock and
having an exercise price per share lower than the then-current exercise price
per share of the cancelled option.

 

5

 

6.           
Director Options

 

(a)           Initial
Grant.  Upon the commencement of
service on the Board by any individual who is not then an employee of the
Company or any subsidiary of the Company, the Company shall grant to such
person a Nonstatutory Stock Option to purchase 50,000 shares of Common Stock
(subject to adjustment under Section 10).

 

(b)           Annual
Grant.  On the date of each annual
meeting of stockholders of the Company, the Company shall grant to each member
of the Board of Directors of the Company who is both serving as a director of
the Company immediately prior to and immediately following such annual meeting
and who is not then an employee of the Company or any of its subsidiaries, a
Nonstatutory Stock Option to purchase 15,000 shares of Common Stock (subject to
adjustment under Section 10); provided, however,
that a director shall not be eligible to receive an option grant under this Section 6(b) until
such director has served on the Board for at least nine months.

 

(c)           Terms
of Director Options.  Options granted
under this Section 6 shall (i) have an exercise price equal to the
closing sale price (for the primary trading session) of the Common Stock on the
national securities exchange on which the Common Stock is then traded on the
day of grant (or if the date of grant is not a trading day on such exchange,
the trading day immediately prior to the date of grant) or if the Common Stock
is not then traded on a national securities exchange, the Fair Market Value of
the Common Stock on such date as determined by the Board, (ii) (A) in
the case of options granted under Section 6(a) shall vest in equal
25% increments on each anniversary of the date of grant and (B) in the
case of options granted under Section 6(b) shall vest in full on the
first anniversary of the date of grant, provided that in either such case the
individual is serving on the Board on such date (or in the case of an option
granted under Section 6(b), if earlier, on the date which is one business
day prior to date of the Company’s next annual meeting), provided that in
either such case no additional vesting shall take place after the Participant
ceases to serve as a director and further provided that in either such case the
Board may provide for accelerated vesting in the case of death, disability,
change in control, attainment of mandatory retirement age or retirement
following at least 10 years of service, (iii) expire on the earlier of 10
years from the date of grant or three months following cessation of service on
the Board and (iv) contain such other terms and conditions as the Board
shall determine.

 

7.           
Stock Appreciation Rights

 

(a)           General.  The Board may grant Awards consisting of SARs
entitling the holder, upon exercise, to receive an amount of Common Stock or
cash or a combination thereof (such form to be determined by the Board)
determined by reference to appreciation, from and after the date of grant, in
the Fair Market Value of a share of Common Stock over the measurement price
established pursuant to Section 7(c). 
The date as of which such appreciation is determined shall be the
exercise date.

 

(b)           Grants.  SARs may be granted in tandem with, or
independently of, Options granted under the Plan.

 

6

 

(1)           Tandem Awards. 
When SARs are expressly granted in tandem with Options, (i) the SAR
will be exercisable only at such time or times, and to the extent, that the
related Option is exercisable (except to the extent designated by the Board in
connection with a Reorganization Event) and will be exercisable in accordance
with the procedure required for exercise of the related Option; (ii) the
SAR will terminate and no longer be exercisable upon the termination or
exercise of the related Option, except to the extent designated by the Board in
connection with a Reorganization Event and except that a SAR granted with
respect to less than the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related Option has been
exercised or has terminated exceeds the number of shares not covered by the
SAR; (iii) the Option will terminate and no longer be exercisable upon the
exercise of the related SAR; and (iv) the SAR will be transferable only
with the related Option.

 

(2)           Independent SARs. 
A SAR not expressly granted in tandem with an Option will become
exercisable at such time or times, and on such conditions, as the Board may
specify in the SAR Award.

 

(c)           Measurement
Price.  The Board shall establish the
measurement price of each SAR and specify it in the applicable SAR
agreement.  The measurement price shall
not be less than 100% of the Fair Market Value on the date the SAR is granted;
provided that if the Board approves the grant of a SAR with a measurement price
to be determined on a future date, the measurement price shall be not less than
100% of the Fair Market Value on such future date.

 

(d)           Duration
of SARs.  Each SAR shall be
exercisable at such times and subject to such terms and conditions as the Board
may specify in the applicable SAR agreement; provided,
however, that no SAR will be granted with a term in excess of 10
years.

 

(e)           Exercise
of SARs.  SARs may be exercised by
delivery to the Company of a written notice of exercise signed by the proper
person or by any other form of notice (including electronic notice) approved by
the Company, together with any other documents required by the Board.

 

(f)            Limitation
on Repricing.  Unless such action is
approved by the Company’s stockholders: (1) no outstanding SAR granted
under the Plan may be amended to provide an exercise price per share that is
lower than the then-current exercise price per share of such outstanding SAR
(other than adjustments pursuant to Section 10) and (2) the Board may
not cancel any outstanding SAR (whether or not granted under the Plan) and
grant in substitution therefor new Awards under the Plan covering the same or a
different number of shares of Common Stock and having an exercise price per
share lower than the then-current exercise price per share of the cancelled
SAR.

 

8.           
Restricted Stock; Restricted Stock Units

 

(a)           General.  The Board may grant Awards entitling
recipients to acquire shares of Common Stock (“Restricted
Stock”), subject to the right of the Company to repurchase all
or part of such shares at their issue price or other stated or formula price
(or to require forfeiture of such shares if issued at no cost) from the
recipient in the event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable restriction 

 

7

 

period or periods established by the Board
for such Award.  Instead of granting Awards
for Restricted Stock, the Board may grant Awards entitling the recipient to
receive shares of Common Stock or cash to be delivered at the time such Award
vests (“Restricted Stock Units”)
(Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

 

(b)           Terms
and Conditions for All Restricted Stock Awards.  The Board shall determine the terms and
conditions of a Restricted Stock Award, including the conditions for vesting
and repurchase (or forfeiture) and the issue price.

 

(c)           Additional
Provisions Relating to Restricted Stock.

 

(1)           Dividends. 
Participants holding shares of Restricted Stock will be entitled to all
ordinary cash dividends paid with respect to such shares, unless otherwise
provided by the Board.  Unless otherwise
provided by the Board, if any dividends or distributions are paid in shares, or
consist of a dividend or distribution to holders of Common Stock other than an
ordinary cash dividend, the shares, cash or other property will be subject to
the same restrictions on transferability and forfeitability as the shares of
Restricted Stock with respect to which they were paid.  Each dividend payment will be made no later
than the end of the calendar year in which the dividends are paid to shareholders
of that class of stock or, if later, the 15th day of the third month following the date the
dividends are paid to shareholders of that class of stock.

 

(2)           Stock Certificates. 
The Company may require that any stock certificates issued in respect of
shares of Restricted Stock shall be deposited in escrow by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee).  At the expiration of the
applicable restriction periods, the Company (or such designee) shall deliver
the certificates no longer subject to such restrictions to the Participant or
if the Participant has died, to the beneficiary designated, in a manner
determined by the Board, by a Participant to receive amounts due or exercise
rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”).  In the absence of an effective designation by
a Participant, “Designated Beneficiary” shall
mean the Participant’s estate.

 

(d)           Additional
Provisions Relating to Restricted Stock Units.

 

(1)           Settlement. 
Upon the vesting of and/or lapsing of any other restrictions (i.e.,
settlement) with respect to each Restricted Stock Unit, the Participant shall
be entitled to receive from the Company one share of Common Stock or an amount
of cash equal to the Fair Market Value of one share of Common Stock, as
provided in the applicable Award agreement. 
The Board may, in its discretion, provide that settlement of Restricted
Stock Units shall be deferred, on a mandatory basis or at the election of the
Participant in a manner that complies with Code Section 409A.

 

(2)           Voting Rights. 
A Participant shall have no voting rights with respect to any Restricted
Stock Units.

 

(3)           Dividend Equivalents.  To the extent provided by the Board, in its
sole discretion, a grant of Restricted Stock Units may provide Participants
with the right to receive an amount equal to any dividends or other
distributions declared and paid on an equal number of 

 

8

 

outstanding shares of Common Stock (“Dividend Equivalents”).  Dividend Equivalents may be paid currently or
credited to an account for the Participants, may be settled in cash and/or
shares of Common Stock and may be subject to the same restrictions on transfer
and forfeitability as the Restricted Stock Units with respect to which paid, as
determined by the Board in its sole discretion, subject in each case to such
terms and conditions as the Board shall establish, in each case to be set forth
in the applicable Award agreement.

 

9.           
Other Stock-Based Awards

 

(a)           General.  Other Awards of shares of Common Stock, and
other Awards that are valued in whole or in part by reference to, or are
otherwise based on, shares of Common Stock or other property, may be granted hereunder
to Participants (“Other Stock-Based-Awards”),
including without limitation Awards entitling recipients to receive shares of
Common Stock to be delivered in the future. 
Other Stock-Based Awards may be paid in shares of Common Stock or cash,
as the Board shall determine.  The
Company may also grant Performance Awards or other Awards denominated in cash
rather than shares of Common Stock (“Cash-Based Awards”).

 

(b)           Terms
and Conditions.  Subject to the
provisions of the Plan, the Board shall determine the terms and conditions of
each Other Stock-Based Award or Cash-Based Awards, including any purchase price
applicable thereto.

 

10.          Adjustments
for Changes in Common Stock and Certain Other Events

 

(a)           Changes
in Capitalization.  In the event of
any stock split, reverse stock split, stock dividend, recapitalization,
combination of shares, reclassification of shares, spin-off or other similar
change in capitalization or event, or any dividend or distribution to holders
of Common Stock other than an ordinary cash dividend, (i) the number and
class of securities available under the Plan, (ii) the sub-limits and
share counting rules set forth in Sections 4(a) and 4(b), (iii) the
number and class of securities and exercise price per share of each outstanding
Option and each Option issuable under Section 6, (iv) the share- and
per-share provisions and the measurement price of each SAR, (v) the number
of shares subject to and the repurchase price per share subject to each
outstanding Restricted Stock Award and (vi) the share- and
per-share-related provisions and the purchase price, if any, of each
outstanding Other Stock-Based Award, shall be equitably adjusted by the Company
(or substituted Awards may be made, if applicable) in the manner determined by
the Board.  Without limiting the
generality of the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to an outstanding Option are adjusted as of the date
of the distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

 

9

 

(b)           Reorganization Events.

 

(1)           Definition. 
A “Reorganization Event” shall
mean:  (a) any merger or
consolidation of the Company with or into another entity as a result of which
all of the Common Stock of the Company is converted into or exchanged for the
right to receive cash, securities or other property or is cancelled, (b) any
transfer or disposition of all of the Common Stock of the Company for cash,
securities or other property pursuant to a share exchange or other transaction
or (c) any liquidation or dissolution of the Company.

 

(2)           Consequences of a Reorganization Event on Awards Other
than Restricted Stock Awards.  In
connection with a Reorganization Event, the Board may take any one or more of
the following actions as to all or any (or any portion of) outstanding Awards
other than Restricted Stock Awards on such terms as the Board determines:  (i) provide that Awards shall be
assumed, or substantially equivalent Awards shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof), (ii) upon
written notice to a Participant, provide that the Participant’s unexercised
Awards will terminate immediately prior to the consummation of such
Reorganization Event unless exercised by the Participant within a specified
period following the date of such notice, (iii) provide that outstanding
Awards shall become exercisable, realizable, or deliverable, or restrictions
applicable to an Award shall lapse, in whole or in part prior to or upon such
Reorganization Event, (iv) in the event of a Reorganization Event under
the terms of which holders of Common Stock will receive upon consummation
thereof a cash payment for each share surrendered in the Reorganization Event
(the “Acquisition Price”), make or
provide for a cash payment to a Participant equal to the excess, if any,
of  (A) the Acquisition Price times
the number of shares of Common Stock subject to the Participant’s Awards (to
the extent the exercise price does not exceed the Acquisition Price) over (B) the
aggregate exercise price of all such outstanding Awards and any applicable tax
withholdings, in exchange for the termination of such Awards, (v) provide
that, in connection with a liquidation or dissolution of the Company, Awards
shall convert into the right to receive liquidation proceeds (if applicable,
net of the exercise price thereof and any applicable tax withholdings) and (vi) any
combination of the foregoing.  In taking
any of the actions permitted under this Section 10(b), the Board shall not
be obligated by the Plan to treat all Awards, all Awards held by a Participant,
or all Awards of the same type, identically.

 

For purposes of clause (i) above,
an Option shall be considered assumed if, following consummation of the
Reorganization Event, the Option confers the right to purchase, for each share
of Common Stock subject to the Option immediately prior to the consummation of
the Reorganization Event, the consideration (whether cash, securities or other
property) received as a result of the Reorganization Event by holders of Common
Stock for each share of Common Stock held immediately prior to the consummation
of the Reorganization Event (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, however,
that if the consideration received as a result of the Reorganization Event is
not solely common stock of the acquiring or succeeding corporation (or an
affiliate thereof), the Company may, with the consent of the acquiring or
succeeding corporation, provide for the consideration to be received upon the
exercise of Options to consist solely of common stock of the acquiring or
succeeding corporation (or an affiliate thereof) equivalent in value (as
determined by the Board) to the per share consideration received by holders of
outstanding shares of Common Stock as a result of the Reorganization Event.

 

10

 

(3)           Consequences of a Reorganization Event on Restricted
Stock Awards.  Upon the occurrence of
a Reorganization Event other than a liquidation or dissolution of the Company,
the repurchase and other rights of the Company under each outstanding
Restricted Stock Award shall inure to the benefit of the Company’s successor and
shall, unless the Board determines otherwise, apply to the cash, securities or
other property which the Common Stock was converted into or exchanged for
pursuant to such Reorganization Event in the same manner and to the same extent
as they applied to the Common Stock subject to such Restricted Stock Award; provided, however, that
the Board may provide for termination or deemed satisfaction of such repurchase
or other rights under the instrument evidencing any Restricted Stock Award or
any other agreement between a Participant and the Company, either initially or
by amendment.  Upon the occurrence of a
Reorganization Event involving the liquidation or dissolution of the Company,
except to the extent specifically provided to the contrary in the instrument
evidencing any Restricted Stock Award or any other agreement between a
Participant and the Company, all restrictions and conditions on all Restricted
Stock Awards then outstanding shall automatically be deemed terminated or
satisfied.

 

11.          General Provisions Applicable to
Awards

 

(a)           Transferability
of Awards.  Awards shall not be sold,
assigned, transferred, pledged or otherwise encumbered by the person to whom
they are granted, either voluntarily or by operation of law, except by will or
the laws of descent and distribution or, other than in the case of an Incentive
Stock Option, pursuant to a qualified domestic relations order, and, during the
life of the Participant, shall be exercisable only by the Participant; provided, however, that the Board may permit or provide in
an Award for the gratuitous transfer of the Award by the Participant to or for
the benefit of any immediate family member, family trust or other entity
established for the benefit of the Participant and/or an immediate family
member thereof if, with respect to such proposed transferee, the Company would
be eligible to use a Form S-8 for the registration of the sale of the
Common Stock subject to such Award under the Securities Act of 1933, as
amended; provided, further, that the Company shall not be required to recognize
any such transfer until such time as the Participant and such permitted
transferee shall, as a condition to such transfer, deliver to the Company a
written instrument in form and substance satisfactory to the Company confirming
that such transferee shall be bound by all of the terms and conditions of the
Award.  References to a Participant, to
the extent relevant in the context, shall include references to authorized
transferees.

 

(b)           Documentation.  Each Award shall be evidenced in such form
(written, electronic or otherwise) as the Board shall determine.  Each Award may contain terms and conditions
in addition to those set forth in the Plan.

 

(c)           Board
Discretion.  Except as otherwise
provided by the Plan, each Award may be made alone or in addition or in
relation to any other Award.  The terms
of each Award need not be identical, and the Board need not treat Participants
uniformly.

 

(d)           Termination
of Status.  The Board shall determine
the effect on an Award of the disability, death, termination or other cessation
of employment, authorized leave of absence or other change in the employment or
other status of a Participant and the extent to which, and the 

 

11

 

period during which, the
Participant, or the Participant’s legal representative, conservator, guardian
or Designated Beneficiary, may exercise rights under the Award.

 

(e)           Withholding.  The Participant must satisfy all applicable
federal, state, and local or other income and employment tax withholding
obligations before the Company will deliver stock certificates or otherwise
recognize ownership of Common Stock under an Award.  The Company may decide to satisfy the
withholding obligations through additional withholding on salary or wages.  If the Company elects not to or cannot
withhold from other compensation, the Participant must pay the Company the full
amount, if any, required for withholding or have a broker tender to the Company
cash equal to the withholding obligations. 
Payment of withholding obligations is due before the Company will issue
any shares on exercise or release from forfeiture of an Award or, if the
Company so requires, at the same time as is payment of the exercise price
unless the Company determines otherwise. 
If provided for in an Award or approved by the Board in its sole
discretion, a Participant may satisfy such tax obligations in whole or in part
by delivery (either by actual delivery or attestation) of shares of Common
Stock, including shares retained from the Award creating the tax obligation,
valued at their Fair Market Value; provided, however,
except as otherwise provided by the Board, that the total tax withholding where
stock is being used to satisfy such tax obligations cannot exceed the Company’s
minimum statutory withholding obligations (based on minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to such supplemental taxable income).  Shares used to satisfy tax withholding requirements
cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other
similar requirements.

 

(f)            Amendment
of Award.  The Board may amend,
modify or terminate any outstanding Award, including but not limited to,
substituting therefor another Award of the same or a different type, changing
the date of exercise or realization, and converting an Incentive Stock Option
to a Nonstatutory Stock Option.  The
Participant’s consent to such action shall be required unless (i) the
Board determines that the action, taking into account any related action, would
not materially and adversely affect the Participant’s rights under the Plan or (ii) the
change is permitted under Section 10 hereof.

 

(g)           Conditions
on Delivery of Stock.  The Company
will not be obligated to deliver any shares of Common Stock pursuant to the
Plan or to remove restrictions from shares previously delivered under the Plan
until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company’s counsel,
all other legal matters in connection with the issuance and delivery of such
shares have been satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations, and (iii) the
Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements
of any applicable laws, rules or regulations.

 

(h)           Acceleration.  The Board may at any time provide that any
Award shall become immediately exercisable in full or in part, free of some or
all restrictions or conditions, or otherwise realizable in full or in part, as
the case may be.

 

12

 

(i)            Performance
Awards.

 

(1)           Grants. 
Restricted Stock Awards and Other Stock-Based Awards under the Plan may
be made subject to the achievement of performance goals pursuant to this Section 11(i) (“Performance Awards”), subject to the
limit in Section 4(b)(1) on shares covered by such grants.

 

(2)           Committee. 
Grants of Performance Awards to any Covered Employee intended to qualify
as “performance-based compensation” under Section 162(m) (“Performance-Based Compensation”)
shall be made only by a Committee (or subcommittee of a Committee) comprised
solely of two or more directors eligible to serve on a committee making Awards
qualifying as “performance-based compensation” under Section 162(m).  In the case of such Awards granted to Covered
Employees, references to the Board or to a Committee shall be treated as
referring to such Committee or subcommittee. 
“Covered Employee” shall mean
any person who is, or whom the Committee, in its discretion, determines may be,
a “covered employee” under Section 162(m)(3) of the Code.

 

(3)           Performance Measures.  For any Award that is intended to qualify as
Performance-Based Compensation, the Committee shall specify that the degree of
granting, vesting and/or payout shall be subject to the achievement of one or
more objective performance measures established by the Committee, which shall
be based on the relative or absolute attainment of specified levels of one or
any combination of the following:  net
income, earnings before or after discontinued operations, stock compensation,
interest, taxes, depreciation and/or amortization, operating profit before or
after discontinued operations and/or taxes, sales, sales growth, earnings
growth, cash flow or cash position, gross margins, stock price, market share,
return on sales, assets, equity or investment, improvement of financial
ratings, achievement of balance sheet or income statement objectives or total
shareholder return. Such goals may reflect absolute entity or business unit
performance or a relative comparison to the performance of a peer group of
entities or other external measure of the selected performance criteria and may
be absolute in their terms or measured against or in relationship to other
companies comparably, similarly or otherwise situated.  The Committee may specify that such
performance measures shall be adjusted to exclude any one or more of (i) extraordinary
items, (ii) gains or losses on the dispositions of discontinued
operations, (iii) the cumulative effects of changes in accounting
principles, (iv) the writedown of any asset, and (v) charges for
restructuring and rationalization programs. 
Such performance measures:  (i) may
vary by Participant and may be different for different Awards; (ii) may be
particular to a Participant or the department, branch, line of business,
subsidiary or other unit in which the Participant works and may cover such
period as may be specified by the Committee; and (iii) shall be set by the
Committee within the time period prescribed by, and shall otherwise comply with
the requirements of, Section 162(m). 
Awards that are not intended to qualify as Performance-Based
Compensation may be based on these or such other performance measures as the
Board may determine.

 

(4)           Adjustments. 
Notwithstanding any provision of the Plan, with respect to any
Performance Award that is intended to qualify as Performance-Based
Compensation, the Committee may adjust downwards, but not upwards, the cash or
number of Shares payable pursuant to such Award, and the Committee may not
waive the achievement of the applicable performance measures except in the case
of the death or disability of the Participant or a change in control of the
Company.

 

13

 

(5)           Other.  The
Committee shall have the power to impose such other restrictions on Performance
Awards as it may deem necessary or appropriate to ensure that such Awards
satisfy all requirements for Performance-Based Compensation.

 

12.          Miscellaneous

 

(a)           No
Right To Employment or Other Status. 
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided
in the applicable Award.

 

(b)           No
Rights As Stockholder.  Subject to
the provisions of the applicable Award, no Participant or Designated
Beneficiary shall have any rights as a stockholder with respect to any shares
of Common Stock to be distributed with respect to an Award until becoming the
record holder of such shares.

 

(c)           Effective
Date and Term of Plan.  The Plan
shall become effective on the date the Plan is approved by the Company’s
stockholders (the “Effective Date”).  No Awards shall be granted under the Plan
after the expiration of 10 years from the Effective Date, but Awards previously
granted may extend beyond that date.

 

(d)           Amendment
of Plan.  The Board may amend,
suspend or terminate the Plan or any portion thereof at any time provided that (i) to
the extent required by Section 162(m), no Award granted to a Participant
that is intended to comply with Section 162(m) after the date of such
amendment shall become exercisable, realizable or vested, as applicable to such
Award, unless and until the Company’s stockholders approve such amendment if
required by Section 162(m) (including the vote required under Section 162(m));
(ii) no amendment that would require stockholder approval under the rules of
the NASDAQ Stock Market (“NASDAQ”)
may be made effective unless and until the Company’s stockholders approve such
amendment; and (iii) if NASDAQ amends its corporate governance rules so
that such rules no longer require stockholder approval of material
amendments to equity compensation plans, then, from and after the effective
date of such amendment to the NASDAQ rules, no amendment to the Plan (A) materially
increasing the number of shares authorized under the Plan (other than pursuant
to Section 4(c) or 10), (B) expanding the types of Awards that
may be granted under the Plan, or (C) materially expanding the class of
participants eligible to participate in the Plan shall be effective unless and
until the Company’s stockholders approve such amendment.  In addition, if at any time the approval of
the Company’s stockholders is required as to any other modification or
amendment under Section 422 of the Code or any successor provision with
respect to Incentive Stock Options, the Board may not effect such modification
or amendment without such approval. 
Unless otherwise specified in the amendment, any amendment to the Plan
adopted in accordance with this Section 12(d) shall apply to, and be
binding on the holders of, all Awards outstanding under the Plan at the time
the amendment is adopted, provided the Board determines that such amendment
does not materially and adversely affect the rights of Participants under the
Plan.  An Award may be made that is
conditioned upon stockholder approval of an amendment to the Plan.

 

14

 

(e)           Authorization
of Sub-Plans.  The Board may from
time to time establish one or more sub-plans under the Plan for purposes of
satisfying applicable securities or tax laws of various jurisdictions.  The Board shall establish such sub-plans by
adopting supplements to the Plan containing (i) such limitations on the
Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such
additional terms and conditions not otherwise inconsistent with the Plan as the
Board shall deem necessary or desirable. 
All supplements adopted by the Board shall be deemed to be part of the
Plan, but each supplement shall apply only to Participants within the affected
jurisdiction and the Company shall not be required to provide copies of any
supplement to Participants in any jurisdiction which is not the subject of such
supplement.

 

(f)            Non
U.S. Employees. Awards may be granted to Participants who are non-U.S.
citizens or residents employed outside the United States, or both, on such
terms and conditions different from those applicable to Awards to Participants
employed in the United States as may, in the judgment of the Board, be
necessary or desirable in order to recognize differences in local law or tax
policy. The Board also may impose conditions on the exercise or vesting of
Awards in order to minimize the Board’s obligation with respect to tax
equalization for Participants on assignments outside their home country. The
Board may approve such supplements to or amendments, restatements or
alternative versions of the Plan as it may consider necessary or appropriate
for such purposes, without thereby affecting the terms of this Plan as in
effect for any other purpose, and the Secretary or other appropriate officer of
the Company may certify any such document as having been approved and adopted
in the same manner as this Plan.

 

(g)           Compliance
with Section 409A of the Code. Except as provided in individual Award
agreements initially or by amendment, if and to the extent any portion of any
payment, compensation or other benefit provided to a Participant in connection
with his or her employment termination is determined to constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code and
the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of
the Code, as determined by the Company in accordance with its procedures, by
which determination the Participant (through accepting the Award) agrees that  he or she is bound, such portion of the
payment, compensation or other benefit shall not be paid before the day that is
six months plus one day after the date of “separation from service” (as
determined under Code Section 409A) (the “New
Payment Date”), except as Code Section 409A may then
permit.  The aggregate of any payments
that otherwise would have been paid to the Participant during the period
between the date of separation from service and the New Payment Date shall be
paid to the Participant in a lump sum on such New Payment Date, and any
remaining payments will be paid on their original schedule.

 

The Company makes no representations or
warranty and shall have no liability to the Participant or any other person if
any provisions of or payments, compensation or other benefits under the Plan
are determined to constitute nonqualified deferred compensation subject to Code
Section 409A but do not to satisfy the conditions of that section.

 

(h)           Limitations
on Liability.  Notwithstanding any other
provisions of the Plan, no individual  acting
as a director, officer, other employee, or agent of the Company will be liable
to any Participant, former Participant, spouse, beneficiary, or any other
person for any claim, loss, liability, or expense incurred in connection with
the Plan, nor will such individual be personally 

 

15

 

liable with respect to the Plan
because of any contract or other instrument he or she executes in his or her
capacity as a director, officer, other employee,  or agent of the Company.  The Company will indemnify and hold harmless
each director, officer, other employee, or agent of the Company to whom any
duty or power relating to the administration or interpretation of the Plan has
been or will be delegated, against any cost or expense (including attorneys’
fees) or liability (including any sum paid in settlement of a claim with the
Board’s approval) arising out of any act or omission to act concerning this
Plan unless arising out of such person’s own fraud or bad faith.

 

(i)            Governing
Law.  The provisions of the Plan and
all Awards made hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware, excluding choice-of-law principles of
the law of such state that would require the application of the laws of a
jurisdiction other than such state.

 

16

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