EB-19F, Revision OCT 1996
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NOTE:  Clauses identified as "MANDATORY" are mandatory if invoked in Buyer's prime or lower-tier contract.

1.    CLAUSES INCORPORATED BY REFERENCE OR FULL TEXT
    (1)    The terms and conditions of this Purchase Order incorporate one or more clauses by reference, with the same force and effect as if they were given in full text.
    (2)    If there is a conflict between, or addition to, the FAR and DFARS clauses invoked herein and the FAR and DFARS clauses of Buyer's prime contract, Buyer's prime contract FAR and DFARS revisions shall govern.  This paragraph (2) is also applicable to clauses provided herein in full text.  However, any alterations or additions by EB to the original clause being so superceded, carry forward to the revised clause.
    (3)    In the FAR and DFARS clauses incorporated in this order by reference or in full text, unless otherwise stated, the terms "Government" and "Contracting Officer" shall mean "Buyer" (Electric Boat Corporation), the term "contractor" shall mean "Seller", the term "subcontractor" shall mean "Seller's subcontractors", and the term "contract" shall mean this order, when it can be so reasonably interpreted, and it is not obvious that the words refer to Buyer's prime contract or Contractor or Government or Contracting Officer or Seller itself.
    (4)    Copies of the FAR and DFARS may be obtained from the Superintendent of Documents, U. S. Government Printing Office, Washington, D. C. 20402.

2.    FAR 52.225-14, INCONSISTENCY BETWEEN ENGLISH VERSION     AND TRANSLATION OF CONTRACT (AUG 1989) (EB-MODIFIED)
     In the event of inconsistency between any terms of this Purchase Order and any translation thereof into another language, the English language meaning shall control.

3.    DEFINITIONS
    (a)    "Seller," means the addressee of this Purchase Order.
    (b)    "Buyer," means Electric Boat Corporation, a wholly-owned subsidiary of General Dynamics Corporation.  Where reference is made to "Buyer" in an active sense, the reference is to an authorized representative of the Materials Management Department of Electric Boat Corporation.
    (c)    "Supplies," means the material, articles, services or other items ordered by this Purchase Order, whether specially manufactured or not.
    (d)    "Federal," or "Government," means the "United States of America."
    (e)    "State," may mean province, department or political subdivision of the Nation in which Seller is performing the work called for by this Order.
    (f)    "Contracting Officer," means any person (Government employee or member of the Armed Forces) properly designated as a Contracting Officer by any agency of the Government.
    (g)    "Prime Contract," means the contract between Buyer and the Government under which this Purchase Order is entered into.
    (h)    "Contract," "Purchase Order," and "Subcontract," used herein are interchangeable, and denote this Purchase Order.

4.    FAR 52.216-7, ALLOWABLE COST AND PAYMENT
    (JUL 1991) (EB-MODIFIED)
    (a)    Invoicing.  The Buyer shall make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable by the Buyer in accordance with Subpart 31.2 of the Federal Acquisition Regulation (FAR) in effect on the date of this Purchase Order and the Terms of this Purchase Order.
    (b)    Reimbursing costs. (1)  For the purpose of reimbursing allowable costs (except as provided in subparagraph (2) below, with respect to pension, deferred profit sharing, and employee stock ownership plan contributions), the term "costs" includes only-
        (i)    Those recorded costs that, at the time of the request for reimbursement, the Contractor has paid by cash, check, or other form of actual payment for items or services purchased directly for the Purchase Order;
        (ii)    When the Seller is not delinquent in paying costs of Purchase Order performance in the ordinary course of business, costs incurred, but not necessarily paid, for -
            (A) Materials issued from the Seller's inventory and placed in the production process for use on the purchase order;
            (B) Direct labor;
            (C) Direct travel;
            (D) Other direct in-house costs; and
            (E) Properly allocable and allowable indirect costs, as shown in the records maintained by the Seller for purposes of obtaining reimbursement under Government prime and subcontracts;
        (iii)    The amount of progress payments that have been paid to the Seller's subcontractors under similar cost standards.
        (2)    Seller's contributions to any pension or other postretirement benefit, profit-sharing or employee stock ownership plan funds that are paid quarterly or more often may be included in indirect costs for payment purposes; Provided, that the Seller pays the contribution to the fund within 30 days after the close of the period covered.  Payments made 30 days or more after the close of a period shall not be included until the Seller actually makes the payment.  Accrued costs for such contributions that are paid less often than quarterly shall be excluded from indirect costs for payment purposes until the Seller actually makes the payment.
        (3)    Notwithstanding the audit and adjustment of invoices or vouchers under paragraph (g) below, allowable indirect costs under this contract shall be obtained by applying indirect cost rates established in accordance with paragraph (d) below.
        (4)    Any statements in specifications or other documents incorporated in this Purchase Order by reference designating performance of services or furnishing of materials at the Seller's expense or at no cost to the Buyer shall be disregarded for purposes of cost-reimbursement under this clause.
    (c)    Small business concerns.  A small business concern may be paid more often than every 2 weeks and may invoice and be paid for recorded costs for items or services purchased directly for the Purchase Order, even though the concern has not yet paid for those items or services.
    (d)    Final indirect cost rates.
         (1) Final annual indirect cost rates and the appropriate bases shall be established in accordance with Subpart 42.7 of the Federal Acquisition Regulation (FAR) in effect for the period covered by the indirect cost rate proposal.
        (2)    The Seller shall, within 90 days after the expiration of each of its fiscal years, or by a later date approved by the Contracting Officer submit to the cognizant Contracting Officer responsible for negotiating its final indirect cost rates and, if required by agency procedures, to the cognizant audit activity proposed final indirect cost rates for that period and supporting cost data specifying the Prime Contract and/or subcontract to which the rates apply.  The proposed rates shall be based on the Seller's actual cost experience for that period.  The appropriate Government representative and Seller shall establish the final indirect cost rates as promptly as practical after receipt of the Seller's proposal.
        (3)    The Seller and the appropriate Government representative shall execute a written understanding setting forth the final indirect cost rates.  The understanding shall specify (i) the agreed-upon final annual indirect cost rates, (ii) the bases to which the rates apply, (iii) the periods for which the rates apply, (iv) any specific indirect cost items treated as direct costs in the settlement, and (v) the affected Prime Contract and/or subcontracts, identifying any with advance agreements or special terms and the applicable rates.  The understanding shall not change any monetary ceiling, contract obligation, or specific cost allowance or disallowance provided for in this Purchase Order.  The understanding is incorporated into this Purchase Order upon execution.
        (4)    DELETED
    (e)    Billing rates.  Until final annual indirect cost rates are established for any period, the Buyer shall reimburse the Seller at billing rates established by the Buyer's authorized representative or by an authorized DCAA representative (the cognizant auditor), subject to adjustment when the final rates are established.  These billing rates-
        (1)    Shall be the anticipated final rates; and
        (2)    May be prospectively or retroactively revised by mutual agreement, at either party's request, to prevent substantial overpayment or underpayment.
    (f)    Quick-closeout procedures.   When the Seller and Buyer's authorized representative agree, the quick-closeout procedures of Subpart 42.7 of the FAR may be used.
    (g)    Audit.  At any time or times before final payment, the Buyer may have the Seller's invoices or vouchers and statements of cost audited. Any payment may be (1) reduced by amounts found by the Buyer's authorized representative not to constitute allowable costs or (2) adjusted for prior overpayments or underpayments.
    (h)    Final payment. (1) The Seller shall submit a completion invoice or voucher, designated as such, promptly upon completion of the work, but no later than one year (or longer, as the Buyer's Authorized Representative may approve in writing) from the completion date.  Upon approval of that invoice or voucher, and upon the Seller's compliance with all terms of this Purchase Order, the Buyer shall promptly pay any balance of allowable costs and that part of the fee (if any) not previously paid.
        (2)    The Seller shall pay to the Buyer any refunds, rebates, credits, or other amounts (including interest, if any) accruing to or received by the Seller or any assignee under this Purchase Order, to the extent that those amounts are properly allocable to costs for which the Seller has been reimbursed by the Buyer.  Reasonable expenses incurred by the Seller for securing refunds, rebates, credits, or other amounts shall be allowable costs if approved by the Buyer's Authorized Representative.  Before final payment under this contract, the Seller and each assignee whose assignment is in effect at the time of final payment shall execute and deliver-
            (i)  An assignment to the Government, in form and substance satisfactory to the Buyer's Authorized Representative, of refunds, rebates, credits, or other amounts (including interest, if any) properly allocable to costs for which the Seller has been reimbursed by the Buyer under this Purchase Order; and
            (ii)  A release discharging the Buyer, the Government, and their officers, agents, and employees from all liabilities, obligations, and claims arising out of or under this Purchase Order, except-
                (A)  Specified claims stated in exact amounts, or in estimated amounts when the exact amounts are not known;
                (B)  Claims (including reasonable incidental expenses) based upon liabilities of the Seller to third parties arising out of the performance of this contract; provided, that the claims are not known to the Seller on the date of the execution of the release, and that the Seller gives notice of the claims in writing to the Buyer within 6 years following the release date or notice of final payment date, whichever is earlier; and
                (C)  Claims for reimbursement of costs, including reasonable incidental expenses, incurred by the Seller under the patent clauses of this Purchase Order, excluding, however, any expenses arising from the Seller's indemnification of the Buyer and Government against patent liability.

5.    FAR 52.216-8, FIXED FEE (APR 84) (EB-MODIFIED)
    A.    Buyer shall pay Seller for performing this Purchase Order the fixed fee specified in the Schedule.
    B.    Payment of the fixed fee shall be made as specified in the schedule; provided, that after payment of 85 percent of the fixed fee, Buyer's Authorized Representative may withhold further payment of fee until a reserve is set aside in an amount that Buyer's Authorized Representative considers necessary to protect Buyer's interest.  This reserve shall not exceed 15 percent of the total fixed fee or $100,000, whichever is less.

6.    FAR 52.222-2, PAYMENT FOR OVERTIME PREMIUMS
    (JUL 1990) (EB-MODIFIED)
    (Applies if this is a cost-reimbursement    purchase order in excess of $100,000.)
    A.    The use of overtime is authorized under this Purchase Order if the overtime premium cost does not exceed zero.  In addition to this dollar ceiling, overtime is permitted only 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 Buyer and the Government.
    B.    Any request for estimated overtime premiums that exceeds the amount specified above shall include all estimated overtime for Purchase Order 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 Buyer's Authorized Representative to evaluate the necessity for the overtime;
        (2)    demonstrate the effect that denial of the request will have on the Purchase Order delivery or performance schedule;
        (3)    identify the extent to which approval of overtime would affect the performance or payments in connection with other Government prime or subcontracts, 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.

7.    FAR 52.228-7, INSURANCE - LIABILITY TO THIRD PERSONS
    (APR 1984) PARTIAL  (EB-MODIFIED)
    A.    The Seller shall procure and thereafter maintain worker's compensation, employer's liability, general liability (bodily injury) and comprehensive automobile liability (bodily injury and property damage) insurance, with respect to performance under this Purchase Order, and such other insurance as Buyer may from time to time require with respect to performance under this Purchase Order, provided, that the Seller may with the approval of Buyer,  maintain a self-insurance program and provided further, that with respect to worker's compensation the Seller is qualified pursuant to statutory authority.  All insurance required pursuant to the provisions of this paragraph shall be in such form, in such amounts, and for such periods of time, as Buyer may from time to time require or approve, and with insurers approved by Buyer.
    B.    The Seller agrees, to the extent and in the manner required by Buyer, to submit for the approval of Buyer any other insurance maintained by the Seller in connection with the performance of this purchase Order and for which the Seller seeks reimbursement hereunder.
    C.    The Seller shall be reimbursed for the portion allocable to this Purchase Order of the reasonable cost of insurance as required or approved pursuant to the provisions of this article.
    D.    The Seller shall give Buyer immediate notice of any suit or action filed or prompt notice of any claim made against the Seller arising out of the performance of this Purchase Order, the cost and expense of which may be reimbursable to the Seller under the provisions of this Purchase Order, and the risk of which is then uninsured or in which the amount claimed exceeds the amount of coverage.  The Seller shall furnish immediately to Buyer copies of all pertinent papers received by the Seller.  If the amount of the liability claimed exceeds amount of coverage, the Seller shall authorize representatives of Buyer to collaborate with counsel for the insurance carrier, if any, in settling or defending such claim.  If the liability is not insured or covered by bond, the Seller shall, if required by Buyer, authorize representatives of Buyer to settle or defend any such claim and to represent the Seller in or take charge of any litigation in connection therewith, provided, however, that the Seller may, at his own expense, be associated with the representatives of Buyer in the settlement or defense of any such claim or litigation.

8.    FAR 52.232-7, PAYMENTS UNDER TIME-AND-MATERIALS AND     LABOR-HOUR CONTRACTS (APR 1984) (EB-MODIFIED)
     Buyer shall pay Seller as follows upon the submission of invoices or vouchers approved by Buyer's Authorized Representative:
    A.    Hourly Rate.
        (1)    The amounts shall be computed by multiplying the appropriate hourly rates prescribed in the Schedule by the number of direct labor hours performed.  The rates shall include wages, indirect costs, general and administrative expense, and profit.  Fractional parts of an hour shall be  payable on a prorated basis.  Vouchers may be submitted once each month (or at more frequent intervals, if approved by Buyer's Authorized Representative), to Buyer's Authorized Representative or designee.  Seller shall substantiate vouchers by evidence of actual payment and by individual daily job timecards, or other substantiation approved by Buyer's Authorized Representative.  Promptly after receipt of each substantiated voucher, Buyer shall, except as otherwise provided in this Purchase Order, and subject to  the terms of E. below, pay the voucher as approved by Buyer's Authorized Representative.
        (2)    Unless otherwise prescribed in the Schedule, Buyer's Authorized Representative shall withhold 5 percent of the amounts due under this paragraph A., but the total amount withheld shall not exceed $50,000.  The amount withheld shall be retained until the execution and delivery of a release by the Seller as provided in paragraph F. below.
        (3)    Unless the Schedule prescribes otherwise, the hourly rates in the Schedule shall not be varied by virtue of the Seller having performed work on an overtime basis.  If no overtime rates are provided in the Schedule and overtime work is approved in advance by Buyer's Authorized Representative, overtime rates shall be negotiated.  Failure to agree upon these overtime rates shall be treated as a dispute.  If the Schedule provides rates for overtime, the premium portion of those rates will be reimbursable only to the extent the overtime is approved by Buyer's Authorized Representative.
    B.    Materials and Subcontracts.
        (1)    Allowable costs of direct materials shall be determined by Buyer's Authorized Representative in accordance with Subpart 31.2 of the Federal Acquisition Regulation (FAR) in effect on the date of this Purchase Order.  Reasonable and allocable material handling costs may be included in the charge for material to the extent they are clearly excluded from the hourly rate.  Material handling costs are comprised of indirect costs, including, when appropriate, general and administrative expense allocated to direct materials in accordance with Seller's usual accounting practices consistent with Subpart 31.2 of the FAR.  Seller shall be reimbursed for items and services purchased directly for the Purchase Order only when cash, checks, or other forms of actual payment have been made for such purchased items or services.  Direct materials, as used in this clause, are those materials which enter directly into the end product, or which are used or consumed directly in connection with the furnishing of the end product.
        (2)    The cost of subcontracts that are authorized under the subcontracts clause of this Purchase Order shall be reimbursable costs under this clause; provided, that the costs are consistent with subparagraph (3) below.  Reimbursable costs in connection with subcontracts shall be limited to the amounts paid to the subcontractor in the same manner as for items and services purchased directly for the Purchase Order under subparagraph (1) above; however, this requirement shall not apply to a Seller that is a small business concern.  Reimbursable costs shall not include any costs arising from the letting, administration or supervision of performance of the subcontract, if the costs are included in the hourly rates payable under A. (1) above.
        (3)    To the extent able, Seller shall:
            (a)  obtain materials at the most advantageous prices available with due regard to securing prompt delivery of satisfactory materials; and
            (b)  take all cash and trade discounts, rebates, allowances, credits, salvage, commissions, and other benefits.  When unable to take advantage of the benefits, Seller shall promptly notify Buyer's Authorized Representative and give the reasons.  Credit shall be given to Buyer for cash and trade discounts, rebates, allowances, credits, salvage, the value of any appreciable scrap, commission, and other amounts that have accrued to the benefit of the Seller, or would have accrued except for the fault or neglect of Seller.  The benefits lost without fault or neglect on the part of Seller, or lost through fault of Buyer, shall not be deducted from gross costs.
    C.    Total Cost.
        It is estimated that the total cost to Buyer for the performance of this Purchase Order shall not exceed the ceiling price set forth in the Schedule and Seller agrees to use its best efforts to perform the work specified in the Schedule and all obligations under this Purchase Order within such ceiling price.  If at any time Seller has reason to believe that the hourly rate payments and material costs that will accrue in performing this Purchase Order in the next succeeding 30 days, if added to all other payments and costs previously accrued, will exceed 85 percent of the ceiling price in the Schedule, Seller shall notify Buyer's Authorized Representative giving a revised estimate of the total price to Buyer for performing this Purchase Order with supporting reasons and documentation.  If at any time during performing this Purchase Order, Seller has reason to believe that the total price to Buyer for performing this Purchase Order will be substantially greater or less than the then stated ceiling price, Seller shall so notify Buyer's Authorized Representative, giving a revised estimate of the total price for performing this purchase Order, with supporting reasons and documentation.  If at any time during performing this Purchase Order, Buyer has reason to believe that the work to be required in performing this Purchase Order will be substantially greater or less than the stated ceiling price, Buyer's Authorized Representa-tive will so advise Seller, giving the then revised estimate of the total amount of effort to be required under this Purchase Order.
    D.    Ceiling Price.
        Buyer shall not be obligated to pay Seller any amount in excess of the ceiling price in the Schedule, and Seller shall not be obligated to continue performance if to do so would exceed the ceiling price set forth in the Schedule, unless and until Buyer's Authorized Representative shall have notified Seller in writing that the ceiling price has been increased and shall have specified in the notice a revised ceiling that shall constitute the ceiling price for performance under this Purchase Order.  When and to the extent that the ceiling price set forth in the Schedule has been increased, any hours expended and material costs incurred by Seller in excess of the ceiling price before the increase shall be allowable to the same extent as if the hours expended and material costs had been incurred after the increase in the ceiling price.
    E.    Audit.
        At any time before final payment under this Purchase Order Buyer's Authorized Representative may request audit of the invoices or vouchers and substantiating material.  Each payment previously made shall be subject to reduction to the extent of amounts, on preceding invoices or vouchers, that are found by Buyer's Authorized Representative not to have been properly payable and shall also be subject to reduction for overpayments or to increase for underpayments.  Upon receipt and approval of the voucher or invoice designated by Seller as the "completion voucher" or "completion invoice" and substantiating materials, and upon compliance by Seller with all terms of this Purchase Order (including, without limitations, terms relating to patents and the terms of F. and G. below), Buyer shall promptly pay any balance due to Seller.  The completion invoice or voucher, and substantiating material, shall be submitted by Seller as promptly as practicable following completion of the work under this Purchase Order, but in no event later than 1 year (or such longer period as Buyer's Authorized Representative may approve in writing) from the date of completion.
    F.    Assignment.
        Seller, and each assignee under an assignment entered into under this Purchase Order and in effect at the time of final payment under this Purchase Order, shall execute and deliver, at the time of and as a condition precedent to final payment under this Purchase Order, a release discharging the Government and Buyers, and their officers, agents, and employees of and from all liabilities, obligations, and claims arising out of or under this Purchase Order, subject only to the following exceptions:
        (1)    Specified claims in stated amounts, or in estimated amounts if the amounts are not susceptible of exact statement by Seller.
        (2)    Claims, together with reasonable incidental expenses, based upon the liabilities of Seller to third parties arising out of performing this Purchase Order, that are not known on the date of the execution of the release, and of which the Seller gives notice in writing to Buyer's Authorized Representative not more than 6 years after the date of release or the date of any notice to Seller that Buyer is prepared to make final payment, whichever is earlier.
        (3)    Claims for reimbursement of costs (other than expenses of Seller by reason of its indemnification of the Government and Buyer against patent liability), including reasonable incidental expenses, incurred by Seller under the terms of this Purchase Order relating to patents.
    G.    Refunds.
        Seller agrees that any refunds, rebates, or credits (including any related interest) accruing to or received by Seller or any assignee, that arise under the materials portion of this Purchase Order and for which Seller received reimbursement, shall be paid by Seller to Buyer. Seller and each assignee, under an assignment entered into under this Purchase Order and in effect at the time of final payment under this Purchase Order, shall execute and deliver, at the time of and as a condition precedent to final payment under this Purchase Order, an assignment to the Government of such refunds, rebates, or credits (including any interest) in form and substance satisfactory to Buyer's Authorized Representative.

9.    FAR 52.232-20, LIMITATION OF COST (APR 1984) (EB-MODIFIED)     (This clause applies if a fully funded cost-reimbursement Purchase Order is contemplated.)
    A.    The parties estimate that performance of this Purchase Order, exclusive of any fee, will not cost Buyer more than (1) the estimated cost specified in the Schedule or, (2) if this is a cost-sharing Purchase Order, Buyer's share of the estimated cost specified in the Schedule.  Seller agrees to use its best efforts to perform the work specified in the Schedule and all obligations under this Purchase Order within the estimated cost, which, if this is a cost-sharing Purchase Order, includes both Buyer's and the Seller's share of the cost.
    B.    Seller shall notify Buyer's Authorized Representative in writing whenever it has reason to believe that:
        (1)    The costs Seller expects to incur under this Purchase Order in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of the estimated cost specified in the Schedule; or
        (2)    The total cost for the performance of this Purchase Order, exclusive of any fee, will be either greater or substantially less than had been previously estimated.
    C.    As part of the notification, Seller shall provide a revised estimate of the total cost of performing this Purchase Order.
    D.    Except as required by other provisions of this Purchase Order, specifically citing and stated to be an exception this clause:
        (1)    Buyer is not obligated to reimburse Seller for costs incurred in excess of (a) the estimated cost specified in the Schedule or, (b) if this is a cost-sharing Purchase Order, the estimated cost to Buyer specified in this Schedule; and
        (2)    Seller is not obligated to continue performance under this Purchase Order (including actions under the "Termination" clause of this Purchase Order) or otherwise incur costs in excess of the estimated cost specified in the Schedule, until Buyer's Authorized Representative (a) notifies Seller in writing that the estimated cost has been increased and (b) provides a revised estimated total cost of performing this Purchase Order.  If this is a cost-sharing Purchase Order, the increase shall be allocated in accordance with the formula specified in the Schedule.
    E.    No notice, communication, or representation in any form other than that specified in subparagraph D.(2) above, or from any person other than Buyer's Authorized Representative, shall affect this Purchase Order's estimated cost to Buyer.  In the absence of the specified notice, Buyer is not obligated to reimburse Seller for any costs in excess of the estimated cost or, if this is a cost-sharing Purchase Order, for any costs in excess of the estimated cost to Buyer specified in the Schedule, whether those excess costs were incurred during the course of the Purchase Order or as a result of termination.
    F.    If the estimated cost specified in the Schedule is increased, any costs Seller incurs before the increase that are in excess of the previously estimated cost shall be allowable to the same extent as if incurred afterward, unless Buyer's Authorized Representative issues a termination or other notice directing that the increase is solely to cover termination or other specified expenses.
    G.    Change Orders shall not be considered an authorization to exceed the estimated cost to Buyer specified in the Schedule, unless they contain a statement increasing the estimated cost.
    H.    If this Purchase Order is terminated or the estimated cost is not increased, Buyer and Seller shall negotiate an equitable distribution of all property produced or purchased under the Purchase Order, based upon the share of costs incurred by each.

10.    FAR 52.232-22, LIMITATION OF FUNDS (APR 1984) (EB-MODIFIED)     (This clause applies if an incrementally funded Cost-Reimbursement purchase Order is contemplated.)
    A.    The parties estimate that performance of this Purchase Order, will not cost Buyer more than (1) the estimated cost specified in the Schedule or, (2) if this is a cost-sharing Purchase Order, Buyer's share of the estimated cost specified in the Schedule.  Seller agrees to use its best efforts to perform the work specified in the Schedule and all obligations under this Purchase Order within the estimated cost, which, if this is a cost-sharing Purchase Order, includes both Buyer's and the Seller's share of the cost.
    B.    The Schedule specifies the amount presently available for payment by Buyer and allotted to this Purchase Order, the items covered, Buyer's share of the cost if this is a cost-sharing Purchase Order, and the period of performance it is estimated that the allotted amount will cover.  The parties contemplate that Buyer will allot additional funds incrementally to the Purchase Order up to the full estimated cost specified in the Schedule, exclusive of any fee.  Seller agrees to perform, or have performed, work on the Purchase Order up to the point at which the total amount paid and payable by Buyer under the Purchase Order approximates but does not exceed the total amount actually allotted by Buyer to the Purchase Order.
    C.    Seller shall notify Buyer's Authorized Representative in writing whenever it has reason to believe that the cost it expects to incur under this Purchase Order in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of (1) the total amount so far allotted to the Purchase Order by Buyer or, (2) if this is a cost-sharing Purchase Order, the amount then allotted to the Purchase Order by Buyer plus the Seller's corresponding share.  The notice shall state the estimated amount of additional funds required to continue performance for the period specified in the Schedule.
    D.    Sixty days before the end of the period specified in the Schedule, Seller shall notify Buyer's Authorized Representative in writing of the estimated amount of additional funds, if any, required to continue timely performance under the Purchase Order or for any further period specified in the Schedule or otherwise agreed upon, and when the funds will be required.
    E.    If, after notification, additional funds are not allotted by the end of the period specified in the Schedule or another agreed-upon date, upon Seller's written request Buyer's Authorized Representative will terminate this Purchase Order on that date in accordance with the provisions of the "Termination" clause of this Purchase Order.  If Seller estimates that the funds available will allow it to continue to discharge its obligations beyond that date, it may specify a later date in its request, and Buyer's Authorized Representative may terminate this Purchase Order on the later date.
    F.    Except as required by other provisions of this Purchase Order, specifically  citing and stated to be an exception to this clause:
        (1)    Buyer is not obligated to reimburse Seller for costs incurred in excess of the total amount allotted by Buyer to this Purchase Order; and
        (2)    Seller is not obligated to continue performance under this contract (including actions under the "Termination" clause of this Purchase Order) or otherwise incur costs in excess of (a) the amount then allotted to the Purchase Order by Buyer or, (b) if this is a cost-sharing Purchase Order, the amount then allotted by Buyer to the Purchase Order plus the Seller's corresponding share, until Buyer's Authorized Representative notifies Seller in writing that the amount allotted by Buyer has been increased and specifies an increased amount, which shall then constitute the total amount allotted by Buyer to this Purchase Order.
    G.    The estimated cost shall be increased to the extent that (1) the amount allotted by Buyer or, (2) if this is a cost-sharing Purchase Order, the amount then allotted by Buyer to the Purchase Order plus the Seller's corresponding share, exceeds the estimated cost specified in the Schedule.  If this is a cost-sharing Purchase Order, the increase shall be allotted in accordance with the formula specified in the Schedule.
    H.    No notice, communication, or representation in any form other than that specified in subparagraph F.(2) above, or from any person other than Buyer's Authorized Representative, shall affect the amount allotted by Buyer to this Purchase Order.  In the absence of the specified notice, Buyer is not obligated to reimburse Seller for any costs in excess of the total amount allotted by Buyer to this Purchase Order, whether incurred during the course of the Purchase Order or as a result of termination.
    I.    When and to the extent that the amount allotted by Buyer to the contracts is increased, any costs Seller incurred before the increase that are in excess of (1) the amount previously allotted by Buyer  or, (2) if this is a cost-sharing Purchase Order, the amount previously allotted by Buyer to the Purchase Order plus Seller's corresponding share, shall be allowable to the same extent as if incurred afterward, unless Buyer's Authorized Representative issues a termination or other notice and directs that the increase is solely to cover termination or other specified expenses.
    J.    Change Orders shall not be considered an authorization to exceed the amount allotted by Buyer specified in the Schedule, unless they contain a statement increasing the amount allotted.
    K.    Nothing in this clause shall affect the right of Buyer to terminate this Purchase Order.  If this Purchase Order is terminated, Buyer and Seller shall negotiate an equitable distribution of all property produced or purchased under the Purchase Order, based upon the share of costs incurred by each.
    L.    If Buyer does not allot sufficient funds to allow completion of the work, Seller is entitled to a percentage of the fee specified in the Schedule equalling the percentage of completion of the work contemplated by this Purchase Order.

11.    FAR 52.243-2, CHANGES - COST-REIMBURSEMENT (AUG 1987)
     (EB-MODIFIED)
     A.    Buyer may at any time, by written Order, and without notice to the sureties, if any, make changes within the general scope of this Purchase Order in any one or more of the following:
        (1)    Description of services to be performed.
        (2)    Time of performance (i.e., hours of the day, days of the week, etc.)
        (3)    Place of performance of the services.
    B.    If any such change causes an increase or decrease in the estimated cost of, or the time required for performance of any part of the work under this Purchase Order, whether or not changed by the Order, or otherwise effects any other terms and conditions of this contract, Buyer shall make an equitable adjustment in the (1) estimated cost, delivery or completion schedule or both; (2) amount of any fixed fee; and (3) other affected terms and shall modify the Purchase Order accordingly.
    C.    The Seller must assert its right to an adjustment under this clause within 20 days from the date of receipt of the written Order.  However, if Buyer decides that the facts justify it, Buyer may receive and act upon a proposal submitted before final payment of the Purchase Order.
    D.    Failure to agree to any adjustment shall be a dispute.  However, nothing in this clause shall excuse the Seller from proceeding with the Purchase Order as changed.
    E.    Notwithstanding the terms and condition of paragraphs A. and B. above, the estimated cost of this Purchase Order and, if this Purchase Order is incrementally funded, the funds allotted for the performance of this Purchase Order, shall not be increased or considered to be increased except by specific written modification of the Purchase Order indicating the new Purchase Order estimated cost and, if this Purchase Order is incrementally funded, the new amount allotted to the Purchase Order.  Until this modification is made, the Seller shall not be obligated to continue performance or incur cost beyond the point established in the "Limitation of Cost" or "Limitation of Funds" clause of this Purchase Order.

    Alternate I.  If the requirement is for services and supplies are to be furnished, substitute the following paragraph (a) for paragraph (a) of the basic clause:
    (a)    The Buyer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this Purchase Order in any one or more of the following:
        (1)    Description of services to be performed.
        (2)    Time of performance (i.e., hours of the day, days of the week, etc.)
        (3)    Place of performance of the services.
        (4)    Drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the Buyer in accordance with the drawings, designs, or specifications.
        (5)    Method of shipment or packing.
        (6)    Inspection standards.
        (7)    Place or time of inspection, delivery or acceptance.

12.    FAR 52.243-3, CHANGES - TIME-AND-MATERIALS OR LABOR     HOURS (AUG 1987) (EB-MODIFIED)
     A.    Buyer may at any time, by written Order, and without notice to the sureties, if any, make changes within the general scope of this Purchase Order in any one or more of the following:
        (1)    Drawings, designs, or specifications.
        (2)    Method of shipment or packing
        (3)    Place of delivery
        (4)    Amount of Government-furnished property.
    B.    If any change causes an increase or decrease in any hourly rate, the ceiling price, or the time required for performance of any part of the work under this Purchase Order, whether or not changed by the Order, or otherwise affects any other terms and conditions of this Purchase Order,  Buyer's Authorized Representative shall make an equitable adjustment in the (1) ceiling price, (2) hourly rates, (3) delivery schedule, and (4) other affected terms, and shall modify the Purchase Order accordingly.
<    C.    The Seller must assert its right to an adjustment under this clause within 20 days from the date of receipt of the written Order.  However, if Buyer decides that the facts justify it, Buyer may receive and act upon a proposal submitted before final payment of the Purchase Order.
    D.    Failure to agree to any adjustment shall be a dispute.  However, nothing in this clause shall excuse Seller from proceeding with the Purchase Order as changed.

13.    FAR 52.244-2, SUBCONTRACTS (COST-REIMBURSEMENT AND     LETTER CONTRACTS) (FEB 1995) (EB-MODIFIED) (MANDATORY IN     PART)
     A.    "Subcontract," as used in this clause, includes but is not limited to Purchase Orders, and changes and modifications to Purchase Orders.  The Seller shall notify Buyer reasonably in advance of entering into any subcontract if:
        (1)    The proposed subcontract is of the cost-reimbursement, time-and-materials, or labor-hour type;
        (2)    The proposed subcontract is fixed-price and exceeds the greater of (a) $25,000 or (b) 5 percent of the total estimated cost of the Purchase Order;
        (3)    The proposed subcontract has experimental, developmental, or research work as one of its purposes; or
        (4)    This Purchase Order is not a facilities Purchase Order and the proposed subcontract provides for the fabrication, purchase, rental, installation, or other acquisition of special test equipment valued in excess of $10,000 or of any items of facilities.
    B.    (1)    In the case of a proposed subcontract that (a) is of the cost-reimbursement, time-and-materials, or labor-hour type and is estimated to exceed $10,000 including any fee, (b) is proposed to exceed $100,000, or (c) is one of a number of subcontracts with a single subcontractor, under this Purchase Order for the same or related supplies or services that, in the aggregate, are expected to exceed $100,000, the advance notification required by paragraph A. above shall include the information specified in subparagraph (2) below.
        (2)    (a)    A description of the supplies or services to be subcontracted.
            (b)    Identification of the type of subcontract to be used.
            (c)    Identification of the proposed subcontractor and an explanation of why and how the proposed subcontractor was selected, including the competition obtained.
            (d)    The proposed subcontract price and the Seller's cost or price analysis.
            (e)    The subcontractor's current, complete, and accurate cost or pricing data and Certificate of Current Cost or Pricing Data, if required by other Purchase Order provisions.
            (f)    The subcontractor's Disclosure Statement or Certificate relating to Cost Accounting Standards when such data are required by other provisions of this Purchase Order.
            (g)    A negotiation memorandum reflecting:
                    (i)  The principal elements of the subcontract price negotiations;
                    (ii)  The most significant considerations controlling establishment of initial or revised prices;
                    (iii)  The reason cost or pricing data were or were not required;
                    (iv)  The extent, if any, to which the Seller did not rely on the subcontractor's cost or pricing data in determining the price objective and in negotiating the final price;
                    (v)  The extent to which it was recognized in the negotiation that the subcontractor's cost or pricing data were not accurate, compete, or current; the action taken by the Seller and the subcontractor; and the effect of any such defective data on the total price negotiated;
                    (vi)  The reasons for any significant difference between the Seller's price objective and the price negotiated; and
                    (vii)  A complete explanation of the incentive fee or profit plan when incentives are used.  The explanation shall identify each critical performance element, management decisions used to quantify each incentive element, reasons for the incentives, and a summary of all trade-off possibilities considered.
    C.    The Seller shall obtain Buyer's written consent before placing any subcontract for which advance notification is required under paragraph A. above.  However, Buyer may ratify in writing any such subcontract.  Ratification shall constitute the consent of Buyer.
    D.    If the Seller has an approved purchasing system and the subcontract is within the scope of such approval, the Seller may enter into the subcontracts described in subparagraphs A. (1) and A.(2) above without the consent of Buyer.
    E.    Even if the Seller's purchasing system has been approved, the Seller shall obtain Buyer's written consent before placing subcontracts that have been selected for special surveillance and identified in the Schedule of this Purchase Order.
    F.    Unless the consent or approval specifically provides otherwise, neither consent by Buyer to any subcontract nor approval of the Seller'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 Purchase Order, or (3) to relieve the Seller of any responsibility for performing this Purchase Order.
    G.    No subcontract placed under this Purchase Order 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 limitation in paragraph 15.903(d) of the Federal Acquisition Regulation (FAR).
    H.    The Seller shall give Buyer immediate written notice of any action or suit filed and prompt notice of any claim made against Seller by any subcontractor or vendor that, in the opinion of the Seller may result in litigation related in any way to this Purchase Order with

respect to which the Seller may be entitled to reimbursement from the Government.
    I.    (1)    The Seller shall insert in each price redetermination or incentive price revision subcontract under this Purchase Order the substance of the paragraph "Quarterly Limitation On Payments Statement" of the clause at 52.216-5, Price Redetermination-Prospective, 52.216-6, Price Redetermination-Retroactive, 52.216-16, Incentive Price Revision-Firm Target, or 52.216-17, Incentive Price Revision-Successive Targets, as appropriate, modified in accordance with the paragraph entitled "Subcontracts" of that clause.
        (2)    Additionally, the Seller shall include in each cost-reimbursement subcontract under this Purchase Order a requirement that the subcontractor insert the substance of the appropriate modified subparagraph referred to in subparagraph (1) above in each lower-tier price redetermination or incentive price revision subcontract under that subcontract.
    J.    To facilitate small business participation in subcontracting, the Seller agrees to provide progress payments on subcontracts under this Purchase Order that are fixed-price subcontracts with small business concerns in conformity with the standards for customary progress payments stated in FAR 32.502-1 and 32.504(f) as in effect on the date of this Purchase Order.  The Seller further agrees that the need for such progress payments will not be considered a handicap or adverse factor in the award of subcontracts.
    K.    The Buyer and/or Government reserve the right to review the Seller's purchasing system as set forth in FAR Subpart 44.3.

14.    FAR 52.245-5, GOVERNMENT PROPERTY (COST     REIMBURSEMENT, TIME-AND-MATERIAL, OR LABOR-HOUR     CONTRACTS) (JAN 1986) (EB-MODIFIED)
     (a)    Government-furnished property.
        (1)    The term "Seller's managerial personnel," as used in paragraph (g) of this clause, means any of the Seller's directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of--
            (i)  All or substantially all of the Seller's business;
            (ii)  All or substantially all of the Seller's operation at any one plant, or separate location at which h the contract is being performed; or
            (iii)  A separate and complete major industrial operation connected with performing this Purchase Order.
        (2)    The Buyer shall deliver to the Seller, for use in connection with and under the terms of this Purchase Order, the Government-furnished property described in the order or specifications, together with such related data and information as the Seller may request and as may be reasonably required for the intended use of the property (hereinafter referred to as "Government-furnished property").
        (3)    The delivery or performance dates for this Purchase Order are based upon the expectation that Government-furnished property suitable for use will be delivered to the Seller at the times stated in the order or, if not so stated, in sufficient time to enable the Seller to meet the Purchase Order's delivery or performance dates.
        (4)    If Government-furnished property is received by the Seller in a condition not suitable for the intended use, the Seller shall, upon receipt, notify the Buyer's Authorized Representative, detailing the facts, and, as directed by the Buyer and at Buyer's expense, either effect repairs or modification or return or otherwise dispose of the property.  After completing the directed action and upon written request of the Seller, the Buyer shall make an equitable adjustment as provided in paragraph (h) of this clause.
        (5)    If Government-furnished property is not delivered to the Seller by the required time or times, the Buyer shall, upon the Seller's timely written request, make a determination of the delay, if any, caused the Seller and shall make an equitable adjustment in accordance with paragraph (h) of this clause.
    (b)    Changes in Government-furnished property.     (1)    The Buyer may, by written notice, (i) decrease the Government-furnished property provided or to be provided under this Purchase Order or (ii) substitute other Government-furnished property for the property to be provided by the Buyer or to be acquired by the Seller for the Government under this order.  The Seller shall promptly take such action as the Buyer may direct regarding the removal, shipment, or disposal of the property covered by this notice.
        (2)    Upon the Seller's written request, the Buyer shall make an equitable adjustment to the Purchase Order in accordance with paragraph (h) of this clause, if the Buyer has agreed in the order to make such property available for performing this Purchase Order and there is any--
            (i)  Decrease or substitution in this property pursuant to subparagraph (b)(1) above; or
            (ii)  Withdrawal of authority to use property, if provided under any other order or lease.
    (c)    Title.    
        (1)    The Government shall retain title to all Government-furnished property.
        (2)    Title to all property purchased by the Seller for which the Seller is entitled to be reimbursed as a direct item of cost under this Order shall pass to and vest in the Government upon the vendor's delivery of such property.
        (3)    Title to all other property, the cost of which is reimbursable to the Seller, shall pass to and vest in the Government upon--
            (i)  Issuance of the property for use in order performance;
            (ii)  Commencement of processing of the property for use in order performance; or
            (iii)  Reimbursement of the cost of the property by the Buyer or the Government, whichever occurs first.
        (4)    All Government-furnished property and all property acquired by the Seller, title to which vests in the Government under this paragraph (collectively referred to as "Government property"), are subject to the provisions of this clause.  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 identify as personal property by being attached to any real property.
    (d)    Use of Government property.
        The Government property shall be used only for performing this order, unless otherwise provided in this contract or approved by the Buyer.
    (e)    Property administration.
        (1)    The Seller shall be responsible and accountable for all Government property provided under the order and shall comply with Federal Acquisition Regulation (FAR) Subpart 45.5, as in effect on the date of this Purchase Order.
        (2)    The Seller shall establish and maintain a program for the use, maintenance, repair, protection, and preservation of Government property in accordance with sound business practice and the applicable provisions of FAR Subpart 45.5.
        (3)    If damage occurs to Government property, the risk of which has been assumed by the Government under this order, the Buyer shall replace the items or the Seller shall make such repairs as the Buyer directs.  However, if the Seller cannot effect such repairs within the time required, the Seller shall dispose of the property as directed by the Buyer.  When any property for which the Government is responsible is replaced or repaired, the Buyer shall make an equitable adjustment in accordance with paragraph (h) of this clause.
    (f)    Access.  The Government and Buyer and all their designees shall have access at all reasonable times to the premises in which any Government property is located for the purpose of inspecting the Government property.
    (g)    Risk of Loss.
        Seller assumes all risk of, loss of, and shall be responsible for, any loss or destruction of, or damage to, the property while in the Seller's or its subcontractor's possession or control, unless the Seller has requested and received relief from such liability as provided for in paragraph (g)(4).  Seller shall return all government property in as good condition as when received, except for reasonable wear and tear or for its use in accordance with the provisions of the Buyer's Prime Contract.
        (4)    If the Seller transfers Government property to the possession and control of a subcontractor, the transfer shall not affect the liability of the Seller for loss or destruction of, or damage to, the property as set forth above.  However, the Seller shall require the subcontractor to assume the risk of, and be responsible for, any loss or destruction of, or damage to, the property while in the subcontractor's possession or control, except to the extent that the subcontract, with the advance approval of the Buyer's Contracting Officer,  relieves the subcontractor from such liability.  In the absence of such approval, the subcontract shall contain appropriate provisions requiring the return of all Government property in as good condition as when received, except for reasonable wear and tear or for its use in accordance with the provisions of the prime contract.
        (5)    Upon loss or destruction of, or damage to, Government property provided under this order, the Seller shall so notify the Buyer and shall communicate with the loss and salvage organization, if any, designated by the Buyer.  With the assistance of any such organization, the Seller shall take all reasonable action to protect the Government property from further damage, separate the damaged and undamaged Government property, put all the affected Government property in the best possible order, and furnish to the Buyer a statement of--
            (i)  The lost, destroyed, or damaged Government property;
            (ii)  The time and origin of the loss, destruction, or damage;
            (iii)  All known interests in commingled property of which the Government property is a part; and
            (iv)  The insurance, if any, covering any part of or interest in such commingled property.
        (6)    The Seller shall repair, renovate, and take such other action with respect to damaged Government property as the Buyer directs.  If the Government property is destroyed or damaged beyond practical repair, or is damaged and so commingled or combined with property of others (including the Seller's) that separation is impractical, the Seller may, with the approval of and subject to any conditions imposed by the Buyer, sell such property for the account of the Government. Such sales may be made in order to minimize the loss to the Government, to permit the resumption of business, or to accomplish a similar purpose.  The Seller shall be entitled to an equitable adjustment in the order price for the expenditures made in performing the obligations under this subparagraph (g)(6) in accordance with paragraph (h) of this clause.  However, the Government may directly reimburse the loss and salvage organization for any of their charges.  The Buyer shall give due regard to the Seller's liability under this paragraph (g) when making any such equitable adjustment.
        (7)    The Seller shall not be reimbursed for, and shall not include as an item of overhead, the cost of insurance or of any reserve covering risk of loss or destruction of, or damage to, Government property, except to the extent that the Buyer may have expressly required the Seller to carry such insurance under another provision of this order.
        (8)    In the event the Seller is reimbursed or otherwise compensated for any loss or destruction of, or damage to, Government property, the Seller shall use the proceeds to repair, renovate, or replace the lost, destroyed, or damaged Government property or shall otherwise credit the proceeds to, or equitably reimburse, the Government, as directed by the Buyer.
        (9)    The Seller shall do nothing to prejudice the Government's rights to recover against third parties for any loss or destruction of, or damage to, Government property.  Upon the request of the Buyer, the Seller shall, at the Buyer's expense, furnish to the Buyer or 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.  In addition, where a subcontractor has not been relieved from liability for any loss or destruction of, or damage to, Government property, the Seller shall enforce for the benefit of the Government the liability of the subcontractor for such loss, destruction, or damage.
    (h)    Equitable adjustment.  When this clause specifies an equitable adjustment, it shall be made to any affected Purchase Order provision in accordance with the procedures of the Changes clause.  When appropriate, the Buyer may initiate an equitable adjustment in favor of the Buyer or Government.  The right to an equitable adjustment shall be the Seller's exclusive remedy.  Neither the Government nor Buyer shall  be liable to suit for breach of contract for--
        (1)    Any delay in delivery of Govern-ment-furnished property;
        (2)    Delivery of Government-furnished property in a condition not suitable for its intended use;
        (3)    A decrease in or substitution of Government-furnished property ; or
        (4)    Failure to repair or replace Govern-ment property for which the Buyer is responsible.
    (i)    Final accounting and disposition of Government property.  Upon completing this Purchase Order, or at such earlier dates as may be fixed by the Buyer, the Seller shall submit, in a form acceptable to the Buyer, inventory schedules covering all items of Government property not consumed in performing this order or delivered to the Buyer or Government.  The Seller shall prepare for shipment, deliver f.o.b. origin, or dispose of the Government property as may be directed or authorized by the Buyer.  The net proceeds of any such disposal shall be credited to the cost of the work covered by this order or paid to the Government as directed by the Buyer.  The foregoing provisions shall apply to scrap from Government property; provided, however, that the Buyer may authorize or direct the Seller to omit from such inventory schedules any scrap consisting of faulty castings or forgings or of cutting and processing waste, such as chips, cuttings, borings, turnings, short ends, circles, trimmings, clippings, and remnants, and to dispose of such scrap in accordance with the Seller's normal practice and account for it as a part of general overhead or other reimbursable costs in accordance with the Seller's established accounting procedures.
    (j)    Abandonment and restoration of Contractor premises.  Unless otherwise provided herein, the Government or Buyer--
        (1)    May abandon any Government property in place,  at which time all obligations of the Government or Buyer regarding such abandoned property shall cease; and
        (2)    Have no obligation to restore or rehabilitate the Seller's premises under any circumstances (e.g., abandonment, disposition upon completion of need, or order completion).  However, if the Government-furnished property (listed in the order or specifications) is withdrawn or is unsuitable for the intended use, or if other Government property is substituted, then the equitable adjustment under paragraph (h) of this clause may properly include restoration or rehabilitation costs.
    (k)    Communications.  All communications under this clause shall be in writing.
    (l)    Overseas contracts.  If this contract is to be performed outside the United States of America, its territories, or possessions, 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.

15.    FAR 52.246-3, INSPECTION OF SUPPLIES - COST     REIMBURSEMENT (APR 1984) (EB-MODIFIED)
    A.    Definitions.
        (1)    "Seller's managerial personnel," as used in this clause, means any of the Seller's directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of:
            (a)    all or substantially all of the Seller's business;
            (b)    all or substantially all of the Seller's operation at a plant or separate location at which the Purchase Order is being performed; or
            (c)    a separate and complete major industrial operation connected with the performance of this Purchase Order.
        (2)    "Supplies," as used in this clause, includes but is not limited to raw materials, components, intermediate assemblies, end products, lots of supplies, and, when the Purchase Order does not include the "Warranty of Data" clause, data.
    B.    The Seller shall provide and maintain an inspection system acceptable to Buyer and the Government covering the supplies fabricating methods, and special tooling under this Purchase Order.  Complete records of all inspection work performed by the Seller shall be maintained and made available to Buyer and/or Government during Purchase Order performance and for as long afterwards as the Purchase Order requires.
    C.    Buyer and/or the Government has the right to inspect and test the Purchase Order supplies, to the extent practicable at all places and times, including the period of manufacture, and in any event before acceptance.  Buyer and/or the Government may also inspect the plant or plants of the Seller or any subcontractor engaged in the Purchase Order performance.  Buyer or the Government shall perform inspections and tests in a manner that will not unduly delay the work.
<    D.    If Buyer or the Government performs inspection or test on the premises of the Seller or a subcontractor, the Seller shall furnish and shall require subcontractors to furnish all reasonable facilities and assistance for the safe and convenient performance of these duties.
    E.    Unless otherwise specified in the Purchase Order, Buyer shall accept supplies as promptly as practicable after delivery, and supplies shall be deemed accepted 60 days after delivery, unless accepted earlier.
    F.    At any time during Purchase Order performance, but no later than 6 months (or such other time as may be specified in the Purchase Order) after acceptance of the supplies to be delivered under the Purchase Order, Buyer may require the Seller to replace or correct any supplies that are nonconforming at time of delivery.  Supplies are nonconforming when they are defective in material or workmanship or are otherwise not in conformity with Purchase Order requirements.  Except as otherwise provided in paragraph H. below, the cost of replacement or correction shall be included in allowable costs, determined as provided in the "Allowable Cost and Payment"  clause, but no additional fee shall be paid.  Seller shall not tender for acceptance supplies required to be replaced or corrected without disclosing the former requirement for replacement or correction, and, when required, shall disclose the corrective action taken.
    G.    (1)    If the Seller fails to proceed with reasonable promptness to perform required replacement or correction, Buyer may:
            (a)    by Purchase Order or other-wise, perform the replacement or correction and charge to the Seller any increased cost or make an equitable reduction in any fixed fee paid or payable under the Purchase Order;            (b)    require delivery of undelivered supplies at an equitable reduction in any fixed fee paid or payable under the Purchase Order; or
            (c)    terminate the Purchase Order for default.
        (2)    Failure to agree on the amount of increased cost to be charged to the Seller or to the reduction in the fixed fee shall be a dispute.
    H.    Notwithstanding paragraphs F. and G. above, Buyer may at any time require the Seller to correct or replace, without cost to Buyer, nonconforming supplies, if the nonconformances are due to (1) fraud, lack of good faith, or willful misconduct on the part of the Seller's managerial personnel or (2) the conduct of one or more of the Seller's employees selected or retained by the Seller after any of the Seller's managerial personnel has reasonable grounds to believe that the employee is habitually careless or unqualified.
    I.    This clause applies in the same manner to corrected or replacement supplies as to supplies originally delivered.
    J.    The Seller shall have no obligation or liability under this Purchase Order to replace supplies that were nonconforming at the time of delivery, except as provided in this clause or as may be otherwise provided in the Purchase Order.
    K.    Except as otherwise specified in the Purchase Order, the Seller's obligation to correct or replace Buyer-furnished property or Government property, shall be governed by the clause pertaining to Buyer-furnished, tooling and material (property) and/or Government property.

16.    FAR 52.246-5, INSPECTION OF SERVICES - COST     REIMBURSEMENT (APR 1984) (EB-MODIFIED)
    A.    "Services," as used in this clause, includes services performed, workmanship, and material furnished or used in performing services.
    B.    Seller shall provide and maintain an inspection system acceptable to Buyer and the Government covering the services under this Purchase Order.  Complete records of all inspection work performed by the Seller shall be maintained and made available to Buyer and the Government during Purchase Order performance and for as long afterwards as the Purchase Order requires.
    C.    Buyer and/or Government has the right to inspect and test all services called for by the Purchase Order, to the extent practicable at all places and times during the term of the contract.  Buyer or the Government shall perform inspections and tests in a manner that will not unduly delay the work.
    D.    If any of the services performed do not conform with Purchase Order requirements, Buyer may require the Seller to perform the services again in conformity with Purchase Order requirements, for no additional fee.  When the defects in services cannot be corrected by reperformance, Buyer may (1) require the Seller to take necessary action to ensure that future performance conforms to Purchase Order requirements and (2) reduce any fee payable under the Purchase Order to reflect the reduced value of the services performed.
    E.    If Seller fails to promptly perform the services again or take the action necessary to ensure future performance in conformity with Purchase Order requirements, Buyer may (1) by subcontract or otherwise, perform the services and reduce any fee payable by an amount that is equitable under the circumstances, or (2) terminate the Purchase Order for default.

17.    FAR 52.246-6, INSPECTION - TIME - MATERIAL AND LABOR HOUR     (JAN 1986) EB-MODIFIED)
     A.    (1)  "Seller's managerial personnel," as used in this clause, means any of the Seller's directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of:
            (a)    all or substantially all of the Seller's business;
            (b)    all or substantially all of the Seller's operation at any one plant or separate location at which the Purchase Order is being performed; or
            (c)    a separate and complete major industrial operation connected with the performance of this Purchase Order.
        (2)    "Materials," as used in this clause, includes data when the Purchase Order does not include the "Warranty of Data" clause.
    B.    Seller shall provide and maintain an inspection system acceptable to Buyer and the Government covering the material, fabrication methods, work, and services under this Purchase Order.  Complete records of all inspection work performed by the Seller shall be maintained and made available to Buyer and/or Government during Purchase Order performance and for as long afterwards as the Purchase Order requires.
    C.    Buyer and/or the Government has the right to inspect and test all materials furnished and services performed under this Purchase Order, to the extent practicable at all places and times, including the period of performance, and in any event before acceptance.  Buyer and/or the Government may also inspect the plant or plants of the Seller or any subcontractor engaged in Purchase Order performance.  Buyer and/or the Government shall perform inspections and tests in a manner that will not unduly delay the work.
    D.    If Buyer or the Government performs inspection or test on the premises of the Seller or a subcontractor, the Seller shall furnish all reasonable facilities and assistance for the safe and convenient performance of these duties.
    E.    Unless otherwise specified in the contract, Buyer shall accept or reject services and materials at the place of delivery as promptly as practicable after delivery, and they shall be presumed accepted 60 days after the date of delivery, unless accepted earlier.
    F.    At any time during Purchase Order performance, but not later than 6 months (or such other time as may be specified in the Purchase Order) after acceptance of the services or materials last delivered under this contract, Buyer may require Seller to replace or correct services or materials that at time of delivery  failed to meet Purchase Order requirements.  Except as otherwise specified in paragraph H. below, the cost of replacement or correction shall be determined under the "Payments Under Time-and-Materials and Labor-Hour Contracts" clause, but the "hourly rate" for labor hours incurred in the replacement or correction shall be reduced to exclude that portion of the rate attributable to profit.  Seller shall not tender for acceptance materials and services required to be replaced or corrected without disclosing the former requirement for replacement or correction, and when required, shall disclose the corrective action taken.
    G.    (1)    If Seller fails to proceed with reasonable promptness to perform required replacement or correction, and if the replacement or correction can be performed within the ceiling price (or the ceiling price as increased by the Buyer), Buyer may:
            (a)    by subcontract or otherwise, perform the replacement or correction, charge to the Seller an increase cost, or deduct such increased cost from any amounts paid or due under this Purchase Order; or
            (b)    terminate this Purchase Order for default.
        (2)    Failure to agree to the amount of increased cost to be charged to the Seller shall be a dispute.
    H.    Notwithstanding paragraphs F. and G. above, Buyer may at any time require Seller to remedy by correction or replacement, without cost to the Buyer, any failure by the Seller to comply with the requirements of this Purchase Order, if the failure is due to (1) fraud, lack of good faith, or willful misconduct on the part of the Seller's managerial personnel or (2) the conduct of one or more of the Seller's employees selected or retained by the Seller after any of the Seller's managerial personnel has reasonable grounds to believe that the employee is habitually careless or unqualified.
    I.    This clause applies in the same manner and to the same extent to corrected or replacement materials or services as to materials and services originally delivered under this contract.

18.    FAR 52.249-6, TERMINATION (COST-REIMBURSEMENT)
    (MAY 1986) AND (T&M AND LH) ALT IV (APR 1984) (EB-MODIFIED)
    A.    Buyer may terminate performance of work under this Purchase Order in whole or, from time to time, in part, if:
        (1)    Buyer determines that a termination is in Buyer's or the Government's interest; or
        (2)    the Seller defaults in performing this Purchase Order and fails to cure the default within 10 days (unless extended by Buyer) after receiving a notice specifying the default.  "Default" includes failure to make progress in the work so as to endanger performance.
    B.    Buyer's Authorized Representative shall terminate by delivering to the Seller a "Notice of Termination" specifying whether termination is for default of the Seller or for convenience of Buyer or the Government, the extent of termination, and the effective date.  If, after termination for default, it is determined that the Seller was not in default, or that the Seller's failure to perform or to make progress in performance is due to causes beyond the control and without the fault or negligence of the Seller as set forth in the "Excusable Delays" clause, the rights and obligations of the parties will be the same as if the termination was for the convenience of Buyer or the Government.
    C .    After receipt of a "Notice of Termination," and except as directed by Buyer's Authorized Representative, Seller shall immediately proceed with the following obligations, regardless of any delay in determining or adjusting any amounts due under this clause:
        (1)    Stop work as specified in the notice.
        (2)    Place no further subcontracts or orders (referred to as subcontracts in this clause), except as necessary to complete the continued portion of the Purchase Order.
        (3)    Terminate all subcontracts to the extent they relate to the work terminated.
        (4)    Assign to the Government, as directed by Buyer's Authorized Representative, all rights, title, and interest of the Seller under the subcontracts terminated, in which case Buyer shall have the right to settle or to pay any termination settlement proposal arising out of those terminations.
        (5)    With approval or ratification to the extent required by Buyer's Authorized Representative, settle all outstanding liabilities and termination settlement proposals arising from the termination of subcontracts, the cost of which would be reimbursable in whole or in part, under this Purchase Order; approval or ratification will be final for purposes of this clause.
        (6)    Transfer title (if not already transferred and, as directed by Buyer's Authorized Representative, deliver to Buyer (a) the fabricated or unfabricated parts, work in process, completed work, supplies, and other material produced or acquired for the work terminated, (b) the completed or partially completed plans, drawings, information, and other property that, if the contract had been completed would be required to be furnished to Buyer; and (c) the jigs, dies, fixtures, and other special tools and tooling acquired for manufacture for this contract, the cost of which the Seller has been or will be reimbursed under this Purchase Order.
        (7)    Complete performance of the work not terminated.
        (8)    Take any action that may be necessary, or that Buyer's Authorized Representative may direct, for the protection and preservation of the property related to this Purchase Order that is in the possession of the Seller and in which Buyer has or may acquire an interest.
        (9)    Use its best efforts to sell as directed or authorized by Buyer's Authorized Representative, any property of the types referred to in subparagraph (6) above; provided, however, that the Seller (a) is not required to extend credit to any purchaser and (b) may acquire the property under the conditions prescribed by, and at prices approved by, Buyer's Authorized Representative.  The proceeds of any transfer or disposition will be applied to reduce any payments to be made by Buyer under this Purchase Order, credited to the price or cost of the work, or paid in any other manner directed by Buyer's Authorized Representative.
    D.    After expiration of the plant clearance period as defined in Subpart 45.6 of the Federal Acquisition Regulation, the Seller may submit to the Buyer a list, certified as to quantity and quality, of termination inventory not previously disposed of, excluding items authorized for disposition by the Buyer.  The Seller may request the Buyer to remove those items or enter into an agreement for their storage.  Within 30 days, the Buyer will accept the items and remove them or enter into a storage agreement.  The Buyer may verify the list upon removal of the items, or if stored, within 45 days from submission of the list, and shall correct the list, as necessary, before final settlement.
    E.    After termination, the Seller shall submit a final termination settlement proposal to Buyer's Authorized Representative in the form and with the certification prescribed by Buyer's Authorized Representative.  The Seller shall submit the proposal promptly, but no later than six (6) months from the effective date of termination, unless extended in writing by Buyer's Authorized Representative upon written request of the Seller within this six (6) month period.  However, if Buyer's Authorized Representative determines that the facts justify it, a termination settlement proposal may be received, and acted on after 6 months or any extension.  If the Seller fails to submit the proposal within the time allowed, Buyer's Authorized Representative may determine, on the basis of information available, the amount, if any, due the Seller because of the termination and shall pay the amount determined.
    F.    Subject to paragraph D. above, the Seller and Buyer may agree on the whole or any part of the amount to be paid (including an allowance for fee) because of the termination.  The Purchase Order shall be amended, and the Seller paid the agreed amount.
    G.    If the Seller and Buyer's Authorized Representative fail to agree in whole or in part on the amount of costs and/or fee to be paid because of the termination of work, Buyer's Authorized Representative shall determine, on the basis of information available, the amount, if any, due the Seller, and shall pay that amount, which shall include the following:
        (1)    All costs reimbursable under this Purchase Order, not previously paid, for the performance of this Purchase Order before the effective date of the termination, and those costs that may continue for a reasonable time with the approval of or as directed by Buyer's Authorized Representative, however, the Seller shall discontinue those costs as rapidly as practicable.
        (2)    The cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated  portion of the Purchase Order if not included in subparagraph (1) above.
        (3)    The reasonable costs of settlement of the work terminated, including:
            (a)    accounting, legal, clerical, and other expenses reasonably necessary for the preparation of termination settlement proposals and supporting data;
            (b)    the termination and settlement of subcontracts (excluding the amounts of such settlements); and
            (c)    storage, transportation and other costs incurred, reasonably necessary for the preservation, protection, or disposition of the termination inventory.  If the termination is for default, no amounts for the preparation of the Seller's termination settlement proposal may be included.
        (4)    A portion of the fee payable under the Purchase Order, determined as follows:
            (a)    If the Purchase Order is terminated for the convenience of the Government, the settlement shall include a percentage of the fee equal to the percentage of completion of work contemplated under the Purchase Order, but excluding subcontract effort included in subcontractor's termination proposals, less previous payments for fee.
            (b)    If the Purchase Order is terminated for default, the total fee payable shall be such proportionate part of the fee as the total number of articles (or amount of services) delivered to  and accepted by Buyer is to the total number of articles (or amount of services) of a like kind required by the Purchase Order.
        (5)    If the settlement incudes only fee, it will be determined under subparagraph G.(4) above.
    H.    The cost principles and procedures in Part 31 of the Federal Acquisition Regulation, in effect on the date of this Purchase Order, shall govern all costs claimed, agreed to, or determined under this clause.
    I.    In arriving at the amount due the Seller under this clause, there shall be deducted:
        (1)    all unliquidated advance or other payments to the Seller, under the terminated portion of this Purchase Order;
        (2)    any claim which Buyer has against the Seller under this Purchase Order; and
        (3)    the agreed price for, or the proceeds of sale of materials, supplies, or other things acquired by the Seller or sold under this clause and not recovered by or credited to Buyer.
    J.    The Seller and Buyer must agree to any equitable adjustment in fee for the continued portion of the Purchase Order when there is a partial termination.  Buyer's Authorized Representative shall amend the Purchase Order to reflect the agreement.
    K.    (1)    Buyer may, under the terms and conditions it prescribes, make partial payments and payments against costs incurred by the Seller for the terminated portion of the Purchase Order, if Buyer's Authorized Representative believes the total of these payments will not exceed the amount to which the Seller will be entitled.
        (2)    If the total payments exceed the amount finally determined to be due, the Seller shall repay the excess to Buyer upon demand, together with interest computed at the rate established by the Secretary of the Treasury under 50 U.S.C. App. 1215(b)(2).  Interest shall be computed for the period from the date the excess payment is received by the Seller to the date the excess is repaid.  Interest shall not be charged on any excess payment due to a reduction in the Seller's termination settlement proposal because of retention or other disposition of termination inventory until 10 days after the date of the retention or disposition, or a later date determined by Buyer's Authorized Representative because of the circumstances.
    L.    The provisions of this clause relating to fee are inapplicable if this Purchase Order does not include a fee.

        (If this Purchase Order is a time-and-material or labor-hour contract, substitute the following paragraphs G. and J. for paragraphs G. and J. of the above clause):

    G.    If the Seller and Buyer's Authorized Representative fail to agree in whole or in part on the amount to be paid because of the termination of work, Buyer's Authorized Representative shall determine, on the basis of information available, the amount, if any, due Seller, and shall pay the amount determined as follows:
        (1)    If the termination is for the convenience of Buyer or the Government, include:
            (a)    an amount for direct labor hours (as defined in the Schedule of the Purchase Order) determined by multiplying the number of direct labor hours expended before the effective date of termination by the hourly rate(s) in the Schedule, less any hourly rate payments already made to Seller;
            (b)    an amount (computed under the provisions for payment of materials) for material expenses incurred before the effective date of termination, not previously paid to Seller;
            (c)    an amount for labor and material expenses computer as if the expenses were incurred before the effective date of termination if they are reasonably incurred after the effective date, with the approval of or as directed by Buyer's Authorized Representative, however, Seller shall discontinue these expenses as rapidly as practicable;
            (d)    if not included in (a), (b), or (c) above, the cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of this Purchase Order; and
            (e)    the reasonable costs of settlement of work terminated, including:
                (i)  accounting, legal, clerical, and other expenses reasonably necessary for the preparation of termination settlement proposals and supporting data;
                (ii)    the termination and settlement of subcontracts (excluding the amounts of such settlement); and
                (iii)    storage, transportation, and other costs incurred, reasonably necessary for the protection or disposition of the termination inventory.        (2)    If the termination is for default of Seller, include the amounts computed under (1) above but omit:
            (a)    any amount for preparation of Seller's termination settlement proposal; and
            (b)    the portion of the hourly rate allocable to profit for any direct labor hours expended in furnishing materials and services not delivered to and accepted by Buyer.
    J.    If the termination is partial, Seller may file with Buyer's Authorized Representative a proposal for an equitable adjustment of the price(s) for the continued portion of the Purchase Order.  Buyer's Authorized Representative shall make an equitable adjustment agreed upon.  Any proposal by Seller for an equitable adjustment under this clause shall be requested within 90 days from the effective date of termination, unless extended in writing by Buyer's Authorized Representative.

19.    FAR 52.249-14, EXCUSABLE DELAYS (APR 1984) (EB-MODIFIED)
    A.    Except for defaults of subcontractors at any tier, the Seller shall not be in default because of any failure to perform this Purchase Order under its terms if the failure arises from causes beyond the control and without the fault or negligence of the Seller.  Examples of these causes are (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather.  In each instance, the failure to perform must be beyond the control and without the fault or negligence of the Seller.  "Default" includes failure to make progress in the work so as to endanger performance.
    B.    If the failure to perform is caused by the failure of a subcontractor at any tier to perform or make progress, and if the cause of the failure was beyond the control of both the Seller and subcontractor, and without the fault or negligence of either, the Seller shall not be deemed to be in default, unless:
        (1)    the subcontracted supplies or services were obtainable from other sources;
        (2)    Buyer's Authorized Representative ordered the Seller in writing to purchase these supplies or services from the other sources; and
        (3)    the Seller failed to comply  reason-ably with this order.
    C.    Upon request of the Seller, Buyer's Authorized Representative shall ascertain the facts and extent of the failure.  If Buyer's Authorized Representative determines that any failure to perform results from one or more of the causes above, the delivery schedule shall be revised, subject to the rights of Buyer under the "Termination" clause of this Purchase Order.

20.    FAR 52.246-20, WARRANTY OF SERVICES (APR 1984)
    (EB-MODIFIED)
    (a)    Definitions.  "Acceptance," as used in this clause, means the act of an authorized representative of the Buyer by which the Buyer assumes for itself, or as an agent of another, ownership of existing and identified supplies, or approves specific services, as partial or complete performance of the Purchase Order.
        "Correction," as used in this clause, means the elimination of a defect.
    (b)    Notwithstanding inspection and acceptance by the Buyer or any provision concerning the conclusiveness thereof, the Seller warrants that all services performed under this Purchase Order will, at the time of acceptance, be free from defects in workmanship and conform  to the requirements of this Purchase Order. The Buyer shall give written notice of any defect or nonconformance to the Seller within 30 days after discovery of the defect or nonconformance.  This notice shall state either (1) that the Seller shall correct or reperform any defective or nonconforming services, or (2) that the Buyer does not require correction or reperformance.
    (c)    If the Seller is required to correct or reperform, it shall be at no cost to the Buyer, and any services corrected or reperformed by the Seller shall be subject to this clause to the same extent as work initially performed.  If the Seller fails or refuses to correct or reperform, the Buyer may, by Purchase Order or subcontract or otherwise, correct or replace with similar services and charge to the Seller the cost occasioned to the Buyer thereby, or make an equitable adjustment in the Purchase Order price.
    (d)    If the Buyer does not require correction or reperformance, the Buyer shall make an equitable adjustment in the Purchase Order price.

21.    FAR 52.246-17, WARRANTY (APR 1984) (EB-MODIFIED)
    A.    Definitions.
        (1)    "Acceptance," as used in this clause, means the act of an authorized representative